[Congressional Record Volume 141, Number 15 (Wednesday, January 25, 1995)]
[House]
[Page H671]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page H671]]
                              {time}  2040
  CAPITAL BUDGETING AND ITS RELATION TO THE BALANCED BUDGET AMENDMENT

  The SPEAKER pro tempore (Mr. Gekas). Under a previous order of the 
House, the Gentleman from West Virginia [Mr. Wise] is recognized for 5 
minutes.
  Mr. WISE. Mr. Speaker, tonight what I would like to discuss is 
capital budgeting an its relation to the balanced budget amendment of 
the Constitution, for one of the amendments that will be on the floor 
tomorrow will be the amendment that I appreciate the Committee on Rules 
making in order, my amendment, the Wise amendment, that says that the 
budget must be balanced by the year 2002. It takes Social Security off 
budget, and it puts in place capital budgeting for physical 
infrastructure. A real mouthful. What does it mean? It simply means 
that it permits that kind of investment that produces much more 
economic return than it costs. It permits investment to be included in 
any kind of balanced budget approach.
  It recognizes there is a difference between the dollar that you spend 
for consumption and the dollar you spend for investment. I call this 
the family budget amendment, because what it does is to recognize what 
the American family does. The American family sits down at its kitchen 
table every month to balance the checkbook and it writes out checks for 
the heating bill, the food bill, the doctor, whatever that consumption, 
and also those investments that the family made because it was 
important for the family to be able to grow in the house, the 
investment for the car, and the investment for the college education.
  What is the significance of capital budgeting? I have two charts that 
I think tell this story well. What we are talking about here is being 
able to account for our infrastructure, our roads, our bridges, or 
highway systems, our airports, our water and sewer systems, those 
things that make us grow, to account for them in the same way every 
State and business does.
  What is it important? The first chart, I think, bears this out. 
Studies are now showing, and these studies are now showing and 
particularly from Dr. David Aschaur, that there is a direct correlation 
between productivity increases and capital budgeting and infrastructure 
investments.
  Because the United States has not been investing at the same rate 
that it once did in its roads, its bridges, its infrastructure, its 
productivity has been essentially a flat line of 1 percent growth a 
year since the year 1978. And yet look what has happened to Canada, 
Italy, France, and Japan who are all investing far more in relation to 
their gross domestic product that the United States. The United States 
is investing somewhere around 1 percent, and it sees about a 1 percent 
productivity gain a year. Japan has consistently invested 4 to 5 
percent, and it sees a corresponding productivity increase.
  Incidentally, Japan, with half the population and about 60 percent 
the size of economy of ours, has productivity growth far exceeding.
  The next chart, I think, is also important. It shows it a little 
differently. These are all different countries, and it shows the 
percent of gross domestic product that they put into their public 
infrastructure, and then it also shows growth of those economies, and 
once again, you see the United States a flat line relative to all the 
other nations, and so you can see the more you invest in your 
infrastructure the more return you get in productivity which means your 
economy grows, your payrolls grow, your jobs grow.
  We do not have that system here. What I am asking for in this 
balanced budget amendment is that we recognize investment, that we 
recognize investment in physical infrastructure, that we recognize what 
all of these other nations do, and that we create an incentive for 
investment.
  People do not want the balanced budget amendment simply to cut a 
deficit and yet at the same time leave us in bankruptcy. What they want 
is a balanced budget amendment to bring us to truly end our deficit but 
at the same time to do it so that we are a growing economy.
  You cannot do it if you are going to shut off this kind of 
investment. And so what we will do with our balanced budget amendment 
is to say Social Security is off budget, and most importantly, capital 
investment will be recognized for physical infrastructure, not for 
other things. It is not a grab bag you can count your way out of any 
problem, but for physical infrastructure only, highways, roads, 
bridges, airports, water, and sewers, buildings, those kinds of things.
  In the domestic budget, discretionary budget, $60 billion roughly 
goes to capital investment. That is nondefense. If you choose to 
include defense in there as well, the battleships and those things that 
protect us, aircraft carriers, the fighters and so on and amortize them 
over the life of the asset, then you are talking about another $60 
billion, but I think you are talking about something else as well.
  Right now there is a disincentive, strong reasons not to do this kind 
of investment, because it is not rewarded in our Federal accounting 
system.
  Under our budget amendment, it is rewarded. It is recognized. Is this 
something radical, different? Please check every State. We say we want 
to model this after the States as well as the families. Please check 
every State. You will find every State has a capital budget. The United 
States can do the same.

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