[Congressional Record Volume 141, Number 30 (Wednesday, February 15, 1995)]
[Senate]
[Pages S2736-S2754]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  The Senate continued with the consideration of the joint resolution.
  (Ms. SNOWE assumed the chair.)


                           Amendment No. 278

       (Purpose: To provide for a capital budget)

  Mr. BIDEN. Madam President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Delaware [Mr. Biden], for himself, Mr. 
     Bradley, Mr. Daschle, Mr. Dorgan, Mr. Lautenberg, Mr. 
     Feingold, and Mr. Kerry, proposes an amendment numbered 278.

  Mr. BIDEN. Madam President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
    
    
  The amendment is as follows:

       3On page 3, strike lines 4 through 8, and insert the 
     following:
       ``Sec. 7. Total outlays shall include all outlays of the 
     United States Government except for those for repayment of 
     debt principal and those dedicated to a capital budget. The 
     capital budget shall include only major public physical 
     capital investments. For each fiscal year, outlays dedicated 
     to the capital budget shall not exceed an amount equal to 10 
     percent of the total outlays for that year, which amount 
     shall not be counted for purposes of section 2. Three-fifths 
     of each House may provide by law for capital budget outlays 
     in excess of 10 percent for a fiscal year.
        [[Page S2737]] ``Total receipts shall include all receipts 
     of the United States Government except those derived from 
     borrowing and the disposition of major public physical 
     capital assets.''

  Mr. BIDEN. Madam President, I ask unanimous consent that Senator 
Kerry be added as an original cosponsor of the amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BIDEN. Madam President, I rise today on behalf of myself, Senator 
Bill Bradley of New Jersey, Senators Daschle, Dorgan, and Lautenberg.
  The amendment we have sent to the desk--some have suggested, why are 
we continuing to do this; it looks like the train has left the station 
and no one is going to listen anymore to the argumentation for any 
change in this balanced budget amendment. It seems that somehow it was 
like the tablet that was handed down, chiseled in stone; even though 
privately Members who are inclined to vote for this amendment but think 
it is flawed now will say, ``Well, why don't you agree to this 
change?'' And they will look at us and say, ``Oh, it makes sense, but 
we can't change it; this is the best we can do.''
  I do not think it is the best we can do and my colleagues who 
cosponsor this do not think this present balanced budget amendment is 
the best we can do. That is why we continue to talk about how we can 
improve it to make it workable.
  I wanted to make the case today that while it would be useful to 
establish a capital budget under the current budget rules and 
practices, it will be even more important if the balanced budget 
amendment is ratified and becomes part of the Constitution.
  The main reason budget experts advocate a way of designating specific 
capital budgets is to assure that we weigh the immediate benefits of 
spending for current operations against the long-term benefits of 
investments that pay over the years. They are the hard choices the 
distinguished Senator from Maine has had to make, as a Congresswoman 
and now as a Senator. We all make them. And that is, there are tens of 
thousands of needs out there.
  But what we tend not to look at closely enough, in my view, and will 
not be permitted to look at, as a practical matter, closely enough, is 
the distinction between short-term investment and long-term investment 
when we are dealing with limited dollars. Roads, bridges, dams, water, 
sewer systems, potentially even electronic infrastructures and, yes, 
even those major defense assets that assure the protection of our 
private economy and public works, all of these return benefits over 
more than the single fiscal year that the balanced budget amendment 
focuses on.
  We decide to focus on an immediate need of whether or not we are 
going to hire 10 more FBI agents. That is an immediate question. That 
is an operating budget. We are going to pay their salaries, an 
important consideration. And that focuses legitimately on what we do 
year to year. But there are others you focus on that have life 
expectancies and needs that go well beyond a year's time.
  Even under current budget rules without this balanced budget 
amendment passing, many observers believe our budget provides for too 
few of these long-term investments. We get much pressure on it from our 
constituents at home, as we should, to deal with the immediate needs 
that they have. It is a whole lot harder to convince them that maybe we 
should use some of that money to make a longer-term investment for 
which they will not see immediate benefit but will, in fact, have much 
greater benefit for them and their children than the short-term 
investment.
  So under our current budget system, we face this difficulty. In 
recent reports, the General Accounting Office, which has been quoted 
numerous times by people who are for the balanced budget amendment, 
against the balanced budget amendment, and not sure of their position 
on the balanced budget amendment, the GAO report has repeatedly 
emphasized the need for a budget process that forces clear decisions 
between our short- and our long-term needs.
  In fact, in the 1992 report on the dire consequences of our current 
deficit policies, the GAO declared, and I quote:

       A higher level of national savings is essential to the 
     achievement of a higher rate of economic growth. But by 
     itself, it is not sufficient to assure that 
     result. . . . In addition . . ., economic growth depends upon 
     an efficient public infrastructure, an educated work force 
     and an expanding base of knowledge, and a continuing infusion 
     of innovations. The composition of Federal spending, as well 
     as the overall fiscal policy, can affect long-term economic 
     growth in significant ways.

  Let me repeat the part that they emphasize: The composition of our 
spending, how we spend it, has as much impact upon our future growth as 
what we spend in the aggregate.
  The composition of Federal spending that was the concern of the GAO 
report, Madam President, was the mix between operating expenses and 
capital investment.
  Let me wrap up this extended citation of where the GAO comes down on 
this issue with the conclusion of the report's chapter on long-term 
priorities, and I quote:

       The recent approach to budgeting, focusing on each year's 
     choices in isolation, has not served the Nation's needs. Only 
     if we change the framework of the debate to emphasize the 
     long-term consequences of both fiscal policy and relative 
     priorities within the budget can we hope to develop a 
     national consensus on the potentially discomforting actions 
     needed to achieve the future we want for ourselves and for 
     the next generation.

  How much truer will these words be, Madam President, after the 
balanced budget amendment passes, if it does, a balanced budget 
amendment that raises each year's fiscal balance to the level of a 
constitutional mandate?
  Madam President, you and I do not know each other well but we have 
served together in different bodies for a long time. How many times 
have we heard, in both political parties, all these experts who have 
come down and talked to us over the last 10, 12, 15 years, saying 
things like: ``You know, corporate America is shortsighted. The 
Japanese are farsighted. Corporate Japan is farsighted. They make long-
term investments, they forgo short-term gains; they work on long-term 
profits, not short-term profits.
  And how many times have we heard managers from the Harvard business 
schools and the Wharton School at the University of Pennsylvania and 
the other great business schools of America tell us the same thing?
  That is all we are saying here; that is all the GAO is saying here. 
As American corporations have begun to retool and not think of what the 
next quarter's profits will be but think about what the next 4 years' 
situation will be, and 8 years and 10 years, corporate America has 
gotten strong. We now, to take one anecdotal example, we now build 
better cars than Japan; they are higher quality. We are gaining a 
larger share of the market. We are doing better because the corporate 
executives stopped thinking about getting the price of the stock up to 
a certain price by the time they retired so their retirement benefits 
related to the value of the stock at the time.
  All I am suggesting, and others, and GAO is we have to do the same 
thing as we make this fateful step, which I think we should make, to 
having a balanced budget amendment. How much more difficult will it be 
for us to make these long-term decisions when we are operating under 
the constraint of requiring an absolute balance every year, every time 
we present a national budget?
  Will not our current incentives--what we all agree is a callous 
disregard for the burden of debt on our children--will not those 
current incentives just shift to a new incentive?
  Right now, rather than make the hard choice of cutting spending or 
raising taxes, we have an incentive to push off the burden of the debt 
we are accumulating onto my sons and daughter, onto your children, our 
children, the next generation.
  That is the incentive. That is why we say we need a balanced budget 
amendment.
  Once we pass the amendment, and I hope we do--I hope we pass a 
balanced budget amendment--once we pass it, the incentive shifts. We 
may no longer push debt onto our children, but we may well neglect the 
things we need to do in order to sustain our infrastructure and to 
raise the level of potential growth in our economy.
  Mark my words; when there is a short-term need to deal with an 
immediate problem when we have to balance 
 [[Page S2738]] the budget, and someone says but if we do not deal with 
the infrastructure of the country, the highway system or the port 
system or the sewer system or whatever it may be, or investing in long-
term technology in a major growth requirement in the Defense 
Department, star wars, whatever you want to pick, you know what we are 
going to do? We are going to make sure we take care of the immediate 
need because we are going to go back home for election, and we do not 
want to tell anybody, by the way, the reason I did not vote to continue 
to fund this or that program is because I believe that if we invest 
more money in our ports, it will put us in a position to compete better 
with the Germans and the Japanese in the next generation. And that is 
why I cut your program and why I invested it in a long-term investment.
  Fat chance. Fat chance. If we have an incentive now to push off debt 
to our children, I think the incentive to neglect future investment 
under the balanced budget amendment will be even stronger.
  Madam President, it would be wrong to shift to a new incentive to 
balance each year's budget without adequate consideration for 
investments that are equally important to future generations.
  I believe that without a capital budget provision the balanced budget 
amendment will replace our current shortsighted budget perspectives 
with another potentially harmful perspective that only rewards current 
cash-flow balances without regard for the investments that are our 
generation's responsibility to the next generation.
  Madam President, we have heard repeatedly here on the Senate floor 
that virtually every State in our land has some form of balanced budget 
requirement in its constitution. We have one in Delaware, one that we 
added to our Constitution in the year 1980, and it has worked well. But 
all of the States, including my State, also use their bonding authority 
to pay for capital projects.
  Madam President, as a prudent way of living within the constraints of 
a constitutional restriction, without neglecting our future, I do not 
know how we can do anything other than what States do.
  I have heard, until I have had it up to here, the States and 
Governors telling us how they balance their budgets. Let me tell you 
they do not. They do not balance their budgets. I do not know of a 
single State that balances its budget, not a single one that I can 
think of.
  I am prepared to state for the Record--if any Senator can come to the 
floor and tell me otherwise, I will apologize--they do not balance 
their budgets. They balance their operating budgets, their operating 
budgets. I also hear my friends, who support this amendment a little 
more stridently than I do, say the following: why can we not balance 
our budget like the folks back home balance their budgets?
  Well, unless you hang out with a really wealthy crowd, I doubt 
whether you know anybody at home who balances their budget. I will bet 
you there is not a single person sitting in the gallery here who 
balances his budget like this amendment will require the Federal 
Government to do.
  I wonder how many people walk out and pay cash for their new house? I 
wonder how many people who have purchased a house within the last 2, 5, 
10, 12 years own the house outright and are not paying a mortgage?
  My dad used to be in the automobile business. There were not a whole 
lot of people who walked in and plunked down cash or a check for a 
brand new car. If they did, he wondered whether they were drug dealers 
most of the time. Who comes in and does that? Some people have the 
money to do it and some people have the discipline to do it, but most 
people buy their cars on time.
  A lot of us, myself included, have to borrow money to send our kids 
to college--take out loans, second mortgages on our homes.
  As long as we pay the mortgage payment, as long as we pay the 
principal and interest on the college loan, as long as we pay the car 
payment, we will assume we are balancing our budget. But if we passed a 
law saying no household in America could operate other than on a 
balanced budget, as we are about to pass here, there would be an awful 
lot of people in apartments. There would not be any new homes being 
built.
  I think we should be honest with the American people about what we 
are doing here.
  Now, there are some arguments which I will respond to--I am sure they 
will come up--about why the Federal Government does not need a capital 
budget. I respectfully suggest that is not the case. If the example set 
by the States is an appropriate one, Madam President, as we have heard 
so often over the years in regards to a balanced budget amendment, then 
certainly we should learn from the States' universal determination to 
borrow for those projects that they deem worthy of long-term funding. 
That is how they do it. The amendment I am offering with my colleagues 
today will put that lesson into effect.
  Madam President, I have here an editorial from the Wall Street 
Journal, not viewed as a liberal paper. Probably the news portion of 
that paper, if not the best, is one of the best in America. The 
editorial page, like many editorial pages, is often very strongly 
slanted. No one has ever suggested that the editorial writers of the 
Wall Street Journal are a bunch of liberal big spenders and taxers.
  Let me read what they say in an editorial dated November 11 of last 
year right after the election. The editorial board expressed concern 
that Congress might move precipitously on a balanced budget amendment.
  Let me read a passage from that editorial:

       To understand the economics--
  Says the Wall Street Journal.

       If all American households were required to balance their 
     budgets every year, no one would ever buy a house. Of course, 
     households don't think about their budgets that way. They 
     figure balance means meeting the mortgage payment. Similarly, 
     State and local governments with balanced budget requirements 
     can still borrow money for capital improvements. . . .

  This amendment offers a simple mechanism to address the lack of a 
Federal capital budget in the proposed balanced budget amendment.
  It introduces the concept of capital investment and says that the 
Federal Government is not bound to pay for such investments out of 
operating expenses up to a total of 10 percent of the operating outlays 
each year. So, to make it simple, let us assume that there is a $100 
billion budget--it is more than that, but let us make it easy, a $100 
billion Federal budget. No more than $10 billion could be added on to 
that budget in terms of a capital budget.
  We can decide to build the bridges and highways out of operating 
expenses if we are flush. But we can also decide it makes sense to 
borrow the money, like we do in States with bonds, essentially saying 
we will pay it off in 2 years or 5 years or 10 years. And we must 
balance it, in the sense that States do in that we pay the yearly 
payment it costs to pay that off--the mortgage payment on the new 
airport, the new highway, the new exotic aircraft we have to build, the 
new whatever capital investment we decide upon.
  In other words, it permits borrowing, the issuing of bonds for such 
investments just like the States, up to a maximum of 10 percent of each 
year's operating expenditures. We would be able to issue bonds without 
the three-fifths supermajority requirement needed for an excess in 
outlays over revenues in 1 year.
  So, to borrow the money to do that, that is to make a capital 
investment, it would be a simple majority vote. Yet if we wanted to in 
effect borrow money, or go in debt in our operating budget, we need a 
three-fifths vote. And the rationale for that is simple, and that is we 
should encourage long-term investment and discourage short-term 
investment, given limited dollars.
  Above that 10 percent amount, you could not borrow without a 
supermajority with 60 votes--just like you have to have now in this 
amendment to borrow money or increase the debt.
  As the Wall Street Journal and many others who have commented on the 
balanced budget amendment proposal before us here today pointed out--
``Borrowing for investments with long-term payoff is the practice of 
individuals, the practice of cities, the practice of State governments, 
and the practice 
 [[Page S2739]] of businesses. And it exists in all other advanced 
economies.''
  And it ought to be our practice, too. It is sound economic practice.
  The 10-percent cap on the investment budget is a rough average of 
what we have been spending on a restrictive definition of capital 
investment every year since 1980. I must say, many analysts believe 
that our investment budget has been inadequate to meet the needs of the 
future. They say we should be investing a lot more than 10 percent of 
our operating budget in long-term investment. That may be. But I am not 
willing to allow more of that to occur with a simple majority vote. If 
we want to do more than that, then it has to compete on the same basis 
that an operating deficit would compete.
  I think the capital budget should have to compete the same way, once 
it is beyond 10 percent. But a 10-percent cap on borrowing, without a 
supermajority needed for extension of the national debt, provides a 
reasonable minimum above which the approval of three-fifths of both 
Houses would be required.
  So we could have a larger capital budget in the future if we need it. 
But either borrowing more under the three-fifths requirement, or if we 
decided to, by putting some big investments in our operating budget, 
would be the only way we could do it.
  By accepting this capital budget amendment we will have established 
the formal procedure, with constitutional authority, for considering 
those projects which will have long-term payoffs and that, therefore, 
merit long-term finance. The capital budget includes only major 
physical capital assets, the kinds of purchases that individuals, 
businesses, and our State and local governments make by borrowing. It 
does not include research or education that many of us may argue are 
long-term and needed capital--investments in our future. They are 
important investments but they are more properly handled on a year-to-
year basis, in the opinion of the authors of this amendment.
  Madam President, let me make it clear again that what constitutes a 
capital investment will be defined in the amendment. But we do not have 
to fund a capital investment through borrowing. We can fund a capital 
investment, if we decide to, through the operating budget. It will take 
a majority of Senators even to conclude that we should treat it as a 
capital investment.
  So the point is there are several hurdles you would have to cross 
here. This is not a giant loophole to allow us to continue deficit 
spending. You would have to meet the definition of a capital 
expenditure, you would have to get the Senate and House both to agree 
it was a capital expenditure, and then you would have to get them to 
agree to the fact it was worth borrowing money to in fact make that 
capital investment. And if the capital investment that was about to be 
made would exceed the 10 percent limit on what could be made, it would 
require a three-fifths vote in both the House and the Senate to do it. 
But at least the mechanism that is available to every State would be 
available to the Government.
  It can be argued, and accurately, I think, that the balanced budget 
amendment as currently written permits borrowing and, therefore, future 
Congress's could engage in a form of capital budgeting. By that same 
logic, of course, our Constitution now permits us to balance the 
budget. The point of a balanced budget amendment is not to correct the 
defect in the Constitution but to correct a defect in our behavior--not 
the Constitution. We do not need this amendment to balance the budget. 
There is no amendment now that says you cannot balance the budget. We 
just do not do it. So many of us think we need an amendment to say we 
must do it.
  I would argue the same rationale applies to those who say with the 
budget amendment we have up here, Joe, you could have borrowing if you 
get a three-fifths vote and you can call it whatever you want, capital 
budget or anything else. That is true. But it begs the question.
  It is in that spirit that we offer this amendment. Not because some 
form of capital budget is impossible under the present amendment, but 
because we need to provide an explicit mechanism by which we can 
distinguish between projects that merit long-term financing and those 
that should be funded year to year.
  One more point before I close, Madam President. My colleagues will 
know that we have provided that any revenue from the sale of public 
assets will and can be only used to fund capital budgets. So, for 
example, if we decide in order to raise money we are going to sell off 
Yellowstone National Park--and no one is suggesting that, that is why I 
pick it-- instead of that money going into the general fund that money 
would go to reduce the debt that has been accumulated on the capital 
budget and pay off the mortgage quicker. That is what it would do. This 
provision removes an incentive to sell off our assets in the name of 
short-term budget balances.
  Again, I want to protect our kids, not only from accumulation of debt 
and the interest they will pay on it, I want to protect them from the 
shortsightedness and the incentive to shift away from them the long-
term investments they need. So, in order to satisfy our immediate need 
to balance the budget I do not want them selling off Cape Henlopen 
State Park, which is supposed to be there for posterity, in order that 
they not fire people who are on the Federal payroll to meet the 
balanced budget amendment.
  So, Madam President, without an explicit capital provision, our 
incentive will be to focus only on those spending priorities that have 
short-term payoffs, economically and politically.
  Madam President, I see the minority leader, the Democratic leader is 
here. I can refrain because I know he is on a very difficult schedule--
refrain from delivering the rest of my statement at this point.
  I will be happy, with the permission of my friend from Utah, to yield 
to him to speak on this or any other item he wishes to speak to.
  Madam President, this amendment is a genuine improvement, in my view, 
designed to protect our children just as the overall balanced budget is 
designed to protect them.
  I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the distinguished 
minority leader of the Senate, the Senator from South Dakota.
  Mr. DASCHLE. Madam President, first let me congratulate the Senator 
from Delaware for his eloquent presentation and the leadership he has 
shown once again on this very important issue. No one in the Senate has 
become more of an expert on this particular question than the junior 
Senator from Delaware. I applaud him and thank him for offering the 
amendment.
  We all know the purpose of a balanced budget amendment. The purpose, 
of course, is to free ourselves from our overwhelming debt burden and 
to promote economic expansion and growth for ourselves and our 
children. We are here to find a more certain path by which to 
accomplish that very purpose.
  A constitutional requirement to balance the budget is one means to 
attain that goal of a budgetary balance. But the point of the whole 
exercise is economic productivity and growth. That is what we seek. We 
want to be able to tell business and we want to be able to tell 
families that Government policies will create more of an opportunity to 
have more economic growth and activity than we have now.
  But if we are to ensure future economic growth, we certainly need to 
craft a balanced budget amendment carefully in a way that meets the 
objective of strengthening the economy.
  I support the idea of forcing the Federal Government to adopt 
budgetary discipline under which most families and businesses and 
States must live. As we all know, our current budget rules do not 
function that way, and we need to correct them.
  Today we have an amendment that would address that situation and 
force the Federal Government to live by the same budget, by the same 
rules and the same standards that every American family, every American 
business, and nearly every American in every State is required to live 
by.
  The Biden amendment would establish, for the first time at the 
Federal budget level, the principle that there is a distinction between 
capital costs and operating costs. We actually would, for the first 
time make the distinction between capital costs and operating costs. 
This is absolutely necessary to allow us to balance the budget and at 
[[Page S2740]] the same time invest in limited long-term priorities 
that fall outside the scope of annual operating expenses.
  We have to come to the same conclusion that businesses and families 
and State governments already have: that there are different types of 
spending. On the one hand we have investments that can generate the 
economic growth in this country, in this business, or in this family. 
On the other hand, we have the operating expenses that daily, monthly 
or annually we have to pay the bills for, to do the work of government 
or business.
  That really is a principle that every family and every successful 
business has recognized. When a family buys a house or car, or a farmer 
buys a better tractor, they do not pay cash. If a business expands to a 
new location or upgrades its computer system or purchases modern 
machinery, it does not pay cash. People and businesses borrow for long-
term investments.
  So the Biden amendment suggests that we draw the same distinction, 
economically and fiscally, between investment and operating expense.
  That is really what the vast majority of States do today. States do 
not finance road construction or new school buildings or State 
courthouses or prisons solely out of a single year's revenues. They 
issue State-backed bonds and pay them off over the useful life of these 
investments. That makes good, common business sense.
  So I support the idea of a constitutional budget amendment because I 
believe its goal is to strengthen our economy. But we do not strengthen 
the economy simply by writing new words into the Constitution. We 
strengthen the economy when we focus on the elements that make the 
economy strong, and shape the constitutional amendment to reflect those 
elements. We strengthen the economy by concentrating Federal spending 
on investments that promote long-term economic development, just as 
business do.
  So I have cosponsored the pending amendment because I believe it is a 
practical way to promote economic growth. The amendment would put the 
Federal budget on the same footing, and subject the Federal Government 
to the same requirements that govern most States, businesses, and 
family budgets today. It would establish a clear distinction between 
capital costs and operating costs.
  The amendment is tightly drawn, as the Senator from Delaware has 
pointed out, to prevent the Federal Government from sinking deeply into 
debt to finance capital investments. The capital budget would be 
limited to no more than 10 percent of the total outlays for each fiscal 
year.
  It would operate under the pay-as-you-go discipline imposed by the 
requirements of the balanced budget amendment itself. So would the 
operating budget. Depreciation and debt servicing costs would be 
assessed to the operating budget, so debt incurred for public 
investments would have to be repaid within a balanced operating budget.
  Just as any family must keep monthly car and mortgage payments 
affordable, the Government would not be able to take on more debt 
without cutting spending or increasing revenues in the operating 
budget.
  So the amendment would ensure that the Constitution preserves the 
ability of the Federal Government to do what it needs to do, to invest 
in our economic future in a meaningful way. Put simply, it would create 
a capital budget to clearly distinguish tax dollars used for public 
investments from tax dollars used for immediate consumption.
  It would create a powerful incentive to balance the operating 
budget--the consumption side--and it would offer an equally powerful 
incentive to subject all proposed investments to heightened scrutiny.
  We hear repeatedly that the States balance their budgets, so why does 
not the Federal Government do so? It is a good question. But it is a 
question that compares apples and oranges.
  Most States' balanced budgets requirements apply only to their 
operating budgets. They borrow for long-term investments and pay back 
the loans. They balance their books, they do not balance their budgets.
  The amendment before us provides for a way to make this an apples-to-
apples comparison. It would place the Federal budget on the same plane 
as most State budgets that exist today.
  Again, the current Federal budget makes no distinction between 
operating and capital costs. We treat a highway that lasts 40 years 
precisely as we treat a traveling bureaucrat's lunch that is eaten and 
forgotten in 15 minutes. That is a prescription for shortchanging 
investment.
  A family does not treat a monthly mortgage payment the same as it 
treats a night at the movies. When the budget is tight, we clamp down 
on nights out. But we still pay the mortgage.
  So it is time to abandon the idea that we can operate in today's 
economy out of a cash drawer as we could two centuries ago. For too 
long, that attitude has forced the Federal Government into costly and 
senseless solutions that are short term and, frankly, shortsighted. For 
example, in the mid- 1980's, when President Reagan was anxious to avoid 
the appearance of higher deficits, the General Services Administration 
spent hundreds of millions of dollars on rental leases around the 
country, although it would have made more sense to build and own the 
buildings outright. In some cases, taxpayers are still paying on some 
of those leases today.
  The argument that Government should operate on a more business-like 
basis is really what this amendment is all about. Every wise business 
borrows money to make investments that will increase profits. Smart 
businesses do not have to guess how much of their borrowed capital, how 
much of their revenue, how much of their future capital is going to be 
sunk into wages instead of a new warehouse. They know how their money 
is allocated because they have capital budgets, and they have operating 
budgets. It is the instinctive response of any normal household to draw 
the distinction. But, under current law, the Federal Government cannot 
do what families or businesses do today.
  Madam President, a group of 435 leading economists recently called 
upon Congress and the President to increase public investment now and 
for the 21st century. They included six Nobel laureates, and their call 
reflects their professional judgment, not a political one.
  They said:
  ``There is a danger in the current antigovernment tone of our 
national political discourse that we as a nation will forget the 
essential economic contribution made by public investment in our people 
and in our infrastructure. * * * The cost of infrastructure decay, 
urban squalor, and social polarization is too high.''
  Nearly every economist agrees that the United States is not investing 
enough in public infrastructure. Our public capital--roads, bridges, 
rails, and airports, our water systems, schools, and libraries--are all 
investments made in the past that support our present standard of 
living.
  Our ability to compete, our ability to improve the quality of life 
for ourselves, and our ability to prepare for the 21st century depends 
upon our willingness to make these kinds of investments. But our 
present budget structure, unchanged, guarantees that we will not be 
able to do so.
  The distinctive mark of American economic growth throughout its 
history has been productivity. Ours is an economy and a system that has 
given free rein to the investments, public and private, needed to 
sustain the productivity growth that we witnessed now for so long. We 
cannot, we should not, continue to live off our seed corn. We should be 
planting for our own futures, certainly not eating the very product 
that has produced the kind of economic vitality that we now enjoy.
  The reason these economists and other Americans had to call attention 
to infrastructure is that investment is not treated by our budget as a 
distinct budgetary cost separate from consumption, and I daresay that 
most of the people in the Chamber today would privately agree that it 
should be. The Biden amendment at long last would achieve just that.
  Polls show that Americans want much of what Government provides. They 
want to eliminate waste, of course. So do all of us. But they also want 
a strong national infrastructure with safer highways, with safe dams, 
with safe bridges, and good schools.
  [[Page S2741]] Indeed, most of our arguments over Government are not 
over the investment end of it; they are over the operational costs. 
Such issues relating to welfare and some of the consumption questions 
certainly will come up in the coming weeks and months on this very 
floor. I have not heard much anger, frankly, over capital investments 
that past generations have made in this country. That is not what this 
debate is about. We all recognize that public investment continues to 
decline. We all recognize that someday the bill will come due. We all 
recognize that if we do not address it now, this problem is going to 
continue to become more complicated. It will compound and become even 
more expensive.
  The amendment before us is neither radical nor complicated. It is a 
coming of age for the Federal Government. It would give us the tools 
that every other competitive trading nation in the world already has.
  Twenty years ago, the first Budget Act was passed. Frankly, I think 
it was regarded as revolutionary.
 For the first time, Congress would know how much money was being 
spent, and on what, before it was spent, not afterward.

  By now, Congress has done practically everything possible to the 
Budget Act except to repeal it. But still we do not have a handle on 
spending.
  We cannot agree, between 1990 and today, whether the trust funds 
allocated to future Social Security benefits should be counted against 
current deficit spending. We took Social Security off budget 5 years 
ago. This week, we nullified that decision. No wonder there is 
budgetary confusion.
  It is time for another revolution, similar in scope to the one that 
brought the Budget Act into being. It is the single step that would 
give us the tools needed to change business as usual in Washington.
  The Biden amendment would make that revolutionary,
   commonsense change. It would allow us to balance the budget and at 
the same time promote the long-term investment that we all want, the 
long-term investment that would give us a real level of confidence 
that, indeed, we can look to the future in the belief that we can, 
indeed, improve our productivity and strengthen our economy.

  I yield the floor.
  Mr. BRADLEY addressed the Chair.
    
    
  The PRESIDING OFFICER. The Senator from New Jersey [Mr. Bradley] is 
recognized.
  Mr. BRADLEY. Madam President, I rise in support of the amendment 
offered by the distinguished Senator from Delaware and as an original 
cosponsor. I think this is one of the most important amendments that we 
will consider in this entire debate on a balanced budget amendment. It 
goes to the question of truth in budgeting.
  I read in the paper constantly how the proponents of the balanced 
budget amendment say, why can we not balance the budget? Our average 
citizen in New Jersey has to balance his or her budget, and so does the 
citizen in Maine or South Dakota or Utah. In fact, I have heard people 
say, if the factory worker can do it, why can we not do it? If the 
insurance salesman can do it, why can we not balance our budget?
  Madam President, I suggest that average people out there in the 
country today, by a surprising margin, do not balance their own 
budgets, in the way we would have to under this balanced budget 
amendment. I think there is a very important distinction to be made 
between people who spend money for consumption and people who spend 
money for investment.
  The average person today, assuming that he has a credit card, spends 
money by using that credit card and piles up debt. This type of 
spending is primarily for consumption. At the same time, my guess is 
that there are millions of Americans who have mortgages on their homes. 
Madam President, under the rules established by this balanced budget 
amendment, any American who has a mortgage on his or her home would not 
have a balanced budget. Under the balanced budget amendment, all 
capital expenditures have to be funded currently, which means that if 
you were going to buy a home under the balanced budget amendment, you 
could not get a mortgage; you would have to pay for the whole house in 
1 year. How many people in this country do that? Not very many. They go 
to the bank and they get a mortgage, and as a result of this mortgage, 
they pay the house off over many years as they use it, and as the 
benefit of the asset accrues to them. They also pay the interest 
charges every year.
  Madam President, let me suggest that there is a great difference 
between a mortgage and credit card debt. Similarly, there is a great 
difference at the Federal level between operating expenses and capital 
expenditures. Operating expenses fund consumption, the day-to-day costs 
of running the Government, including everything from veterans' programs 
to the FBI to employees' salaries. The benefits of this type of 
spending are used up almost immediately. However, when the Federal 
Government makes a capital expenditure, meaning an investment in a 
physical asset such as a building, a highway, or a port, the benefit 
from that asset does not accrue to the country in that first year. It 
accrues over time. Yet, the balanced budget amendment, as it currently 
stands, would require us to put the whole cost in the budget up front, 
unlike the average citizen.
  Therefore, Madam President, the first point I want to make is that 
there is a real distinction between financing day-to-day expenses and 
financing long-term investment. American families know that 
distinction. That is why they have credit cards and mortgages--one to 
pay for day-to-day expenses; the other, to finance long-term 
investments. The Federal Government should operate the same way 
American families do. We should have a Federal budget that balances our 
operating expenses. We should not have a Federal budget that requires 
short-term balance on long-term investments.
  So that is the first point I would like to make. Under this 
amendment, capital expenditures are listed in a separate budget from 
the operating expenditures. And while a three-fifths vote would be 
needed to allow borrowing for the operating budget, if you want to 
borrow on the capital budget, it would take only a majority.
  The other argument we have heard in this debate, is that States 
balance their budgets, so why can the Federal Government not balance 
its budget?
  Madam President, States do not balance their budgets as the Federal 
Government would be required to balance its budget under the terms of 
this amendment. We all live in different States. Let us take my State 
of New Jersey. We have a balanced budget requirement in New Jersey. The 
State must balance the budget. That is what it says. However, we also 
realize the importance of making long-term investments for our State's 
future. Therefore, notwithstanding the balanced budget requirement, the 
State has the authority to borrow to finance capital investments. In 
addition to general obligation bonds issued directly by the State of 
New Jersey, we have a number of State authorities that are authorized 
to borrow to finance long-term investment projects. These authorities 
include the New Jersey Economic Development Authority, which as of 
November 1994 had $3.6 billion in debt outstanding; the New Jersey 
Turnpike Authority, $2.8 billion; the New Jersey Educational Facilities 
Finance Authority, $1 billion; the New Jersey Sports and Exposition 
Authority, $900 million; the New Jersey Building Authority, $700 
million; the New Jersey Highway Authority, $640 million; the New Jersey 
Waste Water Treatment Trust, $620 million; the South Jersey 
Transportation Authority, $590 million; the New Jersey Water Supply 
Authority, $150 million; and the South Jersey Port Corp., $40 million.
  In total, Madam President, New Jersey had 19.8 billion dollars' worth 
of debt in 1992 which was used to finance capital projects. The total 
annual New Jersey State budget is around $16 or $17 billion. If New 
Jersey had to balance its budget as the Federal budget would have to 
balance its budget under the balanced budget amendment, New Jersey 
would have to spend more in annual debt payments than it now spends.
  Madam President, despite the importance of investing for our Nation's 
future, the balanced budget amendment does not distinguish between 
operating and capital expenditures. Instead, the amendment, unlike the 
balanced budget requirements in New Jersey and 42 
[[Page S2742]] other States, lumps both of these categories together by 
limiting the Federal Government from borrowing to finance long-term 
investment. The balanced budget amendment would require that the full 
cost of each investment project be paid immediately regardless of the 
term of the investment's life. In other words, in New Jersey, $19 
billion would be due next year because that is how much New Jersey is 
in debt with the so-called balanced budget amendment at the State 
level. If this rule were applied to families, they would be forced to 
pay off their entire mortgage immediately and they could never again 
borrow to buy a home, pay for college, or finance any other long-term 
investment.
  Do we really want to hamstring the Federal Government in this manner? 
I think not. American families do not do it; our States do not do it. 
What is good for families and States should be good for the Federal 
Government.
  We ought to have a separate capital budget. Therefore, the capital 
budget amendment that the distinguished Senator from Delaware has 
offered would do nothing American families, businesses, and States do 
not already do.
  By allowing the Federal Government to borrow to finance long-term 
investments, this amendment would allow the Federal Government to 
manage its finances in the same way that most States, families, and 
businesses manage theirs. That is what this amendment is all about.
  Why treat the Federal Government differently? Who would argue that 
families in this country should be prevented from taking out mortgages? 
Why should we say to New Jersey taxpayers, ``Pony up for the whole 
State budget plus the total for all State borrowing, all $19 billion 
worth, to pay that debt off?'' Why should we say to businesses that 
borrow to finance capital investments in plant and equipment, ``Nope, 
you can't do that. You have to pay it all off in the same year you buy 
it.''
  The reason that we do not do that, of course, with regard to 
families, businesses, and State governments, is that we recognize the 
connection between long-term investment, economic growth, and job 
creation.
  The more investment you have, the more jobs you have. The more long-
term investment you have, the broader your foundation for economic 
growth is over time.
  How often do we hear about the balanced budget amendment, ``We need 
to reduce the deficit. We need to eliminate the debt. We need the 
balanced budget amendment because it is through debt passed on to 
subsequent generations of taxpayers that the ultimate unfairness comes 
in.''
  However, these same concerns about intergenerational cost shifting do 
not seem to come into play when we discuss the possibility of issuing 
debt to finance long-term capital projects that provide benefits over a 
number of years. Why pay for the benefits of a bridge in 1 year when 
those benefits are going to flow over 50 years? Why pay for the 
benefits of your home in 1 year when the benefits are going to flow 
over 50 years? American homeowners do not pay for all those benefits in 
1 year. They pay over 10, 20, 30 years.
  Why should the Federal Government be different? In short, it should 
not.
  But there is a bigger point here and the bigger point is that capital 
investment, whether you are running a company or a government, is 
enormously important because it is through investment that we increase 
productivity which provides a foundation for long-term economic growth. 
That increased productivity is critical if we wish to enhance long-term 
job opportunities, improve our standard of living, and keep our Nation 
competitive in an increasingly international marketplace.
  Capital investments are investments in the long-term productivity of 
our economy and in the living standards of our citizens. However, 
because these advantages do not become apparent until several years 
after the funds have been invested, they are often underfunded, 
particularly when funds are tight, as they are now. Budget decisions 
tend to focus on immediate, operating needs. As a result, long-term 
investments get shortchanged.
  By separating capital expenditures from operating expenditures, we 
ensure that these long-term investments are not overlooked in the 
budget process. By allowing them to be financed through debt, we can 
ensure that the long-term economic vitality of our country will be 
preserved.
  The threat of insufficient capital investment is very real. Recently, 
a group of 435 economists signed a statement that warned:

       There is a danger in the current antigovernment tone of our 
     national discourse that we as a Nation will forget the 
     essential economic contribution made by public investment in 
     our people and in our infrastructure.

  ``Public investment.'' Ask anybody who lives on the east coast, west 
coast, or gulf coast of the United States how important ports are. 
Those are big capital investments.
  Ask anybody that lives anywhere in the United States how important 
highways are. Ask anybody who lives in a larger metropolitan area how 
important mass transit is. Ask anybody in the West how important dams 
are. Ask anybody in the dry West, beyond the 100th meridian, how 
important irrigation is. Ask anybody beyond the 100th meridian in the 
West how important public investment in power are.
  Ask anybody, and they will tell you that it is on the strength of 
investment, both public and private, that long-term economic growth is 
based.
  Madam President, I would simply suggest that if we look at the public 
investments in the 19th century. The distinguished Senator from Idaho 
is here. He knows how important the dams are in the West. He knows how 
important the irrigation systems are in the West. Madam President, if 
we could not finance those systems with debt, we would have to account 
for it all in the first year. We would have to pay the entire cost 
upfront. Most of those projects would not have been built had it not 
been for the Federal Government's ability to borrow and, in the future, 
many projects such as these will not be built.
  We need to liberate capital spending from these requirements. We can 
do so by having a separate capital budget, a capital budget that would 
be capped at 10 percent of the total operating budget outlays. If we 
were able to do that, I believe that we would all benefit--our country 
would benefit and our children would benefit.
  Madam President, I would like to close by emphasizing that the 
problem we are seeking to resolve by creating a separate capital budget 
is a real one with significant repercussions for our children and 
grandchildren. Like those economists said, if we do not make those 
investments, then our future will not be secure. How we choose to 
finance long-term public investments will have enormous consequences on 
the economic well-being of future generations. It is just as 
irresponsible to leave children and grandchildren with an enormous debt 
burden as it is to leave them without the infrastructure necessary for 
them to build their future.
  I believe it is this concern about the impact of our decisions on 
future generations that is really driving the balanced budget 
amendment. If we are truly concerned about our children and their 
economic well-being, then it is clear that the time has arrived for a 
capital budget.
  I yield the floor.
  Mr. CRAIG. Mr. President, I now yield 5 minutes to the Senator from 
Illinois.
  Mr. SIMON. I thank my colleague. If I may have the attention of my 
friend from New Jersey and tell him that I agree completely on the need 
for long-term investment. But I believe the case is not there for 
carving out this exception for the balanced budget amendment.
  It is very interesting that you mention the interstate highway 
system. President Eisenhower, to his great credit, proposed the 
interstate highway system. And he suggested that we issue bonds for it. 
And a U.S. Senator by the name of Albert Gore, Sr., stood up and said 
we should not issue bonds, we should have a gasoline tax to pay for 
them. And as of about a year or maybe a year and a half ago, the 
estimate was we saved $750 billion in interest.
  The largest project we have now is a nuclear carrier. $7 billion or 
so is paid over 5 years. We can do that on a pay-as-you-go basis.
  GAO has said we ought to separate investment from consumption in our 
budget. I agree with them. But they 
[[Page S2743]] also warn we have no necessity for a capital budget as a 
local unit of government may have.
  It is also interesting, as we look at the history of our budget, as 
our deficits have grown, our capital investment has diminished so that, 
if we are interested in capital investment, what we ought to be doing 
is getting the deficit down and, in fact, we will have more capital 
investment.
  Now, I happen to favor, for example, moving ahead in a massive way 
for mass transit. I think we could say to the Chicago Transit Authority 
and the others, ``We are going to set aside 2 cents of our gasoline, 
$2.4 billion, for your capital investment,'' and then if they want to--
because they do not have the ability to do anything--if they want to 
issue bonds, they can do that.
  I would finally point out that this balanced budget amendment, 
believe it or not, does not prohibit capital investment, in a way that 
I happen to think is not the desirable thing. The Judicial Building 
right next to Union Station was a project designed by our colleague, 
Senator Pat Moynihan. Architecturally, it is one of the most attractive 
buildings in the Capitol area today. Without my knowledge--because I 
would have voted against this method of financing--we are leasing that 
for 20 years, and at the end of 20 years we will own that building. I 
do not favor that, but I mention that simply to suggest there is 
flexibility within this amendment.
  Mr. BRADLEY. Mr. President, if I could respond to my distinguished 
colleague from Illinois.
  Mr. SIMON. I know we are limited to 20 minutes. If you can respond on 
the time of Senator Biden.
  Mr. BRADLEY. Anyway the Senator from Illinois would like--I would 
like to accommodate him because I think he raises a couple of good 
points.
  He raises the issue of the U.S. highway being built. Why do you need 
debt? I wonder if the Illinois Turnpike Authority is financed the same 
way. The New Jersey Turnpike is not financed the same way. We float 
bonds.
  I note that in the 1950's there were a couple of years in which the 
Federal Government ran a surplus on a current year basis. We had no 
gigantic national debt, a very minuscule national debt, we ran a 
surplus. This allowed us the freedom to finance major capital projects 
on a pay-as-you-go basis.
  However, I would say there is a great difference between our 
situation today and the situation that faced young Senator Albert Gore, 
Sr. when he proposed his amendment. The difference is about $4.3 
trillion worth of debt.
  As we try to balance the budget, we will be forced to make dramatic 
spending cuts. The capital budget amendment would simply cause us to 
weigh an investment's long-term benefits against its long-term costs. 
If the benefits outweigh the costs, we should be able to finance the 
project over its projected lifetime. Without this amendment we will be 
forced to budget for the entire cost of a capital investment in its 
first year and compare this cost to the many competing, and frequently 
legitimate, demands for current consumption spending.
  The Senator makes a second point which is that as the deficit has 
grown, capital investment has dropped, to which I would say, ``And the 
sun comes up in the morning.'' Of course, as deficits grow, capital 
investments drop. Capital investments drop because the public sector 
crowds out the capital markets. Instead, the money goes to finance 
public sector consumption. As a result, there is relatively little 
available for private sector investment.
  But that is not the point. The point here is the public budget. 
Unless we act, public investment will continue to drop as we attempt to 
reduce the deficit. Ask yourself, you are a practicing politician, are 
you going to respond to the guy that comes in and says you know what we 
need is a new highway system. What we need is a new dam. Or what we 
need is a new power plant. Or are you going to say, I will give you the 
power plants, the bridge, the highway, but all you senior citizens, all 
you middle-class taxpayers, all you others out there who want to eat 
into a shrinking amount of available public funding, I will say no to 
you so I can make this long-term investment? This never happens. It has 
not happened in the past and is not likely to happen in the future. 
That is precisely why we need a capital budget.
  Now the Senator made one last point about how the balanced budget 
should be flexible. I agree and would simply ask the question: Why is 
what is good for the American family not good for the Federal 
Government? Why is it that American families, when they buy a long-term 
asset, their home, get a mortgage and pay it off as they benefit from 
it each year in terms of interest payments? Why is that okay for the 
American family but not okay for the Federal Government? Why is it that 
Governors across this country say they have a balanced budget but still 
assume debt to finance long-term projects?
  In my State alone, the State budget is $16 to $17 billion; the amount 
of amassed debt is $19.8 billion. Why is what is good for the Governors 
is not good for the U.S. Government? Why is what is good for the 
American families is not good for the U.S. Government?
  So I would simply say, I think the Senator has raised a number of 
interesting questions, to which there are answers, and I have done my 
best to try to answer him.
  (Mr. DeWINE assumed the chair.)
  Mr. DORGAN. Mr. President, I wonder if the Senator will yield for a 
question. I am going to support the amendment that is on the floor 
because I think it makes a lot of sense, but I am always interested in 
this notion of families versus Governors. The major difference here is 
every American family who has debt is required not only to pay interest 
on the debt but to pay down the principal payment after payment after 
payment.
  The difference is, the Federal debt keeps increasing because we pay 
interest and increase the principal year after year after year. That is 
a very fundamental difference between families and Governors.
  Mr. BRADLEY. If I could respond to the Senator, I take his point. At 
the same time, no family is going to put the full price of the house 
out. No family is going to be required, as we would be under the 
balanced budget amendment, to pay this full amount upfront. I think 
there is a significant difference. I take his point on the narrower 
issue. On the broader issue, I do not think anybody wants to say to 
American families, ``You can't buy your home with a mortgage, you have 
to pay for it all up front.''
  I think that is what we are saying under this balanced budget 
amendment, that you cannot finance long-term investment out of debt and 
that, in my view, will be counterproductive; it will lead to lower 
economic growth and fewer jobs.
  Mr. SIMON. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 1 minute.
  Mr. SIMON. Mr. President, first of all, I think Senator Dorgan makes 
a very good point. I will add, that family does not mortgage itself 
because they want to but that is the only way they can acquire the 
thing. When you have a $1.6 trillion budget and the biggest capital 
item is $8 billion, less than 1 percent of that budget, then you do it 
on a pay-as-you-go basis.
  Second, the point that was made for States, I happen to know a little 
bit about the Illinois toll road. I was in the State legislature. I 
voted against it. I wanted to do it on a pay-as-you-go basis. We could 
have done it, and no one in Illinois would be paying tolls today if we 
had been prudent.
  The reality is, we have the lowest gasoline tax of any country 
outside of Saudi Arabia. If we want to do something in mass transit or 
highways, we can do it on a pay-as-you-go basis.
  Finally, I urge that everyone listen to what the General Accounting 
Office suggests and that is we ought to divide our budget into 
investment and consumption but not have a separate capital budget as an 
excuse for a deficit.
  Mr. BRADLEY. If the Senator will yield.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BIDEN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. BIDEN. How much time remains in control of the proponents of the 
amendment?
  The PRESIDING OFFICER. Twenty-three minutes and ten seconds.
  [[Page S2744]] Mr. BIDEN. I yield time to my friend from New Jersey.
  Mr. BRADLEY. Mr. President, I thank my distinguished colleague. I 
simply would like to make the point again, the Senator said people 
would not be able to buy homes if they could not get mortgages. Right, 
that is true. Why did we decide we would allow them to have mortgages? 
So they would buy homes, employ people and, at the same time, make an 
investment that lasts a long time, precisely because it is in the 
interest of this country to have investments in homes that last a long 
time.
  Mr. BIDEN. If the Senator will yield, why did we allow them to deduct 
the interest they pay on their mortgage? To further encourage them to 
buy.
  Mr. BRADLEY. Why do we build the roads that got them to the homes in 
the subdivisions? Same reason. But there is a difference between that 
and sending somebody a check that they spend tomorrow. That is the 
operating budget. Send people a check and they spend it tomorrow. You 
can do debt like that, too.
  You can have a credit card as an individual, you can go out and 
spend, consume, go to the movies, buy your wife dinner, buy some new 
clothes and put it on the credit card. That is consumption. That is the 
operating budget. In general, we should not borrow to finance such 
types of spending. However, when you buy a house, you have a longer-
term investment so you do not want to pay $100,000 or $200,000 for that 
house in 1 year, you want to spread it over time because you are going 
to derive the benefits of that house over a longer period of time, year 
by year by year.
  All we are saying is treat the American Government the same way that 
we treat American families. Treat the Federal Government the same way 
that we treat State governments.
  The distinguished Senator from Delaware was not on the floor when I 
pointed out that in my State of New Jersey, we have public 
indebtedness--State government and authorities--of $19.8 billion and, 
yet, the Governor--and every Governor who has been Governor of the 
State of New Jersey--asserts we have a balanced budget. We balance the 
operating budget, we do not balance the capital budget. The capital 
budget is debt for long-term projects that help the economy grow and 
prosper. It is nonsensical to say, ``Well, we don't need that. We are 
prohibiting it in the balanced budget amendment.''
  Instead, look what happens when you gain control over spending by 
balancing the operating budget and capping the capital budget. Under 
this proposal, the capital budget would be capped at 10 percent of the 
overall budget over time and the payoff in jobs, investment, economic 
productivity is immensely greater than that investment. I agree with 
the Senator from Illinois, it will not be made in the amounts that are 
available under a capital budget because all those demands of people 
who want to consume money we send them through the mail will be greater 
than those people who will be farsighted enough to say, ``Build this 
dam, build that highway or build mass transit.''
  Mr. BIDEN. Will the Senator yield for a question?
  Mr. BRADLEY. I will be pleased to yield for a question.
  Mr. BIDEN. One of the reasons why, as I understand it, some of us--
myself, I know the Senator from Illinois feels this way and I suspect 
the Senator from Idaho--feel we need a balanced budget amendment is 
because now the incentive is to thrust off onto our children the 
obligation of paying for what we are unwilling to make tough decisions. 
When the President put his deficit reduction package down, the three of 
us voted for it but we could not get anybody else to vote for it 
because we did not dare to say we were raising taxes on the very 
wealthy among us, we did not dare to go back and say we were going to 
cap spending for social programs, et cetera. So it was easier to let 
the debt accumulate and the incentive was to shunt it off to our 
children.
  My question is this: Will we not just be supplanting that incentive 
to shove off onto our children debt that we do not want to meet and 
instead shove off on our children the lack of the infrastructure they 
are going to need to be able to compete?
  How many people in here are going to go home and say in New Jersey, 
Delaware, Illinois, Maine, wherever, ``By the way, the reason why I 
voted against providing more money for education is because we think 
that the Port of Wilmington and the Port of Camden need an investment 
of 12 new cranes which are going to cost a half-a-billion dollars, 
because in order for us to be able to compete with the Germans, we have 
to be able to export more to Europe of the automobiles that we are 
building.
  How many people are going to find that their town meeting folks are 
going to say, ``Now let me get this straight, you mean to tell me my 
kid is not going to have as much money for school this year or for a 
college loan program this year or for tuition this year because you are 
telling me you invested so my grandkid will be able to compete with the 
Germans 10 years from now?''
  Has anything in the political experience of the Senator from New 
Jersey led him to believe that will be the norm for American 
politicians?
  Mr. BRADLEY. I will reply to the distinguished Senator from Delaware, 
there is one simple answer: Those investments will not be made.
  Mr. BIDEN. Bingo.
  Mr. BRADLEY. There are not profiles in courage enough for people to 
take longer-term decisions, witness this deficit and debt. The Senator 
is exactly right.
  He points out that we will have a balanced budget amendment that will 
simply reduce the chances for better jobs, more jobs, higher incomes 
for our children because we will not be building the kind of 
infrastructure and the kind of investments that most every State in the 
Union finance by borrowing.
  In my State, the New Jersey Turnpike Authority has financed through 
borrowing what is probably the best known investment. I guess there is 
not a Member of this body who has not ridden on the New Jersey 
Turnpike. That would not have been built if it had not been debt 
financed. I do not know if anybody has gone to Giant Stadium or to the 
racetrack built under the auspicies of the the Sports & Exposition 
Authority. They would not have been built if they had not been debt 
financed. I do not know if many people know about the incredible dams 
in the west that would not have been built.
  Mr. CRAIG. Will the Senator yield?
  Mr. BIDEN. I will be happy to yield on the Senator's time.
  Mr. CRAIG. Specifically to the point of New Jersey, if you take the 
capital investment bonded by the State of New Jersey and the surpluses 
invested in the employment trust funds and you put them into a unified 
budget with the operating budget of the State of New Jersey, that is, 
the General Accounting Office report, October 1983, as we do at the 
Federal level in a unified budget, guess what you have in the State of 
New Jersey? You have a balanced budget based on revenue, based on the 
value of the trust funds, based on the capital investment from bonding, 
and that is why you have the rating you do in the bond system.
  Now, what the Senator is saying is true, but we must tell the whole 
story. And the whole story is the net assets versus the expenditures of 
the State of New Jersey.
  Dick Gephardt over in the House asked for that report, and in almost 
all cases with all States, if you look at it through the eyes of a 
unified budget, which the Senator is not arguing at this moment----
  Mr. BRADLEY. Absolutely.
  Mr. CRAIG. But the Federal Government does look at it in the eyes of 
a unified budget, because that is how we treat Social Security--and 
that has been argued here in the Chamber--then, I say to my friend, the 
rest of the story is that when you put it all together, the State of 
New Jersey, being as fiscally responsible as they are, is balancing 
capital, capital reserves in the trust funds of the retirement system 
versus the investment of the bonds they floated and the obligation they 
get as an A or a AAA rating and their operating fund and they have a 
near balanced budget. That is the reality of the report.
  Mr. BRADLEY. I would say to the distinguished Senator that they might 
have a AAA rating, but it does not 
[[Page S2745]] equal the rating of the U.S. Government. And the reason 
it does not equal the rating of the U.S. Government is because we can 
print the money. State borrowing is not as secure. There might be a 
Governor in New Jersey that might make some bad economic decisions. 
This might result in a bigger deficit than investors had imagined. 
Lenders might believe that the State is not making a good investment. 
At some point they might not be funding the pension funds as they 
should be funding the pension funds. In fact, right now that is the 
debate. And indeed that might affect their rating.
  But we are talking about the Federal Government. I would say to the 
distinguished Senator as well, look, I voted to take the Social 
Security trust funds out. Let us have the trust funds as a separate 
part of the budget. Let us have an operating budget and then let us 
have the capital budget. Let us organize it clearly and tell the 
American people, as the Senator points out, just like the State of New 
Jersey, so that we can then say we have a balanced budget if we balance 
the operating expenditures.
  Mr. BIDEN. Will the Senator yield for a moment for me to respond?
  Mr. CRAIG. I would yield only on the Senator's time.
  Mr. BIDEN. Yes, on my time.
  As I understand what the Senator just said, put another way, if New 
Jersey wanted to pay off its bonds, it would have to take all the money 
it has in its pension funds. Bingo, that is a great idea, is it not? 
What does that do? I mean look, this is not real complicated.
  The Senator from Idaho just laid it out. He said, look, if you take 
the money that is in here for the pension funds, all that money that is 
saved up, and you take the revenues that are coming in on a yearly 
basis and you look at the money that is being paid out and the 
indebtedness, you are almost balanced. That is almost balanced if you 
empty the bank account, the bank account being the pension funds, which 
means those people do not get paid their pensions. What are we talking 
about here?
  Mr. CRAIG. Will the Senator yield?
  Mr. BIDEN. Sure, on the Senator's time.
  Mr. CRAIG. The Senator knows he is not talking about that. The 
Senator is talking about an annual payment on the bond, not emptying 
out the trust funds. We are not emptying out Social Security. The 
bottom line is that GAO agrees with me against the Senator on the 
concept of a unified budget. Now, the Senator can play the rhetorical 
games but the reality is States cannot print money. They must borrow.
  Mr. BRADLEY. Will the Senator yield?
  Mr. CRAIG. No, I will not. They keep their rating by their fiscal 
responsibility. That is exactly what they do. Interestingly enough, 
when you put it all together State by State, while we do not have a 
capital budget--and we know we do not have it, and the reason we do not 
have it is because we like the pay-as-you-go basis; it controls our 
ability to spend and we know we cannot control our ability to spend--
then States are not in a bad shape. States have been offered this 
financing mechanism simply because they do not have the ability to 
print money, because they are a part of the whole.
  Now, we know that. Senators know that. And it comes down to the 
reality of fiscal solvency. States do not borrow beyond their ability 
to pay.
  Mr. BIDEN. Mr. President, on my own time.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. BIDEN. Let me talk like a good old-fashioned Republican here. Let 
us talk about how people back home do it.
  Now, let us just look at what the Senator said. He said States have 
debt. Well, they have debt. We are just saying we should not have any 
debt. But he is saying--let us get this straight--we are going to 
collect in taxes in New Jersey as we collect in taxes federally from 
the FICA tax for Social Security and the income tax and excise tax and 
all the other taxes, the State of New Jersey, the State of Delaware, 
the State of Illinois, the State of Utah, we are going to collect this 
money. Now, under the system that they are setting up, the total amount 
of money we collect cannot be less than the money we pay out. Right? 
OK, so far so good. New Jersey does the same thing. But what we are 
doing in our unified budget is we are spending the Social Security 
pensioners' money.
  Mr. BRADLEY. If the Senator will yield at that point.
  Mr. BIDEN. Surely.
  Mr. BRADLEY. And by the logic of the argument of the Senator from 
Idaho, he thinks we should continue to raid the Social Security trust 
funds in order to balance the budget.
  Mr. BIDEN. Precisely. If I can say to my friend, and he also thinks 
the State of New Jersey--I do not know that what they do is different 
than Delaware; I do not know what New Jersey does, but in most States 
they do not take that money and spend it to pay for roads. Some States 
do. Most do not. They have it segregated, their pension funds.
  Mr. BRADLEY. Will the Senator yield on that point?
  Mr. BIDEN. Surely.
  Mr. BRADLEY. New Jersey is the exception in that as well because New 
Jersey--I do not know what the date of the Senator's economic report 
is, but in the recent New Jersey budget, the State borrowed $3 billion 
from the pension funds to fund the deficit.
  Mr. BIDEN. Right. Now, let us get it like the homeowner does. Let us 
say a homeowner decides, I want to retire, and I am just going to leave 
the State of Delaware or the State of New Jersey. I want to sell all my 
assets and pay all my debts. OK. Well, what he or she has to do is sell 
the house, sell everything they own. They take everything, all their 
income, that year. They pay everything off. And whatever they have left 
means they are either in debt as they leave town on borrowed money for 
an Amtrak ticket or they have money in their pocket.
  Now, how about if you put the State of New Jersey or any other State, 
or the Federal Government in the same situation.
  What happens now? In order for the State of New Jersey to pay off all 
that it owes, that is, its bond indebtedness, in 1 year, and all that 
it costs to operate the State for 1 year, it has to go and take money 
out of the pension fund. They could, if they took all the money out, 
settle all their debts. But now there is no money left for my uncle 
when he retires.
  Now, I do not call that solvency.
   It may be that technically it is solvent, but it sure puts a lot of 
people in jeopardy.

  I do not want to carry this too far except to say, look, there is 
nothing sacrosanct about the way this amendment is written--this main 
amendment is written. It makes sense to make sure we do not shift the 
incentive from accumulating debt on our children's backs so they have 
to pay interest on the debt, to denying them the ability to have any 
infrastructure left where they can make this country competitive.
  Mr. BRADLEY. Will the Senator yield for one last point?
  Mr. BIDEN. I will be delighted to.
  Mr. BRADLEY. Again, back to the New Jersey example, the State budget 
is roughly $16.9 billion, the indebtedness is $19.8 billion. Imagine 
what would happen to taxes if you had to fund New Jersey investment the 
way this amendment would require us to fund Federal investment.
  Mr. BIDEN. In 1 year.
  Mr. BRADLEY. In 1 year.
  Mr.BIDEN. Without being able to raid the retirement fund.
  Mr. BRADLEY. Right, while protecting the pensions.
  Mr. BIDEN. Mr. President, we talked about State total indebtedness. I 
ask unanimous consent to have printed in the Record this survey of 
State and local governments by the U.S. Bureau of the Census. It is in 
current dollars. Just going back to 1983, the total indebtedness was 
$167,289,000,000 for the States. In 1993, 10 years later, it is 
$387,680,000,000 indebtedness.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                  State government total indebtedness

                        [In millions of dollars]

Fiscal year:                                                     Amount
  1993..........................................................387,680
  1992..........................................................371,901
  1991..........................................................348,769
  1990..........................................................318,254
  1989..........................................................295,500
  1988..........................................................276,786
  1983..........................................................167,289
  [[Page S2746]] 1978...........................................102,568
  1973...........................................................59,374
  1968...........................................................35,666
  1963...........................................................23,176
  1958...........................................................15,394
  1953............................................................7,824
  1948............................................................3,676

Note.--Amounts are in current dollars. Total indebtedness amounts 
include both long- and short-term debt. Long-term debt includes full-
faith and credit (general obligation) and revenue debt. State 
government debt total excludes debt obligations of local governments; 
in fiscal year 1992 local government debt amounted to $598 billion 
compared with $372 billion for State governments.

Source.--Annual Survey of State and Local Government Finance, U.S. 
Bureau of the Census.
  Mr. BIDEN. Let us just hope everybody does not think we know what we 
are doing here and decide to pass in every State a balanced budget 
amendment like we have here, because we will be in chaos. Why, 
everybody who stood up--the distinguished Senator from Utah, the 
manager of the bill is here. His Governor, a really solid guy, a guy 
who is a fiscal conservative I assume, a guy who is straight as an 
arrow, and I asked him, ``Do you balance your budget?''
  He said, ``No, we have a capital budget.''
  I said, ``Should we have one federally?''
  He said, ``Well, it is something you should look it. It seems like a 
pretty good idea to me.''
  Did anybody go out there and survey the Governors, whom we all think 
somehow God invested them with some new knowledge now? Governors are 
in. That is great. Ask them do any of them object to us having a 
capital budget? This is silly, refusing to do this.
  I see my friend from New Jersey is on the floor. Would he like some 
time yielded?
  Mr. LAUTENBERG. I would.
  Mr. BIDEN. Please, go ahead. I have 8 minutes left. Is 5 minutes 
sufficient?
  Mr. LAUTENBERG. I will talk fast.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. LAUTENBERG. Mr. President, I thank the Senator from Delaware for 
his courtesy. I also want to commend my senior colleague from New 
Jersey because, though our arguments are going to be essentially the 
same, I thought he did his very well.
  I want to talk about this, the notion of separating the Federal 
budget into capital and operating budgets, and only requiring that the 
operating budget be balanced, which is what I hear being said here. I 
come out of the business community. I served as CEO of a major American 
corporation and got my financial experience there. So as I approach 
this problem, I see it, perhaps, from a moderately different 
perspective than some.
  Mr. President, I strongly support cutting wasteful spending and 
reducing the deficit, but I have serious concerns about putting rigid 
rules for fiscal policy into the Constitution. The balanced budget 
amendment to the Constitution should be defeated. However, if we are to 
have such a constitutional requirement, it should at least establish 
rules that recognize simple and practical realities.
  House Joint Resolution 1, unfortunately, does not do this. By 
continuing commingling of capital and operating budgets, it would 
incorporate budgetary procedures in our Constitution--the permanent law 
of the land--that no aware businessperson would ever think about 
adopting for their business. It flies in the face of common sense and 
standard business practice.
  Mr. President, how many times have we heard the same argument: If 
ordinary Americans can balance their family budgets, if State 
governments can balance their budgets, and if businesses can balance 
their budgets, why can not the Federal Government?
  It sounds good, Mr. President. And the real answer is that, yes, 
families, States and businesses balance their budgets, principally 
because they are able to borrow for long-term investments and spread 
that investment over a period of time so it is accounted for in 
relation to the life of the asset as it is used. Families borrow money 
to buy a house or a car. For most families the achievement of an asset 
base is almost exclusively because they are able to mortgage a piece of 
property, pay it off over a period of time, and accumulate some 
capital.
  States borrow for capital projects that will provide long-term 
benefits, like roads and bridges. And, every day, businesses borrow to 
invest in plant and equipment to make them more competitive. If they 
did not, most would have no future, especially in today's increasingly 
technological age. They know they need to make investments in the 
future. That is why they do not balance all receipts and expenditures--
they balance only their operating budgets.
  By contrast, Mr. President, House Joint Resolution 1 in its current 
form lumps the capital and operating budgets together, and makes no 
distinction between investments and operational expenses. As a former 
CEO of a major cooperation, I can attest that this approach violates 
the most basic principles of budgeting in the private sector. Virtually 
no major business in America commingles their capital and operating 
budgets. Nor do State governments, and for good reason.
  Mr. President, too much borrowing is a dangerous thing, that is 
clear. But borrowing per se is not an evil thing. In fact, it is often 
the most appropriate way to finance long-term investments.
  To illustrate the point, let us consider a town that is trying to 
attract investment by high technology companies, but which lacks the 
schools needed to support such companies.
  If the town cannot afford to build new schools, its only option would 
be to borrow. By doing so, and building those schools, the town would 
promote economic growth, improve the quality of life for years, and 
spread the costs among all the generations who would benefit. In other 
words, it would be a win-win situation for everybody.
  But now let us assume that this town must live under House Joint 
Resolution 1. What would happen? The answer is: absolutely nothing. The 
town could not afford the new schools. It would not attract high 
technology investment. Jobs would be lost. And the town's long-term 
future could be threatened. All in all, it would be a lose-lose 
situation for everybody.
  Well, Mr. President, the fate of that town is really a metaphor for 
what could happen to our country under a balanced budget amendment. Any 
item that cannot be paid for by today's taxpayers will never be built--
even if any borrowed funds would be repaid many times over, and even if 
the economy would benefit substantially by the investment.
  Mr. President, such a constitutional bias against long-term 
investment is especially troubling since our nation has long 
underinvested in our infrastructure.
  History has shown that investment in infrastructure is directly 
related to productivity. That is an economic reality that our 
competitors well understand, but which we have been ignoring. In fact, 
of the G-7 nations, the United States ranks at the bottom for 
infrastructure investment as a percentage of GNP.
  Japan spends three times more on infrastructure investment than the 
United States. The Japanese recognize that to stay competitive they 
need an efficient transportation system. To match Japan's investment 
level for just 1 year, we would need to invest over $250 billion in 
infrastructure.
    
    
  Mr. President, as we meet here today, almost one-fourth of America's 
highways are in poor or mediocre condition. Another 36 percent are 
rated only fair. One in five of the Nation's bridges are structurally 
deficient, meaning that weight restrictions have been set to limit 
truck traffic. There are unacceptable flight delays at 23 of the 
Nation's major airports. If no capacity improvements are made, 33 of 
the Nation's major airports will experience unacceptable delays by the 
year 2002. The effects of poor roads and limited air traffic capacity 
cost our economy $45 billion annually.
  As we move into the 21st century, which will demand substantial 
infrastructure investment, we are laying the groundwork for economic 
disaster.
  Mr. President, many of my colleagues have been arguing recently that 
we ought to shift power from Washington, and rely more on State 
governments to set policy. So it's instructive to see how State 
governments budget their resources. And the answer is: They borrow to 
invest.
  Take my State of New Jersey. Some of our Governors have pointed to 
our State's balanced budget requirement, and said the Federal 
Government should adopt a similar limitation. But 
[[Page S2747]] New Jersey's balanced budget requirement applies to our 
operating budget. It does not prohibit borrowing for investments. In 
fact, between 1960 and 1992, State debt increased from $914 million to 
almost $20 billion. That works out to over $2,500 for each State 
resident.
  Mr. President, balanced budget requirements in other States contain 
similar provisions for capital budgeting. So those of my colleagues who 
routinely proclaim the superior wisdom of the States should not have to 
think twice about voting for this amendment. It is entirely consistent 
with State practices.
  Mr. President, investments in our infrastructure are critical to our 
ability to compete in the global economy and to maintain our country's 
standard of living. But that investment would be impossible under this 
balanced budget amendment, which requires today's taxpayers to pay for 
benefits that only future generations will receive.
  That does not make sense. And to put this kind of misguided policy 
into the Constitution, where it would handcuff our economy in 
perpetuity, would be irresponsible.
  Mr. President, we are talking about the long-term future of our 
economy. We are talking about the future of our children and 
grandchildren. I am thinking of my new granddaughter, Mollie, who was 
born just a couple of weeks ago--and all the children born in New 
Jersey this year. I want them to have as good a life as they possibly 
can. And I want our Nation to make the investments necessary to make 
that happen.
  That is not going to be possible if the Constitution establishes 
budget rules that create a bias against long-term investment and fly in 
the face of common sense, established business practices, and State 
budgetary practices.
  Mr. President, capital budgeting works for America's businesses. It 
works for America's families. It works for State governments. It should 
be incorporated into this balanced budget amendment.
  I urge my colleagues to support this amendment.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, this proposed exemption for a so-called 
capital budget, in our opinion, could help evade the purpose of the 
balanced budget amendment. So I urge its defeat for five reasons.
  No. 1, this provision opens up a loophole in the balanced budget 
rule. There would be a powerful incentive for Congress and the 
President to help balance the budget by placing more programs in the 
capital budget created by this amendment. An abused or gimmick capital 
budget exemption could actually endanger capital investments, as 
falsely styled capital items crowd out real capital investment.
  It may also be that with a segregated capital budget Congress may 
limit itself to spending on capital investment only in the capital 
budget rather than spending more than 10 percent in the general budget.
  But my primary concern is this--that this provision can be used as an 
escape valve for at least 10 percent of the budget each and every year. 
Under President Clinton's proposed budget for fiscal year 1996 that 
would mean that we could have yearly deficits of $160 billion per year, 
adding to the debt we already have, and growing. That means we would 
not be improving things very much from the deficit levels currently 
projected by the President. That is my first objection to this 
amendment.
  No. 2, the loophole problem is aggravated by the fact that there is 
no standard definition of what a capital budget really is. In President 
Clinton's proposed fiscal year 1996 budget, the Office of Management 
and Budget admits this. OMB lists a number of broad categories of 
programs that may or may not be considered capital expenditures. They 
include research and development, education and training, and other 
such categories--very broad categories. Even within these broad 
categories there are questions about what programs should or should not 
be included. The amendment's attempt to cure the definitional problem 
only raises new definitional problems. The definition given is somewhat 
circular. Just what does ``major public physical capital investment'' 
mean? Each term is subject to substantial debate. This is a 
constitutional amendment. OMB's categories include a subdivision for 
major public physical capital investment, the same language used in the 
Biden amendment. This subdivision is broken into so-called direct 
nondefense and defense investments and grants to States and local 
governments.
  All of this suggests that the capital budget would be easy to 
manipulate, or as OMB says malleable. This amendment would, in fact, 
create an incentive to manipulate it. As the President's own budget 
analysis admits,--this is on page 113 of the Analytical Perspectives 
Volume of the Budget of the U.S. Government, Fiscal Year 1996, just 
submitted: It says, ``[t]hese and other definitional questions are hard 
to resolve.'' It goes on to say

       [t]he process of reaching an answer [to the definitional 
     questions] with the capital budget would open the door to 
     manipulation because there would be an incentive to make the 
     operating expenses and deficit look smaller. By classifying 
     outlays as investment and using low depreciation rates this 
     would justify more spending by the program or the Government 
     overall.

  It is particularly inappropriate to place capital budgeting in the 
Constitution when there is no agreement on what constitutes a capital 
budget.
  The third reason for my urging the defeat of this amendment is that 
the Constitution is not the place to set budget priorities. The 
balanced budget amendment seeks to create a process in which programs 
compete for a limited pool of resources. A constitutional amendment 
should be timeless and reflect a broad consensus--not make narrow 
policy decisions.
  This exemption creates in the founding document a new constitutional 
budget subdivision with a percentage cap on it. We should not place 
technical language or budget programs into the Constitution which 
undercut its simplicity and universality.
  My fourth reason for urging defeat of this amendment is that a 
capital budget exemption is unnecessary. Total Federal spending has 
generally been above 20 percent of GDP, and less than 4 percent of 
Federal outlays are for nondefense physical investment, one of the 
possible definitions of capital investment.
  In President Clinton's fiscal 1996 budget, direct nondefense major 
public physical capital investment is projected to be only 1.21 percent 
of total spending. Federal grants to State and local governments is 
projected to be 2.44 percent of total spending. So, if we add the 
nondefense capital spending to grants, the total capital investment is 
only 3.65 percent of projected Federal spending.
  Direct major public physical capital investment for national defense 
is projected to be 3.23 percent of total spending. If you added in the 
defense category, the total capital investment would be 6.98 percent of 
the total budget.
  Given the relatively small and constant share that such capital 
expenditures--as usually understood--have in a very large Federal 
budget, there is no need to remove capital expenditures from the 
general budget.
  One example might illustrate the lack of need for a capital budget. 
Although President Eisenhower initially proposed that the Federal 
Interstate Highway System be financed through borrowing, Congress 
decided to keep it on budget and finance it through a gas tax at the 
suggestion of Senator Albert Gore, Sr. We are unlikely to have a 
capital expenditure of this magnitude again. But, if we do, there is no 
reason to create a standing exemption for such investment.
  If Congress decides to borrow for a particular large investment, this 
avenue is available under the balanced budget amendment as now drafted, 
and to the extent that the three-fifths vote provision in this 
amendment for additional capital investments replicates the general 
provisions of the balanced budget amendment, this amendment of my 
friend and colleague from Delaware simply is pointless. Under the 
balanced budget amendment, Congress can borrow to finance any such 
investments if three-fifths of each House vote to do so. This provision 
of this amendment is simply duplicative of the underlying amendment's 
provisions.
  The fifth reason I urge my colleagues to vote against this amendment 
is that capital spending should compete in the 
[[Page S2748]] budget like all other spending. The balanced budget 
amendment seeks to foster an atmosphere in which Congress prioritizes 
spending options within the revenues available. House Joint Resolution 
1 does prevent the creation of separate operating and capital accounts 
to show where federal money is being spent. Any implementing 
legislation which creates such separate accounts, however, must leave 
the total budget in balance, since implementing legislation cannot 
subvert the clear mandate of this amendment. But, Mr. President, 
accounting techniques should not subvert the prioritizing function of 
the amendment.
  The proposed exemption allows the entire budget to be used for 
noncapital investment like simple transfer payments, and then allows a 
10-percent increase in Federal spending--and the debt to fund it--for 
capital investments. The General Accounting Office saw the fallacy 
implicit in this exemption when it said, ``The choice between spending 
for investment and spending for consumption should be seen as setting 
priorities within an overall fiscal constraint, not as a reason for 
relaxing that constraint and permitting a larger deficit.'' GAO, Budget 
Policy: Prompt Action Required to Avert Long-Term Harm to the Economy, 
June 1992, p. 79.
  The GAO further said, ``The creation of explicit categories for 
Government capital and developmental investment expenditures should not 
be viewed as a license to run deficits to finance these categories.'' 
Id.
  Each Congress should make its own decisions about spending priorities 
each year, but within a rule of fiscal discipline as the balanced 
budget amendment would require. This is particularly true where this 
proffered exemption for a so-called capital budget is so large that it 
nearly maintains the status quo of deficits above $160 billion a each 
year. Under the provisions of this amendment, we could continue to roll 
up debt almost as fast as we do now, maybe even faster as time goes on. 
This amendment creates an exception that nearly swallows the rule.
  Mr. President, I would also note that the revenue portion of this 
amendment unduly hamstrings the Federal Government with respect to the 
sale of assets. If the Government decides to sell off some outdated or 
unneeded assets, there is no reason not to count the revenue resulting 
from the sale as revenue to the Federal Government. This provision 
might even create a disincentive to get fair value from assets we sell 
because the revenues would not count as revenues, and to me this makes 
no fiscal or business sense.
  Finally, there is a flaw in the analogy to States and private 
entities that the proponents of this amendment have made. Besides the 
fact that the Federal Government does not need capital budgeting as 
much as smaller entities, the analogy to capital budgeting by 
businesses or States is flawed because the Federal Government is not 
subject to the same checks as either private businesses or State and 
local governments. Private businesses are disciplined by markets. State 
and local governments' capital budgeting is subject to State bond 
ratings. These checks on the abuse of capital budgets would not exist 
under a Federal capital budget making it far more likely that a Federal 
capital budget could be abused.
  Mr. President, so that we can move quickly here this evening, or at 
least adequate speed, I ask unanimous consent that following the 
disposition of the Biden amendment Senator Feingold be recognized to 
make a motion to refer, and that time prior to a motion to table be 
divided in the following fashion: That no amendments be in order prior 
to the motion to table, 20 minutes under the control of Senator 
Feingold, 10 minutes under the control of Senator Hatch.
  I further ask unanimous consent that following the conclusion or 
yielding back of time on the Feingold motion the majority leader, or 
his designee, be recognized to make a motion to table the Feingold 
motion.
  I have been asked to announce by the majority leader that this is not 
necessarily the final vote.
  Mr. ROCKEFELLER. Mr. President, I want to express my support for the 
concept of a capital budget embodied in this amendment offered by 
Senator Biden and Minority Leader Daschle.
  This amendment would establish a separate capital budget for the 
Federal Government, which would be distinct from the general operating 
budget. It would provide the mechanism to make major physical 
investments that are necessary to remain internally strong and able to 
compete with other nations for the jobs and opportunities our citizens 
deserve.
  I think we all realize the benefits and importance of long-term 
investments in our Nation's infrastructure. In creating a separate 
capital budget, we would recognize the difference between the 
government spending that responds to immediate needs and the spending 
that serves as an investment in America over generations.
  Families are familiar with this concept. Millions of households 
borrow to make very specific investments in their own futures, such as 
the mortgage required to buy a home. They do this because they realize 
the long-term benefits of home ownership. They recognize that many of 
the things they buy will last beyond the time they are done making 
payments on them. My highly respected friend, the senior Senator from 
West Virginia, has described how he went into debt to purchase a 
bedroom set when he and his wife were younger. This very frugal, wise 
person made a sensible investment to increase his family's standard of 
living.
  The fundamental purpose for a capital budget is to ensure that 
America's citizens of today are targeting certain resources into our 
collective needs over future needs. When states issue bonds to pay for 
things like drinking water purification systems, they are recognizing 
that the benefits of that new system will go to many people over the 
course of 25 years of so.
  If a balanced budget amendment to the Constitution passes, it should 
be constructed to treat a one-time, one-year tax break differently than 
the long-term investments in the necessary pillars of a strong nation. 
I think of the facilities needed to keep water pure and safe. Airports, 
highways and roads are that are the lifeblood of our economy, and are 
the only way for rural areas to have real opportunities for jobs and 
industries.
  Many of those in favor of a balanced budget amendment point out that 
49 states work within a balanced budget requirement. However, most of 
those requirements allow for state borrowing to fund capital 
investments.
  In West Virginia, while we do not have a formal capital budget 
process, our state is permitted to borrow to fund long-term 
investments. The state is allowed to repay these debts over time from 
general revenues provided that there is a statewide vote granting the 
authority to do so. The state may also incur debt without this vote if 
the repayment is something other than general revenues.
  In November, the voters in West Virginia held one of these statewide 
votes and passed what was called amendment 3. It was designed to fund 
water and sewer projects--an investment they felt will give them and 
their families benefits over a number of years. Amendment 3 
specifically authorized the state legislature to issue and sell up to 
$300 million in state bonds to be paid for over a period of 30 years.
  Mr. President, as a former Governor, I am more than familiar with the 
difference between operating budgets and capital investments that 
cannot be neglected. I know the cost all too well of neglecting 
infrastructure, health and safety facilities, transportation--when I 
became Governor, I faced those costs and fought to catch up so our 
state could compete for the jobs and opportunities that we saw other 
states win as a result of their superior roads and other assets.
  I am afraid that if we pass this balanced budget amendment without 
allowing for a capital budgeting process, we will make a bad mistake 
even worse. The idea of using the Constitution to set economic policy 
is bad enough. Passing such an amendment without allowing for a 
separate capital budget that recognizes the difference between long and 
short term investments is short-sighted and could be very costly to 
future generations.
  Mr. President, all of my colleagues should vote for this amendment.
  Mr. HATCH. Mr. President, all I can say is I understand what my dear 
friend and colleague is trying to do. I just disagree, and I think the 
Senate should disagree because it would be a 
[[Page S2749]] tremendous loophole. These five reasons that I have 
listed are reasons why I think and why I believe that this amendment 
should be defeated.
  Mr. BIDEN. Mr. President, in a minute and 20 seconds I will give five 
reasons why the Senator is wrong, in my view. One, he makes conclusory 
statements. Two, major physical assets is defined in the amendment, and 
it is amazing how inventive he is about redefining what is in the 
amendment. He accurately read everything the GAO said, but that is not 
what we say in amendment. Four, we want competition to be skewed 
between long-term investment so we do not have our children paying the 
same price they are paying for the accumulated debt we have here. And 
five, nobody else does it the way my friend from Utah wants it done. I 
think it is time we ask ourselves, ``I wonder why.''
  I urge those of us in this body who agree with the need for a capital 
budget to vote against tabling.
  Mr. SARBANES. Will the Senator yield?
  Mr. BIDEN. Yes.
  Mr. SARBANES. When the Senator says ``nobody else does it the way the 
Senator from Utah is suggesting,'' the Senator is referring not only to 
State and local governments, which borrow in order to fund a capital 
budget; he is talking about businesses which borrow and about 
individuals who borrow in order to fund a capital asset; he is talking 
about all of the other countries in the world. He is absolutely 
correct.
  Mr. BIDEN. Maybe we can be different, but I hope we are not.
  Mr. HATCH. Mr. President, how much time remains?
  The PRESIDING OFFICER. There are 32 seconds remaining.
  Mr. HATCH. I will just say this. I have made the case that borrowing 
by State and local governments and by businesses is completely 
different from the borrowing for capital budgets by the Federal 
Government. I do not think you can make the analogy as simple as has 
been made by some of my colleagues.
  I yield back whatever time remains.
  Mr. BIDEN. On behalf of the minority leader, I ask unanimous consent 
that a list of some of those in support of the amendment be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Support the Biden-Bradley Amendment to the Balanced Budget Amendment

       Dear Senator: As currently drafted, the Balanced Budget 
     Amendment (BBA) would create a political straight jacket that 
     could push Congress to sell off our nation's treasured public 
     lands such as national parks, forests and wildlife refuges. 
     To help prevent this consequence, we urge you to support an 
     amendment Senators Biden and Bradley are expected to offer 
     this week to the BBA. The Biden-Bradley amendment would 
     establish a capital budget to assure continued federal 
     investments in major public assets from being counted toward 
     reductions in the operating budget deficit.
       Some policy groups have voiced support for selling off 
     public lands as a means of lowering the federal deficit, most 
     recently at a January hearing before the House Interior 
     Appropriations Subcommittee. While such a proposal seems 
     unthinkable to most Americans, the BBA could push Congress in 
     this direction. This possibility is not merely academic. 
     After a previous administration initiated wide-spread sales 
     of public assets to reach deficit reduction targets, Congress 
     approved the Budget Enforcement Act of 1990 (contained in 
     Public Law 101-508), which prohibits the Congressional Budget 
     Office from counting the sale of public assets toward deficit 
     reduction.
       The reason for such a prohibition is obvious. While sales 
     of federal assets may help reduce the deficit during the year 
     in which they occur, the resulting one-time revenues do 
     nothing to reduce the persistent spending problems that cause 
     continued federal deficits. Far from reducing spending, 
     selling public lands only results in the exchange of one 
     public asset--say a national park--for another, cash. As 
     such, it amounts to budgetary gimmickry in the name of 
     deficit elimination.
       Circumstances may well arise in which it is appropriate for 
     Congress to consider the sale of individual federal land 
     holdings. The Biden-Bradley amendment does nothing to inhibit 
     that. But the Biden-Bradley amendment does assure that the 
     balanced budget amendment does not provide a perverse 
     incentive to sell off large portions of the public estate to 
     produce phony deficit results.
       We urge you to support the Biden-Bradley amendment.
           Sincerely,
         Rodger Schlickeisen, President, Defenders of Wildlife; 
           Brent Blackwelder, President Friends of the Earth; Paul 
           Pritchard, President, National Parks & Conservation 
           Association; John Adams, President, Natural Resources 
           Defense Council; Beth Millemann, Executive Director, 
           Coast Alliance; Carl Pope, Executive Director, Sierra 
           Club; Peter A. Berle, President, National Audubon 
           Society; Victor M. Sher, President, Sierra Club Legal 
           Defense Fund; Julia A. Moore, Executive Director, 
           Physicians For Social Responsibility; Mike Matz, 
           Executive Director, Southern Utah Wilderness Alliance.

  Mr. HATCH. Mr. President, I move to table the amendment and 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 occurs on a motion to table 
amendment No. 278 offered by the Senator from Delaware.
  The yeas and nays have been ordered, and the clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  Mr. LOTT. I announce that the Senator from Missouri [Mr. Bond], the 
Senator from North Carolina [Mr. Helms], and the Senator from Kansas 
[Mrs. Kassebaum] are necessarily absent.
  I further announce that, if present and voting, the Senator from 
North Carolina [Mr. Helms] would vote ``yea.''
  The PRESIDING OFFICER (Mr. Abraham). Are there are other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 59, nays 38, as follows:

                      [Rollcall Vote No. 72 Leg.]

                                YEAS--59

     Abraham
     Ashcroft
     Bennett
     Brown
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Cohen
     Coverdell
     Craig
     D'Amato
     DeWine
     Dole
     Domenici
     Exon
     Faircloth
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hatch
     Hatfield
     Heflin
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kerrey
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Nunn
     Packwood
     Pressler
     Reid
     Robb
     Roth
     Santorum
     Shelby
     Simon
     Simpson
     Smith
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--38

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Bradley
     Breaux
     Bryan
     Bumpers
     Byrd
     Conrad
     Daschle
     Dodd
     Dorgan
     Feingold
     Feinstein
     Ford
     Glenn
     Harkin
     Hollings
     Inouye
     Johnston
     Kennedy
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Pell
     Pryor
     Rockefeller
     Sarbanes
     Wellstone

                             NOT VOTING--3

     Bond
     Helms
     Kassebaum
  So the motion to lay on the table the amendment (No. 278) was agreed 
to.
  The PRESIDING OFFICER. Under the previous order the Senator from 
Wisconsin is recognized.


                            Motion to Refer

  Mr. FEINGOLD. Mr. President, I send a motion to refer to the desk and 
ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report the motion.
  The assistant legislative clerk read as follows:

       The Senator from Wisconsin [Mr. Feingold] moves to refer 
     H.J. Res. 1 to the Judiciary Committee with instructions to 
     report back forthwith H.J. Res. 1 in status quo and at the 
     earliest date possible to issue a report, the text of which 
     shall be the following: It is a Sense of the Committee that 
     the language of the report to accompany S.J. Res. 1, Senate 
     report 104-5, which appears on page 19, and states, ``Among 
     the Federal programs that would not be covered by S.J. Res. 1 
     is the Electric Power Program of the Tennessee Valley 
     Authority which will be deemed null and void and have no 
     effect as the legislative history in interpretation of H.J. 
     Res. 1.''

  Mr. FEINGOLD. Mr. President, the purpose of this motion is pretty 
straightforward.
  The Judiciary Committee report accompanying Senate Joint Resolution 1 
has the most extraordinary passage which flatly says that the Electric 
Power Program of the Tennessee Valley Authority is not--repeating this 
now--is not covered by the balanced budget amendment, on the grounds 
[[Page S2750]] that this program is paid for by the Electric Power 
Program.
  Not another single agency in our Government is singled out in the 
committee report in this manner. Only the Tennessee Valley Authority is 
exempted. That is right. Not Social Security, that is not exempted. But 
the Tennessee Valley Authority is exempted.
  Mr. President, we have heard of appropriations pork. Now I think we 
have a new creature--constitutional pork. We are making constitutional 
history here, and at the same time we are creating a far more 
sophisticated pork than we have ever had in this institution. We are 
putting it right into the Constitution.
  Not only, then, Mr. President, are the advocates of the balanced 
budget amendment saying they will not lay out a plan and say what they 
are going to cut, they are doing it better. They are actually 
protecting one particular program over all the other programs by 
writing in committee report language. It is an incredible provision for 
a committee report.
  To put it another way, Mr. President, this is an attempt to put the 
equivalent of an earmark into a Constitution for a program that is of a 
concern to particular Members of Congress. Do not let anyone be kidded. 
The U.S. Supreme Court has to interpret the language of the 
Constitution. They will be looking at that committee report to get a 
sense of what was intended. They will see that the most important 
program apparently in all of our Government, of everything that this 
Government has ever done or ever will do is one program: The Tennessee 
Valley Authority. The only one the Judiciary Committee thought should 
be treated in a special way.
  Let me raise just two reasons why I think this language is totally 
inappropriate. First, the proponents of this language argue that the 
TVA's Electric Power Program should not be covered by the balanced 
budget amendment because the financing of that program has been the 
sole responsibility of its own electric ratepayers, not the U.S. 
Treasury and the Nation's taxpayers, since 1959.
  Now, Mr. President, that is an argument but it is certainly a 
debatable one. The Congressional Budget Office in its annual report on 
options on reducing the deficit, has this to say about the TVA Electric 
Power Program. It says:

       Because many TVA stewardship activities are necessary to 
     maintain its power system, their cost would more 
     appropriately be borne by the users of the power. Direct cost 
     to the Federal Government could be reduced by about $70 
     million annually if TVA were to increase power rates or fees 
     to cover costs of all stewardship.

  Mr. President, CBO thus says that the Federal taxpayers are, in fact, 
subsidizing the electric power user. It is not just being paid for by 
the folks in that area of the country.
  So, Mr. President, that is not a dispute we need to settle here or 
now. That is what the advocates will say every time, ``We do not have 
to decide this now.''
  But the point is that the backers of this language have attempted to 
tilt the argument on their side by placing this language in the 
committee report that will be used to interpret the meaning of this 
amendment to the U.S. Constitution.
  So what proposition does this stand for? Apparently, so all agencies 
are not equal under the balanced budget amendment. Some--in fact, one--
just one program gets special treatment.
  We will take a look at some of the other quasi-public agencies that 
could make a pretty good claim as the same status as the TVA. Looking 
at the U.S. Postal Service--and here is a routine letter I received 
from the Postal Service in December 1994--that depends exclusively on 
postage and fees rather than taxpayers' revenue for operations, and has 
done this since 1982. Each class of mail by law must cover its cost and 
we must break even over time.
  So the argument, Mr. President, that the Postal Service should 
receive special status under the balanced budget amendment would seem 
to be very much the same as the argument used to exempt the TVA. Why 
was the Postal Service not mentioned in the committee report as being 
exempted from the balanced budget amendment?
  Now, if you do not like the Post Office, and a lot of people do not, 
there are a number of other Federal programs that are operated entirely 
on revenues produced by users.
  For example, the Department of Agriculture's Marketing Service 
provides grading services on a user-fee basis for meat, poultry, eggs, 
dairy products, fruits, vegetables, cotton, and tobacco. Should these 
activities be exempted from any impact of the balanced budget amendment 
since they are entirely funded by the users and not the Federal 
taxpayers?
  Let us try the Farm Credit Administration. This is an independent 
agency in the executive branch of the U.S. Government which is 
responsible for the regulation of the examination of banks and 
associations and related entities that collectively comprise our farm 
credit system. The expenses of the Farm Credit Administration are paid 
through assessments against institutions under its jurisdiction. So, 
again, here is another one--not the TVA--but another program that 
operates at no direct cost to the taxpayer.
  So I ask again, is the Farm Credit Administration exempt like TVA 
from the impacts of the balanced budget amendment? If so, why was it 
not also cited in the constitutional history reported out of the 
Judiciary Committee's report in the same manner?
  What about the Federal Deposit Insurance Corporation, another quasi-
Government corporation established in 1933? FDIC does not operate on 
funds appropriated by Congress but on assessments on deposits held by 
insured banks and from interest on the required investment of its 
surplus funds in Government securities. Is FDIC covered or not, and if 
not, why was it not cited by the Judiciary Committee?
  I will tell you why, Mr. President. The answer is clear. The 
Tennessee Valley Authority was singled out in the committee report 
because those concerned about its future do not want any budget cuts 
imposed upon this entity. It is not surprising in light of this whole 
balanced budget amendment, nobody wants to get cut.
  Guess what? The folks who support the TVA are fearful of the Federal 
budget knife hitting one of the programs they support in part, I 
suspect, because there have actually been a number of bills introduced 
in Government to cut off the subsidies to the TVA.
  I introduced on the first day of this Congress S. 43 which would 
terminate several current TVA programs and provide for a report on what 
remaining functions should be separated from the Federal Government. My 
Republican colleague from Wisconsin, Representative Scott Klug, has 
proposed legislation along similar lines in the other body.
  TVA supporters know that TVA is on the short list of most deficit 
reduction advocates, and that is why they want to provide it with 
special protection that no other program of any kind in the Federal 
Government is getting.
  Mr. President, it is not just the CBO that cited TVA programs as 
needing reform. Citizens Against Government Waste include TVA in their 
prime cuts list for 1994. Reducing funding for TVA was also part of the 
Kerrey-Brown deficit reduction package, which I cosponsored. The 
deficit reduction package of a group of Senators led by Senator John 
Kerry, which I also cosponsored, included it, and also the so-called 
famous Penny-Kasich plan also listed the TVA. There is no reason why we 
should allow this program to gain special protection as a result of the 
language that was put in the committee report.
  In fact, Mr. President, I am afraid that this attempt in the 
committee report begins to make this whole balanced budget process look 
a little bit like a $3 bill. My motion will not disturb the balanced 
budget amendment in any way. It simply says that the committee report 
language that singled this agency out for special protection is null 
and void and cannot be used for legislative history purposes when we 
finally get around to achieving a balanced budget.
  So to conclude, it is a simple proposition. We just need to ask the 
committee to come up with an additional report to change this. 
Otherwise, we will have enshrined a new tradition, something that no 
Democrat or Republican has ever achieved before, we have created 
constitutional pork.
  [[Page S2751]] I hope that every Senator rejects this attempt to 
exempt one program while all the others have to be on the chopping 
table for potential cuts.
  I reserve the remainder of my time.
  Mr. HATCH. I yield 3 minutes to the distinguished Senator from 
Alabama.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. HEFLIN. Mr. President, I was unaware that this motion would be 
made. It caught me by surprise. I would like to go into great detail, 
and I did not know that there would be a time limitation until it had 
already occurred in regard to it. I would like to go into detail, which 
I will later, hoping that this is defeated and then we would have an 
opportunity to explain the history and the background and the reason 
why the TVA is a self-operating agency of the Government and, 
therefore, because of its uniqueness, different than any other agency 
or body, should be exempt in the balanced budget amendment.
  This involves the electrical power program of the TVA, just the 
electrical power program. Certainly, the electrical power program of 
the TVA ought to be paid by the power users, by the ratepayers and not 
by the Government. And the intention of this report language is to 
guarantee and ensure that the Government does not have to pay for the 
electrical power system of the Tennessee Valley Authority. That is the 
purpose it was put in there.
  They have variances that occur all the time, and they have to act 
immediately. They may have a tornado, they may have a downed situation 
pertaining to the transmission of electrical current and they may have 
to move. They may have to spend money immediately relative to those 
matters.
  The ratepayers ought to be the ones to pay for it. That is the reason 
it was put in there. It was put in there for the protection of the 
taxpayers of the United States. It is put in there to protect the 
taxpayers so they do not have to pay for the electricity rates of the 
people in Tennessee and Alabama and Georgia, Mississippi, Kentucky, and 
the other places.
  We have a limited time. Senator Ford, as I understand it, wants to 
make some remarks. I yield to him at this time.
  Mr. FORD. Will the Senator give me 1 minute?
  Mr. HATCH. I yield 1 minute to the distinguished Senator from 
Kentucky.
  Mr. FORD. Mr. President, let me associate my remarks with the 
distinguished Senator from Alabama. TVA is important. TVA rests on its 
own bottom. TVA serves the ratepayers. The ratepayers pay TVA. It is 
good for the valley; it is good for economic development. It is a 
program that works.
  I am opposed to using Social Security money. That is fine, we lost 
that one, but we should not lose this one. This is an amendment that is 
out of order, in my opinion, as it relates to the budget. And the 
income to TVA is important.
  So, Mr. President, let me just say, this is quick. We did not have an 
opportunity. We have 10 minutes. It does not give us much time. I just 
hope that our colleagues will vote against this amendment; that we will 
have an opportunity then, if it is brought up again, to explain it in 
more detail.
  I yield the floor.
  Mr. FEINGOLD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. Ten minutes fifty-two seconds.
  Mr. FEINGOLD. I yield myself such time as is necessary.
  Mr. President, I definitely believe the TVA should be given the fair 
consideration, indeed, that all programs should be given when it comes 
time to balance the budget. I am willing to look at the arguments as to 
what aspects of TVA should be continued and what aspects should not--
all the arguments.
  But it is a little difficult for me to hear Senators from that area 
of the country get up and talk about how wonderful TVA has been to that 
part of the country. I recognize the Depression, New Deal, and the 
history of TVA. I have similar feelings with regard to aspects of our 
dairy programs and those programs that have helped keep our dairy 
farmers going all these years. But I have not sought through the 
committee report or any other mechanism to write a special protection 
for the dairy program or even some of the other programs that affect 
our State, such as the Farm Credit Administration, another quasi-public 
agency that does not rely on taxpayer dollars directly. We do not have 
an exemption for that.
  If there is to be any meaning to the notion that everything has to be 
on the table and that this is not the time to make the preliminary 
decisions, it must mean that the TVA cannot be exempt while all these 
other worthy programs that mean so much to people around the country 
are not exempt.
  All this is--let me be clear, this is not an attack on the TVA--this 
is just saying there should not be any language in a committee report 
that is going to be used by the courts and everyone else in the future 
to interpret the balanced budget amendment that exempts one program.
  That is all. It is a very simple proposition. I am sure much later we 
will get to the merits of the TVA. So I would suggest this is a very 
mild suggestion that we not mess around with the future of the balanced 
budget issue by writing in exemptions in a committee report that relate 
directly to the constitutional provision.
  I yield the floor and reserve the remainder of my time.
  Mr. THOMPSON addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. HATCH. I yield 2 minutes to the distinguished Senator from 
Tennessee.
  Mr. THOMPSON. I thank you, Mr. President.
  I agree that it may not be an attack on the TVA. It is an attack on 
the balanced budget amendment. I think the language of the committee 
speaks for itself. The financing of the TVA power program has been the 
sole responsibility of its electric ratepayers, not the U.S. Treasury 
and the Nation's taxpayers.
  That says it all, Mr. President. It is not an annual expenditure. It 
is not a would-be pork barrel project. It is not the nonpower program 
which is on the table along with everything else. It has to do with a 
power program that is self-financing. And of course, all this is 
another attempt by those who would defeat the balanced budget amendment 
to raise a red herring. We have seen time and time again those who 
would offer amendments, amendment after amendment after amendment, 
while at the same time stating that if their amendments, or all of 
their amendments in their totality were adopted they would still oppose 
the balanced budget amendment.
  So I suggest that we analyze this for what it is. It is another 
attempt to encumber and somehow obfuscate the issue as far as the 
balanced budget amendment is concerned.
  The committee considered this situation. It analyzed the power 
program of the Tennessee Valley Authority and stated the clear fact. It 
is not whether or not we want it on budget or we want it off budget or 
whether it ought to be on or whether it ought to be off. We can debate 
that at the proper time. But it simply stated the fact that since 1959, 
the financing of that program has been the sole responsibility of its 
own electric ratepayers.
  So I would urge that we defeat this amendment and not go against the 
language that was well considered before the committee and we move on 
with what we are supposed to be here about, and that is bankrupting the 
next generation. I think we get too balled up in some of these 
collateral issues sometimes. We forget sometimes what we are about.
  Mr. President, with the enactment of the 1959 Self-Financing Act, the 
TVA Board was given the authority to make power system decisions. In 
turn, the power system became the sole financial responsibility of TVA 
ratepayers, not the Treasury or U.S. taxpayers. Since 1959, the power 
system has not received appropriations and has been funded exclusively 
with power revenues and proceeds from the sale of bonds which, by law, 
are not obligations of or guaranteed by the United States.
  All taxpayer funds originally invested in the power system, 
designated as the appropriation investment, are treated on the power 
system's balance sheet as the Government's equity. Since 1959, TVA has 
made annual payments to the Treasury--currently $20 million per year--
to reduce that investment's balance. TVA also makes 
[[Page S2752]] an annual return payment on that balance, which is 
calculated at the Treasury's current interest rate. This covers the 
Treasury's cost of money and keeps the taxpayers whole.
  Since the receipts and outlays of the power system are its alone, it 
is incorrect and misleading to regard them as receipts and outlays of 
the United States. This view was shared by Senator Howard Baker while a 
member of the Senate Environment and Public Works Committee, TVA's 
jurisdictional committee.
  In reporting legislation in both 1975 and 1979 which increased the 
TVA bond ceiling, the Senate Environment and Public Works Committee 
expressly agreed that ``the obligations represented by bond issues 
under the increased ceiling will not result in any outlay involving 
`Government funds''' and that TVA power funds ``are not, however, 
generated through the general treasury and do not affect Federal fiscal 
policy.'' In both the 1975 and 1979 reports, the committee also found 
that there would be ``no cost'' to the Government ``in implementing 
this legislation.''
  Mr. President, there are those of us who think we are bankrupting the 
next generation, that we need to do some things fundamentally----
  The PRESIDING OFFICER. The Senator's 2 minutes have expired.
  Mr. THOMPSON. Will the Senator yield another minute?
  Mr. FEINGOLD addressed the Chair.
  Mr. HATCH. I yield one more minute.
  Mr. THOMPSON. That we need to do some fundamental things to change 
the direction of this country. There are those of us who are concerned 
about the investment rate, which is now one of the lowest in the 
industrial world; there are some of us concerned about the savings 
rate, which is the lowest in the industrialized world. We are concerned 
about the growth. That is what we are supposed to be discussing here 
with regard to the balanced budget amendment, not singling out some 
self-financing program by folks who would basically love to defeat the 
balanced budget amendment in its entirety.
  So I would urge that we keep that in mind, and we do defeat this 
amendment.
  I thank the Chair.
  Mr. FEINGOLD addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Wisconsin.
  Mr. FEINGOLD. I yield myself such time as I need.
  Mr. President, I am kind of amazed at the comments of the Senator 
from Tennessee. He is suggesting that this amendment is an attempt to 
derail the balanced budget amendment. But I think everyone should know 
that I could be here delaying debate--I have the floor. I could be 
reading the entire history of the TVA to the Senate, if that is what I 
wanted to do--just open it up and read and read. That is permitted 
under the rules as we know.
  That is not what I did. I entered into a very brief time agreement, 
20 minutes for my side. It is because I am not, Mr. President, trying 
to hold up the balanced budget amendment. In fact, this will take 2 
seconds. All we have to do is vote in a few minutes to strike this 
ridiculous language from the committee report that tries to protect one 
program out of all the programs in the Federal budget.
  So I want everyone to know who is listening, it is completely false 
that this is an attempt to delay the balanced budget amendment. It is 
just 20 minutes, 20 minutes to say why should one program of all the 
programs in the United States in our budget get special treatment and 
all the rest, including Social Security, which the Senator from 
California worked so hard on--
  Mrs. FEINSTEIN. Will the Senator yield for a question?
  Mr. FEINGOLD. I yield to the Senator from California for a question.
  Mrs. FEINSTEIN. My question is, is the Senator aware that not only 
TVA is excluded but also the Bonneville Authority, and I believe others 
as well?
  Mr. FEINGOLD. There is only one entity that we are aware of that has 
been specifically named. If there are others that should be named, I 
think that should be the subject of similar amendments. And I am very 
glad to see the senior Senator from California asked that question 
because she knows very well how hard she fought to try to get an 
exemption for a program that really probably does deserve the 
exemption, and that is the contract with the American people in the 
form of Social Security. But that is not the one that got protected.
  Mr. President, this suggestion that this is a delay tactic is very 
troubling to me. I think it is not fair. In fact, I find it astonishing 
that the Senator from the very State that gets protected by this thing 
more than any other State, Tennessee, stands up and says this is a 
delay tactic.
  I am just calling it what it is. It is a great deal for Tennessee. I 
would love to be able to exempt all the programs in Wisconsin up front 
in the committee language and then pass a balanced budget amendment. I 
would get a lot of pats on the back back home for that one. But I did 
not do it. I would not try to do it because I know very well that is a 
denial of the very meaning of the balanced budget amendment.
  All the folks on the other side talked about the glidepath, about the 
right to know; we cannot make those decisions now. If we lay out what 
is going to be cut and is not cut, what happens is that the process 
falls apart.
  I suggest this committee language, if it is not struck, is the 
beginning of the end of any serious attempt to balance the budget 
because there would be a tremendous outcry across the country that this 
and only this program is important enough to be protected and that 
every other program did not count.
  So, Mr. President, I think this is a very, very clear amendment that 
should not even be controversial. That language should not be in the 
report. We all know it. And I would certainly hope TVA has to fight the 
same battle that everybody else does as the coming months go on.
  I yield the floor and reserve the remainder of my time.
  Mr. HATCH. Mr. President, I yield one minute to the distinguished 
Senator from Illinois.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. SIMON. Mr. President, the language of the report is among the 
Federal programs, and among the Federal programs where we guarantee 
bonds are REA's in Wisconsin and Illinois and Minnesota, and other 
States. We guaranteed Lockheed bonds in California. We guaranteed bonds 
for New York City, for Chrysler. Only when there is an outlay by the 
Federal Government is that subject to the balanced budget amendment. 
That is what the report language says. It is good language, and the 
amendment should be defeated.
  Mr. FEINGOLD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. I yield myself sufficient time.
  Let us take a look at the language. It is true, as the Senator from 
Illinois says, ``Among the Federal programs that would not be covered 
by Senate Joint Resolution 1 is the electric power program of the 
Tennessee Valley Authority.''
  But that is all that is mentioned. It is a real valuable thing for a 
program to be the only program out of the entire U.S. budget that gets 
exempted specifically. In other words, all the others will have to 
argue somehow that they are within that language. Maybe they will have 
to go to court, if they are allowed to go to court. We are not even 
sure about that.
  One program gets named, one program is on this pedestal and even 
though the Senator from Illinois, Mr. President, intends that others be 
mentioned, they ought to be mentioned. If we have to do that, let us 
have the committee issue a new report and list all the programs that 
are exempt. I am sure it would be as comfortable to the people who 
support those programs as this language is comforting to those who 
support the TVA. This is about the sweetest deal you can get, a 
constitutional exemption for your program while everyone else has to 
get into the field and has to fight each other for scarce Federal 
dollars.
  Mr. President, I cannot accept this argument of the Senator from 
Illinois. If it was intended the other programs be mentioned, they 
should have been mentioned. Only one is mentioned, and that program 
should not get that kind of special treatment.
  I yield the floor and reserve my time.
   [[Page S2753]] Mr. HATCH. Mr. President, I yield the final time I 
have to the distinguished member of the Judiciary Committee, Senator 
Heflin, from Alabama.
  Mr. HEFLIN. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator has 2 minutes, 22 seconds.
  Mr. HEFLIN. Mr. President, as I mentioned before in my opening 
argument, I reiterate it because it has not been answered: Really, the 
purpose of this is to protect the taxpayers. It is to say, and to have 
in report language--it is not in the language of the constitutional 
amendment, but in the report language--its purpose is to protect the 
taxpayers from where the taxpayers might have to pay or subsidize the 
power program of the Tennessee Valley Authority. It is put there with 
the idea of protecting the taxpayers, and that is what it has been.
  The TVA program has been that the entire power program shall not be 
subject to appropriations and it is not subject to other types of 
revenues that come in. The revenues that operate in regard to this are 
strictly the ratepayers'. They get a bill. The ratepayers get a bill 
just like every other utility user gets a bill, and they pay it every 
month. Those revenues do not go into the Treasury of the United States. 
It is there for the protection of the taxpayers. It is report language 
and it is different from the language that is in the constitutional 
amendment. It is not mentioned in there. It is just report language to 
give some guidance, to show that the taxpayers are not to have to pay 
in regard to the rates of the utility users.
  The PRESIDING OFFICER. The Senator from Utah.


                Motion to Reconsider--Roll Call Vote 72

  Mr. HATCH. Mr. President, I move to reconsider the last vote.
  Mr. CRAIG. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator has 17 seconds remaining. The 
Senator from Utah.
  Mr. HATCH. I yield the remainder of the time.
  Mr. DOLE. Mr. President, parliamentary inquiry; is there any time 
remaining?
  The PRESIDING OFFICER. The Senator from Wisconsin controls 3 minutes 
and 53 seconds.
  The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, just to conclude, this is really a very 
mild thing to ask. I am just asking that this process be a little bit 
honest and that we not mention in the committee report that will be 
used to interpret the constitutional amendment one program. There are 
many quasi-public agencies. This notion that the TVA is a self-
supporting program is just an argument--debatable. It is nothing better 
than that. The CBO says it is not.
  We are going to accept here as a part of the constitutional process 
we are engaged in this absurd notion that simply because an argument is 
made by the supporters of the program, it is not going to be on the 
table? I cannot accept that.
  I suggest again, if we are going to go forward with this 
constitutional pork, it will become the symbol of the lack of 
seriousness of the balanced budget amendment, the ultimate proof that, 
when given an opportunity, special interests will be protected even 
with a balanced budget amendment, the principle being enshrined in the 
United States Constitution.
  I implore my colleague, take a minute or two to strike this language. 
It has no other consequence. I implore you to get this out of there so 
the process of balancing the budget can be an honest one, when we 
finally get to it.
  Mr. President, I yield the remainder of my time.
  The PRESIDING OFFICER. The majority leader.


                           Order Of Procedure

  Mr. DOLE. Mr. President, as I understand it, we will be unable to 
find any additional amendments to be offered this evening. The Senator 
from West Virginia plans to lay down an amendment, as I understand it, 
tomorrow morning?
  Mr. BYRD. Yes.
  Mr. DOLE. I would like to have another amendment or two tonight. I 
cannot force Members to offer amendments, so this will be the last vote 
of the day.
  I am not certain how long we will be in session tomorrow, but 
probably most of the day. I am still prepared, as I have indicated 
before, if we can get some agreement to bring this to a conclusion, to 
go out Friday and all next week. We await some response from the 
Democratic leader, Senator Daschle.
  So we are prepared to entertain an agreement that might bring this to 
a conclusion. There will be a cloture vote tomorrow. I will file two 
cloture motions tonight, so there will be two cloture votes when we 
return on next Wednesday. So Members will know that there will be votes 
on Wednesday--probably a goodly number of votes Wednesday.
  It is my understanding there are 30-some amendments filed at the 
desk. I do not know how many of those Members intend to call up. I 
thought the other day I was informed it would only be three major 
amendments. Then we were told maybe it will be 8 or 10. Now we are told 
it is 36. That would mean we have still a long, long time on this 
balanced budget amendment.
  I understand how important it is. I understand you do not amend the 
Constitution lightly. I think we have now exceeded by a couple of days 
the longest time we have spent on this issue. I think we passed the 
balanced budget amendment--in the 97th Congress we passed a balanced 
budget amendment after 11 days of floor action. There were 31 
amendments offered. The resolution passed the Senate by a vote of 69 to 
31.
  We have not been able to repeat that performance so far on the number 
of days or the number of amendments. But, hopefully, on the number of 
votes. And we would settle for that.
  This will be the last vote today.
  Mr. President, I move to table the motion.
  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 occurs on the motion to lay on 
the table the motion offered by the Senator from Wisconsin. The yeas 
and nays have been ordered.
  The clerk will call the roll.
  The bill clerk called the roll.
  Mr. LOTT. I announce that the Senator from New Hampshire [Mr. Gregg], 
the Senator from North Carolina [Mr. Helms], and the Senator from 
Kansas [Mrs. Kassebaum] are necessarily absent.
  I further announce that, if present and voting, the Senator from 
North Carolina [Mr. Helms] would vote ``yea.''
  Mr. FORD. I announce that the Senator from Hawaii [Mr. Inouye], the 
Senator from Massachusetts [Mr. Kennedy], and the Senator from Maryland 
[Ms. Mikulski], are necessarily absent.
  The PRESIDING OFFICER (Mr. Frist). Are there any other Senators in 
the Chamber who desire to vote?
  The result was announced--yeas 61, nays 33, as follows:

                      [Rollcall Vote No. 73 Leg.]

                                YEAS--61

     Abraham
     Ashcroft
     Bennett
     Bond
     Breaux
     Bryan
     Bumpers
     Burns
     Byrd
     Coats
     Cochran
     Cohen
     Coverdell
     Craig
     D'Amato
     Daschle
     DeWine
     Dole
     Domenici
     Exon
     Faircloth
     Ford
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Harkin
     Hatch
     Heflin
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kerrey
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Moseley-Braun
     Murkowski
     Murray
     Nunn
     Pressler
     Pryor
     Reid
     Roth
     Santorum
     Shelby
     Simon
     Simpson
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--33

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Bradley
     Brown
     Campbell
     Chafee
     Conrad
     Dodd
     Dorgan
     Feingold
     Feinstein
     Glenn
     Hatfield
     Hollings
     Johnston
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Moynihan
     Nickles
     Packwood
     Pell
     Robb
     Rockefeller
     Sarbanes
     Smith
     Wellstone

                             NOT VOTING--6

     Gregg
     Helms
     Inouye
     Kassebaum
     Kennedy
     Mikulski
  So the motion to lay on the table the motion was agreed to.

[[Page S2754]]

  Mr. DOLE. Mr. President, I move to reconsider the vote.
  Mr. FORD. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. GREGG. Mr. President, I rise today to speak on behalf of future 
generations. Our national deficit for fiscal year 1994 stood at $203 
billion. Gross interest on the national debt is now the second largest 
expenditure in the entire budget--higher than Defense spending. The 
Federal Government, this year alone, will spend an estimated $295 
billion in interest on the national debt, which is a 400-percent 
increase since 1980 and an amount equal to 57 percent of all personal 
income taxes collected. Our total accumulated Federal debt stands at 
$4.65 trillion--$18,000 for every man, woman, and child in America. 
Like every family and business in America, when the Government borrows 
money it must pay interest on its debts. Given these grim statistics, I 
believe that we in Congress must amend the Constitution of the United 
States and pass the balanced budget amendment.
  Dr. Robert Reischauer, Director of the Congressional Budget Office, 
in his cost estimate to the Committee on the Judiciary stated:

       Over the entire 1996-2002 period, the savings in CBO's 
     illustrative path that result directly from policy changes 
     would total more than $1 trillion--in relation to a baseline 
     that includes an inflation adjustment for discretionary 
     spending after 1998.

  Amending the Constitution, which represents the very core of American 
life, a governing principle born of a revolutionary war, withstanding a 
civil war, two world wars, the war for equality throughout the Nation 
and endless conflicts, both social and global, is not something to be 
taken lightly. That said--I believe our current conflict to conquer and 
eliminate our public debt--a war that we fight against ourselves here 
in Congress--calls for drastic measures, a call to arms, which the 
budget amendment answers.
  The amendment, House Joint Resolution 1, will set forth in the 
Nation's governing document the basic principle that the Federal 
Government must not spend beyond its means.
  As Thomas Jefferson said:

       We should consider ourselves unauthorized to saddle 
     posterity with our debts, and morally bound to pay them 
     ourselves.

  These words ring clear today. The American taxpayer will no longer, 
nor should they, allow us in Washington to continually spend their 
money with little or no accountability. We in Congress must put 
political expediency aside--reduce the defict--remembering that we are 
to serve the American taxpayer and not vice versa.
  Our Founding Fathers knew of the danger of leveraging current 
political aspiration on the backs of future generations. Congress 
remains incapable of looking toward the future--we are an entity 
embedded in the present, unable to look beyond the next election cycle.
  James Madison wrote in Federalist Paper No 51:

       Government is the greatest of all reflections on human 
     nature. If men were angels, no government would be necessary. 
     If angels were to govern man, neither external nor internal 
     controls on government would be necessary.

  Well Mr. President, here in Washington there are few, if any, angels 
cohabiting among us. Accordingly, we do require a control mechanism to 
reduce our current fiscal dilemma--a balanced budget amendment to the 
Constitution. This amendment will help restore two important elements 
left unaddressed by the Constitution: limited government and 
an accountable deliberative legislative body, both of which are vital 
to a free America. All too often this legislative body has used the 
power of the purse for political expediency rather than what is in the 
best interest of the American people.
  Reducing spending in order to balance the Federal budget is something 
that will require tough decisions, the kind of decisions we in 
Washington rarely have the courage to own up to and all too often pass 
on to future generations.
  My record with regard to reducing the size and scope of the Federal 
Government by eliminating excessive spending is clear. I have been 
cited by numerous grassroots groups like the Concord Coalition, the 
National Taxpayer's Union, as both a taxpayers' friend and as one of 
Congress' most frugal Members. I believe the only way to eliminate our 
Federal deficit is to deal with runaway spending, much like families in 
New Hampshire deal with life's everyday expenses. If a family is unable 
to pay for a certain expense, the prudent thing to do would be to do 
without; not here in Washington where no one and nothing goes without, 
whether it is funding for Medicare, or to conduct another study to 
eliminate the screw worm.
  The American people are well versed in the way Washington operates--
they are not dumb. These past November elections made a strong 
statement about change; a statement heard loud and clear throughout the 
hallowed Halls of Congress; one that demands we revert from our past, 
outdated social policies that govern the Nation and jeopardize the very 
being of the next generation. The people are screaming, ``we have heard 
enough from you in Washington, now it's your turn to hear from us.''
  Mr. FORD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kentucky, Mr. Ford, is 
recognized.

                          ____________________