[Congressional Record Volume 140, Number 57 (Wednesday, May 11, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 11, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1995--CONFERENCE 
                                 REPORT

  The PRESIDING OFFICER. Under the previous order, the hour of 10 a.m. 
having arrived, the Senate will now proceed to the consideration of the 
conference report accompanying House Concurrent Resolution 218, which 
the clerk will report.
  The legislative clerk read as follows:

       The committee on conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the concurrent 
     resolution (H. Con. Res. 218), setting forth the 
     congressional budget for the U.S. Government for fiscal years 
     1995, 1996, 1997, 1998, and 1999, having met, after full and 
     free conference, have agreed to recommend and do recommend to 
     their respective Houses this report, signed by a majority of 
     the conferees.

  The PRESIDING OFFICER. Without objection, the Senate will proceed to 
the consideration of the conference report.
  (The conference report is printed in the House proceedings of the 
Record of May 4, 1994.)
  Mr. SASSER addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Tennessee.
  Mr. SASSER. I thank the Chair.
  Mr. President, we are ready to proceed with the conference report to 
the fiscal year 1995 budget resolution.
  Mr. President, the eminent British statesman Edmund Burke wrote once 
that, ``All government--indeed, every human benefit and enjoyment, 
every virtue and every prudent act--is founded upon compromise and 
barter.''
  Now, the conference report before us today is just that: A fair 
compromise that makes the Government go, a fair compromise that 
provides for order rather than chaos, and allows us to proceed 
expeditiously with the business of this people's Government.
  But this budget resolution is not a compromise simply for compromise 
sake. Like its predecessor, the budget resolution which we passed 
earlier this year, this one hews to the principle of deficit reduction, 
it hews to the principle of fiscal responsibility, and it propels us 
down the path to greater economic growth.
  Make no mistake about it, this economy of ours has flourished since 
we made a commitment last year to serious and credible deficit 
reduction. I wish to commend those Senators who last year cast their 
lot with serious deficit reduction.
  I believe that as we consider this budget resolution conference 
report, it bears repeating the major accomplishments of last year's 
Budget Reconciliation Act, accomplishments that have a direct impact on 
the working men and women of this country, accomplishments that we 
build upon with this budget resolution conference report.
  Last year's deficit reduction plan reduced the deficit by nearly $500 
billion, cut spending by $255 billion, and allocated every new dollar 
to deficit reduction. It constrained the discretionary spending at a 
hard freeze level, and cut $90 billion in entitlement spending.
  As an example of how real last year's budget-cutting effort was, or 
deficit-cutting effort was, and how real the legislation was that we 
passed last year, we now find that the legislation we passed, which was 
calculated to reduce the deficit by $500 billion, is now calculated to 
reduce it by well over $600 billion in the same timeframe as a result 
of primarily increased economic expansion and activity, part of which 
was attributable to the deficit reduction efforts that we took.
  Given the extra lift provided by the rising tide of a strong economy, 
as I said, the package that we produced last year will actually come in 
in the neighborhood of $650 billion in deficit reduction over the next 
5 years; $150 billion, almost, over what we had originally predicted. 
What a difference from other deficit reduction packages.
  I remember years past when we would try to reduce the deficit. We 
would come in with various gimmicks and plans. Invariably, the deficit 
would be larger than we had anticipated. In this case, we have the 
welcome and refreshing and heartening news that the $500 billion 
deficit reduction package that we passed is not just $500 billion. It 
is going to come in at somewhere in the neighborhood of $650 billion in 
deficit reduction.
  If we do not stray from the path we are on, if we pass this budget 
resolution for fiscal year 1995, the 1995 deficit is going to be $100 
billion below the Congressional Budget Office projection of just last 
spring, just a year ago.
  In fact, Mr. President, the deficit in 1995 will be lower than any 
year since 1979.
  And that is not all. The 1998 deficit will be $200 billion less than 
before last year's plan was passed. And projections are that the 1999 
deficit will be cut in half.
  Let us look at this critical deficit reduction from another angle. 
Let us look at it from the point of view of percentage of gross 
domestic product.
  I think most knowledgeable economists would say that the most 
accurate way of measuring a deficit's impact on an economy, and on an 
economy's future health, would be to put it in proportion to the gross 
domestic product.
  The deficits from 1995 through 1999 will average about 2.4 percent of 
gross domestic product; 2.4 percent of gross domestic product for 1995 
through 1999. Contrast that with 4.2 percent of GDP during the 1980's, 
almost cutting the deficit in half as a percent of GDP from where it 
was in the 1980's. How about the 1970's? In the 1970's, we were 
averaging a deficit as a percent of GDP at 2.5 percent.
  So what we are seeing as a result of this deficit reduction program 
we are on, we are almost halving the deficit as a percent of GDP from 
where it was in the 1980's, and bringing it below where it was as a 
percent of GDP on the average in the 1970's. That is quite an 
accomplishment.
  The legacy of a growing debt burden will also be reversed. The 
national debt as a percent of the economy grew to an alarming 52 
percent by 1994. What we are doing is halting the growth of the 
national debt as a larger percentage of the economy, arresting it, and 
starting to reduce it.
  A little brief history might be in order here for our colleagues. 
When we emerged from World War II, the national debt as a percent of 
the gross product or national wealth stood at about 110 percent of the 
gross domestic product at that time. We began reducing it, and reduced 
it down to an area of somewhere in the neighborhood, at its lowest 
level, of about 30 percent of GDP. It began growing again in the 
1970's, and exploded in the 1980's, moving up to a point where it was 
in excess of 50 percent of GDP. We are now halting that growth, 
arresting it, and starting it down in the other direction.
  We often call last summer's budget resolution and reconciliation bill 
the ``historic'' deficit reduction plan. We do so for good reason. 
History gives us a benchmark against which to measure. What we did last 
summer, and what we continue to do with this resolution, measures up, I 
think, with the best of them.
  Discretionary spending as a share of our overall economy and the 
total budget will be the lowest, in this budget resolution, than it was 
when Franklin Delano Roosevelt was last in the White House. For the 
first time since Harry Truman was President, there will be 3 years in a 
row of declining overall deficits. And discretionary spending next year 
will be lower than the preceding year. This is the first time that 
happened since President Nixon took office in his first year. In 
President Nixon's first year in office, we were starting to reduce the 
spending that had been going into the Vietnam War that elevated 
discretionary spending. And that is why discretionary spending in his 
first year in office was more than it was the year before.
  So no one will argue that we have not made substantial progress. But 
I am not here to try to persuade my colleagues this morning that we 
have dealt with this deficit and dispatched it with a single blow. The 
deficit is very tenacious. I say to my colleagues that this deficit is 
receding; it is retreating before the relentless assaults that we have 
launched upon it over the past year and a half.

  There is no doubt in my mind that the growth of this economy and the 
vigor of this economy can be traced, at least in a significant part, to 
the deficit reduction plan that we passed here last summer.
  The financial markets which had long begged for a creditable deficit 
reduction plan among the dross of gimmicks and contraptions offered to 
them in prior years finally found a creditable deficit reduction plan--
the one we passed last year. And how did the financial markets respond? 
They responded with lower interest rates, which helped push us into a 
fully self-sustaining recovery.
  This is how the American people have felt measurable results from our 
efforts in deficit reduction last year. First, it came in jobs. Over 
450,000 jobs were created in the month of March alone. We have now 
created in this economy 2.5 million jobs in 14 months. That is more 
jobs in 14 months than were produced during the previous entire 4 
years--more jobs in 14 months than in the previous entire 4 years.
  Well, the next measure is interest rates. Interest rates have 
plummeted; they have come down; that is, before the Fed began to hear 
inflation creeping in on little cats' feet which nobody else heard and 
panicked.
  For hundreds of thousands of our fellow Americans, low-interest rates 
produced an unparalleled opportunity to purchase a new home. Housing 
starts and permits in sales soared in the fourth quarter of 1993 at 
more than a 50 percent annual rate.
  Sales for domestically produced cars and light trucks jumped at more 
than a 50 percent annual rate between September and February. And in 
the year 1993, for the first time since 1980, more automobiles were 
assembled here in the United States than were assembled in Japan. Let 
me repeat that. In 1993, for the first time since 1980, more 
automobiles were assembled here in the United States than in Japan. In 
Japan, the cry is, ``The Americans are back''--and we are, in a big 
way.
  One of the strongest indicators of economic victory--real business 
investment--advanced at a 22-percent rate in the fourth quarter of last 
year and continued its upward climb in the first quarter to an all-time 
high.
  Well, how does that translate to living standards increases for the 
average American? That is what we are concerned about, elevating the 
quality of life of our citizens, elevating their living standards. 
Well, Mr. President, living standards rose more during the first year, 
in 1993, than during the previous 4 years put together.
  So, taken as a whole, the economy has been performing so well that 
during one of those rare days when we are all singing from the same 
hymn book, Federal Reserve Chairman, Dr. Alan Greenspan, appeared 
before the Joint Economic Committee of this Congress, and here is what 
he had to say:

       I don't recall as good an underlying base in the long-term 
     economic outlook any time in the last two or three decades.

  Alan Greenspan, Chairman of the Federal Reserve Board, came before 
the Congress and stated not too long ago that the underlying base and 
the long-term economic outlook was better than it had been in the last 
two or three decades--in the last 20 or 30 years.
  Unhappily, the Federal Reserve Board seems to have changed its tune 
somewhat since those salad days a little earlier in the spring, and 
many of us, frankly, believe the Fed is singing way off key these days.
  In fact, last quarter's 2.6 percent rate of real economic growth 
confirms that the Fed's actions to tighten monetary policy have been, 
in the judgment of this observer, misguided. In my view, the economy is 
not carrying too much sail, as the Fed would seem to have us believe.
  However, the Fed's actions go far beyond the headlines on the 
business page. They bleed into all facets of our lives. These 
preemptive strikes by the Fed against inflation threaten to choke off 
the economic expansion before working men and women can begin to enjoy 
the full benefits of it.
  I add, too, that in spite of all our promises to the contrary, the 
Fed, once again, is not supporting our efforts at fiscal contraction. 
We are starting to see the positive results of our toil in deficit 
reduction. Real Federal spending on goods and services declined at an 
annual rate of 12 percent in the first quarter, the third consecutive 
quarterly drop.
  Mr. President, I want to repeat that statement. Real Federal spending 
on goods and services declined at an annual rate of 12 percent in the 
first quarter of this year, the third consecutive quarterly drop of 
real Federal spending.
  We are cutting spending, and how does the Fed respond? Do they 
respond with a complimentary monetary policy? Well, we learned a very 
hard and painful lesson from the 1990 budget agreement. We learned that 
fiscal and monetary policy must be carefully balanced if we are to cut 
the deficit and if we are to sustain economic growth. As a 
counterweight to an austere fiscal policy, Congress needs the Fed to 
offset that contraction by using its tools to keep the economy moving.
  Mr. President, I sincerely hope that the Fed will reexamine its 
actions. We in this body have made a courageous and earnest effort to 
reduce the Federal deficit. We have fought hard to resuscitate this 
mighty economy of ours. Our efforts are paying off. The 1995 budget 
resolution will simply cement the structure in place that we brought 
into being last summer.
  Now, let me just spend a few minutes going over some of the 
conference issues. Foremost is the Exon-Grassley amendment which made 
further cuts below the preexisting caps on overall discretionary 
spending.
  Let me briefly review its history.
  For the 5-year period between 1995 and 1999, the Senate budget 
resolution as amended by Exon-Grassley reduced spending from the caps 
by $63 billion in budget authority and $26 billion in outlays. Now, 
that was what the Senate did. By adopting Exon-Grassley we reduced 
spending below the caps by $63 billion in budget authority and $26 
billion in outlays. Our colleagues on the House side passed a budget 
resolution which contained no companion cut before the caps.
  Now, following the passage of the Exon-Grassley amendment and its 
adoption here, the Pentagon and the defense community and defense 
experts began expressing serious reservations that a majority of the 
cuts from Exon-Grassley would be lodged against the defense budget, and 
I think their apprehensions are indeed and were indeed well founded.
  These experts at the Pentagon and others were not alone in that view. 
Many of my colleagues on both sides of the aisle voiced similar 
concerns.
  My friend, the distinguished ranking minority member of the Budget 
Committee, Senator Domenici, who is known for his expertise and 
sensitivity to national security issues, I think showed great courage 
in attempting to restore the cuts once he fully analyzed the 
possibility of the magnitude of the impact they might have on our 
defense efforts.
  Let me observe that my friend, the senior Senator from New Mexico, is 
not given, Mr. President, to spending binges. He is one of the most 
frugal and fiscally responsible Members of this body. I have frequently 
given him credit for the pay-as-you-go system that has worked 
effectively through the last 4 years. And he deserves credit for 
vigilantly fighting deficits for more than a decade.
  His willingness to look at restoring the $26 billion discretionary 
cut I think simply reflects his abiding concern for this Nation's 
national security.
  Following the first meeting of the conferees, Senator Domenici joined 
me to test the Senate waters on feasibility of such a plan of restoring 
the cut.
  But I think both of us quickly learned that the votes were simply not 
there to do it. The will of the Senate was in favor of additional 
discretionary cuts.
  Now, that is where the Senate stood. But the House, on the other 
hand, had made its position clear prior to conference when a motion to 
instruct its conferees passed by a majority of the House to not accept 
the Exon-Grassley language.
  It became obvious that if the conferees were to agree on a budget 
resolution at all, we would have to meet each other halfway and split 
the difference.
  So, Mr. President, that is exactly what we did with the Exon-Grassley 
amendment. Rather than scrapping it altogether, as the House wanted to 
do, and as a majority of the House of Representatives had voted to do 
on the floor of the House, in open vote they voted to, in essence, 
scrap Exon-Grassley, but rather than accepting that and scrapping it, 
the Senate conferees ultimately were able to prevail on the House to 
agree to $13 billion in cuts in outlays and $31 billion in budget 
authority off the caps for 5 years. In other words, we were able to 
prevail upon them to split the difference. That is almost exactly half 
of the original cut off the caps over the next 5 years. In the first 
year, the Exon-Grassley cut amounts to $500 million in outlays. It 
accumulates in the later years.
  I would also tell my colleagues that the conference report sustains 
the language of both the Nunn-Domenici initiative and the Graham of 
Florida initiative with respect to entitlements.
  Both Houses are now on the record in favor of controlling growth in 
entitlement spending. I might say to my colleagues that the resolution 
is still agnostic when it comes to which health care plan or 
combination of plans will be ultimately passed.
  This budget resolution follows the outline of the President's budget 
in that over 300 programs are either cut or terminated. In addition, 
the resolution closes a $3.1 billion gap that opened up on the 
discretionary side of the budget for fiscal year 1995 because of 
differences between OMB and CBO scoring.
  This budget resolution also makes the right investments. Investments 
for education are in this budget resolution, I say to many of my 
colleagues, including the distinguished Senator from Connecticut [Mr. 
Dodd], who has expressed his continuing interest in continued 
investments in education for many years. There are investments in 
nutrition. There are investments for our infrastructure. There are 
investments for fighting crime in this budget resolution. There are 
investments to make life better and more secure for working men and 
women and their families. As an example, we sustain the functional 
totals that reflect the priorities of the amendment offered by the 
distinguished Senator from California [Mrs. Boxer], which proposed more 
funding for children's programs.
  Mr. President, I really see no reason to drag on the debate on this 
conference report. I will yield momentarily to my distinguished 
colleague from New Mexico, Senator Domenici.
  But before I do so, I urge my colleagues to vote for this budget 
resolution for two specific reasons.
  First, the conference report on the budget resolution that we bring 
back to you clearly expresses the will of the majority of the Senate. 
It is the will of the Senate to cut spending further. We have done that 
in this resolution that comes before you. It is the will of the Senate 
to provide for entitlement controls. That is included in this 
resolution. It is the will of the Senate to keep us on the path of 
deficit reduction. We bring it to the Senate in this resolution.
  Second, let me warn my colleagues that the absence of a budget 
resolution would make mischief for the entire appropriations process 
and for the Senate as a whole, and the primary mischief would fall in 
the area of national security and defense budget.
  It is no secret that the Department of Defense appropriations bill is 
the largest and usually the last appropriations bill to be brought to 
the floor. If that bill is brought to the floor after other bills have 
been brought to the floor without the protection of the 602(b) 
allocation ceiling, then there is going to be overspending in the other 
appropriations bills and when the defense bill hits the floor it is 
going to have to pay the price for all of the other spending. I do not 
think anyone will benefit from this chaos. The American people deserve 
better. The institution deserves better, and indeed my colleagues 
deserve better than chaos such as that.
  So, Mr. President, I urge the adoption of this resolution. It is in 
the best interests of our country. It is in the best interests of the 
Senate, and we simply must adopt it.
  Mr. President, I yield the floor to my distinguished friend from New 
Mexico.
  The PRESIDING OFFICER. The Chair recognizes the Senator from New 
Mexico [Mr. Domenici].
  Mr. DOMENICI. Thank you very much, Mr. President, and I thank the 
chairman.
  Before I give my remarks and respond, Mr. President, might I ask a 
little bit about the process we want to follow?
  I have about five Senators who want to speak. Maybe I should state 
the names as we know them, so their offices know we are trying to 
accommodate them but that we also want to get off the floor at the 
earliest possible time.
  I assume that is the chairman's wish.
  Mr. SASSER. It is, indeed.
  Mr. DOMENICI. Senators Gramm, Grassley, Lott, Gregg, and Nickles have 
indicated they desire to speak. I assume that there may be others. But, 
frankly, it is my intention, on our side, working with the chairman, to 
yield back some of the time on this resolution. I assume we each have 5 
hours. I do not think we need 5 hours.
  Might the Senator give me his expression on that, whether he thinks 
he is going to need the full 5 hours?
  Mr. SASSER. Let me say to my able friend from New Mexico, we will not 
need 5 hours. At the present time, we only have two or three Senators 
on our side who have expressed any interest in speaking on the 
resolution. So I would be positive that the time could be reduced very 
considerably.
  Mr. DOMENICI. Might I ask the Senator, has he conferred with his 
leadership about when this vote might occur?
  Mr. SASSER. I have not. I will do that in a timely fashion.
  Mr. DOMENICI. I thank the Senator very much.
  Mr. President, just to set some time parameters about what I say 
here, I am going to yield myself a half hour at this point. Would the 
Chair have the clerk notify me when I have used 30 minutes, please?
  The PRESIDING OFFICER. We will.
  Mr. DOMENICI. First, Mr. President, fellow Senators, I want to talk 
just a bit about some of the remarks that the distinguished chairman 
made with reference to the Federal Reserve Board and their policies.
  I was not privileged to be in attendance at the Banking Committee 
hearing. Perhaps the chairman was there. He and I are both members of 
the Banking Committee.
  But one of the President's designees, a rather eminent economist, Dr. 
Alan Blinder, now serves on the economic adviser team in the White 
House and I assume from economists around this land that he has a very 
excellent reputation. It is my understanding that, as the President's 
designee to the Federal Reserve, he was questioned about inflation 
which ultimately causes interest rates to go up. It is my understanding 
that he intends to fight inflation, concurring with the Federal Reserve 
Board's goals.
  I do not want to make a big point of it, because we are not going to 
have a lot to do with that in this budget resolution anyway. There has 
never been any successful effort on the part of Congress, since the 
Federal Reserve Board was created as an independent entity, to take the 
Federal Reserve and the banking system out of politics. There has never 
been any real successful effort to tell them what to do. There may be 
some political impacts on them, but I do not think we here on the floor 
are going to be telling them what to do.
  I just want to make the point that, in the long-term interest of 
growth and jobs that everybody talks about in the American economy, if 
they are thrilled about one thing that has happened in the past 10 to 
12 years, it is that we have inflation under control. We have learned 
in this great economy that it is inflation that ruins economic growth, 
ruins the pocketbooks of American people, and lowers the receipts for 
work by American workers. That essentially is the big culprit.
  I am not suggesting that inflation is rampant again, but I am 
suggesting that the Federal Reserve is doing the right thing. The right 
thing is to prolong this economic recovery beyond what it might 
accomplish if they did not adjust interest rates.
  Clearly, I believe the political leadership of this country would 
like very much to have this economy continue to grow. It appears my 
friend from Tennessee has forgotten the business cycle and seems to 
think that last year's budget resolution and tax bill caused all this 
economic growth when it seems to me that the business cycle had gone 
down about as far as it was going to go in America. It has started up 
again and we are now reaping the benefits.
  Having said that, it could very well be that Federal Reserve policies 
are going to prolong this recovery and, thus, the positive side of the 
business cycle for a longer period of time than it would have continued 
if we kept the heat on this economy with the lowest possible interest 
rates.
  And I would remind everyone that the Federal funds rate, which is 
what the Federal Reserve has been addressing, is not at an inordinately 
high level. Compared to the past 20 years, it is at a pretty low rate 
for the United States.
  I will give my theory of what has gone wrong in the budget approach 
that this resolution brings before us this year, but first let me take 
a few moments to talk about the reality of what America is experiencing 
today in terms of jobs, economic growth, and, even the specific, 
positive fact that the chairman brought to our attention about American 
automobile manufacturers producing more cars at more competitive costs.
  No. 1, the Senator from New Mexico could not be more pleased about 
anything than I am about the economy turning around and moving in a 
positive direction. The American people have been very, very worried 
about that, over the last few years, and the time has come when it has 
fully turned around. I hope we do everything we can--I am not sure how 
much we can do--to keep that growth going, to continue to improve our 
competitiveness, and that the real wages of American workers increase.
  So in that regard, if I were a Democrat, I would be laying claim to 
all of these positive things that are happening in this economy, and I 
would lay claim to them on the basis that they have all occurred 
because of policies that the President and the Democratic majority have 
adopted. But I think, as a Republican, while I am proud and pleased 
that these things are happening, it is my responsibility to take a 
couple of minutes to try to put this in perspective.
  Second point: I do not know of a single American economist, including 
the distinguished economist currently recommended for the Federal 
Reserve Board, Alan Blinder, who has ever said that the Government can 
change policies, whatever they are, and affect the economy in a 
significant way in less than 1 year, and most say 1\1/2\ years at the 
minimum. We are now in May of 1994, Mr. President--not May of 1995 or 
1996--May of 1994.
  I remind our fellow Senators--just a dose of reality--that the tax 
package that was passed by the U.S. Congress in response to the 
President's recommendations, but clearly not exactly what he asked for, 
was adopted by the U.S. Congress in August of 1993.
  Now, let us see--August, September, October, November, December, 
January, February, March, April, May--we are now at 9 months since that 
package was signed into law. And it is most interesting that the 
largest surge in economic growth occurred in the last quarter of 1993. 
I think it was a 7-percent gross domestic product surge.
  To American business, American labor, American automobile 
manufacturers, small business people, it is more realistic to assume 
and fairer to say that a lot of things have been changing in this 
American economy for the better for a long time. Clearly, I do not deny 
that the chairman, in a sense the leader of the majority party, should 
take the floor today and, in glowing terms, talk about all these good 
things that have happened and say they happened because of the fiscal 
policy plan adopted in August 1993. But I believe it is much closer to 
the mark to assume that the business cycle carried us from lofty growth 
in the Reagan days, to modest growth, then to a very quick recession, 
and then more modest growth as the business cycle unfolded. I think it 
is fairer to say that the time had come in the business cycle of the 
United States when the private sector and the families of America had 
taken debt out of their ledgers--the business ledgers and the private 
ledgers. They bought down their debt tremendously and a number of other 
things occurred where the American economy was ready to surge again, 
and it has.
  If the President's tax package had not passed and the caps had been 
retained as they already were in the law on discretionary spending, I 
am willing to speculate with a degree of certainty that this economy 
would be very close to where it is right now. Perhaps it might have 
even grown more.
  The Congressional Budget Office, the independent arm set up by 
Congress to tell us about these things, says in their analysis of 
fiscal year 1994 that economic growth will be dampened because we have 
a slightly more restrictive policy, including taxes and other things. I 
believe this is true. Yet I want everybody to know if I were Chairman 
Sasser, I would be down here saying what he said. If I were the 
President of the United States, I would be running across this land, 
and wherever I could I would say it is my policies that did all these 
things.
  Let us talk a little bit about what we have cut and what we have not 
cut in 1993, 1994, and in this projected budget. It might shock people 
to know that of the things we could have cut in the entire package of 
appropriated accounts--everything from highways to education, revolving 
funds for loans for water and sewer projects to the FBI--not one single 
dime has been cut from anything other than defense.
  Let me repeat. With all the discussion about strong fiscal policy, in 
all of the array of American appropriated programs--not the 
entitlements--we have only cut defense in 1993 versus 1992; 1994 versus 
1993; and the proposed 1995 versus 1994. Shortly, I will talk 
explicitly about the great risk to the American people and the free 
world in this dangerous world, by the continuation of that downward 
trend of cut, cut, cut defense.
  Even without the allocation of the unspecified appropriations cuts, 
the defense spending of the United States will be at the lowest percent 
of gross domestic product that it has been since immediately preceding 
the bombing of Pearl Harbor.
  Think of that. We recall those days. We saw our men training in the 
Philippine Islands with broomsticks while the Japanese were bombing. We 
are going to be at the second lowest level in history--since the First 
World War era. And that era is the only time in this modern time of 
difficulty and American world leadership that we have been lower.
  I want to have printed in the Record the numbers I have just 
described about what has been cut and what has not been cut. I would 
like very much to have printed this table which has the defense outlays 
for 1992, 1993, 1994, 1995, and the domestic discretionary outlays for 
the same period.
  I might just indicate defense in 1992 was $302, it is now $270; 
domestic was $233, it is now $273. I ask unanimous consent that little 
summary be printed in the Record.
  Mr. DOMENICI. Mr. President, the numbers will show that Defense's 
cuts are going to get worse than that little chart shows as we follow 
the President's policies and as we follow the policies of allocating 
more of the discretionary cuts to defense in this appropriations 
process called a 302(b) allocation process. Before I finish today I 
will urge that the allocation process not take any of the new cuts out 
of defense and we be given, as a people, as a Nation, the President's 
requested Defense budget for 1995.
  Having said that, I want to take a couple of more minutes, since I 
talked about how, if I were Chairman Sasser and a Democrat, I would be 
bragging about all these good things that have happened to the American 
economy and trying to lay all that powerful change on an August 1993 
budget resolution. But I think in the process the chairman also alluded 
to what a great job we are doing in deficit reduction. Again, so 
everybody will understand, if I were the Senator from Tennessee, and 
the chairman, I would be saying exactly the same things. But I think a 
dose of realism is required here, too. So let me try a little bit. 
Obviously my friend from Tennessee will have plenty of time to rebut 
this.
  I would like to state for the Record and for fellow Senators what 
makes up the reduction in the deficit that we are touting? Where does 
that deficit reduction come from? So, my version says the only thing 
that the August 1993 deficit reduction package did was raise taxes. Let 
me take 1993 versus 1994 and let me go through just four or five 
things.
  The deficit for 1994, when it was first figured in 1993, was 
projected to be $291 billion. These are all Congressional Budget Office 
estimates, Mr. President. Now it is being said that in 1994 that 
deficit went down, a $68 billion reduction in that deficit.
  I believe it ought to be clearly understood that very little of that 
deficit reduction came from the 1993 budget resolution, if we will just 
go and look at where the deficit reduction items as shown by the 
Congressional Budget Office.
  First, the largest item is a $31 billion reduction; $31 billion of 
the total $68 billion comes from what are called technical reestimates. 
That means CBO has gone back and looked at how things like Medicare and 
Medicaid spend out. It has nothing to do with policy changes.
  They have found that technical adjustments are necessary to better 
estimate the reality of the spending. Included in that are technical 
reestimates of how much it is going to cost to complete the bailout by 
the Resolution Trust Corporation.
  I do not think we did anything in the budget resolution on that. I 
think what happened is, we overestimated how much it would cost to do 
that final cleanup, pay our bills, and begin the builddown and closing 
up of the RTC shop. So that is $31 billion.
  The new taxes and user fees amounted to $28 billion, according to the 
Congressional Budget Office. Mandatory spending was reduced by $4 
billion. So I assume one could say put credit where credit belongs and 
show $4 billion in savings from policy changes on the mandatory side.
  There are a couple more items, and one is called economic 
assumptions. It amounts to a $13 billion reduction because the 
economics are better than projected. If my arithmetic is right, if you 
add those up, there is only one thing missing, and it is that we spent 
$9 billion that we did not expect to spend on emergencies. So when you 
add up the negatives and subtract that one, a $9 billion increase, you 
end up with $68 billion.
  Frankly, it seems the explanation of the Senator from New Mexico, of 
how we got that deficit down is worthy of as much consideration, if not 
more, since it based on the Congressional Budget Office's numbers. When 
you look at CBO's assessment it is difficult to account for all of the 
deficit reduction coming from an August 1993 tax bill, which included a 
reaffirmation of caps on spending that were nothing more than carrying 
forth the 1990 caps that were agreed upon at the summit at Andrews Air 
Force Base.
  The deficit is currently moving in the right direction, not for very 
long, but it currently is moving in the right direction. I am not going 
to go through the Congressional Budget Office's estimates of where the 
deficit reduction will come in 1995, other than to say that between 
taxes, which will be $46 billion of that reduction, and technical 
reestimates, again, more Medicare/Medicaid spendout reestimates, more 
RTC reestimates, which is $45 billion, what we have is over $90 billion 
of the deficit reduction for 1995 coming from taxes and technical 
reestimates.
  I think that is a little different, Mr. President, than saying we 
have really engaged in a major new round of cuts and restraint. Do not 
forget that the discretionary caps are identical to those established 
in 1990, for which I give the chairman a lot of credit. The President 
wanted much higher caps. He wanted to spend a lot more, which would 
have been very interesting in terms of how this would have come out. 
Remember, the President also tried to gain enactment of a $17 billion 
stimulus package.
  In any event, the chairman of the Budget Committee insisted on 
keeping the caps from the 1990 agreement, and that is why we got at 
least that much. But even in using those, all of the savings, all of 
the cuts came out of defense.
  Mr. President, let me move along, and let me ask how much I have left 
on the first half hour.
  The PRESIDING OFFICER. The Senator has used 26 minutes.
  Mr. DOMENICI. I want to yield myself the remainder of that, and 15 
minutes more.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, my remarks to this point were in 
response to assertions of the chairman, make Republican observations on 
them, which I believe is very valid.
  But now I want to talk about the budget resolution for 1995 and 
analyze it. I say to Chairman Sasser, I regret that I cannot vote for 
it. I did make a proposal. I felt so strongly about one basic 
principle: That we cannot continue to cut defense. We cannot make any 
more across-the-board discretionary cuts and take those funds from 
defense with immunity. I said I would vote for the resolution if there 
were no further cuts in defense.
  Frankly, it turns out we cannot be assured of that, even if we took 
out the Exon-Grassley discretionary cuts, because the Appropriations 
Committee will make that decision. I urge that the Appropriations 
Committee, in allocating the dollars under this budget resolution, give 
the defense committees what the President asked for. The President made 
a case to the American people in his State of the Union Address that we 
have cut defense enough.
  I believe if the whole Senate were to vote on that issue, I believe 
we would give the President his full budget allocation for defense and 
spread any across-the-board cuts across the other functions of the 
Federal Government. I believe we would say that, if we were voting up 
or down in the Senate.
  I merely say that because we have never done that, but I sense enough 
concern that maybe some effort will be made to get the Senate to speak 
on how much defense is enough defense under this budget.
  I say to my fellow Senators, if you look at the budget resolution, 
the defense numbers are exactly the same as the President's. I am not 
speaking about this budget resolution in that regard in a pejorative 
sense. The truth of the matter is that all of the cuts are found in 
another section called allowances. So the reductions from the budget 
baseline are found in an allowance category. Those reductions are not 
allocated between domestic and defense, so you could be a bit misled in 
assuming this budget resolution provides for full funding of the 
President's defense number.
  While I compliment the chairman for producing a budget resolution--I 
have been there, and it is hard to put this kind of thing together--I 
believe it is sending the wrong signals and it is moving in the wrong 
direction. I hope in a few moments I can express these views and 
perhaps, to some extent, sound a warning.
  First, I believe the chairman made the right decision in 
compromising, as he indicated, because clearly the majority has a 
responsibility of producing a budget resolution which adds a degree of 
orderliness to the process.
  But today I come down on the side that the risks of the failure to 
complete a budget resolution are outweighed by the risk to our national 
security and the potential impact of an unspecified $30 billion in 
discretionary spending cuts in this resolution, and what effect that 
might have on our security role in the future in a dangerous world.
  And since some are asking why Senator Domenici did not favor further 
discretionary cuts across the board, I remind the Senate that the 
problem we are having with the budget of the United States is a problem 
of the ever-increasing entitlement programs. And I did offer in this 
Chamber an alternative to further cutting defense and domestic 
discretionary programs and asked the Senate to take a small bite out of 
the growing entitlements instead, kind of a tit for tat. I proposed the 
same amount of deficit reduction but begin just a slight nicking of the 
entitlement programs. It failed. But from the standpoint of reducing 
the deficit, I am in sympathy with reducing it further. That was 
encapsulated as an idea in the Exon-Grassley amendment.
  (Mr. ROBB assumed the chair.)
  Mr. DOMENICI. Now, also, I want to remind the Senators, with 
reference to defense, Senator Nunn and I have been trying to restore 
the firewalls between discretionary defense and nondefense, and had we 
had those in place, I clearly might have been more willing to support 
the Exon-Grassley type cut. But the amendment to put the walls back 
under our processes takes 60 votes, and we have not been successful in 
getting that done.
  So I do not want to relive the last months of battle on that, but my 
reason for not supporting the budget resolution is even more simple. 
The conference report on the 1995 budget, once again, as I view it, 
sends the wrong signal and moves in the wrong direction. It sends wrong 
signals to the American public on how to really address the Federal 
deficit.
  Last year, the signal was taxes and defense cuts, and I believe I 
have gone through that. My statement--that we have essentially cut 
defense and raised taxes as a way to get the deficit under control thus 
far--is supported by the Congressional Budget Office in its latest 
evaluation. I do not think that sends the right signal to the American 
people about how to get the deficit under control.
  We can continue to reduce discretionary spending, implicitly defense 
spending, and this resolution comes before us and says while we are 
reducing discretionary spending, we increase entitlement spending over 
and above the current policy.
  Now, I believe, even if this budget resolution only allows a $5 
billion increase of entitlements, it is sending the wrong signal. The 
conference report reduces discretionary spending, and I think--and I 
repeat--that in that process we are going to significantly reduce the 
President's request for national security spending.
  And then we turn around, as I indicated, according to the 
Congressional Budget Office, and we increase entitlement spending 
relative to what it would be absent this budget resolution.
  Now, I have made this point enumerable times in this Chamber. In 
fact, I have tried to focus the Exon-Grassley cuts away from 
discretionary defense and back onto entitlements, and I have done that 
in health care reform, when this resolution was before the Senate, and 
unfortunately that failed.
  I remind the Senate that we are going to adopt health care reform. 
Almost everyone familiar with the budget has said health care reform is 
our last opportunity to reduce the budget deficit on the entitlement 
side. There are no plans except the bill I introduced yesterday that 
say let us reform health care and apply savings to the deficit. This 
resolution does not do that either.
  So the culprit is really entitlement spending. Everybody knows it. 
The deficit projections show it. Everyone in this Chamber knows it. And 
interestingly enough, this budget resolution does nothing in that 
regard other than, as I indicated, increasing entitlement spending. It 
goes even further to ease our budget enforcement procedures for 
consideration of future entitlement spending legislation. There are 12 
reserve funds--12 reserve funds--in this budget resolution.
  I know my very good friend from Tennessee will get up and say, well, 
these reserve funds are burdened by your ``pay-as-you-go'' idea, 
Senator Domenici. They require that spending be on a pay-as-you-go 
basis so that it will end up deficit neutral. But, Mr. President, these 
12 reserve funds are going to permit, on everything from welfare reform 
to health care, Congress to increase the spending on the entitlement 
side. It is spending that concerns this Senator, not necessarily that 
we spend and tax to pay for it. That is not the solution to the 
problem. The problem is ever-increasing entitlement expenditures.
  When you look at the projections, clearly entitlements or mandatory 
spending is beyond any doubt the culprit in the deficit of the United 
States. The Congressional Budget Office in their baseline says, believe 
it or not, from 1994 to 1999, entitlement and mandatory spending, Mr. 
President, will go up 36.9 percent. Discretionary spending at the same 
time, including everything that we spend on an annual basis, will go up 
3.9 percent--36.9 percent versus 3.9 percent in terms of the growth 
over the next 5 years. The Congressional Budget Office projects that 
annual entitlement spending, which today is over $800 billion--making 
up 55 percent of the Federal spending, excluding interest--will 
increase to $1.1 trillion--a 37-percent increase, roughly, in just 5 
years. Entitlement spending will then be 60 percent of the Federal 
budget.
  Now, this conference agreement will add $5 billion to that--not much 
in the grand scheme of things, but nonetheless it will add to current 
spending increases in that category of the budget.
  More importantly, I want to talk about national security spending and 
the trends. Today's spending on our national security represents 4.2 
percent of our gross domestic product, but in just 5 years that figure 
will decline to 3 percent. Only two times in recorded history, has 
defense ever matched these two lows: once immediately before World War 
II, the bombing of Pearl Harbor, when defense spending amounted to 1.7 
percent of our gross domestic product; and, the second time was 
immediately following World War II, when we had the precipitous 
builddown which brought on the Korean war.
  This resolution assumes $30 billion in discretionary spending cuts 
over the next 5 years, and as I indicated, I hope we have an 
opportunity to let the Senate speak on this issue because I am not 
convinced that the Senate would want to cut defense beyond the 
President's budget, even if it means taking some across-the-board 
discretionary.
  I believe that both will come out that way. If we do not do that, 
maybe this year there will be a way for us to do that.
  While clearly not the problem adding to the Federal deficit, current 
enforcement mechanisms fall disproportionately on discretionary 
spending relative to entitlement spending in this resolution and under 
current law. Let me give you the reasoning as I see it.
  We have found a way, with caps, to control discretionary spending.
  First, if discretionary budget authority or outlay levels exceed 
these caps, OMB makes across-the-board cuts. These caps are very strong 
relative to entitlement spending enforcement mechanisms. As I 
indicated, both budget authority and outlays on the caps are enforced 
separately by OMB, and also by a 60-vote point of order in the U.S. 
Senate.
  Second, Congress must annually negotiate discretionary spending 
appropriations bills to meet the Congressional Budget Office's scoring 
to avoid this 60-vote point of order and OMB's scoring to avoid a 
sequester. These are very strong enforcement measures. It has nothing 
to do with whether the cuts come disproportionately out of defense or 
not because it is the total that is being enforced. Unlike entitlement 
programs, these discretionary caps are not automatically adjusted for 
inflation and beneficiary growth.
  However, on the entitlement side there is nowhere near the same level 
of enforcement. Yes, we have pay-as-you-go for new, and I stress 
``new,'' legislative proposals. Spending grows unabated and 
automatically for inflation and beneficiary growth under current law 
for entitlement programs.
  So, what does this budget resolution do?
  First, it adds a minimum of $4.5 billion to entitlement spending on 
top of the huge increases that I have alluded to before that are built 
into the law.
  Second, it eases the enforcement procedures to allow expansion of 
entitlement and mandatory spending even beyond these levels. For the 
entitlement accounts of this Government, we add another $4.5 billion in 
agriculture, for crop insurance, and we do not have any pay-as-you-go 
requirement.
  We need to reform the way the Government funds agricultural 
disasters. I acknowledge that. We need to modify the Federal Crop 
Insurance Program. And I acknowledge that. But I am merely suggesting 
that the trends are in the wrong direction when we merely add $4.5 or 
$5 billion and say we are doing that so we can get reform.
  We have to admit up front that proposals that increase, even though 
it is small, entitlement spending, even if it is by slight of hand, 
will add to the Federal deficit. But the conference report does more 
than that. While it ratchets down on enforcement of discretionary 
spending to reflect the Exon-Grassley cuts as compromised, at the same 
time it eases restrictions on entitlement spending.
  Examples: There are several procedural changes made in this budget 
resolution. Let me talk to them for a minute.
  We add 12 broadly defined reserve funds. This is the new way to add 
programs under the rubric of reform that cost money so long as under 
budget calculations they are neutral in terms of their impact on the 
deficit. But they are on the books as new and expanded programs. So 
absent these reserve funds, we would have to get 60 votes to waive a 
point of order under the Budget Act to increase them because of the 
binding nature of the totals on the committees even on entitlements.
  So the 60-vote point of order is waived under this approach of 
reserve funds. Reserve fund legislation can provide unlimited increases 
in entitlement spending as long as it does not lead to any estimated 
increase in deficits. So, for example, the resolution provides an open-
ended spending increase for health care reform so long as it is deficit 
neutral.
  Mr. President, have I used my time?
  The PRESIDING OFFICER. The Senator has used 13 minutes and 45 
seconds.
  Mr. DOMENICI. Could I add 2 minutes to that? That will permit me to 
finish.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, so in health care reform everybody 
should know that this budget resolution provides an open-ended 
invitation in terms of how big and how expensive the health package can 
be so long as we pay for it with new taxes and other savings.
  I believe, even though by estimates it is deficit neutral, it is very 
risky to do that not knowing exactly what the total is going to be.
  While budget authority levels are binding on appropriations, one of 
these funds effectively eliminates the enforcement of budget authority 
levels for entitlement spending.
  This budget resolution also weakens the pay-as-you-go point point of 
order to make it even easier to expand mandatory spending by doing the 
following:
  First, it eases the discipline by only requiring legislation to be 
deficit neutral for the first year, years 1 through 5, and years 6 
through 10. Under current enforcement procedures, legislation must be 
deficit neutral for each year through 2003. That is changed and made 
more generous by this resolution. Maybe we should discuss easing the 
application of this point of order. That time may be with us. But 
clearly, there ought to be a major discussion about what it means.
  Second, it exempts legislation from a requirement to pay for deficits 
created by legislation enacted since the 1993 reconciliation bill. 
Frankly, this catches me totally by surprise. I am sure it is going to 
catch plenty of Senators by surprise. But what it really means is that 
for legislation enacted since the 1993 reconciliation bill, if in fact 
there are savings or tax increases that have not been used up in a pay-
go situation, they could be carried forward.
  For 1994, it is a small amount--$17 million. But I submit it is 
another trend and another dangerous precedent.
  Third, it allows for the double counting of savings, by allowing 
legislation to take credit for surpluses generated by legislation 
enacted since the 1993 Reconciliation Act. This seems to me something 
that should be thoroughly debated.
  Fourth, it exempts the budget resolution from the pay-as-you-go 
requirement so that mandatory spending can be increased by a simple 
majority in a budget resolution. As I have just described, this seems 
to be moving in the wrong direction.
  Let me conclude for the record. The projected deficits in this 
resolution increases from $175 billion next year to $200 billion in 
1999.
  Then, if you add the next 5 years to it, you will find that, under 
almost anyone's evaluation, we are spiraling up again, such that in 5 
to 6 years we will be back in excess of $300 billion in deficits.
  Mr. President, I took this opportunity today to explain three or four 
issues that I thought were important. I understand that the budget 
resolution is a typical undertaking. What I have tried to do here is to 
explain why I think it is moving, trend-wise, in the wrong direction 
and why it is sending the wrong signal as to control the deficit.
  I yield the floor.
  The PRESIDING OFFICER. The Chair informs the Senator that he has used 
18 minutes 15 seconds.
  Who yields time?
  Mr. SASSER addressed the Chair.
  The PRESIDING OFFICER. The Senator from Tennessee [Mr. Sasser], is 
recognized.

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