[Congressional Record Volume 141, Number 45 (Friday, March 10, 1995)]
[Senate]
[Pages S3770-S3771]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BALANCED BUDGET AMENDMENT
Mr. SIMON. Mr. President, let me say first that I agree with three-
fourths of what my colleague from North Dakota has just said. First, I
think it makes absolutely no sense to be talking about a tax cut now. I
think it is just absolutely irrational. It politically makes sense but
it does not make sense any other way. And so I agree with him.
Let me point out one other area where we can save money and do a
great deal of good for the people in our country. That is if we pass a
minimum wage bill. If we pass a minimum wage bill, we will spend less
money on food stamps; we will spend less money on welfare. That is very
practical. I do not know the precise numbers, but I saw one figure
yesterday that we will save approximately $1.8 billion a year if we
pass a minimum wage bill, in terms of a Federal budget. I do not know
how thoroughly documented that is.
Where I differ slightly from my colleague from North Dakota--I agree
with him that we ought to be moving away from reliance on the Social
Security trust fund in balancing the budget, and we came very close to
an agreement on that--where I do differ is that it seems to me that the
Krauthammer column is correct in saying the great threat to Social
Security is the debt. Because if we do not change our policies, we will
end up monetizing the debt, printing money, devaluing our currency. We
are already seeing some of that. I want to comment on that in just a
moment. We are already seeing some of that, just in the days since we
failed to pass the balanced budget amendment last Thursday.
I am a cosponsor of the bill to move, by legislation, toward a
balanced budget by the year 2002. There are two problems with that. I
hope it can have some impact. I, frankly, do not think ultimately it is
going to work, because as soon as the squeeze gets on we simply change
the law. That is the reality. There is a second problem with it.
Assuming that it works. And that is interest by the financial markets
is composed of two things. One is they want to have a margin of profit.
That is always going to be there. The second thing the financial
markets do is they put into interest, a hedge against inflation. So
every study, CBO, Data Resources, Inc., Wharton--all of them say if we
pass a balanced budget amendment interest rates will go down. We have
seen what has happened to interest rates since a week ago Thursday. We
did not pass the balanced budget amendment.
There will be no similar confidence in the financial markets by any
statutory change that we make. So we will be paying a premium on
interest for our failure to pass a constitutional amendment. We will
spend hundreds of billions of dollars, in my opinion--and no one knows
this precisely--unnecessarily on interest because of our failure to
pass a balanced budget amendment.
Data Resources, Inc., one of the two most prominent econometric
forecasters in the Nation, predicts that, by the year 2002, if we pass
it, the prime rate will drop 2.5 percent. Wharton says 4 percent. But
Data Resources, 2.5 percent. They say half the savings that we must get
can come from interest savings. That is a very significant savings.
Finally--and this is not in relation to the comment of my colleague
from North Dakota, but to what has happened--I notice the international
publications are very clear in pointing to our failure to pass the
balanced budget amendment. Some of the domestic publications are, too,
though there is much more focus on Mexico as a reason for the fall of
the dollar. The reality is, if we had our fiscal house in order, what
we have done by guaranteeing $20 billion in loans to Mexico would be
just a blip on the horizon. A $20 billion loan guarantee for a country
with a $6 trillion economy is not that significant an item. But when
you compound it with our failure to pass a balanced budget amendment,
then you have a problem.
I would like to quote a few items here, if I can find them.
Yesterday's Los Angeles Times lead story, ``Greenspan Asserts Deficit
Sank Dollar. Fed chief says defeat of balanced-budget amendment sent
wrong signal to global markets. He says Washington must cut deficit to
ease pressure on greenback.''
Then let me read the lead story by James Risen.
Federal Reserve Board Chairman Alan Greenspan on Wednesday
blamed last week's Senate defeat of the balanced-budget
amendment for the sudden plunge in the value of the dollar
and pointedly warned Congress that the currency will remain
under pressure until Washington tackles the deficit.
There are a number of stories along the same line. I am not going to
bother reading all of them at this point.
The point is, it is easy for us here to point to Mexico and say that
is the cause of our problem. The reality of the cause of our problem is
right here in the U.S. Senate, and we have to face up to that reality.
The longer we postpone facing up to that reality, the greater the
jeopardy we put the dollar in and all the ramifications that will have
on the standard of living of our people.
I hope we will face up to reality.
Mr. President, since I do not believe anyone else seeks the floor
right now, let me glance through a few of these things here. Here is
the Financial Post, from Great Britain, ``The Current U.S.
[[Page S3771]] Dollar Crisis Was Exacerbated by Congress' Inability To
Get the Balanced Budget Amendment Passed.''
Here is the Independent, also a British publication.
* * * defeat of the balanced budget amendment only
reinforced in foreign eyes Washington's reputation for
incurable fiscal profligacy. And most important of all, the
tectonic plates of interest rate expectations have abruptly
shifted.
AFX News. I confess I do not know where that is from.
I think some of the support the dollar got from the
election of the Republican Congress has faded with the defeat
of the balanced budget.
Quoting some analyst here.
Here, from Singapore, the Straits Times.
The dollar's fall began last Friday, after Federal Reserve
Board member, Mr. Lawrence Lindsay, told reporters that the
yen-dollar rate had not reached a ``critical level.''
It coincided with the failure of the U.S. Senate to pass a
constitutional amendment requiring a balanced Federal budget.
The failure was seen as a lack of political will by the
United States to tackle its twin deficits--budget and trade
deficits--widely seen as among the factors contributing to
the weak dollar.
And the stories go on. Here is one from Japan, the Daily Yomiuri.
The move was accompanied by news that the U.S. Senate voted
down an amendment to the U.S. Constitution that would have
forced balancing of the national budget by 2002. This
combination caused the mark to soar, followed by the surge of
the yen.
And the stories go on.
Clearly we have the ability here to get ahold of this thing. We ought
to do it for the future of our country. But it is affecting us right
now, and I hope in some way we can find one more Member of the U.S.
Senate who will vote for a constitutional amendment. I think when that
happens, if that happens, you will see a reversal. Obviously, I cannot
predict and guarantee this. But the evidence is pretty overwhelming.
You are going to see a reversal of what has happened to the dollar.
I hope we do the sensible thing.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SIMON. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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