[Congressional Record Volume 141, Number 103 (Thursday, June 22, 1995)]
[Extensions of Remarks]
[Pages E1305-E1306]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                  THE PRESIDENT'S BALANCED BUDGET PLAN

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                        Thursday, June 22, 1995
  Mr. HAMILTON of Indiana. Mr. Speaker, I would like to insert my 
Washington Report for Wednesday, June 21, 1995 into the Congressional 
Record.
                  The President's Balanced Budget plan

       In a nationally televised speech President Clinton recently 
     joined congressional leaders in calling for an historic 
     reduction in the federal budget deficit and for a reduction 
     in the size of government. He stepped from the sidelines on 
     the budget debate and laid out a ten-year route to a balanced 
     budget which dramatically scales back much of what government 
     does. He wants to balance the budget by the year 2005 while 
     still investing in education and training, taking serious 
     steps toward health care reform while protecting its 
     beneficiaries, and targeting modest tax cuts to working 
     families. He calls for real cuts in most areas of government 
     spending other than Social Security.


                              differences

       Although the President and congressional leadership agree 
     on the broad outlines of balancing the budget, many 
     differences remain. President Clinton would balance the 
     budget over ten years; their plan says seven. He would cut 
     taxes only for the middle class; the House leadership would 
     also cut taxes for upper-income taxpayers. And their tax cuts 
     would be much more costly--$350 billion versus the $96 
     billion the President proposes. The President eliminates $25 
     billion in corporate subsidies; they would not. He trims 
     spending for the poor while they cut it sharply. He squeezes 
     Medicare and Medicaid; they cut back these programs much 
     more. Both he and the congressional leadership reach a 
     balanced budget by making fairly optimistic economic 
     projections, such as assuming that interest rates will fall 
     sharply.
       The President increases spending on education, training, 
     and medical and scientific research, areas the congressional 
     leadership would cut. On health care the President offers a 
     plan far less ambitious than his original health care reform 
     proposal of a year ago. But he does propose to save $124 
     billion from Medicare and $55 billion from Medicaid; the 
     congressional leadership's cutbacks would be more than twice 
     as much. He reaches the Medicare savings by reducing growth 
     in health care costs, not by asking beneficiaries to pay 
     more.
                              new strategy

       The President has clearly chosen the path of conciliation 
     as a better way for him than continued confrontation with the 
     congressional leadership. He dropped his stand-pat budget 
     which he submitted to Congress in February and joins the 
     chorus to eliminate the deficit. The President has received 
     sharp criticism from some members of his own party as well as 
     some indications of openness from the congressional 
     leadership. He is positioning himself as an independent, 
     centrist leader. He has rightly rejected the strategy of just 
     counterpunching against congressional budget proposals and 
     has indicated that he believes a President's responsibilities 
     rise above politics to leadership.


                           growing consensus

       There isn't any doubt that Congress and the President are 
     now very serious about bringing the budget into balance. That 
     means the question is not whether to balance the budget into 
     balance. That means the question is not whether to balance 
     the budget but when and how. This is good news. The federal 
     budget has been in the red every year but one, 1969, since 
     the Eisenhower Administration. Public opinion polls which 
     show 80% of the American people favoring a balanced budget 
     have had a strong impact. But quite apart from politics, the 
     economic arguments for a balanced budget are also [[Page E 
     1306]] very strong. Consistently large budget deficits 
     endanger the country's economic future and cheat future 
     generations of Americans. Balancing the budget will increase 
     national savings and that means greater national investment 
     in physical, human, and technological capital. That in turn 
     will increase productivity and boost incomes for Americans.
       Many Americans believe that balancing the budget is not 
     just an economic issue but almost a moral issue--that the 
     government's inability to balance the budget means the 
     country has lost a moral sense of fiscal responsibility. They 
     see the huge deficits as shifting the burden to the next 
     generation. Others look at deficits as shifting the burden to 
     the next generation. Others look at deficits in more 
     practical terms. They see no great harm with a deficit in any 
     one year, but believe the continuing deficits undermine the 
     economic underpinnings of the country. So a growing consensus 
     has come to the view that deficit spending must end.
       The details of balancing the budget still remain. In the 
     current political climate neither Social Security nor defense 
     spending can be cut and taxes cannot be raised. That puts 
     enormous pressure on a rather small part of the government's 
     total budget composed of Medicare, Medicaid, and other social 
     welfare programs. Rather than gutting important programs such 
     as health care for older Americans, our emphasis needs to be 
     on reforms to make government work better and cost less.


                               assessment

       I think the President's new position on the budget is much 
     better than his old one. He now wants to continue the deficit 
     reduction that he started in the first two years of his 
     administration, but he wants to do it more gently than others 
     have proposed. Cutting the deficit too hard too fast could 
     lead to a lot of pain which could undermine political support 
     for a balanced budget. The President believes that a more 
     gradual approach increases the chances of getting to a 
     balanced budget.
       I believe that both the congressional leadership and the 
     President are wrong in providing for tax cuts now. The 
     President's tax cut is much smaller and more targeted than 
     the congressional leadership's. By the stretchout in years 
     and the smaller tax cut he gets to his goal of a balanced 
     budget without cutting as much from important programs like 
     Medicare. But I believe any tax cut at this time is a bad 
     idea. It does not make sense to me to borrow more money to 
     provide a tax cut now. It is better to cut the spending, get 
     the budget into balance, and then give ourselves a tax cut. 
     We simply make the problem much more difficult if we add to 
     the deficit we want to reduce.
       Although I disagree with some of its specifics, I think the 
     President has put forth a sensible plan for budgetary 
     discipline. I am pleased to see that both parties are now on 
     the same course. At the same time, no one should think the 
     battle has been won. Much of the budget debate from this 
     point on will be seen more as a skirmish over details, but 
     some major decisions still lie ahead.
     

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