[Congressional Record Volume 141, Number 24 (Tuesday, February 7, 1995)]
[Senate]
[Pages S2233-S2242]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BALANCED BUDGET AMENDMENT TO THE CONSTITUTION
The Senate continued with the consideration of the joint resolution.
Mr. BYRD. Mr. President, today we continue one of the most important
debates in the history of the Senate. The debate involves whether to
change the basic, fundamental, organic law of this Nation forever, and
for the first time
[[Page S2234]] to write fiscal policy into the Constitution of the
United States--for the first time, amended only 27 times in its
history. The Constitution of the United States is one of the most
brilliant, uplifting, and inspired documents ever written by the hand
of mere mortals. It has served as a model for other nations, nations
that are struggling to emulate the American genius and ensure a
government that allows maximum freedom for its people, and yet also
fairly imposes the strictures of the rule of law.
Such a document, with its carefully weighted checks and balances, its
beautiful guarantees of freedom and liberty, its eloquent preamble of
52 words, and its visionary flexibility has inspired and guided this
great Nation of ours for generations.
Now the decision to preserve it for our future generations rests with
this body--100 men and women sworn to support and defend this marvelous
Constitution against all enemies, foreign and domestic. And the
decision rests with us. The buck stops here. I have taken that oath 13
times in the last 48 years--to support and defend the Constitution
against all enemies, foreign and domestic. I have administered the oath
of office on a good many occasions to several of my colleagues, and I
have considered it an honor and a privilege to do so.
This body has a solemn responsibility to debate the proposed
amendment carefully, fully, thoroughly and with diligence. Nothing on
the Senate's agenda is as important as this proposal. It is the most
important decision that will be made in this Senate this year. And if,
which God avert, this amendment is adopted, it will prove to have been
the most important amendment, the most important change to the
Constitution since the Constitution became effective 206 years ago, and
it will be the first time out of 27 times that an amendment has been
adopted to damage this inimitable document.
Nothing on the Senate's agenda, as I say, is as important as is this
proposal. So I say that no politically crafted, so-called Contract With
America--you have heard about that, the Contract With America, the so-
called Contract With America. Let me show you my contract with America.
Here it is, the Constitution of the United States. It cost me 15 cents.
There it is--15 cents. Any Senators who wish to get similar copies may
do so from the Government Printing Office. It only costs a dollar even
at today's prices.
So this so-called Contract With America, which I did not sign on to,
and which just sprouted up like the prophet's gourd overnight, during
the last election, should not drive this debate or crowd out the
thorough consideration of this proposed constitutional amendment.
We have a duty to air all sides before the public, lest there be any
misunderstanding about what is being proposed. If we are to adopt this
most serious of alterations to our Constitution, let us not do so
without telling the American people exactly what the change will mean
to them. Let us not do so without telling the American people exactly,
to the very best of our ability, what the change will be to them, the
American people.
The debate may be at times tedious. It deals with concepts and truths
which are not usually on the public radar screen. But it is our
responsibility to focus the public, if we can, on this issue which is
so fundamental, so fundamental to the future of our Nation.
And so it is my hope that the Senate and its Members will concentrate
their fractured attention spans, clear the decks, and listen to and
participate in this extraordinary debate. Now, this is no ordinary
bill. It is no mere amendment to a statute. This is the supreme law of
the land about which we are talking. We are talking about amending the
supreme law of the land, the Constitution of the United States, the
supreme law of the land, the guarantor of our freedoms and the freedoms
of generations of Americans which we are considering here on this
Senate floor. We are considering an amendment to write into the
Constitution for the very first time language dealing with fiscal
policy. That is a subject which the framers of the Constitution, in
their wisdom, left for the decisions of the elected representatives of
the people in this body and in the other body.
I hope that we will be guided by at least a limited wisdom of the
Framers. There is a kind of pretense that one can read between the
lines in this amendment, namely that the statesmen of today are wiser
than those Framers of the Constitution who acted 208 years ago to
submit to the States for their ratification the great document. I hope
that we will reread the solemn oath that we all took when we were sworn
in. I hope that Members will listen to their consciences and resist the
political winds that have already blown through the other body.
Now is the Senate's time to shine. It can fulfill the task before us,
with faithfulness to its purpose, by an exhaustive review of the impact
of this proposal. Nothing we do during our collective service in the
Senate will ever be more important than this task which is before us
today, the task of examining, scrutinizing, dissecting, and hopefully
rejecting this constitutional amendment.
The people hopefully will remember one truth as they watch and as we
engage in this historic debate; that is, that there is no disagreement
over the goal of getting to a balanced budget by reducing the Federal
deficit. This debate, however, is about tampering with the United
States Constitution in such a way as to mandate a zero deficit each and
every year for the life of this Republic--for the life of this
Republic--not just for a few years, but for centuries. Who knows? This
is an extreme and serious remedy, indeed.
We can change a statute a month after it is enacted, 2 weeks after it
is enacted, or a year after it is enacted. A statute can be repealed by
the same Congress that originally enacted it. But not so with an
amendment to the Constitution. Once this surgery has been performed,
once the frontal lobotomy has been done, it will be very difficult to
undo if we do not like the consequences.
That is why as much should be known about this proposal as possible,
including a blueprint for exactly how the proponents would get the
budget into balance by 2002. If that blueprint cannot be produced, then
the American people should be aware from the outset that the amendment
may be a sham and a cruel hoax by politicians looking to curry favor by
making promises that they cannot keep, and by using the Constitution--
this Constitution of the United States--as cover for their singular
lack of courage.
Public service should mean more than that. The welfare of the people
should mean more than that. And the Constitution of the United States
must surely mean more than that.
Mr. President, I have heard the great name of Thomas Jefferson
invoked time and time again during this debate by some of those who
support this constitutional amendment on the balanced budget. Thomas
Jefferson was not one of those at the Constitutional Convention. Thomas
Jefferson was not one of the 39 signers of the Constitution. He was a
Minister to France at the time that the Constitutional Convention was
underway.
We all know that a failure of the Congress under the Articles of
Confederation to provide the Nation with a responsible financial system
was the principal stimulus to the drafting of the Constitution. That
was one of the things that was wrong with the Congress under the
Confederation, one of the things that weakened the Continental
Congress.
The First Continental Congress met on September 5, 1774. The Second
Continental Congress met in 1775, and it continued until 1781, in which
year the Articles of Confederation were created, and the Congress under
the Confederation continued to exist until 1789, when this Republic,
created under the new Constitution, came into being.
One of the principal reasons why it became clear that the Congress
was ineffective under the Confederation was the fact that its financial
system was really a paralyzed system, one in which the Congress had to
depend upon the States for their good will and their support in coming
up with the funds that were levied against them. The Congress had
little power. It had to requisition moneys from the States, and the
moneys were not always forthcoming.
So, it was decided that there would have to be a new form of
Government,
[[Page S2235]] and a new Constitution was thus written. There were also
problems with regard to commerce between and among the States. All
those things came into focus and made clear the need for a new
Constitution and a new form of Government. That Constitution,
therefore, was written during those 116 days that occurred between and
including May 25 and September 17, 1787.
Jefferson did not help to write that Constitution. Jefferson was not
at the Constitutional Convention. So why invoke his name? This notion
that today's populace should not be able, by borrowing, to burden
future generations with debt was never seriously considered by the
convention. Such an amendment to the Constitution was never submitted
to the people.
Jefferson was President of the United States from 1801 to 1809. Why
did he not suggest or recommend that such an amendment be submitted to
the people by the Congress? He had the opportunity to do it. Why did he
not do it?
I think we have to recognize a limitation as to what we are willing
to include in the Constitution by recognizing that there is a vast gulf
between what might be considered a Utopian Constitution and what it
might contain, and what a Constitution in the real world can achieve.
One should never underestimate the price of making promises that even
a Constitution might not be able to deliver.
Thomas Jefferson took no part in the debates, as I have said, of the
1787 Convention that produced the Constitution. He was in France. He
did not return home until October 1789. The Constitution had already
gone into effect on March 4, 1789.
A month previous to his return home from Paris, Jefferson wrote the
celebrated ``The Earth Belongs to the Living'' letter, and he wrote it
to James Madison. In that letter, Jefferson argued that ``no generation
can contract debts greater than may be paid during the course of its
own existence,'' and Jefferson calculated such a period to be about 19
years. We would calculate it to be a longer period these days.
James Madison, though, is generally recognized to be the Father of
the Constitution. Here it is in my hand, the Constitution of the United
States. This is not the so-called Contract With America; this is the
Constitution of the United States. That is my contract with America.
James Madison is generally agreed to have been the Father of the
Constitution of the United States. He continued to explain that ``the
improvements made by the dead form a charge against the living who take
the benefit of them.'' In other words, the improvements made by those
of this generation, who years hence, would be dead. The improvements
made by the dead form a charge against the living generations hence,
who will take the benefit of those improvements. Continuing, Madison
said, ``Debts may be incurred for purposes which interest the unborn,
as well as the living''--This is not Robert C. Byrd talking; this is
James Madison. I was not there when this Constitution was written. I
did not have a thing to do with writing it. But it is my contract with
America. Madison said: ``The improvements made by the dead form a
charge against the living who take the benefit of them. Debts may be
incurred for purposes which interest the unborn, as well as the living;
such are debts for repelling a conquest, the evils of which may descend
through many generations.''
Madison's view, therefore, was that ``debts may be incurred
principally for the benefit of posterity.'' Jefferson said, in essence,
we should not pass debts on to our children and grandchildren. But
Madison took the other view--the better view, in my judgment--that
``debts may be incurred principally for the benefit of posterity.''
I think greater weight should be given to Madison's view than to
Jefferson's more abstract idea, written from the distant European
shores. Particularly compelling is Madison's salient observation of the
year 1790, namely, that ``the present debt of the United States''--in
1790--``far exceeds any burdens which the present generation could well
apprehend for itself.'' Even in 1790, the next year following the
flowering of this new republic, under the new Constitution.
Madison believed in the ``descent of obligations'' from one
generation to another. ``All that is indispensable in adjusting the
account between the dead and the living,'' he wrote, ``is to see that
the debits against the latter do not exceed the advances made by the
former.'' As I stated earlier, Jefferson later became President. Why
did he not propose a constitutional amendment? Why did he not lead an
effort to propose a constitutional amendment to carry out the ``Earth
Belongs to the Living'' theory? Say what you want; he did not do it.
To the contrary, in 1803, Jefferson encountered an unexpected offer
from France to purchase the Louisiana Territory. Although he felt that
he lacked clear constitutional authority to act, Jefferson accepted the
offer--and I am glad that he did--and incurred a public debt to pay the
required $15 million. Where did he get the money? He borrowed it from
English and Dutch banks. Grappling with this contradiction now,
Jefferson said in 1810 that the question was ``easy of solution in
principle, but somewhat embarrassing in practice,'' and then Jefferson
went on to suggest that the ``laws of necessity'' were sometimes higher
than the written laws of government and concluded that it would be
absurd to sacrifice the end to the means. I think he did the right
thing.
I have no doubt that, once the American people are better informed on
this question before the Senate, the judgment of the American people
will be sound.
Talleyrand, who dominated the politics of Europe for 40 years--he was
Prime Minister of France, who served under Napoleon--said there is more
wisdom in public opinion than is to be found in Napoleon, Voltaire, or
all the ministers of State, present and to come.
(Ms. SNOWE assumed the chair.)
Mr. BYRD. But, Madam President, it has to be an informed public
opinion. It has to be an informed public opinion.
And that is, more than anything else, why the Senate is the premier
deliberative body of the world today. It is the forum of the States and
the forum of minorities, and a forum in which there is unlimited
debate, the right of unlimited debate, only to be shut off by a cloture
motion adopted or by a unanimous consent agreement.
I happen to believe that the American people are not fully
informed as to the ramifications of this snake oil constitutional
amendment which would mandate--mandate--a balanced budget every year
from now until kingdom come; every year.
Madison, in Federalist Paper No. 63, said:
* * * so there are particular moments in public affairs
when the people, stimulated by some irregular passion, * * *
or misled by the artful misrepresentations of interested men,
may call for measures which they themselves will afterwards
be the most ready to lament and condemn.
Now he was talking about the Senate. That is what Madison was talking
about. Go look at the Federalist Paper No. 63. He was talking about the
Senate.
``In these critical moments,'' he said, ``how salutary will the
interference of some temperate and respectable body of citizens in
order * * * to suspend the blow meditated by the people against
themselves until reason, justice and truth can regain their authority,
over the public mind.''
Madison was talking about the Senate.
``What bitter anguish'' he said, ``would not the people of Athens
have often escaped if their government had contained so provident a
safeguard against the tyranny of their own passions? Popular liberty
might then have escaped the indelible reproach of decreeing to the same
citizens the hemlock on one day and statutes on the next.''
That was Madison, the father of the Constitution, talking about the
Senate. William Ewart Gladstone--who was prime minister four times
under Queen Victoria--referred to the U.S. Senate as ``that remarkable
body, the most remarkable of all the inventions of modern politics.''
Madison was talking about the Senate, referring to it as a body of
``temperate and respectable'' citizens who might interfere and
``suspend the blow meditated by the people against themselves'' in a
time of partisan political
[[Page S2236]] passion, ``until reason, justice, and truth can regain
their authority over the public mind.''
That is why we have the Senate. That is why we are here to debate
these issues.
Madam President, for more than a week now I have listened with great
fascination as some of the proponents of the balanced budget
constitutional amendment have laid out every conceivable reason as to
why we should adopt this measure. If I did not know better, if I did
not certainly think I knew better, I might be convinced by all of the
rhetoric that the amendment is the silver bullet cure-all for
everything that ails the country. But I do know better, and, more
importantly, the American people will know better, too, if only they
can be fully informed on the matter.
Unfortunately, left unsaid in all the pro-amendment talk has been one
of the most important parts of this, what it will really amount to,
what it really amounts to in my judgment will be an immense fraud: the
people's right to know how implementation of the amendment will affect
them. How will the adoption of this amendment affect you, Mr. and Mrs.
America, you and your children and your grandchildren?
And, contrary to what some may think, the public does have a right to
know how they will be affected. The people have a right to know how
spending cuts on the magnitude of $1.5 trillion over the course of a 7-
year span will impact their lives and the lives of their children.
The fact that the public is beginning to understand that they are
going to be hit and hit hard can be seen in the results of a recent
nationwide survey. Last week, the American Association of Retired
Persons released a poll, conducted by the Wirthlin Group during the
last week of January, which showed that 75 percent of the American
people want to know the details of what will have to be cut to balance
the budget before the amendment is voted on. Notice, I said ``before
the amendment is voted on.''
So, as will be seen by this chart here, the American people are
saying, ``Spell out the cuts.'' Spell out the cuts.
Three out of four Americans, according to this poll that was released
by the American Association of Retired Persons last week, three out of
four Americans want to know, Madam President, where, oh where, we
intend to come up with $1.5 trillion and they want to know it before
the vote on this fiscal pie-in-the-sky proposal takes place.
Even more amazing than those overwhelming numbers, though, is that
the support for the radical idea of knowing the details ahead of time
runs across party lines.
The chart to my left plainly states that 68 percent of the
Republicans polled by the Wirthlin Group want to know what will be cut
first before Congress passes the balanced budget amendment. Seventy-
seven percent of the Democrats want to know. Eighty-three percent of
the independents want to know. Want to know what? What will be cut
first?
They want to know first, before we adopt any such amendment, they
want to know the figures that will be cut.
These results of the poll show that the argument over the people's
right to know is not a partisan argument. It is not, as some have
suggested, simply a way of delaying a vote on the balanced budget
amendment. Sixty-eight percent of the Republicans polled do not believe
that it is simply a way of delaying the vote. Seventy-seven percent of
the Democrats polled do not believe it is just a way to delay the vote.
They want to know what is in the amendment. Eighty-three percent of the
independents do not believe it is just a way to delay the vote. They
want to know what is going to be cut.
It is not, as some have suggested, simply a way of delaying a vote on
the balanced budget amendment. On the contrary, the people's right to
know is a very real issue that must be confronted. In reality, Madam
President, none of the Members should be surprised by the poll results
because the American people are not reckless.
People know, for example, that before they buy a house, they need to
ask whether or not the roof leaks. They know that before they buy an
insurance policy, they should read the fine print to see exactly what
it covers. And they know if they want to cut the amount of fat and
cholesterol in their diets, they should read the label on the foods
that they buy at the supermarket.
The people take the time to think about what they are being asked to
buy. They consider all of the pluses and all of the minuses of what
they are judging. They do not run out willy-nilly and lay down their
money without asking for the details of what they are about to
purchase. They do not take it on faith that what they are being told is
the full story. They ask questions. They ask questions. They expect to
be given clear and honest answers to their questions.
Now that the American people are asking questions, now that they are
asking the details of the $1.5 trillion magic pill that will shrink the
deficit without pain or suffering, are they going to be ignored? Is the
American people's right to know going to be ignored? By refusing to
honor the public's right to know, the proponents will, in effect, be
telling the American people that we here in Washington know what is
best.
``Take it on faith,'' is what the American people are being told.
``Trust us. Trust us. Do not press us. Do not press us for all of these
messy details.'' Is that what Senators think the public was telling
Members last November? Do Senators honestly believe the message out of
the last election was that the American people want Members to pass
legislation in such a hurry that we do not tell the American people the
ramifications?
Does anyone think that the public is happy with being kept in the
dark on this $1.5 trillion scam? In my view that is what it is, unless
we tell them, let them look under the hood, unless we tell them what is
on the label, unless we at least put a label on this bottle. If anyone
thinks that, then they should think again. The American people have a
right to know the details behind this amendment. They have a right to
know whether or not their children are going to be able to get a
student loan, whether or not the national parks in their State will be
closed, whether or not the National Institutes of Health will be able
to continue with breast cancer research, whether or not they will see
fewer cops on the beat in their cities, whether or not the Federal
Government will continue to offer financial help with highways and
water treatment plants in their communities. People have a right to
know.
Nearly everyone is making promises, as I listen, promises that Social
Security will not be cut under the balanced budget amendment. There
will be amendments offered to exempt Social Security, we hear, and
promises made to protect Social Security from cuts. I do not want our
senior citizens to be misled. Taking the Social Security trust fund off
the table does not totally ensure our elderly citizens from the
devastation of this amendment. Taking the Social Security trust fund
off the table simply means that even more pressure for cuts falls on
Medicare and on other programs that help the elderly, such as Meals on
Wheels.
Moreover, there are backdoor ways, backdoor ways of getting at Social
Security even if it were to be taken off the table. One such idea which
is being explored, I believe by our Republican friends, is to
recalculate the way we measure cost-of-living increases in order to
help to reduce the deficit. That proposal, that recalculation, would
actually mean a reduction in inflation adjustments for taxpayers'
standard deductions and personal exemptions on their income tax form.
Those changes, then, would result in both a cut in Social Security
benefits and a tax hike to the recipients of Social Security benefits.
So Social Security recipients should not rest easy, even if the trust
fund were to be exempted.
Social Security recipients will not be protected. The mammoth cuts
that will have to be made under this balanced budget amendment, even if
Social Security were to be taken off the table, will mean that state
taxes and local taxes will likely go through the ceiling so that States
can pay for some of the essential services which the Federal Government
no longer will be able to provide.
The elderly, along with everybody else in the Nation, will see their
incomes eroded by higher taxes in the
[[Page S2237]] States. The elderly will be hurt by this balanced budget
amendment, whether or not the trust fund is exempted. And I say make no
mistake about that.
Additionally, I do not want to see a kind of generational and
interest group warfare set up by the enactment of this amendment. There
will be interest group and generational hand-to-hand combat the like of
which we have never seen if this amendment is adopted, and the warfare
and sniping will worsen if Social Security were to be exempted.
A recent study shows that 26 percent of the children under 6 years
old live in poverty in the United States. Do we want to set up a
situation that forces Members to choose between helping the elderly and
helping the children; helping the elderly and helping the grandchildren
of the elderly?
What about pitting the elderly against their grandchildren? What
about pitting the elderly against the veteran? Certainly, we should not
want to see that. Many senior citizens also receive veterans benefits.
This amendment sets one American against another, one interest group
against another, and would tend to force severe across-the-board cuts
under the guise of fairness. Instead of using our judgment, instead of
looking at what could and should be cut, Senators would likely buckle
under competing interest group pressure, put the blindfolds on, and
enact sweeping, meat-ax cuts on all programs.
That would be bad public policy. But if that is to be the policy,
then the elderly, the veterans, the mayors and Governors, the parents
and grandparents of the children and everybody else in America,
including the Members of this body, need to know now, in order to be
able to make an informed choice about the wisdom, or the unwisdom, of
this constitutional amendment.
Did the Senator ask me a question?
Mr. HOLLINGS. I thought you completed your comments. I will wait.
Mr. BYRD. I say to my able friend, I will not go longer than another
5 minutes at most. The Senator has been sitting here waiting. I did not
see him sitting back there because this chart is between the two of us.
If the Senator will indulge me just another 3 or 4 minutes.
Mr. HOLLINGS. I have been enjoying it.
Mr. BYRD. I thank the Senator.
Mr. President, the American people have a right to know these things,
and while many of them come to the floor to speechify on the need for a
balanced budget amendment, over the past 5 years we here in the
Congress have already cut more than $900 billion from the deficit. In
the Budget Enforcement Act of 1990, Congress cut $482 billion from the
deficit. We followed that effort with $432 billion worth of deficit
reduction in 1993--without, I would note, the help of many of those who
favor a balanced budget amendment. And each and every one of those
dollars of deficit reduction, Mr. President, was cut without--without--
a constitutional amendment. What was required to do the job then, and
what will be required to do the job in the future, was putting a budget
plan out here on the Senate floor, getting down to business and
discussing the pros and cons of the proposed cuts in full view of the
American public, and then voting up or down.
Yesterday, we were treated to several hours of bashing of the
President's budget by the proponents of this constitutional amendment
to balance the budget. But I hope that no one will be confused by those
transparent attempts to obscure the central point of this debate. That
point is that the American people need to know how the proponents
intend to get to a perfect budget balance by the year 2002, and they
need to know it before their Senators vote on the amendment. The
President has submitted his budget. He does not support a
constitutional amendment to balance the budget by 2002; therefore, it
is not incumbent upon him to produce a budget that does so. He will not
even have a chance to sign such an amendment or veto such,
constitutional amendment, because that amendment goes straight to the
States if we in the Congress approve it, God forbid. The President is
largely a mere observer in this process. The decision to amend the
Constitution is a decision that is reserved for the Congress and for
the people of the several States.
But the President's budget is a useful illustration of one thing.
Budget balance, or even a continuing glidepath to deficit reduction, is
difficult to achieve if tax cuts are part of the equation. Be that as
it may, I believe that the President has given us an honest budget,
even if I personally do not agree with it. I do not believe he has
cooked the numbers. We have seen plenty of that in the past. He has
held the deficit steady, even though health care costs will grow by
more than 9 percent a year for the next 5 years. And I believe that we
could have had a continuing glidepath of deficit reduction if the tax
cuts had been dropped from the President's budget.
But, the President has put his cards on the table. What about the
amendment's supporters? They say that they are in favor of this so-
called constitutional amendment, but they refuse to show their cards.
And, worse, they propose to start on the road to this constitutional
amendment with a gigantic tax cut--one that dwarfs the administration's
modest proposal, by something like three to one. Just last week, the
staff of the Joint Committee on Taxation estimated that the revenue
loss to the Treasury, if the Republican tax cuts are enacted, would be
almost $205 billion over 5 years. Even that figure is somewhat
misleading because the tax cuts which the proponents are suggesting are
back-loaded. Taking the back-loading into account, in the fifth year
alone, revenue losses would be some $69 billion.
But, the proponents claim that, not only can they pay for these tax
cuts with spending cuts; they can cut even further and get the budget
to balance by 2002. So far, the proponents will only make vague
promises about what they will not cut. They have listed Social
Security, defense, and interest on the debt as items that will not be
touched. Those three items together make up a little over one-half of
the Federal budget. To get to budget balance by 2002, the proponents
would have to cut the remaining Federal budget by about one-third. The
largest category of spending in the half of the budget that is to be on
the chopping block are the health care programs. Medicare and Medicaid
amount to about one-sixth of all Federal spending. These same health
care programs, Medicare for the elderly and the disabled, and Medicaid
for the poor, are also the fastest growing programs in the half of the
budget which the proponents propose to cut.
So why do the proponents not stop talking about what they will not
cut and tell the American people what they will cut? It is popular to
say Social Security is off the table. But how about telling the
American people what is left on the table? Medicare is on the table.
State and local grants are on the table. Why not tell the Governors and
the mayors and the elderly about the cuts that will be necessary for
budget balance by 2002? Veterans pensions, civilian and military
retirement pensions, highway grants, environmental cleanup, WIC,
education--all those items are left on the table. Why do the proponents
not show down? This so-called balanced budget amendment is their idea,
not mine, not President Clinton's. So, let us hear how the proponents
intend to deliver. Let us know how the proponents plan to enact giant
tax cuts, protect Social Security from any cuts, protect defense from
any cuts, pay the interest on the debt and still get the budget into
balance by 2002. The silence from the proponents about the specifics of
how we get to budget balance is positively deafening. Why is that? Will
someone please tell the American people why we are not laying out a
plan for their scrutiny? I can only say what I believe. I believe that
we are hearing nothing from the proponents because it cannot be done,
or because they will not do it.
We are already required to project the deficits for at least 5 years
out. Why can the proponents not project the plan for this amendment, as
it will affect the American people, 7 years out? I believe that we are
hearing nothing from the proponents because they don't really want the
American people to know.
Tax cuts, coupled with removing Social Security, defense, and
interest payments from any consideration for spending reductions, make
balancing
[[Page S2238]] the budget by 2002 without totally devastating the
economy of this Nation and the 50 States, is mission impossible.
Let us not tell the patient that he is going under the knife for
cosmetic liposuction--lipo comes from the Greek, l-i-p-o, meaning
``fat''--when, in fact, we all know that he will wake up with most of
his intestines and part of his stomach missing. Let us not sign on to
this contract with evasion. We hear so much about the so-called
Contract With America. This is a contract with evasion and deceit.
Unless we tell the American people how we intend to get the budget to
balance by the year 2002 before we vote, this amendment amounts to
little more than a contract with deceit. The Senate would have to be
infected with the virus of collective madness to adopt this contract
with deceit and evasion.
But as the poll shows, the American people have caught on to this
unbecoming ruse, and they are not going to let us get away with it.
Passing the buck is a political cop out. In the case of the
constitutional amendment to balance the budget, the buck stops right
here.
Madam President, I ask unanimous consent to insert in the Record at
this point an article from the Wall Street Journal of today, titled
``GOP Tax Cuts Are Seen Costly Over 10 years,'' which states that the
GOP tax cuts would cost $704.4 billion over the next decade.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal, Feb. 7, 1995]
GOP Tax Cuts Are Seen Costly Over 10 Years
new congressional analysis finds loss of revenue reaching $704.4
billion
(By Jackie Calmes and Christopher Georges)
Washington.--Even as Republican lawmakers lambasted
President Clinton's budget for its failure to slash federal
deficits, a new congressional analysis put the cost of their
promised tax cuts at $704.4 billion over the next decade.
That analysis yesterday from Congress' nonpartisan Joint
Committee on Taxation, whose estimates are the basis for
Republican legislation on taxes, closely parallels the
Clinton administration's own earlier finding, which many GOP
leaders criticized at the time. Now both have found that the
revenue loss from the proposed tax cuts would balloon in
later years far beyond the five-year estimates of $200
billion that Republicans previously have cited. The Treasury
Department last month put the cost of the Republican tax cuts
at $725.5 billion through fiscal 2005.
Although Republicans in Congress have vowed to offset the
five-year cost through $200 billion in matching spending
cuts, the effort has proved such a struggle that the House
isn't expected to act on the package until at least mid-
March. Only afterward will it turn to drafting a budget aimed
at slashing deficits. While Congress bases its budgets on
five-year outlooks, the new 10-year forecast for the tax cuts
is pertinent given the Republicans' current push for a
constitutional amendment mandating a balanced budget by 2002.
Meanwhile, at a news conference on the president's budget,
Senate Majority Leader Robert Dole said ``the administration
has given up'' on the deficit, a realization that ``will
certainly help our cause to get enough votes for a balanced-
budget amendment.'' The Senate is in the second week of
debate on the amendment.
President Clinton and his advisers yesterday defended their
budget after it was released as one that would reduce the
deficit gradually if measured as a percentage of the gross
domestic product, the total value of goods and services
produced in the country. ``There is no magic amount of
deficit reduction that you need,'' Budget Director Alice
Rivlin told reporters. ``We now have a deficit that's under
control and coming down in relation to the size of the
economy.''
``The best way or the most obvious way to do additional
deficit reduction,'' Ms. Rivlin said, ``is the one that we
talked so much about last year, namely, controlling the out-
year costs of health care.'' She described the
administration's decision to essentially ignore health-care
reform in this year's budget as a tactical one. The president
still wants to work with Congress to slow the growth in the
cost of health care and to improve access to health care, she
said.
The budget projects a deficit of $196.7 billion, or 2.7% of
GDP, in fiscal 1996, which begins Oct. 1. If Mr. Clinton's
proposals were adopted by Congress and if the economy
performs precisely as the White House projects--two unlikely
outcomes--then the deficit is projected to be 2.7% of GDP the
following year and to fall to 2.4% of GDP in fiscal 1998. But
it would remain around $200 billion a year for the
foreseeable future.
The new White House economic forecast published in the
budget shows that the administration thinks the Federal
Reserve is finished raising interest rates. The president's
economic advisers anticipated the increase of one-half
percentage point in short-term interest rates that the Fed
engineered last week, but they don't foresee any further
boosts, chief White House economist Laura Tyson said.
ballooning costs
The congressional committee previously estimated that the
Republican tax-cut proposals would cost $203.9 billion in the
first five years. But over 10 years, the reductions would
cost the Treasury more than three times as much because the
cost of some proposals balloon in the future. GOP proposals
to reduce capital-gains taxes would lose $170.3 billion over
10 years--up from $53.9 billion in the first five years. The
Treasury projects similar revenue drains, of $60.9 billion in
the first five years, and $183.1 billion over 10.
The similarity of the Treasury and Joint Committee
findings--and particularly those on the much-debated capital-
gains proposals--provides striking evidence that the new GOP-
controlled Congress hasn't significantly departed from
longstanding procedures for measuring the impact of tax
changes. For years, some Republicans had vowed to overhaul
those procedures to reflect their belief that tax cuts boost
revenues through economic growth, rather than lose revenues.
Two GOP proposals that are shown to raise revenues over the
first five years would become revenue-losers after that
period, as Treasury had found. One, to liberalize the
existing deductions for individual retirement accounts, would
raise an estimated $2.2 billion through 2000 but then
increasingly lose revenue--for a total of $23.9 billion over
10 years. Early on, the new proposal would encourage
taxpayers to transfer existing IRAs into new ``American Dream
Savings Accounts,'' but they would have to pay taxes on the
amount transferred. After five years, however, savers could
withdraw money from the new accounts tax-free.
write-off provision
The second provision, liberalizing write-offs for capital-
intensive businesses' plant and equipment, would raise $16.7
billion over the first five years but lose $88.8 billion over
10 years. The early gain comes because the proposal would
create less generous write-offs for the first years of an
investment, in exchange for more generous write-offs later.
The Treasury found an even larger loss from this ``neutral
cost recovery'' provision--$120.4 billion over a decade.
The Treasury says President Clinton's tax cuts for the
middle class would cost $62.7 billion over five years and
$171.2 billion over 10 years.
Although many private forecasts anticipate further
increases in short-term interest rates, last week's
employment report has led some to conclude that the Fed won't
raise rates much more than it has already.
``They'll be wrong on interest rates, but not by much.
We'll get one more rate hike from the Fed this year,''
Elliott Platt, an economist at Donaldson, Lufkin & Jenrette,
said of the White House forecast. The Fed has increased
short-term rates three percentage points in the past year.
The economic forecast in the budget says the unemployment
rate, now at 5.7% of the work force, will climb to 6% by the
fourth quarter of this year. But the president's Council of
Economic Advisers has already changed its mind and now
predicts that unemployment will range between 5.5% and 5.8%
over the rest of the decade.
new or higher fees
Nearly all the significant features of the president's
budget were leaked over the weekend. Among the details in
documents released yesterday are a number of new or higher
fees, including some on small-business loans and pesticide
registration. The president also proposes:
To levy a border-crossing fee of $3 a vehicle and $1.50 a
pedestrian, with discounts for those who cross the border
frequently.
To fund the Commodity Futures Trading Commission with a 10-
cent fee for each round-turn transaction on commodity futures
and options contracts.
To charge federal employees for parking, but only where the
agency heads decide to do so.
To raise about $1 billion over five years by requiring the
Federal Deposit Insurance Corp. and the Federal Reserve to
assess fees from state-chartered banks they regularly
examine. The fees would be calculated according to the size
of the banks; those with assets of less than $100 million
would be exempt.
To submit a plan to raise $4.8 billion over five years by
expanding Federal Communication Commission authority to
auction off more of the radio spectrum or to levy new user
fees.
To collect fees from medical-device makers that are seeking
Food and Drug Administration product approvals, using the
money to hire more staff to speed reviews.
Mr. BYRD. I yield the floor.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Chair recognizes the Senator from South
Carolina.
Mr. HOLLINGS. I thank the distinguished Chair.
Madam President, there is an old axiom in the court of equity that is
he who seeks equity must do equity; he who comes into the court of
equity must come with clean hands. We have
[[Page S2239]] had many chants and claims in recent days calling on
Members to submit a balanced budget.
Two weeks ago, with that equitable axiom in mind, I did exactly that.
I felt that I lacked standing in this so-called court of the U.S.
Senate to demand that my colleagues submit a budget blueprint that I
had not submitted myself.
Two weeks ago, I included it in the Record and attempted to highlight
certain realities of our present fiscal situation. The reality is that
balancing the budget in a 7-year period requires $1.2 trillion in
spending cuts.
The other reality was that the savings from entitlement reform would
not be enough to balance the budget. Clearly, we must try our best to
slow health costs and reform our welfare system. Likewise, we can save
some Federal dollars by reviewing supplementary security income as Mort
Zuckerman suggested in last week's U.S. News and World Report.
But putting these reforms in place costs money. Anyone who argues
that they can set up a work program for welfare recipients, care for
their children, and reap large savings is whistling Dixie. Likewise, in
reforming in health care, our focus has been on slowing the growth of
overall spending rather than cutting back on existing funds. President
Clinton's commitment to health care reform has already led to
marketplace reforms in my own State of South Carolina. In fact, not too
long ago the chairman of the board of one of the largest employers in
my State said, ``Fritz, you keep on debating that health reform package
up there, because whatever happens is healthy. Rather than seeing
increases, I am now getting a 10 percent decrease in premiums for
coverage of my employees.''
So while the President has done a magnificent job in encouraging the
marketplace to make reforms, we are still a long way from getting on a
realistic path to a balanced budget. In short, to stop the hemorrhaging
in interest costs, spending cuts as well as taxes are necessary.
I ask unanimous consent, Madam President, to include once again in
the Record this particular document which lists the budget realities
and a potential list of discretionary spending cuts.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Senator Hollings on Truth in Budgeting
Reality No. 1: $1.2 trillion in spending cuts necessary.
Reality No. 2: Not enough savings in entitlements. Yes,
welfare reform but job program will cost; savings
questionable. Yes, health reform can and should save some,
but slowing 10 percent growth to 5 percent--not enough
savings. No, none on social security; off-budget again.
Reality No. 3: Hold the line budget on Defense--no savings.
Reality No. 4: Savings must come from freezes, cuts in
domestic discretionary--not enough to stop hemorrhaging
interest costs.
Reality No. 5: Taxes necessary to stop hemorrhage in
interest costs.
----------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Deficit CBO Jan. 1995 (using
trust funds)................. 207 224 225 253 284 297 322
Freeze discretionary outlays
after 1998................... 0 0 0 -19 -38 -58 -78
Spending cuts................. -37 -74 -111 -128 -146 -163 -180
Interest savings.............. -1 -5 -11 -20 -32 -46 -64
Total savings ($1.2 trillion). -38 -79 -122 -167 -216 -267 -322
Remaining deficit using trust
funds........................ 169 145 103 86 68 30 0
Remaining deficit excluding
trust funds.................. 287 264 222 202 185 149 121
5 percent VAT................. 96 155 172 184 190 196 200
Net deficit excluding trust
funds........................ 187 97 27 (17) (54) (111) (159)
Gross debt.................... 5,142 5,257 5,300 5,305 5,272 5,200 5,091
Average interest rate on the
debt (percent)............... 7.0 7.1 6.9 6.8 6.7 6.7 6.7
Interest cost on the debt..... 367 370 368 368 366 360 354
----------------------------------------------------------------------------------------------------------------
Note.--Does not include billions necessary for middle class tax cut.
Mr. HOLLINGS. Here is a list of the kinds of nondefense discretionary
spending cuts that would be necessary now as a first step to get $37
billion of savings and put the country on the road to a balanced
budget:
------------------------------------------------------------------------
Nondefense discretionary spending cuts 1996 1997
------------------------------------------------------------------------
Cut space station................................. 2.1 2.1
Eliminate CDBG.................................... 2.0 2.0
Eliminate low-income home energy assistance....... 1.4 1.5
Eliminate arts funding............................ 1.0 1.0
Eliminate funding for campus based aid............ 1.4 1.4
Eliminate funding for impact aid.................. 1.0 1.0
Reduce law enforcement funding to control drugs... 1.5 1.8
Eliminate Federal wastewater grants............... 0.8 1.6
Eliminate SBA loans............................... 0.21 0.282
Reduce Federal aid for mass transit............... 0.5 1.0
Eliminate EDA..................................... 0.02 0.1
Reduce Federal rent subsidies..................... 0.1 0.2
Reduce overhead for university research........... 0.2 0.3
Repeal Davis-Bacon................................ 0.2 0.5
Reduce State Dept. funding and end misc.
activities....................................... 0.1 0.2
End P.L. 480 title I and III sales................ 0.4 0.6
Eliminate overseas broadcasting................... 0.458 0.570
Eliminate the Bureau of Mines..................... 0.1 0.2
Eliminate expansion of rural housing assistance... 0.1 0.2
Eliminate USTTA................................... 0.012 0.16
Eliminate ATP..................................... 0.1 0.2
Eliminate airport grant in aids................... 0.3 1.0
Eliminate Federal highway demonstration projects.. 0.1 0.3
Eliminate Amtrak subsidies........................ 0.4 0.4
Eliminate RDA loan guarantees..................... 0.0 0.1
Eliminate Appalachian Regional Commission......... 0.0 0.1
Eliminate untargeted funds for math and science... 0.1 0.2
Cut Federal salaries by 4 percent................. 4.0 4.0
Charge Federal employees commercial rates for
parking.......................................... 0.1 0.1
Reduce agricultural research extension activities. 0.2 0.2
Cancel advanced solid rocket motor................ 0.3 0.4
Eliminate legal services.......................... 0.4 0.4
Reduce Federal travel by 30 percent............... 0.4 0.4
Reduce energy funding for Energy Technology
Develop.......................................... 0.2 0.5
Reduce Superfund cleanup costs.................... 0.2 0.4
Reduce REA subsidies.............................. 0.1 0.1
Eliminate postal subsidies for nonprofits......... 0.1 0.1
Reduce NIH funding................................ 0.5 1.1
Eliminate Federal Crop Insurance Program.......... 0.3 0.3
Reduce Justice State-local assistance grants...... 0.1 0.2
Reduce Export-Import direct loans................. 0.1 0.2
Eliminate library programs........................ 0.1 0.1
Modify Service Contract Act....................... 0.2 0.2
Eliminate HUD special purpose grants.............. 0.2 0.3
Reduce housing programs........................... 0.4 1.0
Eliminate Community Investment Program............ 0.1 0.4
Reduce Strategic Petroleum Program................ 0.1 0.1
Eliminate Senior Community Service Program........ 0.1 0.4
Reduce USDA spending for export marketing......... 0.02 0.02
Reduce maternal and child health grants........... 0.2 0.4
Close veterans hospitals.......................... 0.1 0.2
Reduce number of political employees.............. 0.1 0.1
Reduce management costs for VA health care........ 0.2 0.4
Reduce PMA subsidy................................ 0.0 1.2
Reduce below cost timber sales.................... 0.0 0.1
Reduce the legislative branch 15 percent.......... 0.3 0.3
Eliminate Small Business Development Centers...... 0.056 0.074
Eliminate minority assistance, score, Small
Business Institute and other technical assistance
programs, women's business assistance,
international trade assistance, empowerment zones 0.033 0.046
Eliminate new State Department construction
projects......................................... 0.010 0.023
Eliminate Int'l Boundaries and Water Commission... 0.013 0.02
Eliminate Asia Foundation......................... 0.013 0.015
Eliminate International Fisheries Commission...... 0.015 0.015
Eliminate Arms Control Disarmament Agency......... 0.041 0.054
Eliminate NED..................................... 0.014 0.034
Eliminate Fulbright and other international
exchanges........................................ 0.119 0.207
Eliminate North-South Center...................... 0.002 0.004
Eliminate U.S. contribution to WHO, OAS, and other
international organizations including the U.N.... 0.873 0.873
Eliminate participation in U.N. peacekeeping...... 0.533 0.533
Eliminate Byrne grant............................. 0.112 0.306
Eliminate Community Policing Program.............. 0.286 0.780
Moratorium on new Federal prison construction..... 0.028 0.140
Reduce Coast Guard 10 percent..................... 0.208 0.260
Eliminate Manufacturing Extension Program......... 0.03 0.06
Eliminate Coastal Zone Management................. 0.03 0.06
Eliminate National Marine Sanctuaries............. 0.007 0.012
Eliminate climate and global change research...... 0.047 0.078
Eliminate national sea grant...................... 0.032 0.054
Eliminate state weather modification grant........ 0.002 0.003
Cut Weather Service operations 10 percent......... 0.031 0.051
Eliminate regional climate centers................ 0.002 0.003
Eliminate Minority Business Development Agency.... 0.022 0.044
Eliminate public telecommunications facilities,
program grant.................................... 0.003 0.016
Eliminate children's educational television....... 0.0 0.002
Eliminate National Information Infrastructure
grant............................................ 0.001 0.032
Cut Pell grants 20 percent........................ 0.250 1.24
Eliminate education research...................... 0.042 0.283
Cut Head Start 50 percent......................... 0.840 1.8
Eliminate meals and services for the elderly...... 0.335 0.473
Eliminate title II social service block grant..... 2.7 2.8
Eliminate community services block grant.......... 0.317 0.470
Eliminate rehabilitation services................. 1.85 2.30
Eliminate vocational education.................... 0.176 1.2
Reduce chapter 1, 20 percent...................... 0.173 1.16
Reduce special education, 20 percent.............. 0.072 0.480
Eliminate bilingual education..................... 0.029 0.196
Eliminate JTPA.................................... 0.250 4.5
Eliminate child welfare services.................. 0.240 0.289
Eliminate CDC Breast Cancer Program............... 0.048 0.089
Eliminate CDC AIDS Control Program................ 0.283 0.525
Eliminate Ryan White AIDS Program................. 0.228 0.468
Eliminate maternal and child health............... 0.246 0.506
Eliminate Family Planning Program................. 0.069 0.143
Eliminate CDC Immunization Program................ 0.168 0.345
Eliminate Tuberculosis Program.................... 0.042 0.087
Eliminate Agricultural Research Service........... 0.546 0.656
Reduce WIC, 50 percent............................ 1.579 1.735
Eliminate TEFAP--administrative................... 0.024 0.040
Commodities............................. 0.025 0.025
Reduce Cooperative State Research Service 20
percent.......................................... 0.044 0.070
Reduce Animal Plant Health Inspection Service 10
percent.......................................... 0.036 0.044
Reduce Food Safety Inspection Service 10 percent.. 0.047 0.052
---------------------
Total......................................... 36.941 58.402
------------------------------------------------------------------------
Note.--Figures are in billions of dollars.
Mr. HOLLINGS. Madam President, we have heard a lot in recent days
about a simple way to balance the budget--the so-called 3 percent
growth approach--which the Senator from Texas spoke of last week. But
let's look at the facts. According to CBO,
[[Page S2240]] the budget is growing annually at about 6.2 percent or
by $94 billion. Thus, if you plan to cut that in half to 3 percent
growth, that is $46 billion. But wait, we all agree Social Security is
off the table and will grow by $18 billion next year. Similarly, we
will have to pay the interest costs on the debt which will increase by
$25 billion next year. Kick in the last $3 billion to try and hold the
line on defense spending and you quickly see that there's not much left
of that 3 percent. While seductively simple, this approach fails to
spell out the impact on the American people. If the 3 percent is used
up, what is the effect on Medicare and Medicaid programs, education,
and law enforcement?
The glidepath that I have put before the Senate requires $37 billion
in spending cuts for the first year. It meets that target by listing
some 80 spending cuts that I do not think for a minute would ever pass
on the floor of the Senate. In addition to cuts in discretionary
programs, I also included a list of possible entitlement programs to
pick and choose from that was circulated earlier this year by Senator
Gregg of New Hampshire.
We tried such budget cutting exercises before. Give credit to Senator
Domenici, who was chairman of the Budget Committee in 1986, when he
offered an amendment to adopt President Reagan's budget cuts. Do you
know how many votes they got? Fourteen, fourteen votes.
Last year, on the House side, Congressman Solomon corralled together
a list of cuts that had been recommended by various groups. He put them
all together and came up with $700 billion in cuts over 5 years. Do you
know who voted against it? Congressman Kasich. Do you know who voted
against it? Speaker Gingrich. Do you know how many votes they got?
Seventy-three out of four hundred and thirty-five.
Madam President, you have to face the realities and I think one stark
reality is the one stated by the House majority leader who feared that
coming forward with specific spending cuts would cause members knees to
buckle. That is the truth.
I have come to the floor this afternoon to say a word about those who
are blaming President Clinton for not doing anything about the deficit.
If there is one fellow who had nothing to do with this deficit, it
would be President William Jefferson Clinton. He came from Arkansas up
to Washington, and he inherited fiscal chaos.
I do not mean to sound rude. I mean to sound factual and to give you
the reality of the situation. Yesterday, we honored our distinguished
past President, President Reagan, on his birthday. We gave him a
birthday present but he has given us a birthday present. That birthday
present is an increase in taxes of a billion a day. It is the biggest
tax increase in the history of this land.
I constantly hear about the largest tax increase. We were there, this
particular Senator, and Senator Mathias on the other side of the aisle
at the birth of Reaganomics. Eleven of us voted against the massive tax
cuts that some called a riverboat gamble. President Bush called it
voodoo economics.
But the fact of the matter is this Senator voted against the tax cuts
of Reaganomics and for the spending cuts. Only three Senators who voted
against the tax cuts but for spending cuts: Senators Bradley, Mathias,
and myself.
So we have positioned ourselves with some kind of credibility on
trying to balance the budget. When they talk about the biggest tax
increase in history, we only have to refer very quickly, Madam
President to--and I was going to at length, but I only just refer to
it--the article by Judy Mann in the Washington Post entitled ``Fiddling
With the Numbers.''
I ask unanimous consent that it be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Fiddling With the Numbers
(By Judy Mann)
Gov. Christine Todd Whitman, the Republican meteor from New
Jersey, had the unusual honor for a first-term governor of
being asked to deliver her party's response to President
Clinton's State of the Union message last week.
And she delivered a whopper of what can most kindly be
called a glaring inaccuracy.
Sandwiched into her Republican sales pitch was the kind of
line that does serious political damage: Clinton, she
intoned, ``imposed the biggest tax increase in American
history.''
And millions of Americans sat in front of their television
sets, perhaps believing that Clinton and the Democrat-
controlled Congress had done a real number on them.
The trouble is that this poster lady for tax cuts was not
letting any facts get in her way. But don't hold your breath
waiting for the talk show hosts to set the record straight.
The biggest tax increase in history did not occur in the
Omnibus Budget Reconciliation Act of 1993. The biggest tax
increase in post-World War II history occurred in 1982 under
President Ronald Reagan.
Here is how the two compare, according to Bill Gale, a
specialist on tax policy and senior fellow at the Brookings
Institution. The 1993 act raised taxes for the next five
years by a gross total of $268 billion, but with the
expansion of the earned income tax credit to more working
poor families, the net increase comes to $240.4 billion in
1993 dollars. The Tax Equity and Fiscal Responsibility Act of
1982, by comparison, increased taxes by a net of $217.5
billion over five years. Nominally, then, it is true that the
1993 tax bill was the biggest in history.
But things don't work nominally. ``A dollar now is worth
less than a dollar was back then, so that a tax increase of,
say, $10 billion in 1982 would be a tax increase of $15
billion now,'' says Gale. In fact, if you adjust for the 48
percent change in price level, the 1982 tax increase becomes
a $325.6 billion increase in 1993 dollars. And that takes it
the biggest tax increase in history by $85 billion.
Moreover, says Gale, the population of the country
increased, so that, on a per person basis, the 1993 tax
increase is lower than the one in 1982, and the gross
domestic product increased over the decade, which means that
personal income rose. ``Once you adjust for price
translation, it's not the biggest, and when you account for
population and GDP, it gets even smaller.
He raises another point that makes this whole business of
tax policy just a bit more complex than the heroic tax
slashers would have us believe. ``The question is whether
[the 1993 tax increase] was a good idea or a bad idea, not
whether it was the biggest tax increase. Suppose it was the
biggest? I find it frustrating that the level of the debate
about stuff like this as carried on by politicians is
generally so low.''
So was it a good idea? ``We needed to reduce the deficit,''
he says, ``we still need to reduce the deficit. The bond
market responded positively. Interest rates fell. There may
be a longer term benefit in that it shows Congress and the
president are capable of cutting the deficit even without a
balanced budget amendment.''
Other long-term benefits, he says, are that ``more capital
is freed up for private investment, and ultimately that can
result in more productive and highly paid workers.''
How bad was the hit for those few who did have to pay more
taxes? One tax attorney says that his increased taxes were
more than offset by savings he was able to generate by
refinancing the mortgage on his house at the lower interest
rates we've had as a result. The 1993 tax increase did
include a 4.3-cent-a-gallon rise in gasoline tax, which hits
the middle class. But most of us did not have to endure an
income tax increase. In 1992, the top tax rate was 31 percent
of the taxable income over $51,900 for single taxpayers and
$86,500 for married couples filing jointly. Two new tax
brackets were added in 1993: 36 percent for singles with
taxable incomes over $115,000 and married couples with
incomes over $140,000; and 39.6 percent for singles and
married couples with taxable incomes over $250,000.
Not exactly your working poor or even your average family.
The rising GOP stars are finding out that when they say or
do something stupid or mendacious, folks notice. The jury
ought to be out on Whitman's performance as governor until we
wee the effects of supply side economics on New Jersey. But
in her first nationally televised performances as a
spokeswoman for her party, she should have known better than
to give the country only half the story. In the process, she
left a lot to be desired in one quality Americans are looking
for in politicians: honesty.
Mr. HOLLINGS. Madam President, I quote:
The biggest tax increase in post-World War II history
occurred in 1982 under President Ronald Reagan.
Because when you cut all the revenues on the one hand and then you
increase all the spending on the other hand, rather than growth,
growth--``growth.'' That is what they are trying to come up again with.
It is the same act, same scene, same players, same disaster, in this
Senator's opinion. When they come up with that growth, instead of
growing out of the deficit, we have grown into the worst deficit and
debt, saddling us with interest costs.
Madam President, in 1981 the gross interest cost on the national debt
with President Reagan--of course, he had nothing to do with that one
because
[[Page S2241]] that one was already made up by President Carter. But,
incidentally, President Carter cut the deficit that he received from
President Ford, and President Lyndon Johnson gave us a balanced budget.
So I have been around when we have been cutting deficits and when we
balanced the budget in this Government.
But President Reagan came to town and he was elected on the promise
that, ``I am going to put this Government on a pay-as-you-go plan.'' He
said, ``I am going to do it in a year.'' When he got to town, he said,
``Oops. This is worse than I ever thought. It is going to take 2 to 3
years to do it.'' He cut back, and never increased that interest cost
of $95.5 billion.
I am listening to the other side of the aisle and the blame game on
President Clinton about what he said and what he is doing. President
Reagan said that he was going to balance the budget in a year and not
add to the interest costs. Rather, he has the interest up to $339
billion, according to CBO, and that does not take into account the
increase by Alan Greenspan, the Federal Reserve, here this past week.
So it is going to be about $350 billion, $352 billion--$1 billion a
day. That is what it is. The interest cost cannot be avoided. It has to
be paid. There are two things in life: Death and taxes. It has to be
paid. But interest cost is interest taxes. You get absolutely nothing
for it. The deficit this year is only conceived to be $176 billion by
CBO. We would have a $67 billion surplus if President Ronald Reagan had
not given us that birthday present of the biggest tax increase.
So here they come to town and talk about ``taking a walk,'' ``white
flag of surrender,'' and on ``life supports.'' I know Speaker Gingrich
gives out to the troops the right expressions around here to make on
the 7 o'clock news. But that does not take over the facts. The facts
remain that we are in one heck of a fix financially, and you cannot do
it without taxes.
On that score, do not blame President Clinton. President Clinton came
and struggled in his first year as a freshman President for a $500
billion cut in the deficit, and there was not a soul talking about
taking walks. They squatted, sat in the chair fixed, on both sides of
the aisle, and would not move, would not give a vote. Then after he did
that, he went about health care reform. And in health reform, yes, he
recommended Medicare cuts. But he said, ``I have to get health reform
with it.'' Now they blame him.
Do you know why they blame him, Madam President? It is very
interesting. Because they put out the alternative budget, the ``GOP
Alternative: Deficit Reduction and Tax Relief.'' This was last year.
You cannot get anything out of them this year except the blame game
and the catchy phrases they are putting out here, and now the ``white
flag of surrender'' and ``taking a walk.''
``GOP Alternative: Deficit Reduction and Tax Relief; Slashing the
Deficit, Cutting Middle Class Taxes.''
I ask unanimous consent that it be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Republican Alternative Budget will reduce the deficit
$318 billion over the next five years--$287 billion in policy
savings and $31 billion from interest savings. This is $322
billion more in deficit reduction than the President proposes
and $303 billion more in deficit reduction than the House-
passed resolution contains.
Moreover, the GOP alternative budget helps President
Clinton achieve two of his most important campaign promises--
to cut the deficit in half in four years and provide a
middle-class tax cut. The GOP plan:
Reduces the deficit to $99 billion in 1999. This is $106
billion less than the 1999 deficit projected under the
Clinton budget.
Even under this budget federal spending will continue to
grow.
Total spending would increase from $1.48 trillion in FY
1995 to more than $1.7 trillion in FY 1999.
Medicare would grow by 7.8-percent a year rather than the
projected 10.6-percent. Medicaid's growth would slow to 8.1-
percent annually rather than the projected 12-percent a year
growth.
It increases funding for President Clinton's defense
request by the $20 billion shortfall acknowledged by the
Pentagon.
Provides promised tax relief to American families and small
business:
Provides tax relief to middle-class families by providing a
$500 tax credit for each child in the household. The
provision grants needed tax relief to the families of 52
million American children. The tax credit provides a typical
family of four $80 every month for family expenses and
savings.
Restores deductibility for interest on student loans.
Indexes capital gains for inflation and allows for capital
loss on principal residence.
Creates new incentives for family savings and investments
through new IRA proposals that would allow penalty free
withdrawals for first time homebuyers, educational and
medical expenses.
Establishes new Individual Retirement Account for
homemakers.
Extends R&E tax credit for one-year and provides for a one-
year exclusion of employer provided educational assistance.
Adjusts depreciation schedules of inflation (neutral cost
recovery).
Tax provisions result in total tax cut of $88 billion over
five years.
Fully funds the Senate Crime Bill Trust Fund, providing $22
billion for anti-crime measures over the next five years. The
Clinton budget does not. The house-passed budget does not.
The Chairman's mark does not.
Accepts the President's proposed $113 billion level in
nondefense discretionary spending reductions and then secures
additional savings by freezing aggregate nondefense spending
for five years.
Accepts the President's proposed reductions in the medicare
program and indexes the current $100 annual Part ``B''
deductible for inflation. Total medicare savings would reach
$80 billion over the next five years.
Achieves $64 billion in medicaid savings over the next five
years, by capping medicaid payments, reducing and freezing
Disproportionate Share Hospital payments at their 1994 level.
Achieves additional savings through reform of our welfare
system totaling $33 billion over the next five years.
Repeals Davis-Bacon, reduces the number of political
appointees, reduces overhead expenditures for university
research, and achieves savings from a cap on civilian FTE's.
Mr. HOLLINGS. I will not read it all. I want to be accurate:
The GOP plan:
Accepts the President's proposed reductions in the medicare
program and indexes the current $100 annual Part ``B''
deductible for inflation. Total medicare savings would reach
$80 billion over the next five years.
And then:
Achieves $64 billion in medicaid savings . . .
So you see, that was $144 billion in savings that the President did
not stand over them for to ride on.
I saw my distinguished chairman of the Budget Committee on the House
side throw a duck fit. Cover it. Oh, no. He got caught off base. He was
the one in December, I say to the Senator from Utah, who said: ``We are
on a roll. I have to meet the press, right here.'' He said: ``We have
three budgets now. When that is done, Alan''--he is talking to Alan
Murray. He says, ``at the same time, we are going to move onto the
glidepath of zero now.'' Who is taking a walk? That was December, one
for January, one of three budgets; we are moving, we are going, and
where is his?
That is what the Senator from West Virginia wants. That is what this
Senator wants. I put up mine. We ask that they put up theirs. This
rings in my ears when they say take a walk, when they talk about the
largest tax increase in the history of the Government. We are suffering
from the largest tax increase. That is why, with all the spending cuts,
even in entitlements, on the SSI, some of the programs, and domestic
discretionary, try it on for size. You are going to need tax increases
in order to get on top of this monster. You are going to need tax
increases.
I recommended a 5-percent value added tax. I disagree with President
Clinton. I think the need of the hour is just that, to get physically
sound, put us on a pay-as-you-go basis and a Marshall plan for the
United States. We have 40 million in poverty. We have 10 million
homeless, sleeping on the streets of America. We have 12 million hungry
children. We have the cities, dens of violence and crime; the land is
drug infested. And we have the biggest deficit in the balance of trade.
That age group between 17 and 24, 73 percent of that age group cannot
find a job out of poverty. They are the hope of the land.
We need now, with the fall of the Wall and the sacrifices to occur in
order to keep the alliance together, to sacrifice for ourselves. We
need a 5 percent value added tax; $180 billion could start paying down
the deficit, the debt, take care of health costs, and get the country
moving with respect to women and infants feeding, Head Start, and title
I for the disadvantaged. Biotechnical research at NIH, they are
[[Page S2242]] cutting. They are all going around being proud to cut. I
do not believe in dismantling the Government.
I got the first triple A credit rating of any State from Maryland
around to Texas. So I have been down the road. We know how to pay our
bills. I have said time and again we need more South Carolina-led
Government than Washington Government in South Carolina.
So I go along with my Republican colleagues on that particular score.
But when they come around here now and they say, about welfare and
pulling the wagon--that is another one. Pulling the wagon. The idea is,
of course, that we here are pulling the wagon and the welfare people
are all squatting in the wagon. We are all in the wagon and nobody is
pulling it, except maybe the Japanese who are buying the bonds. Yes.
Get trade policy, and try to go against Japan. If the Chinese want to
get out of this soup that they are in on CD's, tell them to buy a few
Treasury bills and the Secretary of Treasury will come over and say,
``I am sorry. We didn't mean to talk. We have a special relationship.''
We are in the hands of the Philistines because we have to sell those
bonds to finance this debt. That is what is going on. They all know it.
We are all in the wagon to the point of $1 billion a day, and nobody is
pulling it. So let us get away from that particular expression. But
they do not want Government and everything else.
Another thing, then I will close. But I have to refer to this because
I have the greatest respect for, and I have worked very closely with
the distinguished Senate majority whip, Trent Lott of Mississippi.
Senator Lott said, ``Nobody, Republican, Democrat, conservative,
liberal, moderate, is even thinking about using Social Security to
balance the budget.''
Absolutely false. They are not thinking about it; they are working on
it. When I was buddied up with the distinguished Senators from Texas
and New Hampshire in Gramm-Rudman-Hollings, I talked to Senator Gramm,
and the first page he gave me was an across the board cut entitlements
including Social Security. I said, ``Phil, I can tell you now that is a
nonstarter. You will not get a single Democrat, including me, that is
going to vote for that one.'' So, we exempted Social Security and split
it in half with entitlements and discretionary spending on one side and
defense on the other. I knew he was particularly anxious to cut Social
Security. I am particularly unanxious to cut any kind of Social
Security because it pays for itself. If you want a contract for
America, let us pull out the 1935 contract for the senior citizens of
America. As a result of that agreement, taxes are paid, put in a trust
fund, and they want to violate it.
On July 10, I offered the Social Security Preservation Act before the
Budget Committee. There were 20 yeas with the Senator from Texas [Mr.
Gramm] voting nay. Then, the distinguished Senator from Texas came
along last year and introduced his Balanced Budget Implementation Act
on February 16, 1993, at page S1635, and I read: ``Exclusion from
budget. Section 13301(a) of the Budget Enforcement Act of 1990 is
amended by adding at the end thereof the following: This subsection
shall apply to fiscal years beginning with fiscal year 2001.''
I put section 13301 into the Budget Enforcement Act because I did not
want to use the Social Security funds. We put it into statutory law by
almost a unanimous vote on this floor. There were only two dissenters,
but we had 98 others who supported it. But the Senator from Texas, in
his own budget there, is proposing it.
Madam President, it is against the law to cite the deficit using the
Social Security trust funds, but Members of Congress and the White
House violate it at every level. I cannot get them to enforce the law.
I do not want to go along with any constitutional amendment that
violates that law, because I am talking about truth in budgeting. That
is how we passed Gramm-Rudman-Hollings.
I could go on, Mr. President, but I want to yield. I will tell you,
this off-Broadway show generalities and percentages fails to tell the
American people the true facts about the fiscal crisis we face. I
challenge them, or anyone on this side of the aisle, or on any aisle in
any House, to give me a 1-year budget that only grows by 3 percent.
Republicans can continue to give us the gamesmanship and the
percentage arguments, but let us cut out this blame game. There is one
thing we cannot charge William Jefferson Clinton with and that is the
responsibility for the deficit. He came up with a plan to cut it $500
billion during his first year. The second year he has proposed
terminating 131 programs and consolidating 271 programs into 27. He has
not left much for ``President'' Dole, if he ever takes over this budget
in Government.
I do not believe in dismantling the Government. I think we live in
the real world and we have to come out here and quit dancing around the
fire. Let's end the argument and provide the American people with a 1-
year budget that has only a 3-percent increase and puts Government in
the black. They cannot do it without taxes.
I thank the Senator from Minnesota for yielding time, and I thank the
Senator from Utah.
Mr. WELLSTONE. Mr. President, the distinguished Senator from Utah may
want to speak.
Mr. HATCH. I notice the Senator from Minnesota is trying to get to an
appointment. So why do we not proceed. If I could ask some comity, I
know the Senator from Arkansas is waiting, too. Senator Specter would
like to speak. I will defer my remarks until later if we can go to
Senator Specter for a few minutes after the distinguished Senator from
Minnesota, and then to the distinguished Senator from Arkansas; is that
OK?
Mr. BUMPERS. Yes.
Mr. HATCH. I ask unanimous that be the case--first the Senator from
Minnesota and then the Senator from Pennsylvania and then the Senator
from Arkansas and perhaps myself.
The PRESIDING OFFICER (Mr. Grams). Without objection, it is so
ordered.
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