[Congressional Record Volume 141, Number 15 (Wednesday, January 25, 1995)]
[Senate]
[Pages S1477-S1484]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                THE NEED FOR A BALANCED BUDGET AMENDMENT

  Mr. CRAIG. Mr. President, I have requested and gained an hour of 
morning business under a special order today to discuss the beginning 
of what I believe will be one of the most historic debates that the 
Congress of the United States will engage itself in and most certainly 
that the 104th Congress will become involved in. That debate will begin 
in the House today and will begin in the Senate early next week.
  What I am talking about is an issue that many of us for a good number 
of years have believed is the most important issue to bring our 
Government back on track and to focus it on the priorities that the 
American people want us to focus on and that, of course, is the issue 
of our fiscal matters and our spending under a balanced budget 
amendment to the Constitution of the United States.
  In November of this year, as for a good many years, the American 
people have spoken very loudly about their desire to see this Congress, 
and all past Congresses, move in a fiscally responsible way. Our 
failure to do so over the last good many decades has produced our 
Nation's largest Federal debt of now 4.6-plus trillions of dollars. It 
has produced an annualized deficit of nearly $200 billion and an 
interest on debt--now the second-largest payment in our Federal 
budget--of nearly $300 billion a year.
  I think the American people spoke with fright and alarm this year, 
that this Congress and its political leaders seem to be unsensitive to 
the continued mounting of a Federal debt and the potential impact that 
debt will have on future generations.
  Before the President pro tempore opened the Senate this morning, I 
asked him if he would address us on this issue briefly before he 
resumed his duties as chairman of a very important committee in the 
Senate. Certainly, for all of his political life, Senator Thurmond has 
led this issue, has offered the American people and the Congress of the 
United States the foresight to focus on the issue of balancing the 
Federal budget, and he was the first, some 30-plus years ago, to 
introduce the concept of a constitutional amendment for a federally 
balanced budget.
  At this time, I yield to Senator Thurmond such time as he might 
consume.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.


                      A Balanced Budget Amendment

  Mr. THURMOND. Madam President, I am very pleased to say a few words 
on behalf of the constitutional amendment to balance the budget. I have 
been in the Senate 40 years now and for 36 of those years I have 
favored a constitutional amendment to balance the budget. I worked with 
Senator Harry Byrd, Sr., Senator Styles Bridges, Harry Byrd, Jr., and 
many others in the past, in an effort to get this amendment adopted.
   [[Page S1478]] As chairman of the Judiciary Committee a few years 
ago when President Reagan was the President, I was chairman of the 
Judiciary Committee and was the author of a constitutional amendment to 
balance the budget. We got that amendment through the committee and we 
got it through the Senate. We sent it to the House and the House killed 
it. The Speaker of the House and the majority leader led the movement 
to kill that amendment.
  Evidently, they did not want to stop spending. And the spending has 
gone on year after year after year. We have not balanced this budget 
but one time in 32 years. We have not balanced this budget but eight 
times in 64 years. That is a disgrace to this Nation. We should not 
spend more than we take in in any year. And if we do spend more, it 
should be made up immediately.
  Under the South Carolina law and constitution, we have to balance the 
budget every year, and we do it. If we can do it in South Carolina, we 
can do it in the United States. It is nothing but reasonableness and 
fairness and exercising foresight that will balance the budget.
  I am very anxious to see us pass this amendment. I think it would be 
the greatest step we could take.
  There are two threats to this Nation that we must realize. One is 
that we must keep strong armed services. We have threats now throughout 
the world. We have hot spots in North Korea, Iran, Iraq, and other 
places. We must keep a strong defense if we are going to remain free.
  President Clinton has taken steps to reduce our strength in defense. 
I am hoping we can rebuild that strength. We need to make the 1996 
budget for defense equal to the 1995 budget. We must take steps to 
rebuild defense so that this Nation can remain free and strong and 
preserve all that this country has stood for.
  The other threat is the fiscal threat, and that is a serious threat. 
When we have not balanced this budget but one time in 32 years, that 
means it is a threat. How are we ever going to balance it if we do not 
take steps?
 I remember a statute was passed years ago to balance the budget. 
Before the end of the session, we had passed appropriations to overcome 
that statute. The statute did not amount to anything. It will not 
amount to anything now.

  The only way, in my judgment, to stop spending more than we take in 
and to balance this budget is to pass a constitutional amendment to 
mandate, to make, the Congress do it. The Congress has not shown the 
attitude to do it. They have not shown the will to do it.
  How are we going to handle it? I do not know of any other way under 
the Sun to do it except to pass this constitutional amendment. I urge 
my colleagues to go forth and show the courage and take the steps 
necessary to balance this budget. The best way I know to do it is to 
pass this constitutional amendment.
  First, I want to commend the able Senator from Idaho for the great 
interest and leadership he has shown on this important question. He is 
a very fine representative. He represents his State and Nation well. On 
this particular question he has shown unusual leadership and is to be 
commended.
  Mr. CRAIG. Madam President, let me thank the Senator from South 
Carolina and once again recognize his early and continued leadership on 
this most critical issue. I thank him for making those opening comments 
this morning on this special order as we begin to debate the balanced 
budget amendment.
  As I mentioned in my opening comments, Madam President, the House 
begins debate on House Joint Resolution 1. Under the rule reported from 
the Rules Committee, six substitute amendments are in order from the 
following Members: Mr. Barton, Mr. Owens, Mr. Wise, Mr. Conyers, Mr. 
Gephardt, and Schaefer-Stenholm. In other words, the House is looking 
at a variety of approaches to offer an amendment through the resolution 
process to our American citizens.
  Of course, we must recognize that any one of those resolutions, as is 
true of the resolution here in the Senate, has to gain the necessary 
two-thirds vote for final passage. There will be about 3 hours of 
general debate and 1 hour of debate on each one of the substitutes.
  The reason I bring this up, Madam President, is because early next 
week we will begin debate on a very similar resolution to the Schaefer-
Stenholm resolution. Already there is talk that that debate could go on 
for 2 weeks, 3 weeks. There could be 200 or 300 amendments, all dealing 
with different aspects of Federal spending that some Members of the 
Senate think ought to be exempt from the rule or the constitutional 
requirement of a balanced budget.
  Whatever time we take in the House and in the Senate, I believe the 
most significance to that time will be reflective on the importance of 
this debate and the attention the American people are giving it. There 
will be a good many arguments about whether we should or should not 
balance the Federal budget, whether we should exempt certain portions 
of the budget, whether we should clearly establish priorities of 
spending within the Constitution, or whether we ought to be sensible, 
as I think the Senate resolution is, to establish the ground rules of a 
constitutional requirement for a balanced budget and then to recognize, 
as I think all Americans recognize, that over the length and breadth 
and strength of a Constitution now having directed the Senate for over 
208 years, that it is the Congress itself what must establish the 
spending priorities from one generation to another.
  It is clearly important that we establish the rule of a balanced 
budget and the dynamics of how we get to a balanced budget through a 
procedure. Certainly, it is the responsibility of the House and the 
Senate, of the Congress of the United States, to establish the spending 
priorities. That certainly is what the Senator from South Carolina was 
referring to this morning when he placed high on the list of priorities 
for the strength and stability of our Nation in a world of nations our 
national defense and a concern that that ought to be, as our Founding 
Fathers said, one of the primary responsibilities of a Federal central 
government: providing for our national defense and our human freedoms. 
That is a priority that the Senator from South Carolina would 
establish. It would be a priority similar to the one that I would want. 
It would list high on a number of items that I might place as 
priorities for spending.
  What is reality today is that there is no fiscal discipline within 
the bodies of the Congress of the United States, so there need not be 
the listing of priorities, there need not be the responsibility of 
turning to the American citizen and saying, ``Here is the money we have 
to spend; here is where we are going to spend it'' because we believe 
that is the best priority outline that we can offer to the American 
people at this time.
  Second, under our Constitution, we have clear obligations, and that 
is, of course, to provide for the common defense and, in the words of 
our Constitution or the preamble, to promote our Nation's welfare.
  I am pleased to be joined this morning with the Senator from Wyoming, 
and I ask at this time if he would like to participate in our special 
order. I yield to the Senator from Wyoming such time as he may consume.
  Mr. THOMAS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.


                  A BALANCED BUDGET IS NOT A NEW IDEA

  Mr. THOMAS. Madam President, I thank the Senator. I am pleased to 
have the opportunity to join in to talk about a balanced budget 
amendment.
  There has been a great deal of talk about it. There continues to be a 
great deal of talk about it. There is a great deal of interest in this 
matter, as there should be. I think most of all, as evidenced by the 
leadership of the Senator from Idaho, there is a great deal of 
dedication to getting this job done.
  Voters supported the idea in November. It is not a new idea. Somehow 
some of the discussion seems to center on what will we do with such a 
thing. The fact is that it is not a new idea. It is not a new idea for 
the Congress. It is not a new idea for the Nation. Indeed, it is used 
by 48 States now, and used successfully in my State of Wyoming. We have 
a constitutional balanced budget amendment. The legislature and the 
government live by that constitutional amendment without a great deal 
of problem, as a matter of fact.
  So, it seems to me that it is terribly important. It is important 
because it 
[[Page S1479]] will result in a balanced budget amendment and a 
balanced budget that we all agree should happen.
  It is also a symbol of responsibility, both morally and fiscally. So 
it is something that we really ought to do. There are, of course, a 
couple of questions that are always asked. The first question and the 
basic question we ought to ask ourselves and voters ask themselves and 
citizens ought to ask themselves is: Should we, in fact, balance the 
budget? Should we in the Congress spend more than we take in? Should we 
live on the same basis as our families must? As our businesses must? As 
local governments must? And that is, that we have to have a balance 
between revenue and expenditures, a reasonable thing. That first 
question is: Should we do that? The answer is, I think, almost 
unanimous, not only among Members of the Congress, but among voters and 
among citizens: Yes, indeed, we should do that.
  So, a citizen in Greybull, WY, says: What is the discussion about? I 
do not quite understand this. Of course we ought to balance the budget.
  The fact is we have not balanced the budget and we need to do 
something about it.
  He says: Gosh, everyone says they are for a balanced budget. Do you 
know of anyone who says, no, we should not balance the budget? Of 
course not. Everyone wants to balance the budget. And yet we find more 
and more people who are saying, ``What is the hurry? Let us delay this. 
I am not sure about this. Let us talk about it,'' as if we had not 
talked about it before.
  They oppose the amendment saying we do not need an amendment; we have 
the tools. The Director of OMB was on TV the other day in sort of a 
debate about it and saying, ``Gosh, we do not need an amendment; we can 
balance the budget. We have the tools.'' The fact is, the evidence is, 
that that is not true. We have not balanced the budget. We have 
balanced the budget once, I think, in 26 years or something and just a 
few times out of the last 50 years.
  So the fact is that there does need to be some discipline. The idea 
that we want to balance the budget does not just make it happen. I 
understand why it does not happen. There is always a reluctance to 
raise revenues and there is always a willingness on the part of 
politicians to want to do things for their constituents.
 And I understand that. The result, of course, is that we spend much 
more than we take in. The result is that we have nearly a $5 trillion 
deficit that you and I and our children and our grandchildren must live 
with.

  So then some say, ``Well, what about the details? We want to know 
precisely how you are going to do this.'' Obviously, that is almost an 
impossibility. It is going to be done over a period of time and, I must 
tell you, I am not concerned about the fact that it is 5 years or 7 
years or, personally, if it is 10 years. If we are in a course toward 
balancing the budget, moving without deviation to that, if it takes 
longer, let it take longer.
  But who knows what the economy will be in 5 years? Who knows? So the 
idea that you can lay out in detail how you are going to do it does not 
seem to be reasonable. It seems to me, rather, to be a way of saying, 
``Yes, I am for a balanced budget, but unless you can give the details, 
then I am not for it.'' It is simply a way of saying I am for it and 
not for it, which is not a new technique in this place, by the way. It 
is done quite often.
  The other interesting thing about that is the same person will say, 
``We can balance the budget without the amendment, but I want to know 
the details if you are going to have an amendment; tell me the details 
of how you are going to do it without an amendment.'' The cuts are 
going to have to be about the same.
  Then I heard someone this morning on TV say, ``We want to know about 
Social Security.'' We have clearly said Social Security is not to be a 
part of the reduction. We have clearly said that Social Security is an 
obligation that we have to Social Security recipients.
  We hear a great deal about cuts, as if there would be draconian cuts 
to do this. The fact of the matter is that what we are really talking 
about is a reduction in the growth. That is what it takes, the 
discipline to have a reduction in the growth.
  I noticed there are others on the floor who want to talk about this. 
I feel very strongly about the balanced budget amendment. As I 
indicated, as a member of the Wyoming Legislature, I was involved with 
this process. I think it works. I think it should work for us on the 
national level. I think we have a great opportunity to do that now.
  I think this is one of the procedural changes that we really need to 
have if you want to have a change in Government. Procedural changes 
are, in the long run, more important than are the specific changes that 
we will make in this year or any other year because they change the way 
that the Congress deals with problems.
  Procedural changes, like the one that we have already passed on 
making the Congress accountable, to live under the same rules that we 
expect everyone else to live under, changes like line-item veto are 
very important, it seems to me.
  It is almost impossible for Members of this body or the House to 
reach into bills and make changes on the floor. But the President is 
the only person who has the kind of political structure on which to 
stand to make those sorts of cuts in pork. The line-item veto is very 
important.
  I happen to believe that unfunded mandates is one that we have to 
pass. Procedurally, that will change the future of how this Congress 
behaves. I personally believe we ought to have term limits. These are 
the procedural changes that will impact the decisions we make.
  I am persuaded--I think most people in this country are persuaded--it 
is morally and fiscally correct to balance the budget. I am persuaded 
the evidence shows we have not and cannot do it without the discipline 
of an amendment. I am persuaded that the States and the people, through 
their legislatures, ought to have a chance to deal with it on a 
constitutional basis.
  I urge that we move forward and give the people of America an 
opportunity to deal with this issue through their legislatures.
  I yield the remainder of my time.
  (Mr. JEFFORDS assumed the chair.)
  Mr. CRAIG. Mr. President, I thank the Senator from Wyoming for 
participating with us this morning in the discussion of the debate 
that, as I mentioned earlier, is beginning today in the House and will 
commence next week in the Senate, one of the most important debates, I 
think, any of us who are privileged to serve in this Chamber will 
engage in in the course of the next good many years.
  Let me now yield such time as he would desire to the Senator from 
Georgia for comments on the balanced budget amendment.


                    A Great Issue Before the Nation

  Mr. COVERDELL. Mr. President, I thank my colleague from Idaho for the 
opportunity to share thoughts on this great issue before the Nation 
called a balanced budget amendment.
  I really do not think we would be in this debate this year except for 
one thing: I believe this would have passed the U.S. Senate last year. 
We had a very strong debate and very narrowly failed to pass a balanced 
budget amendment a full year ago.
  Why did we not pass it? In my judgment, it failed because the 
President of the United States chose to oppose it. When it was clear 
that the President would not throw his weight behind this idea, I 
sensed the energy in letter after letter coming in from one special 
interest group after another that had become dependent upon the Federal 
Government and its largess, stacks upon stacks upon stacks, in an 
effort to frighten the American people about the consequences of a 
discipline machinery to deal with the financial health of our Nation.
  Fair tactics--will somebody be affected? Will there be less there for 
them if we manage the financial health of the Nation?
  In my judgment, we would have passed it had the President assisted.
  This is important as we begin this debate, Mr. President, because 
shortly thereafter--shortly thereafter--the Nation had a chance to 
reflect on that debate and this Presidency, and the contest that has 
been waging in our Nation's Capital about governance, how are we going 
to govern ourselves? As we have, or are we going to change our ways in 
the Nation's Capital?
   [[Page S1480]] The election of November 8 probably is only 
paralleled maybe four other times in American history. Four other times 
in the entire history of this Nation has the whole of the Nation come 
so forcefully to an election. I think much of it was shaped by that 
balanced budget debate which was defeated with the weight of the 
Presidency against it.
  Then we have a public opportunity to comment and the public says, 
``We want the way things are done in Washington changed and we are 
going to change the people who represent us there.'' And they did, in 
overwhelming numbers.
  At the center of the debate, over and over, was the balanced budget 
amendment. The people who were sent here are supporters of the balanced 
budget amendment. Many of the people who opposed it were not returned. 
Today, between 7 and 8 out of 10 Americans across the land support the 
balanced budget amendment.
  In the last few weeks, we have heard talk about ``reinventing the 
President.'' From my point of view--I am sure my advice is not adhered 
to down at the Pennsylvania Avenue White House--you really cannot 
reinvent people who have been in public life a quarter of a century. I 
do not think it is a useful term. But in any event, ``reinventing the 
President.''
  Last night, we were to have our first view of the new look. I think 
it has all paled and will all be forgotten and will all be set aside 
except for two paragraphs of the speech; a 1\1/2\-hour speech and about 
a 3-minute piece will be the substance that will be remembered.
  That is when the President about midway through the speech said, ``I 
do not support the balanced budget amendment,'' having supported a 
balanced budget. But that is the routine we have been playing for the 
last 30, 35 years. We all support a balanced budget, but we never get 
to one.
  To me, the President defined and made vivid his decision about the 
next 2 years of his administration when he decided: ``I do not support 
the balanced budget amendment.'' That means that the message of 
November 8 has not been embraced by this President. Anything that was 
so core to the election, so overwhelmingly supported, to be rejected in 
the face of all this, to be set aside, that he will stand in the way of 
that yet again as he did last year, defines his view of this capital 
city. What it says is I think things are just fine the way they are. I 
do not think we need to change the rules. We do not need to change the 
rules to balance the budget. The reason so many Americans support it is 
they do not believe that anymore. And why should they? We never do.
  Mr. President, the American people realize that we must change the 
process and the procedures by which we deal with governance in this 
country. They believe the Federal Government has become too big; that 
it exacts too much of the fruit of their labor. They work from January 
to June, some of them August, before they get to keep the first dime 
for their own dreams. They feel the Federal Government has become too 
intrusionary, too much in their face.
  The balanced budget amendment is symbol and substance--symbol and 
substance. It symbolizes that we are going to change; that we are going 
to reorder the way we manage our financial health; that we are going to 
come to grips finally with the setting of priorities; that we are going 
to force ourselves to pick that which we can do and that which we 
cannot do.
  When the President decided he would not support it, he was saying, 
loud and clear, we are going to keep on doing things just the way we 
have been, and I am not going to listen to the message of November 8.
  Then he went a step further; he began using the same techniques that 
have been used historically to frighten America, to frighten her about 
a discipline and a new set of rules, to start picking out different 
groups of people and saying, now, wait a minute. If we start setting 
priorities, this may affect you.
  It had been that technique over the years that has blocked, time and 
time again, our coming to grips with our priorities. You know what I 
would say to those groups? I would say that if this Nation does not 
find a way to discipline its financial management, it will be unable to 
care for anyone.
  Have you ever known a family, have you ever known a business, have 
you ever known a community, a State or a nation that was able to 
effectively provide for its needs and its priorities if it was 
financially weakened or unhealthy or it had been undisciplined in the 
process by which it governed itself, that it had mounted debt it could 
no longer control?
  We only need to look south of the border, not far from here, to know 
what happens when you do not have sound financial management. Who is 
impacted by that? By every report, the disadvantaged, the poor. Those 
who are on the margin are the ones who are going to suffer from that 
crisis in Mexico.
  The balanced budget amendment is a fundamental core process that 
forces our Nation to set priorities and assures us that we will always 
maintain financial integrity, and that integrity is fundamental to our 
ability to take care of our responsibilities for ourselves and our 
responsibilities as the leader of the free world and civil order in 
that world.
  Mr. President, I yield the floor to my colleague from Idaho.
  Mr. CRAIG. Mr. President, I thank our colleague from Georgia for 
those well-placed comments and pointing out some of the stark reality 
of the debate and the support and the opposition for this most 
important issue.
  I was in the Chamber of the House last night for the State of the 
Union speech, and I was very disappointed when our President used the 
old argument: well, if you are going to balance the budget, show us 
where you are going to cut.
  That is like saying to a man or a woman who is terribly overweight 
and they are just getting ready to start a diet, tell me every bite of 
food you are going to take over the next 4 or 5 years to lose all of 
your weight--every bite, every kind of food.
  You and I know that is not possible. What we do know, when someone 
announces they are on a diet and has consulted a doctor and is 
beginning to work, they have started a process, and they have begun to 
work toward a goal and they have put themselves on a regimentation.
  Mr. President, that is a phony argument, and you used it last night, 
and you know it is. Over the next 5 or 6 or 7 years, as the Senator 
from Wyoming spoke, as we balance the Federal budget, priorities may 
shift, they may change a little, and we may choose to spend less in one 
area and more in another because we have seen that is where the 
American citizenry needs their tax dollars spent.
  So as the Senator from Georgia said, what we speak about today and 
what begins in the House today and on this floor next week is the 
debate about putting into the Constitution a process requiring a 
procedure through a process that gets us to a balanced budget and 
begins to build the enforcement of what we hope would become a standard 
discipline in this Congress, and that would be to balance the budget on 
an annual basis.
  Mr. President, we are now joined by our colleague from Michigan who 
just in the past few months has campaigned on this issue and others. 
The people of Michigan decided to send him here to work in their behalf 
on issues like the balanced budget, and I would now yield to that 
Senator such time as he might consume.
                       balanced budget amendment

  Mr. ABRAHAM. Mr. President, as Congress prepares to take up a 
balanced budget amendment, I would like to offer to my Senate 
colleagues the perspective of a new freshman Senator who ran on an 
aggressive platform to reform Congress and limit the size of 
Government.
  In my view, the balanced budget amendment to the Constitution 
embodies the spirit of the electorate that voted for a Republican 
Congress for the first time in 40 years last November. We in the Senate 
should not let them down.
  The Founding Fathers recognized that persistent Government deficits 
and the growth of Government has consequences for the long-term 
stability of our democracy and implications for our individual 
freedoms.
  The reason why the Founding Fathers did not include a balanced budget 
requirement in the Constitution is because they felt it would be 
superfluous. 
[[Page S1481]] Paying off the national debt and balancing the budget 
was considered a high priority of the early administrations.
  Consider the following comments by some of our Nation's early 
leaders:
  Thomas Jefferson: ``The public debt is the greatest of dangers to be 
feared by a republican government.''
  John Quincy Adams: ``Stewards of the public money should never suffer 
without urgent necessity to be transcended the maxim of keeping the 
expenditures of the year within the limits of its receipts.''
  James Monroe: ``After the elimination of the public debt, the 
Government would be left at liberty to apply such portions of the 
revenue as may not be necessary for current expenses to such other 
objects as may be most conducive to the public security and welfare.''
  From 1879 until about 1933 the Federal Government operated under an 
implicit balanced budget requirement. Spending remained low--and rarely 
exceeded revenues. To the greatest extent possible, the existing debt 
was reduced.
  As a consequence, Federal spending as a share of GNP never rose above 
10 percent. In the mid-1930's, the rise of Keynesian economics gave 
politicians the economic rationale to increase Government spending to 
solve the Nation's economic problems. As a consequence, the balanced 
budget discipline was abandoned--and Federal spending exploded.
  Today, Federal spending as a share of our national income stands at 
22-23 percent--near historic levels. In effect, deficit spending has 
become the norm.
  Because there are no limits to the availability of deficit spending, 
Members of Congress find it extraordinarily difficult to resist such 
spending. On the one hand, every dollar of deficit spending creates 
some measure of political advantage by pleasing parts of a Member's 
constituency; on the other hand, there is no need for Members to incur 
equivalent political disadvantage by having to raise anyone's taxes.
  All the balanced budget amendment does is eliminate from our system 
this built-in bias toward spending caused by the unlimited access to 
deficit spending.
  Critics of the amendment charge that it is a hollow gimmick, a 
substitute for making real choices about how to balance the budget. 
Perhaps the best way to respond to this charge is to examine how 
balanced budget constraints have worked on the State level. Every State 
except Vermont has some sort of statutory or constitutional requirement 
to balance its budget.
  According to economist Bruce Bartlett, in 1933 total Federal spending 
was $3.9 billion and total State and local spending was $7 billion; 60 
years later, however, the situation was almost reversed. By 1993, 
Federal spending had risen to $1.5 trillion, while total State and 
local spending had risen to $865 billion.
  The fact that State governments were required to make real choices 
and balance their budgets, while the Federal Government did not, was 
the major reason why Federal spending has dramatically outraced State 
and local spending.
  Without a balanced budget amendment, this Nation could be looking at 
Federal deficits in the trillions of dollars within 15 years. I was 
sent here by people who will not accept such a fate.
  The proposed amendment does not read into the Constitution any 
particular level of spending or taxation, or mandate particular 
economic policy outcomes. It only restores the historical relationship 
between levels of public spending and available public resources. 
National solvency is not--nor should it be--a partisan political 
principle. It should be a fundamental principle of our Government.
  Mr. President, I yield the floor.
                       Balanced Budget Amendment

  Mr. CRAIG. Mr. President, let me thank my colleague from Michigan for 
saying that a balanced budget amendment should be a fundamental 
principle. It was historically. While it was not embodied in our 
Constitution, it was a fundamental principle of our Founding Fathers. 
And it was a fundamental principle of many Congresses for well over a 
century.
  This Congress, this Government recognized there might be times of 
deficit. But during the good times, after you had overspent--whether it 
was for war or for other extraordinary purposes--you paid off your 
debt. In fact you ran a surplus.
  That was an important part of the way our Nation kept its fiscal 
house in order. Of course we have lost that principle and now, for many 
decades, we have run deficits that mounted the debt I referred to 
earlier. Over the course of the next good many weeks there will be a 
variety of arguments about why we cannot balance the Federal budget.
  I ask unanimous consent to have printed in the Record an article from 
Business Daily that appeared this morning entitled ``A Balanced Budget 
Myth Bared: Economic Cycles Unlikely To Worsen Under Plan.''
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

           [From the Investors Business Daily, Jan. 25, 1995]

 A Balanced Budget Myth Bared; Economy Cycles Unlikely To Worsen Under 
                                  Plan

                           (By John Merline)

       A balanced budget amendment will either restore fiscal 
     sanity to a town drunk on deficit spending or lead the 
     country toward economic ruin.
       Those, at least, are the stark terms typically used by 
     supporters and opponents of a constitutional amendment 
     outlawing deficit spending.
       And, while passage of a balanced budget amendment is almost 
     a sure thing this year, debates over its merits remain 
     fierce--with critics from all sides of the political spectrum 
     lobbing grenades at it.
       Democrats don't like the rigidity it imposes while 
     conservatives fear it may bias Congress towards tax 
     increases.
       One of the principal criticisms of the amendment is that it 
     would short-circuit the federal government's ability to fight 
     recessions, either with ``automatic stabilizers'' or with 
     stimulus spending like temporary tax cuts or spending hikes. 
     Yet there is little evidence to support this view.
       ``When purchasing power falls in the private sector, the 
     budget restores some of that loss, thereby cushioning the 
     slide,'' said White House budget director Alice Rivlin in 
     testimony before the Senate Judiciary Committee earlier this 
     month.
       ``Unemployment compensation, food stamps and other programs 
     fill the gap in family budgets--and in overall economy 
     activity--until conditions improve,'' she said, defending the 
     budgetary ``automatic stabilizers.''
       In addition, because of the progressive income tax code, 
     tax liability falls faster than incomes drop in a recession, 
     slowing the decline in after-tax incomes.
       The result, however, is typically an increase in the 
     deficit.
       Mandatory balanced budgets would, she argued, force 
     lawmakers either to raise taxes or cut spending in a 
     recession to counteract increased deficits.
       ``Fiscal policy would exaggerate rather than mitigate 
     swings in the economy,'' she said, ``Recessions would tend to 
     be deeper and longer.''
       Other economists agree with Rivlin.
       Edward Regan, a fellow at the Jerome Levy Economics 
     Institute in New York, argued that the amendment would 
     ``restrict government efforts to encourage private sector 
     activity during economic slowdowns.''
       The assumption, of course, is that these automatic 
     stabilizers actually work as advertised, an assumption not 
     all economists share.
       ``If anything, I think the government has made economic 
     cycles worse,'' said James Bennett, an economist at George 
     Mason University.
       Bennett, along with 253 other economists, signed a letter 
     supporting a balanced budget amendment introduced last year 
     by Sen. Paul Simon, D-Ill.
       Ohio University economist Richard Vedder agrees. ``If you 
     look at the unemployment record, to use that one statistic, 
     it was more favorable in the years before we began automatic 
     stabilizers than in the years since,'' he said.
       Much of the countercyclical programs were implemented in 
     the wake of the Great Depression.
       Unemployment data show that in the first three decades of 
     this century the average jobless rate was roughly 4.5%.


                           prolonging slumps

       In the four decades since World War II, the rate averaged 
     5.7%. And, from 1970 to 1990, it averaged 6.7%.
       In addition, some of the stabilizers may actually keep 
     people out of the work force for longer periods of time, 
     possibly prolonging economic slumps.
       A 1990 Congressional Budget Office study found that two-
     thirds of workers found jobs within three months after their 
     unemployment benefits ran out--suggesting that many could 
     have found work sooner had they not been paid for staying 
     home.
       Other data suggest that, at most, federal fiscal policy has 
     had only a small stabilizing effect on the economy, despite 
     the sharp increase in the economic role played by government.
       A study by economist Christina Romer of the University of 
     California at Berkeley 
     [[Page S1482]] found that economic cycles between 1869 and 
     1918 were only modestly more severe than those following 
     World War II.
       Romer corrected what she said were serious flaws in data 
     used to suggest that the pre-war economy saw far larger 
     swings in economic cycles.
       The finding runs contrary to conventional wisdom--which 
     posits that government fiscal programs enacted after the 
     Great Depression have greatly reduced the magnitude of boom 
     and bust cycles.
       ``I think there are plenty of arguments against the 
     balanced budget amendment,'' said Christina Romer is an 
     interview. ``I would not put much emphasis on taking away the 
     government's ability of having countercyclical fiscal 
     policy.''


                           private insurance

       Other economists argue that, even if economic stabilizers 
     made a difference at one time, vast changes in the economy 
     have diluated the importance of government efforts.
       ``All this policy was formulated before the days of easy 
     access to credit cards, two-earner families, and so on,'' 
     said Bennett.
       Finally, some economists note that the stabilizers Rivlin 
     points to don't have to be a function of government.
       Private unemployment, farm or other insurance could provide 
     needed cash during economic downturns, they say, replacing 
     the government programs as the provider of these funds.
       While the effectiveness of automatic stabilizers is doubted 
     by some, straightout antirecessionary stimulus spending has 
     few outright backers--for one simple reason.
       Every major stimulus package since 1949 was passed after 
     the recession was already over.
       These packages typically consisted of temporary tax cuts or 
     spending hikes designed to boost economic demand and 
     artificially stimulate growth.
       The problem has been that, by the time Congress recognizes 
     the economy is in a slump and approves a package, it's too 
     late.


                         too little, too late?

       Clinton's failed stimulus package, for example, was 
     proposed nearly two years after the 1990-91 recession ended, 
     and half of the money wouldn't have been spent until 1994 and 
     1995.
       A study of the 50-year history of stimulus-packages by 
     Bruce Bartlett, a senior fellow at the Arlington, Va.-based 
     Alexis de Tocqueville Institution, concluded that ``without 
     exception, stimulus programs have failed to moderate the 
     recessions at which they were aimed, and have often sowed the 
     seeds of the next recession.''
       ``These programs have not been simply worthless, but 
     harmful,'' Bartlett wrote. ``It would have been better to do 
     nothing.''
       Further, even assuming the economic stabilizers or stimulus 
     spending work as intended, a balanced budget amendment would 
     have little bearing on the government's ability to pursue 
     these policies during recessions.
       First, the amendment allows Congress to pass an unbalanced 
     budget, as long as it can muster 60% of the votes.
       And, lawmakers could avoid that by simply running a budget 
     surplus during growth years.
       ``The best technique is to aim for a modest budget surplus, 
     of about 2% of GDP, over the course of the business cycle,'' 
     Fred Bergsten, director of the Institute for International 
     Economics, told the Judiciary Committee.
       ``This would permit the traditional `automatic 
     stabilizers,' and perhaps even some temporary tax cuts and 
     spending increases, to provide a significant stimulus to the 
     economy,'' he said. Interestingly, Rivlin herself made 
     similar arguments in her book, ``Reviving the American 
     Dream,'' which was published shortly before she joined the 
     Clinton administration.
       In that book, Rivlin said that the federal government 
     should run annual budget surpluses--increasing national 
     savings and, in turn, economic growth.
       At the same time, Rivlin said the federal government could 
     strengthen federal ``social insurance'' programs designed to 
     mitigate economic swings.
       To accomplish this, she proposed shifting whole blocks of 
     federal programs down to the states, including education, 
     welfare, job training and so on.
       Whether the amendment should contain a tax or spending 
     limitation provision is another subject of debate.
       ``Absent a three-fifths majority provision, there will be 
     significant tax increases if a balanced budget amendment is 
     approved,'' said Allen Shick, a budget expert at the 
     Brookings Institution in Washington, at a recent Brookings-
     sponsored budget briefing.
       That is precisely what worries conservatives who insist 
     that the supermajority language is included in the amendment.


                        A Supermajority On Taxes

       ``The supermajority requirement is premised on the fact 
     that there is an intrinsic bias in favor of tax increases,'' 
     said Rep. Joe Barton, R-Texas, who co-sponsored the tax 
     limitation amendment.
       While benefits go to specific groups who can effectively 
     lobby Congress, taxes as spread more widely, he said.
       A balanced budget amendment without a supermajority might, 
     Barton and others argue, exacerbate this bias--requiring a 
     supermajority to borrow money but only a simply majority to 
     raise taxes.
       He points out that in states with tax limitation laws, 
     taxpayers saw taxes decline 2% as a share of personal income 
     between 1980 and 1987. States without such protection saw 
     taxes climb a comparable 2% over those years.
       Sen. John Kyl, R-Ariz., argues that a spending limit, 
     rather than a tax limit, should be included in the amendment.
       ``It's very important both how you balance the budget and 
     at what level you balance it,'' he told Investor's Business 
     Daily.
       ``If all you have is a requirement to balance the budget, 
     Congress can fix the level of balance at too large a 
     percentage of gross national product,'' he said.


                        spending limit amendment

       Kyl proposes a constitutional limit on federal spending at 
     19% of gross national product--roughly equal to the average 
     level of federal revenues over the past several decades.
       Not everyone things these limits need to be in the 
     amendment.
       ``The balanced budget rule should stand alone on its own 
     merits,'' said James Buchanan, Nobel Prize winning economist 
     at George Mason University, at the Judiciary committee 
     hearing. ``To include a tax or spending limit proposal . . . 
     would, I think, make the proposal vulnerable to the charge 
     that a particular economic attitude is to be 
     constitutionalized.''
       Buchanan argues that such limitations should be passed as 
     separate laws.
       Others argue that even without a supermajority tax 
     requirement, voters will not stomach more tax hikes. They 
     point to the recent election outcomes as proof of the 
     punishment leveled against tax-raising lawmakers.
       ``That's the true tax limitation,'' said Sen. Larry Craig, 
     R-Idaho.

  Mr. CRAIG. Mr. President, the writer of this article suggests that 
one of the standard arguments we are hearing, and we have now heard 
before both the committees--the Judiciary Committees in the House and 
the Senate--that have taken testimony on a balanced budget amendment, 
have come from people like Alice Rivlin who, in testimony for the White 
House as the Budget Director, suggests that we cannot possibly strive 
to balance the budget because, she suggests, that when purchasing power 
falls in the private sector--in other words referencing a recession--
that the Federal budget must be there to stimulate, to cushion the 
slide, to cushion the downfall. She and others have used that as a 
standard argument, that under the ``straitjacket of a balanced budget 
amendment, the Federal Government will not have that kind of 
flexibility. As a result, recessions will become deeper, verging on to 
depressions. Certainly our citizens will suffer as a result of it.''
  That is what she and other economists believe. They would argue that 
is largely the substantial majority of belief embodied in the community 
of economists in our Nation today.
  I would like to argue differently. James Bennett, who is an economist 
at George Mason University, along with 235 other economists, have 
signed a letter supporting a balanced budget amendment of the very kind 
that the Judiciary Committee here in the Senate has brought forth that 
we will begin debate on next week.
  Ohio University economist Richard Vedder agrees that the automatic 
stabilizers, if you will, that Alice Rivlin talks about, really are not 
necessary if you treat the economy of this country and if you treat the 
budget of our Government in an interesting way, and that is to keep it 
balanced and in the good years run a little surplus like they used to 
do, a good many years ago, and use that surplus in the more difficult 
times or recessionary times, to provide the cushion, and that in fact 
you will have fewer recessions, fewer radical swings in the economy, 
because you have created a much more stable private sector with a much 
stronger private sector financing base than to constantly be pulling 
from the private sector ever larger sums into the Federal package.
  Every major stimulus package, this article says--which I think is 
fascinating--every major stimulus package that the Federal Government 
has passed to soften a recession since 1949 was passed after the 
recession was over.
  If you remember, last year our President brought a stimulus package 
to the floor of this Senate, and to the Congress of the United States, 
arguing that this was going to be a cushion in the recession. Yet we 
were out of the recession. We had been out of the recession a year and 
a half. Last night this President touted that in his 2 years of 
Presidency so far we have had the 
[[Page S1483]] strongest economy, we have created the largest number of 
jobs, that our economy is stronger now than at any other time in the 
Nation. How could, just a year ago, this President have been offering a 
stimulus package to pull us out of a recession because we were still in 
one? Mr. President, you cannot have it both ways. Because what you were 
suggesting last night was true, or what you were suggesting last year 
was true, but both cannot be true.
  This article points out that historically, every time we have used a 
stimulus package since 1949 it has been at least 1 year after a 
recession was over with, and in the case of last year, nearly 2 years 
after the recession was over with.
  What that references then is that it was not necessary, that, in 
fact, it created a deficit and it created debt, and it may well have 
brought on the next recession by pulling an excessive amount of money 
out of the private sector at just the time it was lifting off, growing, 
and creating jobs.
  Mr. President, at this time let me yield to my colleague from Montana 
to use such time as he may desire.
  Mr. BURNS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana is recognized using 
the time of the Senator from Idaho which expires at the hour of 10:30.


                     THE BALANCED BUDGET AMENDMENT

  Mr. BURNS. Thank you, Mr. President. I want to thank my friend and 
neighbor from Idaho, not only for this time but also for his leadership 
on this particular issue. It is not just this year that he has been 
involved in this. I think he has been involved in the balanced budget 
debate ever since he served in the House of Representatives, and he 
still works very closely with our friends in that body.
  I just need a couple of minutes to remind the American people about, 
basically, representative government and the debate on priorities. If 
we ever worked in local government where the law says you will balance 
a budget and you will retain reserves on each line, no matter what the 
county government or what part of county government you look at, there 
was always a reserve. You were by law given a cap on how much reserves 
you could keep, but you also maintained those reserves.
  So, basically, that is what we are talking about when we talk about a 
balanced budget amendment. It is the old self-governed philosophy as we 
pick our priorities and what is important to the survival of a free 
society.
  We worked in Montana under an initiative called 105. We could not 
levy any more mills to raise taxes. In a time of declining property 
values when your entire budget almost was set on property values, the 
mills that you collected and put in your coffers and delivered the 
services that people then wanted, it was a wrenching experience to go 
through and say, ``We just cannot find enough money for our museums, 
for our libraries, for our schools, for roads and bridges.'' Then we 
had to go back and sort of survey exactly the mission of government. 
What is government for? We had to reidentify. What is our mission here? 
What is our primary consideration? What are our second considerations 
if we have the money?
  I would suggest that those primary considerations would be, first, 
public safety. That is our fire, our police, our emergency. I say that 
is the first consideration of government, public safety. Then I would 
go to probably transportation because we have to get farm-to-market 
roads; to provide, in other words, transportation, that highway of 
commerce that leads to all other elements of government. Then I would 
have to say it has to be education. They do not have to be in that 
order. But that is the primary purpose of government.
  Then, when you move off of that--you are talking about dollars--if we 
have some, it is nice to add some amenities. Then we have to start 
looking at utilities, water, public health.
  But I think we have to reevaluate why we have government. That is 
what this debate will be about; where we set our priorities. After all, 
is not that the debate of a free people? We will have to redefine the 
mission of government as we go into this debate called a balanced 
budget amendment. It forces us to take a look at those priorities, to 
set them and fund the ones we can. Yes. If the public wants more, then 
we should say it will cost such and such dollars. Are you willing to 
pay those dollars for that particular program?
  I have said all along we can get to where we want to go in this 
debate if we have some reform. We need regulatory reform and spending 
and budget reform. The balanced budget amendment makes us go to those 
reforms and makes us take a look at them. In fact, as our good friend 
from Pennsylvania said yesterday in a small debate on a balanced 
budget, it starts the clock. It puts us on the field. It makes us look 
at our priorities.
  So I thank my friend from Idaho. I just wanted to make those comments 
this morning. But we must not take our eye off of the ball. It forces 
us to set priorities. I think that is what the American people say. I 
think that is why they sent us here, to say, look at your priorities.
  We heard the discussion about public radio and the NEA, the National 
Endowment for the Arts. I am saying, if my particular area of great 
interest is the ability to feed and clothe this great Nation, where are 
our priorities? Where are our priorities to maintain a free society and 
to bring together those elements that create a standard of living that 
is unmatched by any other society to this date in our history, and to 
take care of this little piece of mud that happens to be whirling 
through the universe? What this does is set priorities. I support it 
wholeheartedly.
  I thank my friend from Idaho.
  I yield the floor.
  Mr. CRAIG. Mr. President, in my concluding minutes, let me thank my 
colleague from Montana for his strong support and for the always strong 
dose of good common sense he brings to the floor of the U.S. Senate, 
which sometimes does not prevail here when we debate fiscal matters, 
when we work in setting the priorities that he so clearly spelled out 
are the responsibilities of legislators like ourselves in meeting the 
mandates of a constitution and of the kind of government we have.
  I think we all recognize that our Government cannot be all things to 
all people, and yet for well over three decades we have had a Congress 
that largely believed we could continue to spend and get involved in 
almost every aspect of American life, stimulating, offering, providing, 
adding to and always directing and controlling ultimately when we put 
the Federal tax dollar there. That has amounted, as I mentioned in my 
opening comments, to a $4.7 trillion debt that is now more than $18,500 
of debt for every man, woman, and child in the United States.
  In just a few moments we will resume debate of S. 1. That again is 
symbolic of a Congress and a government that has lost its vision of 
what our Government and country ought to be like. Our State Governors 
said, if you are going to pass a balanced budget, then pass S. 1 first 
so that you will not have the ability of a central Federal Government 
to push through to us mandates and then require that we raise the 
taxes. In other words, S. 1 really forces the priority process that my 
colleague from Montana so clearly talked about, which is part of the 
debate that is very much important in the whole of what we plan to do 
in the reorganization and redirection of our Government that was 
demanded of us by the electorate on November 8.
  But, once again, let me remind my colleagues that as we begin this 
debate, there will be loud cries of: Show us your nickel and show us 
your dime, show us where you are going to spend, show us every bite of 
food you are going to take as you scale down your diet and you plan to 
lose weight.
  Let me remind my colleagues we are talking about, with this Senate 
resolution, a balanced budget amendment to the Constitution. That is a 
process. That then requires a procedure to be adopted by the Congress 
of the United States to establish the priorities and spending and to 
bring us to a federally balanced budget.
  So let the debate begin. Let us recognize over the next several weeks 
that this is only the beginning, that if this Congress sends forth a 
constitutional amendment, it must go to every State capital in this 
Nation and every legislator. And I hope every citizen becomes involved 
in what could be one of the most unique national debates in the history 
of our country as the citizens determine whether they want to ratify 
[[Page S1484]] by 38 States the balanced budget amendment and begin to 
require the Congress of the United States to live within the parameters 
of a process that we will soon begin to debate and hope to establish.
  I yield the remainder of my time.
  

                          ____________________