[Congressional Record Volume 141, Number 22 (Friday, February 3, 1995)]
[Senate]
[Pages S2084-S2087]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of House Joint Resolution 1, which the clerk will 
report.
  The assistant legislative clerk read as follows:

       A joint resolution (H.J. Res. 1) proposing a balanced 
     budget amendment to the Constitution of the United States.

  The Senate resumed consideration of the bill.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I really appreciate the remarks of the 
distinguished Senator from Texas. She is a great leader and is 
undaunted in this balanced budget amendment fight like so many other 
Republicans and some Democrats willing to stand up and do what is 
necessary in this battle. I for one appreciate very much her 
leadership. She has been a leader ever since she has gotten to the U.S. 
Senate. She is right up there, up front, doing what she believes is 
correct and proper. I might add she is right. This is the most 
important vote any of us are going to cast in our whole time in the 
U.S. Senate. I have cast a lot of very important votes. But this one is 
in my opinion a save-the-country vote. We have to do everything we can 
to save this country.
  Right now it is going to take the help of a lot of people out there 
in our country to work with our colleagues to let them know that they 
want this balanced budget amendment. Because, if you want to protect 
Social Security, if you want to protect some of these other important 
social spending programs, then we had better protect the dollar, our 
economy, and the things that will keep our Government and our Nation 
strong. Frankly, if we do not adopt this balanced budget amendment, I 
fear we might attempt a monetization of the debt which would wreck this 
country, and we really cannot allow that to happen.
  Mr. President, I would now like to respond to some of the comments of 
some of the opponents of the balanced budget amendment.
  Some of my colleagues contend that section 6 of House Joint 
Resolution 1, the section that mandates that Congress enforce the 
amendment through implementing legislation, is similar to section 5 of 
the 14th amendment, which permits Congress to enforce that amendment. 
Because they are similar, the argument goes, and because courts enforce 
the 14th amendment, courts will also be able to enforce the balanced 
budget amendment to the extent courts enforce the 14th amendment.
  This analogy is misleading. First, courts may only enforce an 
amendment when legislation or executive actions violate the amendment 
or when Congress create a cause of action to enforce the amendment. An 
example of the latter is 42 U.S.C. section 1983, the 1871 Civil Rights 
Act that implements section 1 of the 14th amendment.
  Of course, Congress has not created, and need not create, an 
analogous cause of action under section 6 of the balanced budget 
amendment. So there is no direct judicial enforcement in existence 
similar to section 1983, and I cannot imagine Congress giving that 
authority.
  Second, as to the judicial nullification of legislation or executive 
action that is inconsistent with a constitutional amendment, the ``case 
or controversy'' requirement of article III requires that a litigant 
demonstrate standing. As I have stated at great length already during 
this debate, it is very improbable that a litigant can demonstrate 
standing--that the litigant could demonstrate a particularized injury, 
which is what is required for standing--different from the generalized 
harm facing any citizen or taxpayer. Contrast this with cases under the 
14th amendment, where standing was found because a litigant could 
demonstrate a particular, individualized, and concrete harm. The 
perfect illustration could be the case of Reynolds versus Sims, a 1962 
case, the one man/one vote decision.
  Third, in this circumstance, the separation of powers doctrine 
prevents courts from redressing a litigant's alleged harm. That is, 
courts will not entertain a suit where they cannot bring supply relief 
to the litigant. The most important case here is a recent case, Lujan 
versus Defenders of Wildlife, decided in 1992. The Constitution, under 
Article I, delegates to Congress taxing, spending, and borrowing 
powers. These are plenary powers that exclusively and historically have 
been recognized as belonging only to Congress. The balanced budget 
amendment does not alter this. Courts, consequently, will be loathe to 
interfere with Congress' budgetary powers. It is simply an exaggeration 
to contend that courts will place the budgetary process under 
receivership or that the courts will cut spending programs.
  Fourth, the political question doctrine will deter courts from 
enforcing the balanced budget amendment. Budgetary matters, such as 
where to cut programs or how to raise revenues, are prototypically a 
political matter best left to the political branches of Government to 
resolve. Courts, under the political question doctrine, will naturally 
leave these matters to Congress.
  Finally, it is ludicrous to assume that Congress would just sit by in 
the unlikely event that a court would commit some crazy act. Believe 
me, Congress knows how to defend itself. I would be at the forefront of 
that defense. Congress knows how to strip the courts of jurisdiction or 
limit the scope of judicial remedies. We do not like to do it, but in 
the case of outrageous judicial interference, and ignorance of the law, 
including prior case law, and of the Constitution, we would do that.
  I might say that I do not think that it is necessary. Lower courts 
follow precedent, and the precepts of standing, separation of powers, 
and the political question doctrine effectively limit the ability of 
courts to interfere in the budgetary process.
  Let me just give some examples of judicially unenforceable political 
questions. The guaranty clause of the Constitution, at issue in Luther 
versus Borden, back in 1849, was found to be outside the range of 
certain separated powers.
  Treaty termination by the President, decided by Goldwater versus 
Carter. The conduct of foreign policy by the President is almost always 
found to be a political question.

[[Page S2085]]

  The conduct of foreign policy by the President almost always found to 
be political question. See Tiger, ``Judicial Power, The `Political 
Question' and Foreign Relations,'' 17 U.C.L.A. L. Rev. 1135 (1970) (and 
cases cited within).
  The legality and conduct of wars and military actions. E.g., Crockett 
v. Reagan, 720 F.2d 1355 (D.C. Cir. 1983) (per curiam), cert. denied, 
467 U.S. 1251 (1984) (legality of President Reagan's activities in 
Nicaragua); Atlee v. Laird, 347 F. Supp. 689 (E.D. Pa. 1972) (three 
judge panel) (legality of Vietnam war).
  The legality and conduct of wars and military actions. Again, there 
are so many things that are clear here.
  I do not think anybody can legitimately argue that the courts are 
going to interfere in enforcing the balanced budget amendment by 
increasing taxes or cutting spending. I just do not think anybody can 
legitimately argue that from a constitutional standpoint.
  I yield the floor.
  Mr. MURKOWSKI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alaska [Mr. Murkowski] is 
recognized.
  Mr. MURKOWSKI. Mr. President, as we continue in this historic debate, 
I would like to take a few minutes of the Senate's time to share a 
perspective on the extraordinary burden that our accumulated deficits--
34 years of deficits in the last 35 years--have placed on the capacity 
of our Government to operate.
  I will have more to say at another time, but for now I want to focus 
specifically on the $4.8 trillion accumulated national debt.
  You have heard a lot lately of the fact that the deficit has declined 
for 3 consecutive years. A big part of that decline is a direct result 
of the growth of the economy that began in the late stages of the Bush 
Presidency when the country began to emerge from recession. The 
remaining deficit decline, in my opinion, can be attributed, to a large 
degree, to President Clinton's record tax increase, which has 
temporarily increased Federal tax revenues. Further, we have had 
substantial cuts in spending. But it is interesting to reflect on just 
where those cuts came from, primarily: The military, a decline in the 
military budget and military personnel.
  But the reality, Mr. President, is that the decline in the deficit is 
but a temporary phenomenon. I am going to show some charts here that 
will highlight that fact. According to the Congressional Budget Office 
[CBO] in every year, starting next year, 1996, and for the unending 
future, the annual deficit, unfortunately, is on the rise. In fact, CBO 
projects that the deficit will more than double in less than 10 years. 
It will more than double in less than 10 years, from $176 billion to 
more than $400 billion.
  This unending string of deficits has caused us to accumulate a $4.8 
trillion national debt that could easily exceed $7 trillion before the 
end of the century. So as we add to the deficit, each year as we create 
a deficit, we are adding to the accumulated debt, and today it is $4.8 
trillion.
  Mr. President, we simply cannot tolerate the continued business-as-
usual in Washington that assumes that every year we can run deficits of 
$150 billion, $250 billion, $350 billion. We dictate under our laws, 
and our financial community demands, obviously, that we live within our 
means. Our checks will bounce and we will no longer have credit 
extended to us.
  The exception to that, of course, is the Federal Government. The 
accumulation of this debt has today brought us to the point where, for 
the first time in our history, we are faced with borrowing from the 
credit markets of the world for the sole purpose of paying interest on 
the debt. When you think about that, Mr. President, we are borrowing to 
pay interest on the debt; we are not borrowing to pay down the 
principal. We are borrowing to pay interest on the debt.
  It may surprise some people to know that over the next 10 years, we 
would be running a surplus in the Federal budget in every year if we 
did not have to pay a $200 to $400 billion annual interest bill that 
has resulted from our chronic inability to bring revenue and spending 
into balance.
  Let me begin, Mr. President, by showing on the charts the devastating 
effect that our fiscal policies have shown in the past and suggest over 
the next 10 years.
  This chart shows that in every year between 1995 and the year 2004, 
all American Government borrowing is for the single purpose of paying 
interest on the debt. We could finance Defense, Medicare, Social 
Security, and all other Government functions over this period and still 
accumulate a surplus of some $360 billion if we were not strangled by 
this extraordinary debt.
  Now, as the chart shows, beginning in 1994, our deficit was $203 
billion. That was precisely the amount of interest we had to pay on the 
accumulated debt. So here we have the situation where we had a deficit 
in that year--in other words we expended $203 billion more than we 
collected in revenues--and we had to pay the interest on the 
accumulated debt, which was about $4.8 trillion but the interest was 
more than the deficit that year. Think about that, Mr. President. Think 
about the implication of what that means.
  In other words, our entire deficit in 1994 consisted of interest on 
the debt. Without that debt service burden, we would not have had to 
auction a single new Treasury note or bond in the market. In 1995, we 
would be running a surplus of $59 billion if we did not have to service 
that debt. Instead, as this chart shows, our $176 billion deficit 
results directly from the fact that our interest costs are $223 
billion. The same holds true in every year through the year 2004.
  In 1997, Mr. President, a $57 billion surplus disappears into a $207 
billion deficit. Why? Because, again, we have to pay $260 billion in 
interest.
  Some say, ``Well, why do we have to pay it? We are only paying it to 
ourselves.'' Well, clearly we are not paying it to ourselves. We are 
paying it to those who hold that debt, the Treasury bills that have to 
be paid. We have already seen, in the crisis in Mexico, what happens 
when a government can- not meet the demands of those who held the 
notes.
  Now let us look at 1998. In 1998, our interest bill jumps to $270 
billion, converting a $46 billion surplus into a $224 billion deficit. 
And in 1999 our interest bill jumps to $294 billion, converting a $26 
billion surplus into a $284 billion deficit. And that is what happens 
every single year through the year 2004.
  If we did not have the extraordinary debt overhanging, we would have 
been able to reduce the national debt by some $360 billion over the 
next 10 years. We would not have to go back to the credit markets to 
borrow more than $2.9 trillion--$2.9 trillion--to finance the debt and 
the deficit. In other words, if we did not have this accumulated $4.8 
trillion debt, the United States would be able to retire $360 billion 
of our national debt and would not have to issue a single new Treasury 
note or bond over the next 10 years.
  How did we get into this extraordinary set of circumstances? We did 
it to ourselves. We have had Republican Presidents, we have had 
Democratic-controlled Congresses. As a consequence, Mr. President, the 
simple reality is it has to be addressed, and it has to be addressed 
now. And the only way to address this debt is to adopt the proposal 
that is before us which amends the Constitution to require a balanced 
budget.
  Mr. President, the projections that I have cited assume that interest 
rates stay within the projections that CBO assumes.
  Now what would happen if, as in the past years, we would see a 
substantial rise in interest rates? In this past year alone, long-term 
interest rates on Federal borrowing was 1.3 percent higher than the CBO 
forecast of a year ago. So clearly, CBO makes a forecast and we rely on 
that forecast in making budgetary judgments.
  But since the Federal Reserve raised interest rates sevens times in 
the past year, Government borrowing costs were higher than CBO assumed. 
As a result, over the next 5 years the Federal Government will have to 
spend $143 billion more than CBO assumed just a year ago. And that is 
all due to interest on the national debt.
  I am going to show you the second chart, Mr. President, because I 
think it makes my point.
  What we see here is a projection of our debt service cost if--if--
interest rates continue to rise. We saw the Fed come up with the 
seventh increase on 
[[Page S2086]] Wednesday. Now, if we look at the bottom line, it shows 
the current CBO projection with interest rates on 10-year notes 
averaging between 6.7 to 7.7 percent. Under that, the lowest scenario, 
interest payments will increase from $235 billion in 1995 to $310 
billion by the year 2000. However, if interest rates rise by merely 1 
percent, just 1 percent through this period, we will have to pay $175 
billion more in interest; by the year 2000 our interest bill would be 
$50 billion higher or a total of $360 billion.
  The next line, Mr. President, shows what would happen if interest 
rates are 3 percent higher than projected. Now mind you, the first one 
was 1 percent, now we go to 3 percent. Under this scenario, by the year 
2000 our interest bill annually would be $460 billion if interest rates 
are in the 9.7 to 10.7 percent range. That is not unheard of by any 
means.
  Now, if that happened, interest on the debt would be the single--the 
single--largest expenditure in the Federal budget.
  I was a commercial banker, Mr. President, for 25 years. Interest is 
like having a horse that eats while you sleep. It goes on and on and 
on.
  If interest rates turn out to be 3 percent higher than projected, in 
the year 2000 interest costs would exceed Social Security payments by 
$27 billion. Interest costs would exceed combined Medicare-Medicaid 
spending by $25 billion. And interest costs would exceed our national 
defense expenditure, all of it, in that year by an astounding $156 
billion.
  (Mr. ASHCROFT assumed the chair.)
  Mr. SIMON. Will my colleague yield?
  Mr. MURKOWSKI. I am happy to yield briefly, without losing the floor, 
because I am wandering through this chart.
  Mr. SIMON. I want to point out that the Senator's figures are 
conservative figures. For my friends who are new, they may not know 
that our colleague from Alaska is a banker by background.
  But the Senator starts off with net interest. For example, he starts 
off with a $225 billion expenditure here. The net interest is something 
that administrations like to use rather than the gross interest because 
it makes it look better. In no other field--in the Justice Department; 
for example, we do not say, ``Well, they took in so many dollars in 
fines and, therefore, we should subtract that from the total of the 
Justice Department expenditures.''
  The gross interest expenditure--and I have to give credit to my 
colleague, Fritz Hollings, for educating me on this--the gross interest 
expenditure this fiscal year is $339 billion. So the figures that my 
colleague from Alaska is using, those are conservative figures and I 
thank him for his contribution.
  Mr. MURKOWSKI. I thank my friend from Illinois for his comments. He 
has been the leader in the balanced budget amendment for a long time, 
and I commend him for his commitment and dedication because I know, to 
some extent, the issue has been somewhat like rowing uphill until this 
year and truly the public has said, ``Wait a minute. This simply cannot 
go on.'' We have an obligation to address it, and I am pleased to join 
with him in that debate.
  Let me conclude my remarks, Mr. President, by referring to the top 
line. The top line is rather interesting, because, as we know around 
here, many of our agencies have a worst-case scenario. The EPA has a 
worst-case scenario, the Corps of Engineers has a worst-case scenario. 
This is the worst-case scenario on the chart simply because we did not 
want to make another worst-case scenario. We could have.
  But the top line shows our interest bill if interest costs were 5 
percent higher than the CBO projects, only 5 percent higher. That would 
assume interest rates would be 12.7 percent. We can all remember 
interest rates at 12.7 percent. As many of my colleagues know, it is 
not without precedent for interest rates to go that high.
  When I came to the Senate in 1981, the prime rate in this country, in 
case we have forgotten, Mr. President, was 20\1/2\ percent; 20\1/2\ 
percent was the prime rate. So when we talk about potentially a 5-
percent interest rate increase, higher than CBO projections, for an 
effective rate of 12.7 percent, we are not being unreasonable in our 
projection.
  Now, I do not expect interest rates to take such a rapid jump. 
However, if they did rise that high, our interest bill over the next 5 
years would be $885 billion higher than projected, and the single-year 
cost of interest in the year 2000 would be $560 billion.
  Now, to imagine how large that amount would be, I would note that all 
discretionary spending, all discretionary spending--defense, education, 
highways, criminal justice, on and on and on--is projected to cost $585 
billion, barely $25 billion more than the projected interest bill in 
the year 2000, if interest rates spike upward.
  If I were looking at the balance sheet, Mr. President, I would say we 
are broke. We are broke now. We do not admit we are broke. But the 
balance sheet simply shows if we are borrowing to pay interest on our 
accumulated debt, we are broke. We cannot meet our obligations. We are 
subject to the shifting wind of international investment, because 
international investment is what funds our debt. They are buying our 
notes, our bonds, our obligations.
  A minor change of economic policy in Bonn or London, or even an 
earthquake in Japan has a direct effect on what the United States 
Government has to pay to service this unending sea of debt. Can anyone 
imagine what would happen if the owners of our debt--the owners of our 
debt are the people out there, firms, mutual funds, that hold this 
debt, and 18 percent of the debt is held by foreigners--what if they 
called the debt in and said, ``Hey, we do not want to renew it. We do 
not want to rewrite it. We want you to pay up. We will not buy any more 
of your debt.'' They called in 18 percent, just $300 billion or maybe a 
little more, $500 billion of our debt. How would we pay the owners off? 
How would we pay the principle when we are borrowing to pay interest?
  We could not, unless we inflated our dollar to the point that what a 
dollar buys today would be actually worth 50 cents or less tomorrow. 
And that is inflation. We have seen it. After the First World War in 
Germany, the citizens ran around with a wheelbarrow full of nearly 
worthless marks to buy a cup of coffee.
  We have already seen what happened the other day in Mexico where we 
had a collapse of the monetary system. We saw fit to use a monetary 
stabling fund that we had since we came off the gold standard in 1934, 
to commit some $20 billion to a $46 billion loan guarantee.
  Well, Mr. President, there was a warning signal of what can happen 
when debt gets out of hand. I have mentioned Mexico several times, but 
I would not attempt to even compare our two economies, for ours is far 
healthier, far stronger than Mexico. There is no comparison between the 
importance of the dollar and that of the peso in world currency 
markets.
  I note that Mexico's crisis is a crisis of too much debt, and lack of 
investor confidence. It is simply that simple. The result of that 
crisis is that Mexico last week had to pay 25 percent interest to roll 
over a small portion of its international debt--25 percent interest. 
Well, 25 percent, in 4 years, 100 percent. The only way to get out from 
under this sea of red ink is to adopt--in my opinion and that of many 
on this floor--the balanced budget amendment.
  The public knows, they understand that no family or business can 
survive very long when year in and year out the principle of the debt 
grows and all of its borrowing is dedicated to pay off the interest 
that the debt holders hold.
  As we begin this debate, we should not forget that a point or two or 
three change in the interest rates can absolutely devastate our 
projections and, as a consequence, our capacity to effectively govern 
and spin our Nation's economy into a spiral of bankruptcy.
  So, Mr. President, I urge my colleagues to break with the past and 
begin moving this Government away from the verge of bankruptcy. And 
those who have doubts about the appropriateness of this balanced budget 
amendment, please reflect on what these figures mean. Some say we learn 
by history and others say not much. Let Members recognize the reality. 
We did not have the self-discipline to address this. It has been proven 
by our inability each year to bring our revenues in line with our 
expenditures.
  Others have said that we cannot do this until we spell out what the 
cuts are going to be. We saw the same extended debate year after year 
on what 
[[Page S2087]] to do with the military bases. And we finally concluded 
that the only way to address base closings was to put together a 
commission. The commission would evaluate the priorities, and we in 
this body would vote up or down on the Commission's recommendations.
  With the balanced budget amendment, it is the same set of 
circumstances, Mr. President. To try and spell out first what the cuts 
will be is simply a copout. We do not have the self-discipline. If 
those who say, well, this is a very dangerous proposal to mandate a 
balanced budget because it may affect some of our social programs, I 
would ask them to reflect on the reality if we do not maintain a 
healthy economy, a monetary system that is stable, that provides 
confidence, how in the world are we going to meet those obligations if 
there is a breakdown in investor confidence, a collapse of our monetary 
system, because of one single thing--too much debt.
  It has happened in South America, time and time again. It has 
happened in Mexico. Canada is paying over 20 percent of their total 
budget in interest on their debt. They have a government health care 
system that is costing them more than their initial projection. They 
are among the most heavily taxed population in North America. They are 
facing a monetary crisis because they have nowhere to go. They cannot 
generate more revenue in order to float more debt. They have to pay 
more interest, and the consequences, Mr. President, are extremely 
significant and extremely severe.
  So, I would ask my colleagues to reflect on this reality as we 
consider this issue. The previous posture that we have had of increased 
debt has been fraught with inability to bring together the reality 
associated with any fiscal matter, and that is revenue balancing 
expenditures. We have that set of facts today. We are not living up to 
it and we have little opportunity other than to take this measure which 
may seem extreme to some.
  Mr. President, I have no further remarks. I know others are anxious 
to speak. But I wonder if I may be granted 30 seconds under morning 
business to simply introduce a technical amendment.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. MURKOWSKI. I thank the Chair.

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