[Congressional Record Volume 141, Number 93 (Thursday, June 8, 1995)]
[Extensions of Remarks]
[Page E1188]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         THE BUDGET RESOLUTION

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                        Wednesday, June 7, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, May 31, 1995 into the Congressional Record.

                         Balanced Budget Plans

       The House of Representatives recently completed action on 
     the budget resolution, which sets broad dollar targets for 
     federal spending and revenues for the next seven years. Each 
     of the four versions considered by the House would, in 
     theory, balance the federal budget by the year 2002. Some 
     would even produce a surplus and begin reducing the national 
     debt.
       The House leadership deserves credit for bringing balanced 
     budget resolutions to the floor. The deficit this year is 
     projected to be just under $200 billion. The deficit has been 
     significantly reduced--from 4.9% of the total economy three 
     years ago to 2.5% today--but much more needs to be done. The 
     cuts necessary to erase the deficit will be felt by all 
     Americans. Congress' challenge is to make sure that the 
     burden of cuts is distributed fairly.
       A Moderate Plan: I support a balanced budget. The budget 
     resolution I voted for would balance the budget by 2002, 
     begin to reduce the national debt, stabilize the Medicare 
     trust fund, and invest in our children through student loans, 
     Head Start, and childhood immunization. It would make tough 
     but fair cutbacks in almost every part of the budget: foreign 
     aid, welfare, agriculture, transportation, housing, and many 
     others. It did not raise tax rates. The gradual reductions 
     would cut the deficit in half by 1999, provide a surplus in 
     2002, and reduce the national debt (the sum of yearly 
     deficits) by $160 billion more than the majority's budget. 
     This budget received the most bipartisan support. 
     Unfortunately, it was defeated.
       The Majority Plan: The majority leadership's resolution 
     passed the House. While I disagreed with several of its 
     priorities, the majority's budget has some positive features. 
     It is a serious attempt to break the pattern of government 
     overspending with hard targets and a final date to balance 
     the budget. It forces the nation to confront fiscal decisions 
     avoided for too long.
       The majority's budget would cut spending for virtually all 
     federal programs except defense, which would increase 
     sighificanlty. It also assumes cuts in tax revenue by $280 
     billion reduction over seven years and an additional $350 
     billion in the following three years.
       The largest savings in the majority budget come from a $288 
     billion in Medicare services, compared to spending levels 
     required under current law. The plan would eliminate 284 
     programs, reduce student loans, cut major agricultural 
     programs, and make significant cuts in child nutrition 
     services. Heating assistance to low-income families would be 
     abolished, and only 50 percent of housing assistance vouchers 
     for older persons would be renewed. The majority's budget 
     would also eliminate small business assistance, community 
     development funds, and assistance to rural communities for 
     wastewater treatment.
       Reservations: I did not support the majority budget 
     resolution for several reasons:
       First, the majority delayed most of the tough spending cuts 
     until 2001. Until then, we will have deficits in excess of 
     $100 billion per year. My preference is to reduce spending 
     gradually each year, rather than postponing action.
       Scond, the job of balancing the budget is made much more 
     difficult by huge tax cuts. I do not think we can justify 
     large tax breaks until the budget is balanced--especially 
     when the tax cuts start early and the bulk of the spending 
     cuts are delayed for six years. If and when a surplus occurs, 
     then Congress should pass tax cuts. It does not make sense to 
     borrow more money to give ourselves a tax cut.
       Third, my spending priorities are different. Half of the 
     total savings come from health care and assistance to the 
     poor. We should not ask the poor to bear more than their 
     share of the burden. The curbs on Medicare and Medicaid are 
     too steep. I prefer fair, across-the-board cuts in most 
     programs, and deep cuts in ``corporate welfare''--wasteful 
     subsidies to business. We should also preserve funding for 
     long-term investments such as health and science research, 
     infrastructure, and education. These are necessary to 
     continue economic growth, increase revenues, and reduce the 
     deficit.
       Fourth, the majority budget devolves a great deal of 
     responsibility to state and local governments in a short 
     period of time. This may be a good idea in many cases, but we 
     need more information on the ability of these governments to 
     handle new duties. Balancing the federal budget will be a 
     hollow victory if state and local governments fail to run 
     programs well or raise taxes to meet exploding costs.
       Fifth, I am not convinced the majority plan would achieve a 
     balanced budget. The plan makes optimistic economic 
     assumptions that it could lower interest rates almost two 
     percentage points and boost economic growth. That might 
     occur, but the hope of $170 billion in savings from this 
     should not be assumed in advance.
       Conclusion: The House action on the budget was a 
     significant step toward restoring fiscal responsibility to 
     the federal government. The Senate has also passed a budget 
     resolution, with no immediate tax cut. The House and Senate 
     resolutions must be reconciled in what will be a contentious 
     conference committee, with tax cuts at the center of debate. 
     The budget resolution itself is not subject to a Presidential 
     veto, but the measures to implement it must be approved by 
     the President.
       The toughest choices lie ahead, when Congress debates these 
     specific spending cuts. It is one thing to say that Medicare 
     services must be reduced by $288 billion over seven years, 
     but quite another to decide exactly how these savings will be 
     accomplished. The real budget decisions are just beginning.
       The popular promise of 1994, that the budget could be 
     balanced painlessly, will not be kept. The strongest evidence 
     of that is the deep cuts in Medicare and Medicaid services. 
     The right way to reduce the deficit is to distribute the 
     burden of spending cuts fairly. The challenge is to balance 
     the need for austerity with critical investments in long-term 
     growth. We should reduce unnecessary and marginal programs, 
     but also invest in programs that will help working families 
     build a more prosperous future.
     

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