Congressional Record, Volume 141 Issue 27 (Friday, February 10, 1995)

[Congressional Record Volume 141, Number 27 (Friday, February 10, 1995)]
[Senate]
[Pages S2441-S2453]
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 joint resolution.

Pending:
Reid amendment No. 236, to protect the Social Security
system by excluding the receipts and outlays of Social
Security from balanced budget calculations.
Dole motion to refer H.J. Res. 1, Balanced Budget
Constitutional Amendment, to the Committee on the Budget,
with instructions.
Dole amendment No. 237, as a substitute to the instructions
(to instructions on the motion to refer H.J. Res. 1 to the
Committee on the Budget).
Dole amendment No. 238 (to amendment No. 237), of a
perfecting nature.

The PRESIDING OFFICER. Under the previous order, the Senator from
Oregon [Mr. Packwood] is recognized to speak for up to 60 minutes.
Mr. PACKWOOD. Mr. President, I had prepared over several days a
speech for this morning. But because of a news article this morning on
the death of Senator Fulbright the day before yesterday, I decided to
change my approach and have thrown away all of the comments I was going
to make. I will try to put this debate in a different light.
The Washington Post article on Senator Fulbright is well worth
reading, because he was a figure of great consequence here. As we are
debating this, another matter of great consequence, I look back at some
of the other events that have taken place in my career on this Senate
floor. I will not use Yogi Berra's famous expression, ``It's deja vu
all over again,'' because I think a more apt expression might be
Justice Holmes' comment about the law, but it really relates to all of
us. He said, ``The life of the law has not been logic. It has been
experience.''
I think, as we look at this balanced budget amendment, we are better
off to look at it in the light of experience rather than the light of
logic.
I mentioned Senator Fulbright because I recall in this Chamber the
most extraordinary event--certainly the most extraordinary debate, but
extraordinary event--that I have ever witnessed in my life.
It was an unusual situation. It was a closed session of the Senate on
the debate--this was in 1969--on the antiballistic missile system.
There were two extraordinary Senators who were
[[Page S2442]] going to carry the battle for and against that: Senator
Symington of Missouri, high up on the Armed Services Committee, was
unalterably opposed; Senator Jackson of Washington, high up on the
Armed Services Committee, was unalterably in support. These two
Senators had access to identical witnesses, identical information, and
came down on absolute opposite sides. The antiballistic missile was a
touchstone between the so-called hawks and doves.
We were then enmeshed heavily in Vietnam. This, I suppose, would have
been the equivalent of the star wars of its day. Could we invent a
missile that would go up in the air and shoot down other missiles? We
finally agreed, under a unanimous consent, as I recall, to either 6 or
8 hours of debate. And because it was going to be highly sensitive,
classified information, the Senate was cleared of all press. The
galleries were closed. The staff left. We had all 100 Senators on the
floor and the Vice President presiding.
We started the debate. Senator Symington, in opposition, spoke first.
He spoke for an hour without notes. The only references he had were
some charts behind him, showing the Russian missile system and its
progress. When he finished speaking, I thought to myself, that is the
end of the ABM, the antiballistic missile. No one can rebut that
argument.
Then, Senator Jackson arose and spoke for an hour, without notes. I
remember him turning to Stewart Symington and saying: ``Let me take you
just a few charts further than where my distinguished colleague from
Missouri left off.'' And Senator Jackson went on with his seven or
eight charts, taking us up to what was probably the SS-18 or SS-19 at
the time--a brilliant argument. And I thought when he finished, that is
it. We are going to have an antiballistic missile system. No one can
rebut that argument.
Then these two giants began to ask questions of each other. Like
great fencers, they parried and thrusted. They each knew the answers to
the questions they were asking. They hoped that somehow they could
pinion the other. And the reason the questions and answers were so
critical is everyone knew this was a close vote, just like this coming
vote on the balanced budget amendment. Everyone knew it was one or two
votes, one way or the other.
President Nixon desperately wanted the ABM because he needed it as a
bargaining chip with the Soviets to attempt to begin arms reduction.
Without it, he knew he could not begin. So when the two had finished
their speeches and had finished questioning each other, then the rest
of us had an opportunity to ask questions.
Again, you have to picture a full Chamber, 100 Senators, in closed
session. There was no one here but us: no press, no gallery, no staff.
And the third or fourth question was from Senator Fulbright to Senator
Jackson.
Senator Fulbright said, ``Would my good friend from Washington yield
to a question?''
``Yes,'' Senator Jackson said.
Senator Fulbright said, ``Has my good friend had a chance, yet, to
digest the remarks of the Russian Foreign Minister, Andrei Gromyko, in
Warsaw last week, in which the Soviet Foreign Minister said that the
Soviet Union wanted to reach a new era of detente--of cordiality with
the United States? And doesn't my friend from Washington think that
before we rush pellmell into this unproven missile system, we should
give just some little credence to the words of the Russian Foreign
Minister?''
Senator Jackson shot back, as if it had been a prompted question. He
pointed his finger at Senator Fulbright. I remember the gesture so
well. They sat no more than two or three desks apart.
He said, ``Let me call to memory for my friend from Arkansas'' and
then Scoop Jackson moved his hand like this and said to the--others,
who were not here at that time--``that morning, when President Kennedy,
in October 1962, asked Russian Foreign Minister Gromyko, who had been
at the United Nations the day before, to come to Washington to chat
with him. Andrei Gromyko flew down from New York and went to the White
House.''
Scoop Jackson related this scene: ``That day, the President asked
Gromyko, if there were any Russian missiles in Cuba.''
``No, came the answer.''
``Were there any Warsaw Pact country missiles in Cuba?''
``No.''
``Had any missiles been transported on Russian ships to Cuba?''
``No.''
``Were there any Russian troops in Cuba assembling missiles?''
``No.''
Then Scoop Jackson made this gesture. He reached down and said--
``Then the President opened the drawer of his desk, took out the
pictures from the U-2, threw them in front of Mr. Gromyko--showing the
missiles, showing the ships, pictures so good that you could see the
chevrons on the sleeves of the Russian troops in Cuba assembling the
missiles.''
Scoop Jackson said, ``Andrei Gromyko left that room an acknowledged
liar. If my friend from Arkansas wants to rest the security of this
country on the truthfulness and credibility of Andrei Gromyko, that's
his business. I would not ask a single American to sleep safely tonight
based upon the credibility of Andrei Gromyko.''
The vote that afternoon was 51 to 50, with the Vice President
breaking the tie.
And the answer to that question was the difference of one or two
votes.

So do we on occasion have the opportunity to participate in great
events where we can make a difference? We do. With that vote, President
Nixon was able to start negotiations with the Soviet Union, and it was
the first of our major negotiations leading to arms reductions over the
years.
I cite that moment because I think we are approaching a similar
moment again. This time on the balanced budget amendment and just one
or two of us may make an extraordinary difference for the future. I
have said, quoting Holmes, it is experience, not logic.
Let us take a look at some of our experiences from that time on. In
1972--this was an open debate, it is in the Record--we did not have
budget bills in those days. We thought we had a terrible budget
problem. The deficit was $15 billion. The budget was $245 billion. This
is in my lifetime in the Senate; 1972, barely 20 years ago, a budget
that was smaller than some of our deficits have been in the last few
years. But we thought this was so terrible that we were going to vote
on a bill to delegate to President Nixon the power to cut the budget
anyplace he wanted--once it exceeded $250 billion. You talk about a
line-item veto. This was not just a line-item veto. It was carte
blanche power to cut it wherever he wanted it. It had passed the House
with Wilbur Mills leading the fight for it. It came to this body. We
had an extraordinary debate. There is not even a baker's dozen of us
left now from that time. I am not going to read into the Record all of
the debate. Most of the people who were involved are now gone. But
interestingly there are still a few left that opposed that effort. I
was one that opposed it. I made what I thought was an extraordinary
speech on the history and the power of the purse, going into the
parliamentary debates and the fights with the kings' efforts over the
centuries to gain power over the purse. Did we want to give to the
President a power which the Parliament and the Congress had fought for
the better part of 500 years to gain for itself? I said no. And all of
us who talked and opted against that legislation said we the Congress
can do it. We have the courage in Congress to narrow a $15 billion
deficit. We do not need to give away the power to balance the budget.
It is particularly interesting to read the statements of one or two
of the Democratic Senators who were in opposition to the balanced
budget amendment, speaking in opposition to this particular bill in
1972, as to how we in Congress could do it. That is almost now 25 years
ago. The deficit was $15 billion.
In 1978--there have been several people who have made reference to
it--we had the Byrd amendment. This is not Robert Byrd of West
Virginia. This is Harry Byrd of Virginia. We passed it in 1978. It is
very simple. All it says is beginning with fiscal year 1981 the total
budget outlays of the Federal Government shall not exceed its receipts.
It is pretty easy to understand. It is a balanced budget statute.
Somehow we did
[[Page S2443]] not make it. We did not even come close.
Do you know what the problem with a statute is? Every time you pass
another statute later that is in conflict, the later one governs. So we
passed a later nonbinding law that says in 3 years we have to balance
the budget, and, then, this Byrd law is just irrelevant. We just
ignored it. I thought it was ridiculous. It was embarrassing to have it
on the books and ignore it year after year. So in essence, we repealed
it. Then we knew that we had to face the deficit ourselves. We had the
courage to do it. We in Congress could do it. Even then we were
starting to talk about constitutional amendments. But we had not quite
gotten to there yet.
Now I want to go to 1981, again this experience. It is amazing how
myths are perpetrated. ``The Reagan tax cuts are what led to the
deficits.'' How many times have we heard that? Again, I was here. I was
on the Finance Committee. But sometimes when you hear it long enough
your memory plays tricks on you, and you wonder if you remember as it
actually happened.
So I had Dr. Reischauer, the head of the CBO, check it for me. And
indeed my memory was right. From roughly January 1980 until July 1981,
a period of about 18 months, every budget projection we had from the
Congressional Budget Office, from the Office of Management and Budget,
from the Joint Committee on Taxation and private economists said we
were going to have by 1985 between a $150 billion and a $200 billion
surplus--not a deficit; a surplus.
So President Reagan proposed tax cuts in 1981. I want to emphasize
something. His Treasury Department came and made staging estimates.
They assumed that the tax cuts would parallel these projected $150 to
$200 billion in deficits. President Reagan correctly understood that if
we did not give this money back to the taxpayers, we would spend it; no
question about that. Do not worry. We have plenty of experience on
that. But they were to parallel the projected surpluses.
Well then, did we ever become generous. The House Ways and Means
Committee took the President's bill and added to it more tax cuts. Then
it came to the Senate Finance Committee. We added tax cuts to the House
version. We even gave real estate 15 years for depreciation. It is no
wonder that we had a building boom--built on taxes, not on economics--
from 1981 on--when you could depreciate real property over 15 years.
You could not lose. You did not even have to rent the building. In
fact, many of them were not rented. That is what happened. But that is
not the point. They were not being built to be rented. They were built
for tax losses. We piled everything on we could. We went to conference,
and we took the most expensive provisions of both bills and sent it
down to the President. He signed it.
What the economists did not foresee in those 18 months were three
things: First, the rapid decline in inflation. This was before we had,
indexed, the Tax Code. We had run 4 years of inflation of 13, 14, or 15
percent. We could presume that before we indexed the Tax Code we would
get about 1.7 percent increase in revenues for each 1 percent of
inflation.
So if you could presume 10 or 11 or 12 percent inflation compounded
from 1981 to 1985, it is no wonder we were projecting surpluses. But we
did not foresee that inflation would absolutely nosedive, nor did we
foresee that recession. It wasn't anybody's fault. It was not President
Reagan's fault. It was a rosy scenario. This was everybody's
projection. When the recession comes down, revenues go down, expenses
go up.
So we had an immense shortfall by 1982. Just to corroborate this, so
that those that believe in the myth do not think that I do not know of
what I speak, I want to insert two letters from Dr. Reischauer in the
Record, one of November 8, 1994, and one of December 15, 1994, and then
just a portion of his testimony, just 2 weeks ago on January 26, 1995,
before the Finance Committee. I will quote just one sentence when he is
referring to this period.

It is reasonable then to ascribe nearly all of the
underestimate of deficits during that period to errors in
economic forecasts.

Mr. President, I ask unanimous consent that those three documents be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

U.S. Congress,

Congressional Budget Office,

Washington, DC, November 8, 1994.
Hon. Bob Packwood,
U.S. Senate,
Washington, DC.
Dear Senator: This is in response to your request of
November 3, asking CBO to provide additional information
about budget projections done almost 15 years ago, before
enactment of the Economic Recovery Tax Act [ERTA] of 1981. As
you recognize, many changes in budget policy and presentation
hamper our ability to answer questions about projections that
are so widely separated in time. Nevertheless, we will answer
the questions posed in your letter as best we can.
Briefly, before the enactment of ERTA, CBO's budget reports
routinely warned that a continuation of current tax and
spending laws would lead to a surplus that would act as a
drag on the economy. The late 1970s and early 1980s were a
period of high inflation. Key features of the individual
income-tax--brackets, personal exemptions, and standard
deductions--were not indexed for inflation, even though
inflation tended to push taxpayers into progressively higher
tax brackets. In response, policymakers typically enacted ad
hoc tax reductions every few years to keep the revenue-to-GDP
ratio from spiraling. Examples are the tax cuts enacted in
1964, 1969, 1971, 1975, 1976, 1977, and 1978. On the spending
side of the budget, many entitlement programs (such as Social
Security) were automatically indexed to inflation, but
discretionary programs had no such automatic feature and
relied on the annual appropriation process for funding (if
any) to compensate them for inflation.
In doing its pre-ERTA projections, then, CBO faced a
dilemma: literal projections of current-law revenues and
spending implied a fiscal drag that was viewed as
incompatible with long-term growth. Therefore, CBO's economic
projections assumed changes in fiscal policy sufficient to
offset this effect and were not predicated on unchanged laws.
The tax cuts enacted in 1981 and subsequent economic
developments, of course, erased projected surpluses from
CBO's reports.
CBO February 1980 Projections

Illustrating this dilemma, in its February 1980 report
Five-Year Budget Projections: Fiscal Years 1981-85, CBO
projected that the revenues collected under current tax law
would climb from about 21 percent of GNP in 1981 to 24
percent by 1985. Simple arithmetic pointed to enormous
surpluses in the outyears. For example, current-law revenues
exceeded outlays by a projected $98 billion for 1984 and $178
billion for 1985.
CBO purposely did not, however, publish these surpluses,
which it called the ``budget margin.'' The reasons was one of
internal consistency. CBO's assumptions of economic
performance beyond the two-year forecasting horizon were
based on an analysis of historical trends and the economy's
long-run growth potential. Thus, the February 1980 report
assumed that the economy would grow at a real rate of 3.8
percent a year in 1982 through 1985. Such growth was
incompatible with a rising revenue-to-GDP ratio; in fact, the
report stated that ``fiscal policy changes that would use up
most of the burden margin would be required if the economic
growth path were to be achieved.'' The economic assumptions
assumed approximately budget balance in 1983 through 1985 but
did not assume specific tax cuts or changes in spending.

early 1981 projections

The tax environment changed in 1981. By mid-1981, the
Congress and the Administration had agreed on a large multi-
year tax cut. The budget resolution prescribing the
appropriate size of the cuts was adopted in May, and ERTA
itself was enacted in August. Indexing for inflation was not
a feature of the Administration's tax proposal submitted in
March 1981, but was a part of ERTA. It did not take effect
until 1985, after an intervening series of three cuts in
individual income taxes effective at the start of calender
years 1982, 1983, and 1984.
Economic assumptions. CBO presented its baseline
projections in 1981 using two different sets of economic
assumptions--those contained in the budget resolution
(resembling the Reagan Administration's assumptions), and an
alternative set developed independently by CBO. For the
reasons described above, economic forecasts require an
assumption about fiscal policy; the CBO assumptions
explicitly assumed adoption of a package of tax cuts and
spending cuts like those advocated by the Administration.
Budget projections. Without the tax cuts, long-run
surpluses still appeared likely from the vantage point of
early 1981. For example, using the economic assumptions
dictated by the budget resolution, OMB envisioned a surplus
of $76 billion in 1984 and $209 billion in 1986 if no changes
in tax law or spending policy were adopted (Baseline Budget
Projections: Fiscal Years 1982-1986, July 1981). Those
economic assumptions were rosier than the set developed
independently by CBO. Budget projections based on CBO's
economic assumptions, which were more fully documented in a
March 1981 report (An Analysis of President Reagan's Budget
Revisions), foresaw smaller surpluses amounting to $23
billion in 1984 and $148 billion in 1986.
The budget resolution was expected to generate a bare $1
billion surplus in 1984, under
[[Page S2444]] the economic assumptions contained therein.
That would presumably imply a deficit of roughly $50 billion
under CBO's less rosy assumptions.
In sum, given the best information available at the time,
the Congress and the Administration reasonably thought that
surpluses loomed under current law. Analysts differed,
however, on whether following the policies of the first
budget resolution would put the government on a balanced-
budget footing or would lead to deficits.

Post-1981 Deterioration

Economic developments led to far bigger deficits than even
relatively pessimistic participants in the 1981 debate
envisioned. As you requested, we have prepared a comparison
of the economic assumptions contained in the fiscal year 1982
budget resolution with the actual outcomes (see attached
Table 1). For completeness, we also include a comparison with
the CBO alternative forecast published in March 1981.
Revisions by the Department of Commerce to economic data
(such as the shift in the base year for measuring real
growth) prevent the actuals from being perfectly comparable
to the projections, but do not distort the overall story.
Compared with the budget resolution, the most dramatic
deviations in economic performance were sharply lower real
growth and sharply lower inflation. The economy plunged into
recession, registered negative growth in 1982, and then
recovered. Even so, real growth over the 1981-1986 period
(including recession and recovery years) averaged 2.6
percent, versus the budget resolution's assumption of 4
percent. Inflation was sharply lower than in the budget
resolution, averaging 4.9 percent over the 1981-1986 period
(when measured by the CPI) versus the 6.6 percent assumed in
the resolution. These two factors--lower real growth and
lower inflation--caused nominal GNP to be about $700 billion
smaller by 1986 than assumed in the resolution, with a
corresponding drop in the tax base. Interest rates, however,
did not
behave very differently than assumed in the resolution--
implying that real interest rates (nominal rates adjusted
for inflation) were much higher than foreseen.
In one crucial respect, the economy performed closer to
CBO's early-1981 alternative forecast. Although CBO did not
foresee the recession, it did envision average real growth of
2.8 percent over the 1981-1986 period, compared with an
actual rate of 2.6 percent. CBO overestimated inflation, and
underestimated real interest rates (as proxied by nominal
Treasury bill rates minus inflation).
The post-1981 deterioration in the budget picture cannot be
allocated to individual economic variables--real growth,
inflation, and interest rates--as you requested. But it is
clear that economic factors were mostly responsible, with so-
called technical factors running a distant second. In 1986,
the deficit was more than $400 billion greater than in the
CBO July 1981 baseline projections (see attached Table 2).
Policy changes contributed slightly over $100 billion; this
figure includes not just the impact of ERTA and other changes
adopted in 1981 but also the effects of later changes, such
as the Tax Equity and Fiscal Responsibility Act and the 1983
Social Security Amendments, enacted to curb the burgeoning
deficit. Economic and technical changes contributed the
remaining $300 billion. The deterioration was overwhelmingly
in the areas of revenues and net interest and it is
reasonable to ascribe nearly all of it to errors in the
economic forecast.
Of course, the indexation of the tax system contributed
very little to the deterioration in this five-year period,
because indexing did not take effect unit 1985. By then, CBO
estimated that repealing it would generate a mere $5 billion
in fiscal year 1985 and less than $15 billion in 1986. Since
1985, indexation--the annual adjustment to tax brackets and
other features of the individual income tax code--has
operated, other things being equal, to keep such taxes
roughly constant as a share of GDP.
I hope that this information is helpful to you. If you have
additional questions, please do not hesitate to contact me.
The principal CBO staff contact is Kathy Ruffing (X62880);
more detailed questions about revenues can be answered by
Rosemary Marcuss (X62680) and inquiries about CBO's economic
forecast by Robert Dennis (X627750).
Sincerely,
Robert D. Reischauer,
Director.
____

TABLE 1.--ECONOMIC ASSUMPTIONS IN THE FIRST BUDGET RESOLUTION FOR FISCAL YEAR 1982 AND ACTUAL OUTCOMES
[By calendar year]
----------------------------------------------------------------------------------------------------------------
Nov. 8, 1994 1980 1981 1982 1983 1984 1985 1986
----------------------------------------------------------------------------------------------------------------

(6) First Budget
Resolution for
1982\1\

Nominal GNP (dollars) 2,626 2,941 3,323 3,734 4,135 4,641 4,983
Real GNP growth
(percentage change). -0.2 2.0 4.1 5.0 4.5 4.2 4.2
Consumer price index
(percentage change). 13.5 11.0 8.3 6.2 5.5 4.7 4.2
Unemployment rate.... 7.1 7.5 7.2 6.6 6.4 5.9 5.6
3-month Treasury bill
rate................ 11.4 13.5 10.5 9.4 8.2 7.0 6.0

(6) CBO Alternative
Assumptions of March
1981\2\

Nominal GNP
(dollars)\3\........ 2,626 2,936 3,285 3,663 4,081 4,558 5,055
Real GNP growth
(percentage change). -0.2 1.3 2.5 2.7 3.0 3.8 3.7
Consumer price index
(percentage change). 13.6 11.3 9.6 8.9 8.2 7.7 7.1
Unemployment rate.... 7.1 7.8 7.9 7.8 7.7 7.5 7.2
3-month Treasury bill
rate................ 11.4 12.6 13.7 11.5 10.2 9.7 9.3

(6) Actual\4\

Nominal GDP (dollars) 2,708 3,031 3,150 3,405 3,777 4,039 4,269
Real GDP growth
(percentage change). -0.6 1.8 -2.2 3.9 6.2 3.2 2.9
Consumer price index
(percentage change). 13.6 10.3 6.2 3.2 4.3 3.6 1.9
Unemployment rate.... 7.1 7.6 9.7 9.6 7.5 7.2 7.0
3-month Treasury bill
rate................ 11.4 14.0 10.6 8.6 9.5 7.5 6.0
----------------------------------------------------------------------------------------------------------------
\1\The budget resolution contained assumptions through 1984; assumptions for 1985 and 1986 are a CBO
extrapolation. They were published in Baseline Budget Projections: Fiscal Years 1982-1986 (July 1981).
\2\CBO's alternative assumptions assumed fiscal policy changes comparable to those contained in President
Reagan's March 1981 budget revisions. These alternative projections were published in An Analysis of President
Reagan's Budget Revisions for Fiscal Year 1982 (March 1981) and in Baseline Budget Projections: Fiscal Years
1982-1986 (July 1981).
\3\Nominal GNP was not published; these levels are estimated using the published growth rates.
\4\The actuals are not strictly comparable to the 1981 projections. They reflect the shift in emphasis from GNP
to GDP and the redefinition of the base year used in measuring real economic growth (from 1972 at the time of
the 1981 projections to 1987 for the most recent actuals). These changes, however, do not seriously distort
the comparison.

TABLE 7.--CHANGES IN BUDGET OUTLOOK, 1982-86, FROM CBO JULY 1981
BASELINE
------------------------------------------------------------------------
Nov. 8, 1994 1982 1983 1984 1985 1986
------------------------------------------------------------------------

(4) CBO July 1981
Baseline\1\

Revenue.................... 709 810 920 1033 1159
============================================
Outlays:
Net Interest........... 72 70 67 62 59
Other\2\............... 687 742 796 853 911
--------------------------------------------
Total................ 759 812 863 915 970
Deficit or surplus (-)..... 50 2 -56 -118 -189
============================================

(4) Changes

Policy changes:
Revenues............... -43 -75 -100 -117 -133
Outlays:
Net interest....... 0 1 6 16 29
Other\3\........... -40 -39 -36 -15 -51
--------------------------------------------
Total............ -40 -38 -30 1 -23
Deficit.................... 3 37 70 118 110
============================================
Economic and technical
changes:
Revenues............... -48 -135 -153 -182 -257
============================================
Outlays:
Net interest....... 13 19 38 51 48
Other\2\........... 14 16 -20 -21 -5
--------------------------------------------
Total............ 26 35 19 30 43
Deficit.................... 75 169 171 212 300
============================================
Total changes:
Revenues............... -91 -210 -253 -299 -390
============================================
Outlays:
Net interest....... 13 20 44 67 77
Other\1\........... -26 -24 -56 -36 -57
--------------------------------------------
Total............ -13 -4 -11 32 20
Deficit.................... 78 206 242 331 410
============================================

(4) Actual Outcomes

Revenues................... 618 601 666 734 769
--------------------------------------------
Outlays:
Net interest........... 85 90 111 130 136
Other\1\............... 661 719 741 817 854
--------------------------------------------
Total................ 746 808 852 946 990
Deficit.................... 128 208 185 212 221
------------------------------------------------------------------------
\1\The July 1981 baseline was based on the economic assumptions of the
first concurrent resolution, not those of CBO.
\2\Adjusted by approximately $20 billion a year in formerly off-budget
outlays (chiefly lending by the Federal Financing Bank).
\3\Includes a one-time cost of about $12 billion for the purchase of
maturing subsidized housing notes in fiscal year 1985.

Source: CBO memorandum, ``Changes in Budgetary Policies since January
1981'' (May 30, 1986), updated for fiscal year 1985 actuals.

U.S. Congress,

Congressional Budget Office,

Washington, DC, December 15, 1994.
Hon. Bob Packwood,
U.S. Senate,
Washington, DC.
Dear Senator: This responds to your request for additional
information about budget projections done before the 1981 tax
cuts were enacted. The conclusions that follow were discussed
more extensively in my letter to you of November 8, 1994.
Before enactment of the 1981 tax cuts, CBO's budget reports
routinely projected that a continuation of current tax and
spending laws would lead to large budget surpluses. CBO also
warned that such levels of taxes and spending would act as a
drag on the economy.
[[Page S2445]] The primary reason for this outlook was that
high inflation was expected to drive up revenues
dramatically. Because key features of the federal individual
income tax were not automatically adjusted for inflation,
periods of high inflation--like the late 1970s and early
1980s--pushed individuals into higher tax rate brackets and
caused revenues to increase rapidly. In response,
policymakers cut taxes every few years on an ad hoc basis--
five times in the 1970s alone.
Illustrating this dilemma, in its February 1980 report
Five-Year Budget Projections: Fiscal Years 1981-1985, CBO
projected that revenues collected under current tax law would
climb from about 21 percent of GNP in 1981 to 24 percent by
1985. Simple arithmetic pointed to enormous surpluses in the
outyears. For example, current-law revenues exceeded outlays
by a projected $98 billion for 1984 and $178 billion for
1985. Similarly, in its July 1981 report Baseline Budget
Projections: Fiscal Years 1982-1986, CBO projected budget
surpluses of between $148 billion and $209 billion for 1986,
depending on the economic assumptions used.
In the same report, CBO estimated that the 1981 tax cuts
and other policies that were called for in the May 1981
budget resolution would generate a balanced budget or a small
deficit (roughly $50 billion) by 1984--again, depending on
the economic assumptions employed.
This was the budget background leading to the 1981 tax
cuts. Given the best information available at that time, the
Congress and the Administration reasonably thought that
significant budget surpluses loomed under current law.
Analysts differed, however, on whether the 1981 tax cuts
would put the government on a balanced-budget footing or
would lead to small budget deficits.
As it turned out, the federal government ran budget
deficits of about $200 billion a year from 1983 through 1986.
Economic performance was poorer than envisioned in
projections of either CBO or the Administration at the time
of the 1981 tax bill. The economy plunged into recession,
registered negative growth in 1982, and then recovered. The
rate of inflation dropped sharply. By 1986 nominal GNP was
about $700 billion smaller than assumed in 1981, which caused
a corresponding drop in tax revenues. And interest rates
remained high despite the plunge in inflation. It is
reasonable to ascribe nearly all of the underestimate of
deficits during this period to errors in economic forecasts.
Sincerely,
Robert D. Reischauer,
Director.
____

Statement of Robert D. Reischauer, Director, Congressional Budget
Office, on the Economic and Budget Outlook: Fiscal Years 1996-2000,
before the Committee on Finance, United States Senate, January 26, 1995

the budget outlook differs from the outlook in 1980 and 1981

At the request of Chairman Packwood, CBO has also examined
how the current outlook compares with the economic forecast
and budget projects CBO made before the Economic Recovery Tax
Act of 1981 was enacted. The many changes in budget policy
and presentation made since 1981 limit our ability to provide
a detailed analysis of the differences between projections
that are so widely separated in time. Nevertheless, we can
explain the primary reasons for the fundamental differences
between the outlook now and the outlook then.
Unlike the current Economic and Budget Outlook, CBO's
budget reports issued before enactment of 1981 tax cuts
routinely projected that a continuation of current tax and
spending laws would lead to large budget surpluses. CBO also
warned that such levels of taxes and spending would act as a
drug on the economy.
The primary reason for those projections was that high
inflation was expected to drive up revenues dramatically.
Because key features of the Federal individual income tax
were not automatically adjusted for inflation, periods of
higher inflation--such as the late 1970's and early 1980's--
pushed individuals into higher tax rate brackets and caused
revenues to increase rapidly. In response, policymakers cut
taxes every few years on an ad hoc basis--five times in the
1970s, for instance.
Illustrating this dilemma, in its February 1980 report
Five-Year Budget Projections: Fiscal Years 1981-1985, CBO
projected that revenues collected under current tax law would
climb from about 21 percent of GNP in 1981 to 24 percent by
1985. Simple arithmetic pointed to enormous surpluses in the
out-years. For example, current-law revenues exceeded outlays
by a projected $98 billion for 1984 and $178 billion for
1985. Similarly, in its July 1981 report Baseline Budget
Projections: Fiscal Years 1982-1986, CBO projected budget
surpluses of between $148 billion and $209 billion for 1986,
depending on the economic assumptions used.
In the same report, CBO estimated that the 1981 tax cuts
and other policies that were called for in the May 1981
budget resolution would generate a balanced budget or a small
deficit of roughly $50 billion by 1984--again, depending on
the economic assumptions employed.
That budget background led to the 1981 tax cuts. Given the
best information available at that time, the Congress and the
Administration reasonably thought that significant budget
surpluses loomed under current law. Analysts differed,
however, on whether the 1981 tax cuts would put the
government on a balanced-budget footing or would lead to
small budget deficits.
As it turned out, the federal government ran budget
deficits of about $200 billion a year from 1983 through 1986.
Economic performance was poorer than envisioned in
projections of either CBO or the Administration at the time
of the 1981 tax bill. The economy plunged into recession,
registered negative growth in 1982, and then recovered. The
rate of inflation dropped sharply. By 1986, nominal gross
national product was about $700 billion smaller than assumed
in 1981, which caused a corresponding drop in tax revenues.
Furthermore, interest rates remained high despite the plunge
in inflation. It is reasonable, then, to ascribe nearly all
of the underestimate of deficits during that period to errors
in economic forecasts.

illustrative path to a balanced budget

A constitutional amendment requiring a balanced federal
budget will be considered during the early days of the 104th
Congress. If the Congress adopts such an amendment this year
and three-quarters of the state legislatures ratify it over
the next few years, the requirement could apply to the budget
for fiscal year 2002. If the budget is to be balanced by
2002, it is important that the Congress and the President
begin immediately to put into effect policies that will
achieve that goal. According to CBO's latest projections of a
baseline that adjusts discretionary spending for inflation
after 1998, some combination of spending cuts and tax
increases totaling $322 billion in 2002 would be needed to
eliminate the deficit in that year. The amounts of deficit
reduction called for in years preceding 2002 depend on both
the exact policies adopted and when the process is begun.

Mr. PACKWOOD. It was not President Reagan's fault, not really our
fault. We were just wrong. The only reason I say that is because now we
are not facing the same situation we were facing on projections in
1981. Now we are projecting $200 billion to $400 billion deficits as
far as the eye can see. Could we be wrong? I suppose so. We were wrong
in 1981. Should we base the budgeting of this Congress on the
assumption that we are wrong, we are not going to have these deficits?
I do not think so. I do not think so.
Let us go on to 1982. We have the recession. So a number of people
say to President Reagan, we are going to have to increase the taxes to
cut this deficit. He was not wild about that. To the best of my
knowledge, President Reagan is perhaps the only person that ever lived
who actually paid 91 percent in income taxes. He hit it in Hollywood
when the rates were 91 percent, and I do not think he had to count. I
think he remembered 91 percent. He was reluctant to go back to a tax
increase. We promised him--we the Congress--if he will give us $1 in
real tax increases, we will give him $3 in real spending cuts. Mr.
President, it is not logic. It is experience. He did not get a dime of
those spending cuts. We did not pass them. All he got was a tax
increase.
None of us should start down that road again of promises in this
Congress. I am not here attacking anybody as being immoral, malevolent,
or anything else. We should not accept promises that we do not need a
balanced budget amendment and we will pass spending cuts. We have not
done it, and we will not do it. Anybody that was here in 1982 and
bought that charade maybe can excuse themselves the first time.
Remember the old adage, ``Fool me once, shame on you; fool me twice,
shame on me.'' That was 1982. That is when we first had the balanced
budget amendment vote in this Senate. Up until 1981--or maybe 1982, I
cannot remember --I had been opposed to a balanced budget amendment. I
believed we could do it. But I realized after 1981 and 1982--and
especially 1982--there was never any hope that we would have the
courage, and unless we were compelled to do what every city, county,
and State has to do, we would never, ever, ever balance the budget. So
I voted for the balanced budget amendment in 1982.
Now, let us go forward a bit again, to 1985. I feel privileged to
have been a part of the 1985 budget bill. Bob Dole, in one of the most
extraordinary acts of leadership I have ever seen, from a Republican or
a Democrat, managed to cobble together the Republicans--because we only
got one Democratic vote--on a budget bill that had a 1-year freeze on
Social Security COLA's. We were not eliminating them. We were not
cutting them back to the Consumer Price Index. A 1-year freeze. It
passed by one vote. It passed because we wheeled Pete Wilson into this
[[Page S2446]] Chamber--now the Governor of California, then a
Senator--who had an appendectomy just 24 hours before and could not
walk. We wheeled him in and he voted from a gurney right over there.
The controversial part of it was this 1-year freeze on the COLA's on
Social Security.
Unfortunately, here I have to be critical of President Reagan. Before
it got to the House, he said he would not accept it. That finished it;
it was over. The Republicans had to pay for it in 1986. We had already
paid for it once, politically, in 1982. Budget Director Stockman, at
that time, suggested a modest change in the amount of money you could
get in your Social Security benefits if you retired at 62. For that
suggestion, we never even got to the place of seriously considering it.
For that suggestion, he got unshirted hell. The Democrats used it in
1982 to further their campaign, and they clobbered us.
I remember a cartoon afterward--Tip O'Neill was Speaker at that
time--that showed Tip O'Neill and he has his mother there, and it says
``Social Security'' on her. He is dropping her off at the nursing home,
saying, ``Good to see you, Ma. I will call you in 2 years when we need
you once more.'' From that day on, the Republicans have been frightened
of ever talking about Social Security.
The fright is on both sides. You will recall the 1984 Democratic
convention in San Francisco, where Fritz Mondale said, ``The President
has a secret plan to raise taxes. He will not tell you, but I am
courageous enough.'' And President Reagan says, ``There he goes
again.'' For the rest of that campaign, Fritz Mondale was on the
defensive about tax increases. So we are all skittish.
It is understandable why we are politically skittish. None of us,
Republicans or Democrats, or the President, want to take the step
forward that we all know needs to be done. The most freshman Member of
this Congress, who has never been in politics before, knows what the
problem is. This argument about term limits and that you have to have
8, or 9, or 10 terms to understand the problems--no, no, no. You do not
have to be here 10 minutes to understand the problem. Maybe you have to
be here 8, 9, or 10 terms to have the courage, when you finally feel
safe enough to face the problem and say, let us solve it. We know what
the problem is.
Well, where are we now? The President has given up. He, in essence,
has thrown in the towel. Last year, when he proposed his health bill,
he had $475 billion in Medicare and Medicaid restraints. Someone called
them ``cuts'' because they were not lower than we were, but over the
period of 5 years, $475 billion in Medicare and Medicaid restraints. He
has no health care in the budget this year and has no restraints of any
consequence in Medicare or Medicaid--as if to sort of say it is
Congress' problem, or maybe the Republicans' problem, to come up with a
budget.
You know, it is funny. It is all right to have those $475 billion in
reductions if we were going to spend them, but it is not all right to
have them if we are going to save them and apply them to the deficit.
At least that is what the President is saying.
Then the critics say, well, we cannot vote for this until we know the
direction we are going to go in. I have heard the Senator from Ohio,
the Senator from Michigan, the Senator from South Dakota say that,
until we know specifically what the roadmap is, we cannot vote for
this. I would defy any Governor in this country right now --and nearly
all of them operate under a balanced budget requirement--to tell me how
they are going to balance their budget in 2002. I bet you they could
not. They will have to raise the sales tax, or cut welfare, cut the
highway fund and say we can use the State highway funds for the State.
They know they have to do it and will do it, and they will do it
because they have to do it. And we will do it if we have to do it. But
if we use the excuse that because we do not have a roadmap now as to
how it is going to be done, we will not vote for this amendment. That
is a patsy's way out. That means we do not want to face the problem.
This is an excuse to avoid it.
But if they want suggestions, I will give them some. My favorite one
that everybody comes up with is that we will tax the rich--however you
define who is rich. If we just tax the rich, that will take care of our
problem. Well, I had the Joint Tax Committee do a chart for me, an
estimate and a letter of how much money we could get. I asked how much
money could we confiscate from those earning over $200,000? We will
have a 100 percent rate of taxation. We will take it all.
They said they could not quite answer that question. They had never
run that on their computers, but they could tell me how much untaxed
income there was with people above $200,000. So, they sent me the
letter. And this year, if we were to tax all of the rest of the income
that is not now taxed above $200,000, 100 percent of it, we would get
about $182 billion,--billion, with a ``b''--not enough to narrow our
deficit.
My hunch is we would never get it again, because I do not think
anybody would ever, ever again make over $200,000 if they had to give
it all to the Government.
And the Joint Committee had a wonderful paragraph in this letter. I
will just read the paragraph and then put the whole letter in. This is
the effect of a 100 percent rate of taxation. These effects would be
extraordinary.

If the 100 percent tax rates were to be in effect for a
substantial period of time. . . then in our judgment there
would be a substantial reduction in income-producing activity
in the economy and, thus, a significant reduction in tax
receipts to the Federal Government.

I do not know why that should surprise anybody. But so much for the
goose and the golden egg. We can get it once, then that deficit problem
is right back with us again.
Mr. President, I ask unanimous consent that the text of the letter
from the Joint Committee on Taxation be printed in the Record.
There being no objection, the text of the letter was ordered to be
printed in the Record, as follows:

Congress of the United States,

Joint Committee on Taxation,

Washington, DC, October 12, 1994.
Hon. Bob Packwood,
U.S. Senate,
Washington, DC.
Dear Senator Packwood: This is in response to your letter
of September 30, 1994, for revenue estimates of imposing a
100-percent tax on all income over $100,000, and
alternatively, income over $200,000. We are unable to provide
a revenue estimate for these options for the reasons given
below. However, the following table, which gives the amount
of taxable income above those levels reduced by the current
Federal income tax attributable to such income shows the
amount of tax that could be raised by such change assuming no
behavioral or macroeconomic responses.

------------------------------------------------------------------------
Item 1995 1996 1997 1998 1999 1999-95
------------------------------------------------------------------------
After tax income in
excess of:
100,000........... 289.1 314.4 342.8 370.1 399.6 1,716.1
200,000........... 182.3 195.5 212.6 227.0 243.5 1,061.9
------------------------------------------------------------------------

As mentioned above, we are unable to provide a complete
analysis of the proposal outlined. Our estimating models and
methodology incorporate behavioral effects based on available
empirical evidence to produce reliable estimates of the
effects of tax changes in general. Even when tax rate changes
are relatively small, our analyses include significant
changes in behavior to account for portfolio shifts and the
timing of income realizations. At a proposed tax rate of 100
percent, however, we lack historical experience on which to
base an estimate of the significant behavioral effects. One
may speculate that these effects would be extraordinary. If
the 100-percent tax rate were to be in effect for a
substantial period of time, so that taxpayers would have no
rational hope of avoiding or evading the 100-percent tax in
the outyears by deferring income to lower rate years or using
other tax avoidance or deferral plans, then in our judgment
there would be a substantial reduction in income-producing
activity in the economy and, thus, a significant reduction in
tax receipts to the Federal government.
I hope this information is helpful to you. If we can be of
further assistance, please let me know.
Sincerely,
John L. Buckley.

Mr. PACKWOOD. So, let us go on down some other suggestions.
Restrain spending. We all get this from home. If we just spent no
more next year than we spend now, in 3 years we will balance the
budget. If we spend no more than we spend now, we will balance the
budget.
I will give you some problems. You can decide what you want to do
with them.
[[Page S2447]] Let us just take Social Security. Let us assume Social
Security now spends $1,000. You have 10 recipients and they each get
$100 apiece; $1,000, that is all we spend on Social Security.
And let us say there is 10 percent inflation. Under the present law,
all of those recipients would get a 10-percent increase. They would all
get $110, and we would spend $1,100 on Social Security. But we said we
are not going to spend any more than we spend now. Therefore, do they
all get just $100 and their purchasing power declines a bit?
Or I will give you another scenario. We are only going to spend
$1,000. There are 10 recipients on Social Security. But the population
is aging. Let us say next year one more person becomes eligible. Now we
have 11, not 10. But we are only going to spend $1,000. Do they all get
about $90 instead of the 10 that got $100? When you pose this to
people, they say, ``Well, we did not think about that. Maybe we can
give Social Security recipients their cost-of-living increase and still
hold all others.''
But now they do not expect to hold all other things this year. You
are going to have to spend less this year. Do you know what you get?
``Well, we have to spend more for defense. Don't spend any more than we
spent last year. Increase defense, increase education, increase health,
but don't spend any more than you spent last year and take it out of
somebody else. Don't take it out of me.''
I was intrigued with a statement in the paper, if quoted accurately,
by the American Medical Association the day before yesterday. I like
the American Medical Association, but here is the statement.

AMA leaders said at a news conference here that Medicare
needs a major restructuring to save it from bankruptcy, but
insisted that should not be achieved by slashing doctors' or
other health care providers' fees. The American Hospital
Association and others that provide health services have
taken a similar position and a coalition is forming to fight
such cuts.

Mr. President, there are only two expenses to Medicare. One is we
reimburse the patient on occasion and the other is we pay the doctors
and hospitals and labs and what not. That is all there is. Those who
provide the services say, ``Not us,'' and the beneficiaries say, ``Not
us, but cut spending.''
Well, if you do not cut those who provide the medical services and if
you do not cut those who get the medical services, where do you cut the
spending? You do not. These are the things we want to gloss over.
The same problem exists if, instead of cutting spending, you say,
``Well, let's do it at the Consumer Price Index minus 1 percent or
minus 2 percent.'' You have these same variations all the way through.
I am not saying it cannot be done, but you have to realize that while
Social Security only goes up with the cost of living each year, plus
any new members that come on--it is not just the cost of living; you
have more people, more expenses--but Medicaid and Medicare go up
anywhere from 7 or 8 percent, at a minimum, to 15 to 16 percent a
year--a year.
Do you know what would happen if we take a 15-percent increase and
compound it over 5 years? You have more than doubled your spending.
So we say, ``Well, still spend the same we spent last year. Spend
what we spent last year plus inflation. It is doable and, if we are
forced to do it, we will do it and we should do it.''
And everybody says the problems are the entitlements. That is a term
we use here in Washington. It is not a term any ordinary American uses.
Entitlement means nothing more than a Government program that is
passed and put into law and we never have to appropriate the money for
it. Again, you get it automatically, unless we change the law. Social
Security is the one that is best known. Medicare is one. Unless we
change the law--positively vote to change it, the President has to sign
it, or if he vetoes it we have to override the veto--this law goes on
forever and it spends money forever.
They say, ``Take it out of the entitlements.'' We have about 410
entitlement programs in this country--410--that automatically spend
money, so surely we can find some money in entitlements.
So I took a look at some of the entitlements. I have some where we
can save some money.
The Canal Zone Biological Area gets $150,000 a year. This is an
island in the Panama Canal Zone. The money comes out of the Department
of the Interior, administered by the Smithsonian, but it is an
entitlement. Well, there is one we could save. There is 150,000 bucks.
The John C. Stennis Center for Public Service Development trust fund.
Now this is a big one--$680,000. This program trains State and local
public servants to become more efficient. This program ought to be
applied to the Federal Government, not the State and local governments.
It also ``increases awareness about the importance of public service.''
We all revere John Stennis and we would hate to do anything to demean
his memory, but this is $680,000 in spending.
Now, another: The Pershing Hall revolving fund. General Pershing, of
course, was the commander of our troops in Europe in World War I.
Pershing Hall is a Department of Veterans Affairs building in Paris,
France. It does not get many tourists. It is currently being subleased
to a hotel firm which is gutting the building and will turn it into a
hotel. A hotel firm is going to gut the building, and turn it into a
hotel. But it is an entitlement of $114,000 in fiscal year 1996.
Let us take the last one. Payment of Government losses in shipment
fund. This is a permanent, indefinite appropriation in the Treasury
Department. The fund would cover losses incurred by the Postal Service
or any Federal agency in shipping coins, currency, and savings bonds--
$500,000.
I have added up these four, and I think they come to a couple million
total for these four entitlements. I said we have 410 entitlements.
These are four inexpensive ones. But the bottom 400 of them
altogether--there are about 410--the bottom 400, in terms of expense,
cost about plus or minus $50 billion. Fifty-billion dollars is big
money, but it is for 400 of the entitlements--$50 billion.
The top four entitlements, plus interest--and the top three are
Medicare, Medicaid, and Social Security, and then fourth is other
Government retirements, military, civilian retirements--just those
four, plus interest, are $900 billion a year. You know interest is the
ultimate entitlement. We have to pay it or we can be sued. The entire
cost of the bottom 400, the $50 billion, is less than the amount that
these four, plus interest, goes up a year.
You want to get rid of the 400? Go ahead. Save the $50 billion and
the deficit, then, instead of being $200 billion will be $150 billion.
The problem is, we are all afraid to approach these big entitlements.
Now what is the old expression? If you want to go duck hunting, you
go where the ducks are. The ducks are these big programs.
You think they are growing? Boy, are they growing. You take those
four that I mentioned, plus interest, in 1964 those four, plus
interest, were 23 percent of all of the money that the Federal
Government spends--23 percent. Ten years later, in 1974, they were 39
percent. In 1984, they were 48 percent. In 1994, they were 56 percent.
In the year 2004, they will be 67 percent.
One day all the money the Federal Government spends will go for these
four programs, plus interest. And we are afraid to touch them.
One of two things happens, or maybe three things, if we do not do
something soon. First, as we begin to spend more and more and more on
these programs, if we do not increase taxes, all the other programs of
Government get squeezed. We spend less on the Coast Guard and less on
education and less on environmental protection and less on defense.
Less on everything. So we can fund these four.
Or we raise taxes--and I am not suggesting that, and I do not want
that--we raise taxes to try to fund the other programs. Do not worry
about narrowing the deficit. We will not use the taxes to narrow the
deficit. We will spend it if we have it, so we still have a deficit.
That is the other alternative.
Or maybe we do nothing and we finally get to the place where there is
a cataclysmic catastrophe coming. It is coming first in Medicare. There
are two parts to Medicare. One is part A, that is hospital payments;
the other is part B, and that is doctor payments.
[[Page S2448]] In the year 2000 to 2001, the part A trust fund is
exhausted. The part B portion which is the doctor payment--on which we
now spend $47 billion out of the general fund--this is general
taxpayers' money. This is not from the beneficiaries' premium that is
deducted from a Social Security check.
But this scenario does not hold a candle to where we will be in
Social Security in the lifetime of most of the Members of this Senate.
At the moment, Social Security is taking in more money than it pays
out. We will take in $70 to $80 billion more this year than we take
out. That will continue on until about the year 2013.
The reason we are doing that is because we know the baby boomers born
from 1945 to 1965 start to retire in about the year 2010. Give or take
a few years or so from 2010--2013--the Social Security starts to pay
out more than it takes in.
But at the moment it is taking in more money and investing it in
Government bonds. That is all we allow it to do, Government bonds. If
we had cut them lose and let them invest what they wanted in 1978, they
might have invested in Texas real estate and they would be broke now.
Here comes the $70 billion more than we pay out. In it comes. Social
Security administration, in essence, gives the $70 billion to the
Treasury Department. The Treasury Department gives the Social Security
administration a bond for $70 billion, a Government bond. We,
thereupon, spend that money now, the $70 billion. We spend it on the
Coast Guard, on education. We spend it on defense, we spend it on
environmental protection, we spend it on everything Government spends
money on. The $70 billion is gone.
This continues, in the next year, the year after that, the year after
that until about the year 2013 when I estimate Social Security will
probably hold almost 3 trillion dollars' worth of Government bonds.
Now, at this stage they start to pay out more than they take in. The
Social Security Administrator takes their bond to the Treasurer of the
United States and says, ``Here, give me some money to pay these
benefits.'' The Treasurer looks at the Administrator and says, ``Are
you crazy? We spent that money 20 years ago. What do you mean, give you
money? I don't have any money.''
At that stage we have to start redeeming the bonds. For example, if
we keep faith with the recipients we have to raise the taxes to pay
those bonds. That is not bad enough. About the year 2013 we start to
pay out more money than we take in. By about the year 2029, only 34
years from now--look backward 34 years and that is but a memory. That
is not history. Much of it is as clear today as it was 34 years ago. We
think that is not a very long time. Yet think ahead and we think it is
an eternity.
About the year 2029, not only is Social Security paying out a lot
more than it takes in, all of the bonds are gone. They have now
redeemed all of the bonds, and by that year Social Security is paying
out about $3 trillion a year. Unfortunately, it is only taking in about
$2.2 trillion, roughly, $700 to $800 billion shortfall and no bonds to
turn in.
At that stage, if we are going to keep faith, and we are going to do
it with a payroll tax we will have a whopping increase in the payroll
taxes. I cannot even estimate how high it will have to be to pay that
kind of a deficit.
What I fear is going to happen is this: Your children or your
grandchildren at that stage will say, ``I am not going to pay that
money. I will not pay that much. And I will not vote for anybody that
will tax me that much,'' and this is where the cataclysmic coalition
comes between generations.
We can cure that if we would face the problem now. But we are not
going to, I fear. We are not going to unless we pass the balanced
budget amendment. Then what does that require of Members? It does not
require a cut. We spend, this year, 1995, rounded off to the nearest
$100 billion, we will spend this year about $1.5 trillion, $1.5
trillion if we spend in what I referred to earlier as baseline.
If we do not change the laws at all, we do not add new spending, we
do not add prescription drugs to Medicare, we do not add long-term care
to Medicare, we spend as we are doing under the present law, in 7
years, in the year 2002, instead of spending $1.5 trillion, we will
spend $2.2 trillion--$700 billion more.
When people talk about cutting, that is not a cut. We are not talking
about cutting. In order to balance the budget in the year 2002, instead
of spending $2.2 trillion we might have to spend $2 trillion. Now we
are spending $1.5. Now to balance the budget we would have to spend
about $2 trillion instead of $2.2. Is that impossible? Can we not do
that?
The answer is, based upon experience, no. Better phrase it
differently. We will not do that. Because in order to do it, we would
have to undertake steps that we do not politically want to undertake
and we are afraid.
I talked about some of the significant debates of 20-25 years ago and
some of the steps we took and the one-vote margins that made a
difference. And yet in my quarter of a century in this Senate there
probably will be no more important vote that I have cast, or if I
stayed here another quarter of a century, that I ever would cast than
the one that says to my kids and my grandkids I was able to help save
this country.
Sometimes what you do is a holding action. In the military it is
referred to as a holding action. Major Devereux at Wake Island, shortly
after the Japanese bombed Pearl Harbor, 200, 225 marines on this atoll,
and the Japanese invaded it and we can see the footage of it, men
swarming to shore like ants. There is Major Devereux, and his men,
holding on, knowing they were defeated, waiting for the time.
Or maybe it was General Wainwright at Corregidor, when we moved in
and it was clearly a loss. Or Jack Kennedy, a young PT boat commander
being part of that rescue. Or Colonel Travis at the Alamo,
extraordinary courage, when Sam Houston says to him, ``We need a
holding action until we can get our army organized.'' And when the
siege starts February 23, and the battle is on March 6, for 2 weeks
they held out, wiped out the men but gave Sam Houston time to put the
army together and win at the battle of San Jacinto.
These actions made a major difference in American history.

Well, we are at that point now, but I think it is not a holding
action. Every now and then, there is a difference between a holding
action and an action you are going to take that is priceless. It is not
Corregidor Island or Wake Island or San Jacinto.
Shakespeare said it best in Henry V. You recall the history. The
French and the English in the Hundred Years War had been battling.
France had clearly the superior position in geography, and they were a
unified nation and the biggest nation in Europe. The British had beat
them at Poitiers and then at Crecy in the early part of the Hundred
Years War. But the final battle was coming at Agincourt, and the
English were utterly at a disadvantage--foreign soil, 9,000 troops, the
French had 30,000.
Picture Shakespeare's opening scene: Westmoreland is the king's
cousin, and Westmoreland comes in. They know the battle is going to
take place the next day.
He said:

O', that we now had here
But one ten thousand of those men in England
That do no work today!

And the king responds:

What's he that wishes so?
My cousin Westmoreland? No, my fair cousin.
If we are marked to die, we are enow
To do our country proud, and if we live,
The fewer the men, the greater share of honor.

Going on he says:

This day is called the feast of Crispian.
He that outlives this day and comes safe home
Will stand a-tiptoe when this day is named
He that shall see this day and live old age
Will yearly on the vigil feast his neighbors
And say ``Tomorrow is Saint Crispian.''
Then will he strip his sleeve and show his scars,
[And say ``These wounds I had on Crispin's day.'']
And gentlemen in England now abed
Shall think themselves accurs'd they were not here,
And hold their manhoods cheap whiles any speaks
That fought with us on Saint Crispin's day.

Today is an interesting day. Fortunately, there is a feast day for
almost everyday. Today is Saint Scholastica Day, named after Saint
Scholastica. It means ``learned.''
[[Page S2449]] And we are going to vote on this day on a significant
amendment that I think will determine whether or not we pass the
balanced budget amendment. Some will flee, some will stand.
I quote one other part from the soliloquy that I left out at the time
when Henry turns to his troops and says:

Let he which hath no stomach for this fight depart.
His passport shall be made
And crowns for convoy put into his purse.
I would not die in that man's company
That fears his fellowship to die with us.

On this Feast Day of Saint Scholastica, the ``learned,'' we are going
to vote. The vote we make will probably have a greater effect on our
children and grandchildren than anything else we will ever do, and I
would hate to be that man or woman that serves in this Senate whose
child or grandchild comes to you 10 or 20 or 50 years from now and
says: ``Where were you on Saint Scholastica Day?''
And you say: ``I fled the battlefield.''
I thank the Chair. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, I have spoken with the manager of the bill
on the other side, and we ask that we go to the constitutional
amendment to balance the budget, which will be the order at 11 o'clock,
and that we divide the approximately 12 minutes equally between the two
sides.
The PRESIDING OFFICER (Mr. Kyl). Without objection, it is so ordered.
Mr. REID. If the Chair will advise me when I have used 6 minutes, I
would appreciate it.
The PRESIDING OFFICER. The Chair will advise you.
Mr. REID. Mr. President, I refer at this time to a statement that is
on this chart behind me from the majority leader of the other body in
the House of Representatives, the Honorable Richard Armey.
He said:

We have the serious business of passing a balanced budget
amendment, and I am profoundly convinced that putting the
details out would make that virtually impossible.

There has been an attempt to keep from the American people what would
happen to Social Security if it is not exempted from a balanced budget
amendment. Why? The answer is in another statement made by the same
majority leader, Congressman Armey, when he was asked the question why
they had not produced a detailed plan for balancing the budget, wherein
he responded, and I quote:

Because the fact of the matter is that once Members of
Congress know exactly chapter and verse, the pain that the
Government must live with in order to get a balanced budget,
their knees will buckle.

Mr. President, there are a lot of people whose knees are buckling as
a result of the fact that they are going to have to vote whether or not
to exempt Social Security from the balanced budget amendment. However,
the amendment before this body that we will vote on at 11:30 is a
mockery. It is an effort to allow people to walk from this Chamber and
say, ``I voted to protect Social Security,'' when, in fact, they did
just the opposite.
This fig-leaf amendment that is now before this body will be adopted
today, just like it did in the other body. But passage means nothing,
just as it meant nothing in the House of Representatives.
What it does provide is a fig leaf, a cover, a sham, a farce, a
mockery to cloak, to conceal, to hide and mask the fact that Social
Security will never be the same if the Reid amendment is not adopted,
and this amendment will do nothing to conceal that, even though there
is an attempt to conceal it.
Mr. President, virtually everybody will vote for this weak, infirmed,
ineffectual amendment that we will be called upon to cast our ballot at
11:30. We will do it because it is just barely--just barely--better
than nothing.
This amendment allows some to go home and say, ``I protected Social
Security,'' but all should smile when a Member of Congress uses this
amendment to say they protected Social Security because that Member of
Congress will have trouble keeping a straight face when those words are
spoken: ``I protected Social Security.''
I repeat, the only way to prevent the raping of Social Security is to
vote for the Reid amendment next week. Today's vote is posturing and
posturing only.
My amendment excludes Social Security from the general revenues of
this country. This forces Social Security into the pot of red ink; that
is, the general revenues of the United States. This vote is a fig leaf,
but sadly, Mr. President, it does not cover even the bare essentials.
If the balanced budget amendment is ratified, then Congress is
without authority to exclude Social Security trust funds from the
calculations of total receipts and outlays under section 1 of the
amendment, as stated by the Senate's leading legal scholar, Senator
Howell Heflin, of Alabama, and the Congressional Reference Service, a
man by the name of Kenneth Thomas.
So this amendment does nothing to change the direct words of the
underlying constitutional amendment. Not only do we have the words of
the amendment which jeopardize Social Security, but we have the report
from the committee of jurisdiction, the Judiciary Committee, which
reported the bill. This report is an effort by the committee--it is
done on every piece of legislation--to clarify the intent of the
legislation. But let us listen to what the report says. On page 19, it
states that social insurance should be included in receipts.
The report on the same page excluded, or exempted, the Tennessee
Valley Authority but not Social Security. This should give everyone an
idea of the priorities of this body: Power over senior citizens. This
amendment will do nothing for the tens of millions of Americans who pay
their hard-earned money into Social Security and then expect to receive
this retirement in their golden years.
No one watching this debate should be mistaken about what is
happening in this Chamber this day. It is not the politics of meaning,
but the politics of meaninglessness. If it is adopted, which I believe
it will be, it will provide meaningless protection to the Social
Security trust funds.
On the other hand, it provides meaningful protection to politics. It
does not take great courage to vote for this amendment. However, it is
a lot like the old beer commercial: Tastes great, less filling. It will
do nothing to prevent the future raiding of the escalating surpluses
that will be used to pay back the baby boomers. It does nothing to
allay the fears of today's senior citizens that they will not receive
what is rightfully theirs.
The PRESIDING OFFICER. The Senator has used 6 minutes.
Mr. REID. Could I have 1 more minute?
Mr. DASCHLE. I yield the Senator another minute.
Mr. REID. But it should create a state of despair for all
generations, not only my generation, but my children's generation and
their grandchildren. I have three grandchildren, all girls: Two age 4,
one age 2. I want to protect them, because the real contract with
America, the real contract with my grandchildren is not a contract of
passing fancy but the Social Security contract. This contract, Social
Security, deserves our defense. The vote today is a clever effort to
let down our defense, to allow the destruction of the greatest social
program the world has ever known, Social Security.
Mr. DASCHLE addressed the Chair.
The PRESIDING OFFICER. The Senator from South Dakota.
Mr. DASCHLE. Mr. President, let me thank the distinguished Senator
from Nevada for his statement this morning and for the great leadership
he has shown on this issue. This has been an issue that the Senator
from Nevada has been associated with now for a long period of time. He
has led our caucus, he has led the Senate, and I commend him for the
tremendous effort that he has put forth, especially now over the last
couple of days.
As our colleagues know, we are about to vote on a motion by the
majority leader to request a Budget Committee report on how to protect
current Social Security from the effects of a balanced budget
amendment. I support that request, but unfortunately, we all know
[[Page S2450]] that approach, while well-intentioned, just is not going
to get the job done.
First, the request is just that, it is a request. It does not bind
the Congress. It does not bind any future Congresses.
Second, the job is more significant than that. It is more significant
than simply requesting that somehow at some point in the future we hope
that Congresses can protect this important trust fund. The real job is
to protect it, and the only way to protect the dedicated funds into
which every working American pays to help secure his or her future or
the futures of their parents or their children, the only way to do that
is to do as the Senator from Nevada has now proposed.
Even if the majority leader's request was binding, which we all know
it is not, it would do nothing to protect those funds in the future.
There is no way that we can guarantee future Congresses are going to do
what we ask them to do this year. And so they remain vulnerable to the
inevitable attempts to use these funds in future Congresses as we have
used them in past Congresses: To hide the true size of the deficit.
So as we contemplate amending the Constitution, it is essential--it
is essential--that we completely be up front with the American people
about how we are going to do it.
If we want to build a trust, a faith, a confidence in this
institution, we have to level with the public and acknowledge that the
nonbinding request upon which we are about to vote is fine, but it
simply does nothing, nothing to protect Social Security in the future.
When we talk about amending the Constitution, it is the future that we
are obligated to consider.

The Senate has been debating this issue for some time now, and as it
has, many of us have attempted to put teeth and honesty into this
particular amendment. We have done so because it is evident from the
so-called Contract With America that the only reliable cutting promised
by the new congressional majority is going to be made in revenues. The
Contract With America promises no spending cuts at all.
Let me repeat that. The Contract With America does not delineate any
cuts whatsoever in spending. To the contrary, it would commit the
Government to substantial new spending. At the same time, it offers a
balanced constitutional amendment--a promise with no hint on how it
will be fulfilled. And that responsibility is ultimately passed on to
future Congresses in a future year. It avoids the responsibility, it
avoids outlining the spending cuts that will be required, and we all
know we are going to have to vote for if we are here over the next 7
years.
In November of last year, the majority told us they would show us a
budget cutting plan that would establish a glidepath to a balanced
budget. Well, we are still waiting.
Then we began to hear that we would reach a budgetary balance
painlessly by curtailing program inflation. But we have now looked at
the numbers and this easy, pain-free method will not work. It will not
work because the numbers do not add up.
Then the idea was to wait for the President's 1996 budget and
complain that he did not do what the majority said they themselves
would do in November--set out a plan to cut spending and balance the
budget by the year 2002.
So since November, we have heard pledges that Social Security will
not be touched, promises that a plan will be written, and declarations
that it is not fair to ask when.
Current Medicare enrollees were told earlier that Medicare would not
be on the chopping block. Now we are hearing complaints that the
President did not put it there.
I weigh the promises against the hard facts of budget numbers, and I
think a lot of colleagues would share my view that the promises do not
add up, but the numbers do. And what the numbers add up to is that
these promises are, frankly, unrealistic. The promise to lay out a
spending plan has not been kept and apparently will not be.
Intentionally or not, the new majority sent that signal 2 days ago
when every single Senator on the other side voted against telling the
American people how the budget would be balanced in 7 years' time. And
now they want us to accept on faith the promise to protect Social
Security.
While I have no doubt that many of my colleagues truly want to keep
that promise, the fact is we all know that the pending motion does not
bind even this Congress, much less future Congresses. There is no
binding way with which we can take this resolution and tell anybody in
the future that anything is changed that would give them confidence in
knowing their benefits will be there.
So, Mr. President, that is why the Reid-Feinstein amendment is
necessary, to ensure that our good intentions will be realized. The
amendment solidifies the Social Security promise. It writes into the
Constitution, it says to Social Security enrollees, who include
virtually all working people in this country, as well as their retired
parents, that these trust funds will be protected from ever being used
in the future to balance the Federal budget.
It is the only thing--the only thing we know of that will absolutely
guarantee in writing, in black and white, that Social Security is a
trust fund that will always be there. I supported it last year. I will
vote for it again this year. It is just as necessary today as it was
back then.

Why does it deserve special treatment? Because it is a contract
between generations, that is why. Because it protects older Americans
against poverty, that is why. Because it protects working families in
case of premature death, that is why. Because it protects workers if
they are disabled by illness or accident; that is why, too.
It says to every working person: You pay into these trust funds and
when it is your turn, when it is time for you to use them--when you are
too old, when you are too sick, too disabled to work--your Nation will
make sure you do not lose everything, everything that you have worked
for.
Today, 60 years after President Franklin Roosevelt sealed the real
contract with Americans, Social Security is still a promise that is
honored by Government. It is something people can count on to be there
when they need it. It is a contract which recognizes that we are all
human, that we all grow old, we are all vulnerable to illness and to
ill health and to accident. It says that we, as Americans, will not let
hard-working people sink into poverty through no fault of their own
regardless of the circumstances. And that is a contract.
That is a commitment that has not withstood 1 year, or one election,
but generations--lifetimes. From its very creation in 1935 until 1969,
everyone here knows that the program was off budget. And then everyone
also knows what happened in 1969. In an attempt to mask the costs of
the Vietnam war and the growing deficit, guess what happened? Social
Security was put back on the budget.
Then, in 1990, Congress again voted to take it off budget. We may
have forgotten what that vote was, Mr. President. It was 98 to 2--98 to
2, almost unanimous. The people in this body said Social Security ought
to be off budget and not used for other things, not used to mask the
debt, not used to pay for other things that may come along, whether
foreign or domestic. We said then that Social Security revenues held in
trust for retirement should not be used to balance the Federal budget.
And we did the right thing.
The flaw in the proposal now before us is that it includes in the
budget Social Security surpluses that should be set aside to pay future
retirement benefits. That is the flaw. Everybody knows it is there.
Everybody knows we do not want it to be there. The question is, How
serious are we about taking it out of there?
Social Security is not responsible for one dime of the national debt,
and it should not be raided to pay off that debt now. Those who oppose
the Reid amendment argue that while Social Security did not cause the
deficit, they are very concerned about what happens if we take it off
the table to pay down that deficit. They do not want to acknowledge the
Reid amendment can be used to ensure we protect it in the future. As
long as the trust funds are part of the unified budget, we all know
that they help hide the real dimensions of the budgetary imbalance. The
program is currently generating a surplus. We all know that, too.
There is a critical reason for accumulating those surpluses. It was
laid out
[[Page S2451]] very explicitly by the senior Senator from New York just
yesterday. Following World War II, the level of Social Security taxes
was raised so that adequate funds would be available to pay the
retirement benefits that will come due as those of us who are baby
boomers retire. Those surpluses are meant to be there as a confidence-
building effort to ensure the trust fund meets the predictable benefit
payments in the future. If they are not there, from where will they
come?
The Federal Government will owe the Social Security system nearly $3
trillion by the year 2017--$3 trillion. That is why we need to preserve
the surpluses and protect them, because that $3 trillion is going to
come due one day. Whether we have masked the deficit, whether we have
used those funds to pay for other things or not, that money will be
needed.
So the Social Security system today is taking in far more revenues
than it is paying out in benefits for that reason alone. This year it
will take in $69 billion more than it pays out. Between now and 2002,
when the balanced budget amendment would take effect, Social Security
will have amassed $705 billion in additional revenue.
Here is the point. If there is one point to the vote we are about to
take, it is this. Without the Reid amendment, every dollar of those
revenues will be placed on budget--every dollar --to give the false
impression that there is $705 billion in available cash. Future
Congresses would be able to avoid reducing the deficit by that amount,
by $705 billion, in the next 7 years alone. That is why this issue is
so important. The threat of the use of trust funds is a very real one.
It is happening right now. It has been tried before. It will be tried
again.
Our late colleague, the highly respected Senator from Pennsylvania,
John Heinz, used the right word, ``embezzlement,'' when he helped to
lead the fight to take Social Security off the budget.
The Senator from New York, the one to whom I have just recently
referred, Senator Moynihan, has described it as ``thievery.''
I have supported a balanced budget amendment because I believe it is
completely unfair to leave the current legacy of debt to our children
and grandchildren. But what happens if we deplete the Social Security
trust fund that they are now counting on for their retirements? We will
have failed. It is that simple. We will have failed to live up to our
commitment to them.
The Reid amendment would restore budgetary honesty by requiring an
accurate accounting of the true size of the Nation's deficit problem.
That is what it does. Taking Social Security out of the calculation
would protect the fiscal integrity of the Social Security trust funds.
It would require us to enact the tough policies needed to eliminate the
deficit.
Many of our colleagues argue it is unnecessary, that they will help
protect Social Security in the future. But I urge those Senators, if
they are truly sincere, to solidify that commitment in the Constitution
itself to put an end to public concerns that the budget will be
balanced at the expense of trust funds.
So again, I remind everyone that less than 5 years ago, 98 Senators,
across party lines, voted to take Social Security off the unified
budget. Solemn commitments were made then--no less solemn than today's
promises--that the special status of Social Security is acknowledged
and, more important, will be respected by this Congress and by future
Congresses. But the future is now, and it is again necessary to defend
Social Security's unique mission.
So I hope my colleagues will do the only thing that will ensure that
Social Security is able to continue that mission into the future. We
need to support the Reid amendment.
I yield the floor.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, may I ask how much time the majority side
has?
The PRESIDING OFFICER. The majority side has 17 minutes.
Mr. HATCH. Mr. President, let us just all understand here, the Social
Security trust fund is now filled with a bunch of IOU papers because
the Federal Government has been borrowing from that trust fund and has
been using that money to pay off Federal obligations. By agreeing to
the Reid amendment, that does not solve that problem at all. The trust
fund is a bunch of IOU's. Frankly, unless we get spending under
control, unless we get this Government's fiscal house in order, all
that is going to be left is that pile of papers, those IOU's, because
all of that money will have been spent.
So this is not that issue. Just look at this debt tracker that we
have here. We are now in our 12th day. I might as well put that one up
here: 12th day of debate. During these 12 days, we have gone above $4.8
trillion. We are now almost $10 billion in additional deficit in just
the 12 days we have been debating this.
This is serious stuff. And, frankly, if we do not keep the balanced
budget amendment intact to cover everything in the Federal Government,
we will not get this under control.
I would like to congratulate Senator Dole and all of my colleagues
who support offering this motion to refer this measure. This motion
requires that the Budget Committee report how, in implementing the
balanced budget amendment, Congress will move toward balancing the
budget without reducing Social Security benefits or increasing Social
Security taxes. Let me repeat that. Congress will neither cut Social
Security benefits nor increase Social Security taxes to balance the
budget. I have maintained that this is an achievable goal, and now we
have the first vehicle to demonstrate it.
The next step, of course, is to pass the balanced budget amendment
and start the Nation down the road to fiscal responsibility. This is a
very good approach to ensuring that we will not harm either our current
or our future retirees as we get this Nation's fiscal house in order.
And the only thing that is going to do that is the balanced budget
amendment as it is written now. It is bipartisan. It is consensus. It
is Democrat-Republican. It is the only one that we can get through, and
we should not try to change it with issues that can be solved like
this, which does solve them.
For all of our generations this is important. We want to protect
Social Security. There is not a person in this body or in the other
body who is not going to do that. I do not know of anyone in the House
or the Senate who is not going to protect Social Security under the
balanced budget amendment. And this measure that Senator Dole, Senator
Domenici, and others have helped with will prove it.
But everybody knows that, if we amend the balanced budget amendment
to exclude Social Security from its features, the balanced budget
amendment will not be worth the paper it is written on. Everybody knows
that because that would be the loophole through which they would drive
every program there is. We have already seen that with SSI. SSI is paid
out of general revenues, but it is part of Social Security. That would
be the first thing they would turn over to Social Security revenues. I
will say that you can add almost any other social spending program just
by calling it Social Security.
So everybody knows what I am talking about, including those who are
arguing this issue. Anyone who says otherwise is simply using a scare
tactic, trying to scare our seniors into believing that they are going
to be hurt by a balanced budget amendment while the exact opposite is
true. They are going to be killed if we do not get spending under
control, and if we do not get this Government's fiscal house in order.
We have to do it. And it is in the interest of our seniors to do it,
and I think most seniors understand that, and I think they know these
scare tactics for what they are. There is no question that we will
protect Social Security as we implement the balanced budget amendment.
We provide in the amendment for implementing legislation in which
Congress will do that, as Senator Dole's motion shows today.
We all want to protect Social Security. It holds a special place in
our Nation's programs. We will protect Social Security and in an
appropriate and reasonable way. The report required by this motion will
show that we can do that. It is wholly appropriate. It is the
reasonable way to do it. It is wholly reasonable, and it points the way
to real protection for those who are relying upon the Social Security
trust
[[Page S2452]] funds as well as future generations who will depend on
our disciplining ourselves and our deficit spending habits.
This provision goes to the heart of the concern of some that Social
Security benefit cuts or tax hikes could result from attempts to
balance the budget. It shows that, as we move to balancing the budget,
we will not cut benefits or raise taxes in the Social Security trust
funds in order to balance the budget.
I wholly agree with the intention of this motion, and I urge my
colleagues, all those who, like me, support a real balanced budget, and
all of those who, like me--meaning everybody--support protecting Social
Security, I ask all of them, to vote for this measure. Let us adopt
this reasonable and appropriate approach showing that we will protect
Social Security as we move toward balancing our Federal budget.
This motion requires simply that the Budget Committee of the Senate
report to the Congress how we can balance the budget without touching
Social Security. It will show that we can do what we have said we
could, and it is the right way to do it without writing a statute into
this amendment.
We are talking about the Constitution that we are amending. We do not
need a statute, and we need to do something about this ever-increasing
debt. This is only a modest illustration. But, in 12 days our debt has
gone up $9,953,280,000, in the 12 days that we have been debating this
matter and delaying and putting it off. Now we are getting down to
brass tacks. It is time to vote for this.
I hope that our colleagues will support the leader, Senator Dole, and
the leadership in doing this.
I yield 5 minutes to the distinguished Senator from Idaho.
The PRESIDING OFFICER. The Senator from Idaho is recognized.
Mr. CRAIG. Mr. President, it is fair and I believe proper that the
Senate of the United States speak to the citizens of this country as to
our intent about how we plan to handle Social Security as we move
toward a balanced budget. Therefore, I strongly support the Dole motion
and encourage all Senators to vote for it because it is the appropriate
way to express our will and to direct the Budget Committee in its
proceedings once we have sent a balanced budget amendment to the States
for their consideration and, hopefully, their ratification.
What is important is that it is separate and apart from the amendment
itself because it expresses the will of Congress, and it does not
clutter up the Constitution the way the Senator from Utah has so
clearly spoken. It does not create the massive loophole that the
Senator from Nevada is attempting to carve inside the Constitution that
would allow future Congresses to drive ever-increasing social programs
through the Social Security loophole and, in fact, potentially destroy
the Social Security Program.
The strength of the Social Security Program has never been the law
itself. The strength of the Social Security Program is right here on
the floor of the U.S. Senate. It is the obligation of every Senator to
honor what we believe to be a commitment to the citizens of this
country who pay into a supplemental income program as to our obligation
to ensure that program remain sound and stable throughout all time.
There is no statute in the Constitution today singling out any special
program of Government guaranteeing to the citizens how that program
will be operated for all time. The Constitution has been, and must
remain, a code, a sense of principle and an organic act that says here
is how the collective government of our country operates. It is then
Government's responsibility and this Senate's responsibility, once we
have passed legislation and created law as we did with the Social
Security System, to honor the commitment of that law so spoken to the
American people.
Mr. President, the threat to Social Security is not the Senate of the
United States. The threat to Social Security is the debt. It is the
debt that is the threat. And if we fail to balance the Federal budget,
Social Security will go down in 25 or 30 years. The obligations this
Government will have will be so large that the tax increases that will
be demanded to stabilize the system will be so large and overpowering
that the average taxpayer will not be able to pay them, and by the
Office of Management and Budget's own confession, 84 to 85 percent of
the gross pay of the average worker out there in the future will have
to go to the Government in taxes. You know what is going to happen, Mr.
President, if that ever were to occur. They would look at me because,
by then I would be on Social Security, and they would say, ``I am
sorry, Larry, we cannot afford you because we cannot afford to pay our
bills and put our kids through school and buy a home because you are
asking too much of us for your own benefit.''
That is why this motion is important, to say that it is the sense of
the Congress in directing the Budget Committee, as we move to balance
the budget, to do so without increasing revenues or depleting the trust
funds of Social Security. That is a clear intent, a clear expression of
what this Senate will do. It is not unlike what the House did before
they voted on the balanced budget amendment by a vote of over 418 to
say to themselves and to the American people watching that they will
not balance the Federal budget on the backs of the Social Security
recipients.
But what they did not do and what we must not do is to clutter up the
Constitution of this country by creating political loopholes. The
American people are already suspicious of us. They know that we craft
laws and we create special exemptions and special and unique
opportunities with inside the law. We must never do that within our
Constitution. That is why the Dole motion is so important and why I
urge all of my colleagues to vote in support of that motion.
The PRESIDING OFFICER. The Senator from Utah controls 5 minutes.
Mr. HATCH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DOLE. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HATFIELD. Mr. President, removing Social Security from the
provisions of the balanced budget constitutional amendment misleads the
American public and the current and future beneficiaries of the Social
Security system. While removing Social Security from the balanced
budget amendment is purported to protect its beneficiaries, in effect
that action would threaten the long-term viability of the system. As
noted in the report to the President from the Commission on Entitlement
and Tax Reform, benefit payments under the Social Security system will
exceed dedicated revenues for the program by the year 2013. This cash-
flow shortfall will result in the Social Security trust fund becoming
insolvent by the year 2029. Given these projections, removing Social
Security from the table as we debate our Nation's fiscal problems would
be irresponsible. The Congress owes it to the current and future
beneficiaries of Social Security to address this long-term problem.
Removing Social Security from the balanced budget amendment addresses a
short-term politically sensitive issue; however, it does not address
the long-term facts that reform is needed for this program to remain
solvent.
Mr. DOLE. Mr. President, this motion presents us with another
opportunity to demonstrate to America's seniors that there is broad
bipartisan support for protecting Social Security as we move toward a
balanced budget. On January 26, the Senate voted 83 to 16 to adopt a
sense-of-the-Senate amendment stating that we intend to protect Social
Security. The House of Representatives endorsed a similar concurrent
resolution to protect Social Security by a vote of 412 to 18.
Mr. President, we need to put a halt to the scare tactics and
reassure America's seniors.
Later this year, Republicans will put forward a detailed 5-year plan
to put the budget on a path to balance by 2002. Our plan will not raise
taxes. Our plan will not touch Social Security. Everything else, every
Federal program from Amtrak to Zebra Mussel research will be on the
table.
Mr. President, I urge my colleagues on both sides of the aisle to go
on record to reassure America's seniors and vote for this motion.

[[Page S2453]]

Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The yeas and nays have been ordered.
The clerk will call the roll.
Mr. LOTT. I announce that the Senator from Wyoming [Mr. Simpson] is
absent due to a death in the family.
I further announce that, if present and voting, the Senator from
Wyoming [Mr. Simpson] would vote ``yea.''
Mr. FORD. I announce that the Senator from Louisiana [Mr. Johnston]
and the Senator from Minnesota [Mr. Wellstone] are necessarily absent.
I further announce that, if present and voting, the Senator from
Minnesota [Mr. Wellstone] would vote ``yea.''
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 87, nays 10, as follows:
[Rollcall Vote No. 63 Leg.]

YEAS--87

Abraham
Akaka
Ashcroft
Baucus
Bennett
Bond
Boxer
Breaux
Brown
Bryan
Bumpers
Burns
Campbell
Chafee
Coats
Cochran
Cohen
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Dole
Domenici
Dorgan
Faircloth
Feingold
Feinstein
Ford
Frist
Glenn
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Harkin
Hatch
Heflin
Helms
Hutchison
Inhofe
Inouye
Jeffords
Kassebaum
Kempthorne
Kennedy
Kerrey
Kerry
Kohl
Kyl
Lautenberg
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Pell
Pressler
Pryor
Reid
Robb
Rockefeller
Roth
Santorum
Shelby
Simon
Smith
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner

NAYS--10

Biden
Bingaman
Bradley
Byrd
Exon
Hatfield
Hollings
Nunn
Packwood
Sarbanes

NOT VOTING--3

Johnston
Simpson
Wellstone
So the amendment (No. 238) was agreed to.
Mr. CRAIG. Mr. President, I ask unanimous consent that it be in order
to vitiate the yeas and nays on the amendment numbered 237.
The PRESIDING OFFICER. Without objection, it is so ordered.
The question is on agreeing to the amendment, as amended.
So the amendment (No. 237), as amended, was agreed to.
The PRESIDING OFFICER. The question is on agreeing to the motion to
refer, as amended.
So the motion, as amended, was agreed to.
Mr. DOLE. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. FEINGOLD. Mr. President, I ask unanimous consent the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FEINGOLD. Mr. President, I ask unanimous consent to speak as in
morning business.
The PRESIDING OFFICER (Mr. Frist). Without objection, it is so
ordered.

____________________