[Congressional Record Volume 141, Number 70 (Monday, May 1, 1995)]
[Senate]
[Pages S5871-S5873]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          OUR NATION'S BUDGET

  Mr. GREGG. Thank you, Mr. President.
  I want to take this opportunity today to talk a little bit about what 
is going to happen relative to the budget of this country as we move 
forward through the next couple of months when we are taking up key 
issues involving the budget, and to talk a little bit about Medicare, 
which is obviously an issue of considerable concern for our senior 
citizens and of equal concern for those of us who served in the Senate 
and in the House of Representatives as we move through the process of 
trying to restructure, first, the budget of the country to put us into 
solvency and, second, to make sure that the Medicare system remains 
solvent, and that our seniors will be able to benefit from this, the 
largest insurance program in the Nation.
  As I think everybody knows, this country faces some fairly 
significant crises in the coming years over the issue of the deficit. 
In fact, if we continue on our present course, it is projected that by 
about 2015, or thereabouts, this Nation will essentially end up in 
bankruptcy. It will be a bankruptcy which had been generated primarily 
by the fact that we, as a Government, have failed to address the 
spending side of the ledger of the Federal budget. It will also be a 
bankruptcy which passes on to our children a Nation where their chances 
for opportunity, their chances for a lifestyle which is prosperous, is 
essentially eliminated.
  Unfortunately, if we do not take action soon, we will end up like 
Mexico is today; we will be a Nation unable to pay its bills. This is 
not fair or right, as I have said on a number of occasions on this 
floor. In fact, the way I have characterized it is--and I have talked 
about the postwar baby boom generation, the Bill Clinton generation--we 
will be the first generation in the history of this great and wonderful 
country to pass less on to our children than was given to us by our 
parents. Such an action cannot occur and should not occur. It is not 
right and it is not fair.
  We need to address the issue of the deficit. In order to do this, it 
is, I think, informative to look at some of the proposals that are on 
the table and which have been evaluated by various agencies which 
review the deficit.
  Each year, the Congressional Budget Office subjects the President's 
budget to its own independent analysis. It then publishes the analysis 
in a little book, the latest version of which was released last week. 
It is this blue book here. This is a very significant document because, 
as you will recall, when the President was elected, during his first 
speech to the Congress he stated he would use CBO as the fair and 
honest arbiter of the numbers of his budget.
  This year, CBO has found some highly significant differences between 
what the President said will happen under his budget and what CBO 
believes will actually occur.
  If you will recall, in February, when the President's budget was 
shown--when it was first delivered--it showed basically a steady state 
of deficits of $200 billion each year for as far as the eye can see; 
$200 billion a year, basically until the end of the budget cycle and 
beyond, with no progress toward a balanced budget, but at least no 
deterioration from the present position, which was pretty bad. It would 
have added, for example, a trillion dollars of new debt to the Federal 
deficit over the next 5 years.
  CBO, however, says that this is not true; the President's budget is 
not accurate. CBO's analysis found that the President's budget proposal 
would actually cause the deficit to climb by $100 billion over the next 
5 years. From $177 billion in the year 1996 to $276 billion in the year 
2000.
  This chart here shows this problem. This is the President's budget as 
he proposed it. This would be balanced down here. There would be $200 
billion deficits for as far as the eye could see. But CBO has taken a 
look at the President's budget and found that not only is he giving us 
a $200 billion deficit for as far as the eye could see, it appears that 
it is now on an upward trend and well above $200 billion. In other 
words, the President's budget will actually result in adding $1.2 
trillion of new debt to the national debt over the next 5 years.
  That is on top of the $4.8 trillion which we already owe as a 
country, and it is debt which our children will have to pay. It is debt 
which is going to finance current expenses which we are undertaking.
  The President's budget, it seems, was subject to some unfair 
criticism back in February, in fact. Republicans--and I must include 
myself among them--and some Democrats criticized it as a do-nothing 
budget. Well, now it appears that it is not a do-nothing budget, it is 
a make-things-worse budget.
  Congress also received some additional information which is fairly 
significant in the last couple of weeks. It received a report from the 
trustees of the Social Security and Medicare trust fund. That is this 
report here. This is important because the trustees of the Medicare 
trust fund are independent individuals who are given the obligation of 
managing the Social Security and the trust fund program and who are 
theoretically, outside the political process, although three of them 
are political appointees.
  For those who do not know that, the trustees include, for example, 
the Secretary of the Treasury, the Secretary of Labor and Human 
Resources, the Commissioner of Social Security, the Administrator of 
Health Care Financing Administration. In addition, there are two public 
trustees. These two are not administration officials, but private 
citizens, who were appointed to their positions.
  The alarming nature of this year's report results from the trustees' 
telling that the Medicare system is in a full-blown crisis, that it 
will go bankrupt in just 7 years if we do not take decisive action to 
fix it.
  Let me show another chart which reflects the seriousness of this 
situation. This is the hospital trust fund, Medicare. As we see under 
the present scenario, it is solvent. Beginning in about the year 1997, 
it starts to have a negative cash flow, and by the year 2002, 2003, or 
2004 it goes into deficit. In other words, it becomes bankrupt.
  This is the most important trust fund after Social Security that we 
deal with as a nation. The Medicare trustees are saying that the trust 
fund will confront a negative cash flow in just 2 years. This means 
that the Medicare program will be spending more than the Medicare 
payroll tax brings in.
  The Medicare will go insolvent in 7 years, or the year 2002. That is, 
the trust fund will not only have a negative cash flow, but that it 
will also have spent all the surplus reserves that it has accumulated. 
In other words, it will be bankrupt.
  ``It is important to remember,'' the trustees said, ``that under 
present law there is no authority to pay insurance benefits if the 
assets of the hospital trust fund are depleted.'' That means at this 
point, when we cross this line, there will be no money to pay for 
health care for senior citizens. Medicare benefits would simply be cut 
off, or seniors would have to fend for themselves for their health 
care. While Congress would probably do something about that, right now 
the state of the law is that in the year 2002 senior citizens will have 
no health care insurance.
  How big is the Medicare financial problem? The trustees report says 
the following:

       Short term, to restore actuarial balance over the next 25 
     years, an immediate payroll 
     [[Page S5872]] tax of 1.3 percent would have to be imposed or 
     benefits would have to be reduced in a comparable fashion. 
     That 1.3 percent translates into $263 billion over 5 years or 
     $387 billion over 8 years.
       In the long term, to restore balance over a 75-year period, 
     the payroll tax would have to be hiked 3.5 percent 
     immediately or a cut in benefits would have to be made that 
     is comparable. That translates into $565 billion over 5 years 
     or $1.1 trillion over 7 years.

  These are the numbers required to restore actuarial balance. But 
these figures give an idea of the magnitude of the problem that 
Medicare confronts.
  Another important element of this year's Medicare trustees report is 
that the public trustees--the citizen trustees, not the Clinton 
administration trustees--took the highly unusual step of including 
their own message, a dissent, in the statement. This statement sounds 
much more urgent and alarming than the overall report. Remember, it was 
given by the independent folks who serve in this commission. And the 
overall report is pretty severe.
  The public trustees begin the message by saying there has been an 
acceleration of the deterioration of the trust fund. They say that the 
deterioration results from some unforeseen events, but also from the 
absence of prompt action in response to clear warnings that changes are 
necessary.
  Here they are basically scolding the Congress. They are saying, ``We 
have been telling you of this problem for some time but you have 
ignored it. But you have a major crisis on your hands now and you can't 
delay any longer.''
  The trustees also go on to say two things which are rather striking, 
and I have had them reproduced here because they are so significant.
  They say: ``The Medicare Program is clearly unsustainable in its 
present form.'' Unsustainable in its present form.
  They also say, and this is the independent trustees speaking: ``We 
strongly recommend that the crisis presented by the financial condition 
of the Medicare trust funds be urgently addressed on a comprehensive 
basis, including a review of the program's financing methods, benefit 
provisions, and delivery mechanisms.''
  In other words, the Medicare Program is insolvent, is bankrupt, and 
it is unsustainable in its present form. It has to be restructured.
  In light of these two reports, the CBO report and the Medicare 
trustees report, Congress really confronts what I would call a 
political gut check. Are we going to try to save the Medicare system 
and balance the budget despite the political demagoguery that will 
surely result? Are we going to do these things in the face of a 
President who has basically washed his hands of both problems and taken 
the Pontius Pilate approach to budgeting, Pontius Pilate approach to 
Medicare, washed his hands and said there is no problem and walked off 
the stage? Or are we going to pursue politics as usual and just pretend 
for another year there is no problem at all?
  For my part, I believe we must reject the politics as usual and move 
decisively to restore this country's fiscal standing. We must do so to 
save the Medicare trust fund and to assure our seniors that they have a 
health insurance plan that is solvent, and we must do so to balance the 
budget, whether or not we get the President's help.
  Why? Because it is the right thing to do. It is the necessary thing 
to do. Quite simply, it is our job to do it.
  First, we must save the Medicare trust fund from bankruptcy. To do 
this we must pursue two tracks. We must make some changes to head off 
the bankruptcy in the year 2002 and restore the short-term solvency, 
and we must also undertake some structural improvements so that the 
Medicare trust fund remains sustainable into the next century.
  This involves some immediate adjustments, and it involves opening up 
the system to market-based incentives. We must follow the lead of the 
private sector and allow senior citizens to choose from a wide variety 
of health care plans, including traditional Medicare.
  If we allow seniors to have a wide variety of choices similar to 
those that we have as Members of Congress or as Federal employees, then 
the Medicare inflation will come under control and we will be able for 
bring this system into solvency.
  This can be done by giving our seniors choice. We can do it not by 
cutting Medicare. We do not have to cut spending on Medicare. All we 
need to do is reduce its rate of growth.
  Last year, the Medicare trust fund and the Medicaid fund, which is a 
separate fund and is a welfare fund, both grew at 10.5 percent, three 
times the rate of inflation in the economy. It happens to be 10 times 
the rate of inflation in the private sector health care arena, which 
actually dropped last year as a rate of growth. They had a minus 1.9 
percent inflation rate.
  Obviously, we cannot sustain double-digit inflation rates in the 
Medicare accounts. But we could sustain a growth rate which was as high 
as 7-percent, or twice the rate of inflation, and seven times the rate 
of inflation in the private sector health care accounts.
  We can obtain that goal of reaching a 7 percent rate of growth in 
Medicare by giving seniors more choice and creating a market-place 
incentive for them to move into health care provider proposals which 
are more cost efficient.
 I have laid out a fairly significant program to do that, and have 
talked about it before on the floor.

  Along with moving to resolve the bankruptcy of the Medicare system, 
we also must act decisively to resolve the problem with the deficit and 
the Federal budget. We must not only save Medicare but we must reform 
the rest of Government as well, because we must be able to pass on to 
our children a country which is solvent. This can be done by improving 
the way the Government delivers its services. Welfare, including 
Medicaid, has some of the fastest growing programs of the Federal 
Government but they are also some of the areas where the Federal 
Government has had its biggest experiences of failure. In fact, if 
there is one item you can point to in the liberal welfare state as 
having been a failure over the last 40 years, it is welfare itself. It 
has created generations of dependency and despondency: People who are 
locked into a system from which they cannot escape; people who should 
not be in the system who are in the system; people who should be 
getting assistance who are not getting assistance.
  We must admit that the status quo of the welfare system, and the 
Medicaid system, for that matter, which is part of it, is indefensible. 
We must move the responsibility for these programs and the power to 
administer these programs back to the States through using flexible 
funds and returning the dollars and the authority over these programs 
to the States.
  This loss of power on the Federal level will upset a lot of people 
around here and there will be a lot of shrill rhetoric. But the basis 
of that rhetoric will be the concern for loss of power. We will hear it 
couched in terms of compassion. We will hear this outrageous statement, 
which is so often made by some of my colleagues on the left, that State 
Governors and State legislatures and town governance individuals do not 
have the compassion or the knowledge to manage these programs; that 
somehow, the knowledge to manage these programs is uniquely retained in 
a few bureaucrats here in Washington and their assistants here on the 
floor of the Senate and in the House of Representatives.
  But that argument of compassion is, as we all know, a smokescreen for 
the real argument or the real concern, which is one of power. 
Controlling the dollars and controlling the programs means controlling 
people and having power. There are many Members around this arena who 
do not wish to give up the power of the purse or the power of the 
programs. But if we are to get better programs--better managed, more 
efficiently managed, delivering better services--the way to do that is 
to return the responsibility to the States and to the communities along 
with the dollars that support those programs.
  So in the welfare and Medicaid accounts, we can do both. In fact, the 
Governors have come forward and suggested to us that they will take 
over these programs and they will take them over at a fixed price. They 
will deliver these programs and deliver them even better than we do 
because they know how to deliver them and they have the flexibility to 
deliver them if we will simply give them the authority to do that. And, 
in doing 
[[Page S5873]] that, we can save a lot of money and produce a better 
program.
  We also need to address other entitlements. For example, the Federal 
retirement program is one of the largest categories of entitlements. It 
cannot escape reform as we undertake a fair and balanced approach to 
entitlement reform. The American taxpayers bear the full cost of 
Federal retirees' annual COLA adjustments, a feature that virtually no 
private pension plan shares and that was not part of the Government's 
original retirement contract with Federal workers, and we must do 
something to control that growth.
  There are innumerable--literally hundreds--of smaller entitlement 
programs, including some popular ones in the area of agriculture, 
unemployment compensation, and a variety of others. But all of these 
should be put under the microscope of review and we should ask the 
questions: Do they work? Should they continue to exist? Can they be 
improved? If we ask those questions, we will find in all instances the 
answer is they can be improved, and they can be delivered more 
efficiently and for less cost.
  While balancing the budget will mean examining the operation of some 
sacred political cows, it can be done. While in some cases we will 
decide that the Federal Government just cannot afford to continue 
funding some activities, in most cases entitlement reform will simply 
result in better Government being delivered, probably, to more people.
  Unfortunately, however, it appears that the Congress will have to go 
it alone. The President is offering absolutely no help. In fact, as the 
CBO report and the President's recent appearances tell us, his actions 
seem to be just making things worse. Just when the national predicament 
calls out for strong fiscal leadership, the President is doing exactly 
the opposite. He is telling every interest group he appears before that 
they deserve more money. He just told the Iowa farmers that they need 
to spend more money on pigs, more pork. It really is outrageous.
  Still, Congress must forge ahead. We must act to preserve the 
Medicare system so our seniors are not faced with a bankruptcy, which 
cannot be debated, and which has been predicted by their trustees, so 
that they will have an insurance trust fund that is there for them and 
for the next generation. We must act to preserve our children's future 
by moving to balance the budget by the year 2002.
  These will not be an easy 2 months as we go through the process of 
accomplishing these goals. We will have to make serious and difficult 
decisions. But I hope this Congress will not take the course that the 
President has and walk away from the matter. We need to undertake this 
issue of bringing solvency into the Medicare fund for the benefit of 
our seniors. We need to undertake balancing the budget for the benefit 
of our children.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.

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