[Congressional Record Volume 141, Number 31 (Thursday, February 16, 1995)]
[Extensions of Remarks]
[Pages E355-E356]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                      THE PRESIDENT'S 1996 BUDGET

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Wednesday, February 15, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, February 15, 1995 into the Congressional Record.
                      The President's 1996 Budget

       President Clinton recently sent to Congress his $1.61 
     trillion budget for 1996. The President says his budget will 
     allow simultaneously leaner government and sufficient funds 
     for popular and expensive social programs. He claims it cuts 
     middle-class taxes, keeps the deficit down, and does not cut 
     education, Social Security, or Medicare. The budget has come 
     under fire on Capitol Hill.


                                summary

       The President's budget calls for $1.612 trillion in 
     spending and $1.415 trillion in revenues. That leaves a $197 
     billion deficit, up slightly from the $192 billion he 
     projects for 1995. The biggest spending goes for Social 
     Security ($315 billion), Medicare and Medicaid ($270 
     billion), defense ($262 billion), and interest on the 
     national debt ($257 billion). The budget proposes few new 
     initiatives. The most important is the middle-class tax cut, 
     which is actually three cuts: a children's tax credit, a 
     college tuition deduction, and a liberalization of individual 
     retirement accounts. On the spending side, the President 
     seeks to eliminate 131 programs and reduce funding for 
     another 86. He calls for the restructuring of five agencies: 
     Housing and Urban Development, Transportation, Energy, 
     General Services Administration, and Office of Personnel 
     Management. He also proposes merging 271 separate programs 
     into 27, including the consolidation of 69 job training 
     programs. The number of federal employees will continue to 
     decline under the President's budget. The total reduction 
     will reach 173,300 in 1996, nearly two-thirds of the 272,900 
     required by 1999 under existing law.
       He requests increases in discretionary spending for crime 
     reduction, national service, Goals 2000, education, 
     Headstart, and WIC. His budget only includes limited changes 
     in entitlement programs and makes no changes in Social 
     Security and only modest changes in Medicare. He calls for a 
     slight reduction in defense spending in 1996 but increases 
     starting in 1998. He keeps foreign aid at current levels (1% 
     of budget) to help maintain U.S. commitments overseas.
                  [[Page E356]] challenge to congress

       Members
        from both sides of the aisle have taken aim at President 
     Clinton's budget for not being aggressive enough in 
     reducing federal spending and reducing the deficit. The 
     argument of the President that the deficit is now under 
     control because it has shrunk by $100 billion over the 
     past two years has not been well received. The President 
     did not identify deep spending cuts for the new leadership 
     in Congress, and in a sense his budget challenges them: 
     ``It's your turn, show me where you're going to cut the 
     budget.''
       The big question now is what the budget of the new 
     congressional leadership will look like. We may not know for 
     another few months. The leadership's strategy seems to be to 
     keep everything very quiet and secret and then spring a 
     surprise on the country and the interest groups that might be 
     affected. It remains to be seen whether Congress will be 
     serious about eliminating the deficit.


                           deficit reduction

       The good progress that has been made on deficit reduction 
     in the first two years of the Clinton administration seems to 
     be replaced by a strategy of deficit control. The President 
     and Congress were right to attack the budget deficit in the 
     last two years, and the reasons for doing so are still 
     compelling today. The key issue here is the country's future 
     standard of living. The deficit preempts investment that 
     would otherwise go into expanding the economy. That is one 
     major reason for the stagnation of wages and incomes for many 
     Americans since the mid-1970s.
       I believe that any serious effort to cut the deficit will 
     inevitably have to deal with health care costs. The political 
     judgement behind the President's budget is that the 
     electorate offers little thanks to those who make a serious 
     run at deficit reduction. Many Members of Congress continue 
     to play on the overwhelming belief among the public that the 
     budget can be balanced just
      by cutting out waste, fraud, and abuse, and that all it 
     takes is cutting foreign aid, taking young mothers off 
     welfare, and ending congressional perks. At some point we 
     will have to be honest and specific with the American 
     people. Difficult choices are needed, and anyone who takes 
     a hard look at the budget knows it. One of the most 
     important things that has to happen in this country is 
     improving public understanding about the budget.
       Too many Members of Congress favor a balanced budget but 
     are unwilling to offer any specifics. Indeed many go in the 
     opposite direction. They want larger tax cuts and more 
     spending on defense and other popular programs. They list 
     only the spending they will not cut, like Social Security. 
     They also try to assure the governors and mayors that they 
     will be held harmless in the process. I do not want to repeat 
     the experience of the 1980s when the country was told it was 
     possible to cut taxes and balance the budget by cutting 
     domestic spending. The spending cuts were never found and the 
     national debt, as well as our interest payments, quadrupled.


                                Tax cuts

       Basically I believe that for the sake of our children we 
     should cut the deficit first and then cut taxes, not the 
     other way around. At the same time, I am prepared to support 
     tax cuts that are deficit neutral-cuts that are offset with 
     spending reductions so there is no impact on the deficit. I 
     would target tax cuts to savings and investment because that 
     is what the country really needs to grow and to increase 
     standards of living.
       I am inclined to think the tax cuts are being oversold to 
     the American people. Middle-class Americans are in economic 
     pain, but I doubt the tax cuts being proposed are a genuine 
     cure for their afflictions. And unless offset by equivalent 
     reductions in government spending, the measure might end up 
     costing middle-class taxpayers more money in the form of 
     higher interest rates on their mortgages, credit cards, and 
     loans.


                               Conclusion

       A President's budget is simply the opening ante in an 
     annual game between Congress and the President. President 
     Clinton's budget comes to a hostile Congress. It is not a 
     dead-on-arrival budget, but a document for bargaining. 
     Congress understands that. Significant changes are expected 
     in the weeks and months ahead.
     

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