[Congressional Record Volume 141, Number 161 (Wednesday, October 18, 1995)]
[Senate]
[Pages S15262-S15265]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           A BALANCED BUDGET

  Mr. DOMENICI. First of all, let me in advance thank Senator Cochran 
for organizing this time. I am only going to use a few minutes because 
I get more than enough time in expressing budget and fiscal problems 
for our country. But today I want to start by saying the long, long 
journey of getting to a balanced budget from the standpoint of the 
Senate and all of the committees of this Senate doing their work is 
completed as of now.
  In fact, just about a half-hour ago, dated today, I received a letter 
from the Congressional Budget Office directed to me as chairman of the 
Budget Committee signed by Dr. June O'Neill, Director of the 
Congressional Budget Office, that says when we pass in the Senate and 
if the President will just sign what we have done, we have a balanced 
budget, literally. For the first time in more than 25 years we have put 
together a package of reforms and changes, restraints and modifications 
in the law such that the authenticator of our budgets, the institution 
created to tell us the truth, has said in this letter that we have a 
balanced budget.
  Now, for many of us, this letter has been years, years, and years in 
the making, and for some who have joined us recently, like the occupant 
of the chair and my good friend from Wyoming, they came and they lent 
their support to this very, very important endeavor in their first year 
of what may be for them many years of being Senators when the United 
States spends only what it takes in and establishes a new premise that 
we will only fund what we can afford.
  So it is with a great deal of pleasure that I kick off this 1 hour 
today, and many to follow, when we explain why we are doing what we are 
doing by saying to those who want future Americans to have a better 
standard of living, for those seniors, those parents across this land 
that are wondering why cannot our children have a better standard of 
living, why cannot they get better paychecks. This is the beginning of 
the reinstating across this land a U.S. economy that can grow and 
prosper with low inflation and provide an increasing standard of 
living.
  Why? Because it is obvious when you borrow so much money to pay for 
Government that you probably could not afford, you siphon off the 
resources and the productivity of our people, young and old. Those 
around now and those who will be here in a couple years, you take their 
productivity and their wealth and you say the U.S. Government needs 
that. We need it, to borrow it, to pay our bills, which we should not 
have incurred in the first place. Mr. President, $4.6 trillion of that 
kind of debt, which sooner or later will stop growing when all these 
bills we are going to send to the President gets signed or when the 
President gets real and says how we will do it with real numbers, not 
with phony economic numbers.
  I repeat, it would not have been very difficult to get this letter 
from the Director of the Budget Office if we had the luxury that the 
President had. The President found $475 billion without cutting 
anything, without reforming anything. He just said, ``We'll have better 
numbers than the Congressional Budget Office. Things are just going to 
be so much better, Medicaid is not going to cost so much. You don't 
have to change it. It is just going to stop costing so much.''
  ``Medicare, you know, it is also going to stop costing so much,'' 
said the President. ``We are going to save a bunch of money because the 
costs are going to start going down.'' He said, ``We're going to pick 
up interest.'' He says we are going to pick up $175 billion because he 
thinks we are going to grow more than the Congressional Budget Office 
says, again, the authenticator of truism and the opposite of smoke and 
mirrors that we so long looked for around here and now we have.
  So when the President comes to the party, after we have done what 
this CBO Director says, after we pass what she says will get you the 
balance, the ball is going to be in the President's court. What does he 
want to do about it? We already had the Secretary of the Treasury, with 
weeping and gnashing of teeth about the debt limit, making changes in 
advance of what he assumes might happen around here.
  Mr. Secretary of the Treasury, while we recognize and respect your 
past business performance, we insist that you understand that we want, 
too, a balanced budget. We do not want America to default on its debt. 
But, Mr. Secretary, we want a balanced budget. And we believe that the 
CBO Director told us today how you do it. You do not dream up better 
numbers so you do not have to do so much, you do what must be done. No 
smoke and mirrors. Reform the entitlement programs. You will get there. 
America will have a much better place for its youngsters to grow up in 
and have the opportunity to prosper and grow in.
  So, I will ask unanimous consent that the letter, and for those 
interested, the attached charts be printed in the Record. The charts 
are now attached. And believe it or not, in 2002, the Congressional 
Budget Office, without a rosy scenario, with conservative economics, 
real estimates, says we will have a $10 billion surplus.
  Now, I know for many that is one of these ``believe it or nots,'' is 
it not? It has been so long since we ever thought about this seriously. 
You never thought we could get there. And I might conclude after all my 
years of trying to get there, I never thought we would be here today, 
and next week and the week after when we vote to do this. And I would 
hope some of those on the other side of the aisle will help us do it. I 
am not sure they will. But I hope they do not rely on the President's 
budget as a means of getting there.
  I have heard some very, very expert members of the Democratic Party 
on that side of the aisle talk about the need to reform entitlement 
programs. 

[[Page S 15263]]
 Well, reform did not mean that you wish away the costs by just sitting 
down and saying it just is not going to cost that much, you do not have 
to change anything.
  Let me tell everyone, I have been down that route. The one summit 
that failed, when we got the Executive and the Congress together, 
failed because we refused to reform entitlement programs. We estimated 
their costs. And much like the President, we estimated them very low. 
The OMB Director thought they would not cost so much. We saw the 
result. They cost a lot more than we predicted, and we never came close 
to the goals we had set.
  We are not doing that. We are not doing that. We are taking on some 
very tough issues. There is some pain. We think it is fair pain. And so 
today I am very, very proud to say that the journey toward a balanced 
budget is perhaps drawing to an end.
  Mr. President, pursuant to section 205(a)(4) of the fiscal year 1996 
concurrent resolution on the budget (H. Con. Res. 67), I am submitting 
to the Senate the Congressional Budget Office certification of the 
reconciliation recommendations.
  In accordance with the procedures set forth in the budget resolution, 
the Budget Committee transmitted the recommendations received pursuant 
to section 105(a) of that resolution to the Congressional Budget Office 
[CBO]. CBO completed the required estimate and transmitted it to the 
Senate Budget Committee today. The estimate projects that enactment of 
the legislation will result in a balanced total budget in 2002--indeed 
there will be a $10 billion surplus in that year. This estimate does 
not include projections of the fiscal dividend.
  This certification triggers the revenue reconciliation instructions 
to the Senate Finance Committee contained in section 105(b) of the 
budget resolution. Pursuant to that section, the Finance Committee must 
submit its revenue reduction recommendations to the Budget Committee 
within 5 days.
  I submit officially for the Record the CBO's letter saying when we 
pass the Senate proposals we will have a balanced budget in the year 
2002.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                 Washington, DC, October 18, 1995.
     Hon. Pete V. Domenici,
     Chairman, Committee on the Budget, U.S. Senate, Washington, 
         DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     reviewed the legislation submitted to the Senate Committee on 
     the Budget by eleven Senate committees pursuant to the 
     reconciliation directives included in the budget resolution 
     for fiscal year 1996 (H. Con. Res. 67). CBO's estimates of 
     the budgetary effects of each of those submissions have been 
     provided to the relevant committees and to the Budget 
     Committee. Based on those estimates, using the economic and 
     technical assumptions underlying the budget resolution, and 
     assuming the level of discretionary spending specified in 
     that resolution, CBO projects that enactment of the 
     reconciliation legislation submitted to the Budget Committee 
     would produce a small budget surplus in 2002. The effects of 
     the proposed package of savings on the projected deficit are 
     summarized in Table 1, which includes the adjustments to 
     CBO's April 1995 baseline assumed by the budget resolution. 
     The estimated savings that would result from enactment of 
     each committee's reconciliation proposal is shown in Table 2.
       As you noted in your letter of October 6, CBO published in 
     August an estimate of the fiscal dividend that could result 
     from balancing the budget in 2002. CBO estimated that 
     instituting credible budget policies to eliminate the deficit 
     by 2002 could reduce interest rates by 150 basis points over 
     six years (based on a weighted average of long-term and 
     short-term interest rates) and increase the real rate of 
     economic growth by 0.1 percentage point a year on average, 
     compared with CBO's economic projections under current 
     policies. CBO projected that the resulting reductions in 
     federal interest payments and increases in federal revenues 
     would total $50 billion in 2002 and $170 billion over the 
     1996-2002 period. Those projections were based on a 
     hypothetical deficit reduction path developed by CBO. The 
     deficit reductions estimated to result from the 
     reconciliation legislation submitted to the Budget Committee, 
     together with the constraints on discretionary spending 
     proposed in the budget resolution, would likely yield a 
     fiscal dividend similar to that discussed in the August 
     report.
       If you wish further details on this projection, we will be 
     pleased to provide them.
           Sincerely,
                                                  June E. O'Neill,
                                                         Director.
       Enclosure.

                                          TABLE 1.--PROPOSED SENATE BUDGETARY CHANGES FROM CBO'S APRIL BASELINE                                         
                                                        [By fiscal year, in billions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Total 1996-
                                                      1996         1997         1998         1999         2000         2001         2002         2002   
--------------------------------------------------------------------------------------------------------------------------------------------------------
CBO April baseline deficit \1\..................          210          230          232          266          299          316          349            *
Baseline adjustments \2\                                                                                                                                
    CPI rebenchmarking \3\......................            0            0            0           -1           -3           -6           -9          -18
    Other adjustments \4\.......................            1            1            1            2            2            1            1           10
                                                 -------------------------------------------------------------------------------------------------------
      Subtotal..................................            1            1            1            1           -1           -5           -8           -8
                                                 =======================================================================================================
Policy changes:                                                                                                                                         
    Outlays:                                                                                                                                            
        Discretionary: \5\                                                                                                                              
            Freeze \6\..........................           -8           -9          -12          -35          -55          -75          -96         -289
            Additional savings..................          -10          -21          -27          -24          -20          -24          -25         -151
                                                 -------------------------------------------------------------------------------------------------------
              Subtotal..........................          -18          -29          -39          -59          -75          -99         -121         -440
        Mandatory:                                                                                                                                      
            Medicare............................           -8          -17          -25          -36          -48          -60          -75         -270
            Medicaid............................           -5           -9          -16          -25          -33          -42          -52         -182
            Other...............................          -12          -21          -24          -27          -29          -30          -32         -175
                                                 -------------------------------------------------------------------------------------------------------
              Subtotal..........................          -26          -48          -65          -87         -110         -133         -159         -627
Net interest....................................           -2           -6          -12          -21          -33          -48          -67         -189
                                                 -------------------------------------------------------------------------------------------------------
      Total outlays.............................          -45          -83         -116         -168         -217         -280         -347       -1,256
Revenues \7\....................................           -1           -3           -3           -4           -4           -4           -4          -24
                                                 -------------------------------------------------------------------------------------------------------
      Total policy changes......................          -46          -86         -120         -171         -221         -284         -351       -1,280
                                                 =======================================================================================================
Total adjustments and policy changes............          -45          -85         -118         -171         -222         -288         -359       -1,288
Senate policy deficit...........................          165          146          113           96           77           28          -10            *
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Projections assume that discretionary spending is equal to the spending limits that are in effect through 1998 and will increase with inflation     
  after 1998.                                                                                                                                           
\2\ The budget resolution was based on CBO's April 1995 baseline projections of mandatory spending and revenues, except for a limited number of         
  adjustments.                                                                                                                                          
\3\ The budget resolution baseline assumed that the 1998 rebenchmarking of the CPI by the Bureau of Labor Statistics will result in a 0.2 percentage    
  point reduction in the CPI compared with CBO's December 1994 economic projections.                                                                    
\4\ The budget resolution baseline made adjustments related to revised accounting of direct student loan costs, assuming expiration of excise taxes     
  dedicated to the Superfund trust fund as provided under current law, the effects of enacted legislation, and technical corrections.                   
\5\ Discretionary spending specified in the Concurrent Resolution on the Budget for Fiscal Year 1996 (H. Con. Res. 67).                                 
\6\ Savings from freezing 1996-2002 appropriations at the nominal level appropriated for 1995.                                                          
\7\ Revenue increases are shown with a negative sign because they reduce the deficit.                                                                   
                                                                                                                                                        
Source.--Congressional Budget Office.                                                                                                                   
                                                                                                                                                        
Note: *=not applicable; CPI=consumer price index.                                                                                                       


                                                                                                                                                        

[[Page S 15264]]
                                                  TABLE 2.--SENATE RECONCILIATION SAVINGS BY COMMITTEE                                                  
                                                        [By fiscal year, in billions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      1996         1997         1998         1999         2000         2001         2002      1996-2002 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Agriculture, Nutrition and Forestry:                                                                                                                    
    Outlays:                                                                                                                                            
        Farm and export programs................         -0.9         -1.6         -2.1         -2.0         -2.0         -2.0         -2.0        -12.7
        Nutrition programs......................         -2.4         -4.0         -4.7         -5.3         -5.9         -6.4         -7.0        -35.7
                                                 -------------------------------------------------------------------------------------------------------
          Subtotal..............................         -3.3         -5.6         -6.8         -7.3         -7.8         -8.4         -9.0        -48.4
                                                 =======================================================================================================
Armed Services: Outlays.........................         -0.1         -1.2          0.4          0.4          0.3          0.3          0.3          0.3
Banking, Housing, and Urban Affairs: Outlays....         -5.1          0.3          0.3          0.3          0.3          0.3          0.3         -3.3
Commerce, Science and Transportation: Outlays...         -0.1         -1.8         -2.6         -3.5         -3.1         -2.6         -1.4        -15.1
Energy and Natural Resources:                                                                                                                           
    Outlays.....................................         -0.6         -1.4         -1.1         -0.3         -0.9         -0.3         -0.1         -4.7
    Revenues\1\.................................          0.0        (\2\)        (\2\)        (\2\)        (\2\)        (\2\)        (\2\)        (\2\)
                                                 -------------------------------------------------------------------------------------------------------
    Deficit.....................................         -0.6         -1.4         -1.1         -0.3         -0.9         -0.3         -0.1         -4.7
                                                 =======================================================================================================
Environment and Public Works: Outlays...........         -0.1         -0.3         -0.2         -0.5         -0.4         -0.4         -0.4         -2.3
Finance:                                                                                                                                                
    Outlays:                                                                                                                                            
        Medicare................................         -8.4        -17.1        -25.3        -36.1        -47.8        -60.3        -75.2       -270.2
        Medicaid................................         -5.1         -9.0        -16.4        -24.5        -32.9        -42.2        -51.9       -182.0
        Welfare reform..........................         -0.8         -9.0        -10.9        -12.1        -13.6        -15.0        -16.9        -78.3
                                                 -------------------------------------------------------------------------------------------------------
          Subtotal..............................        -14.3        -35.1        -52.6        -72.7        -94.3       -117.5       -144.0       -530.5
                                                 =======================================================================================================
    Revenues\1\:                                                                                                                                        
        Earned Income Tax Credit................         -0.1         -1.2         -1.4         -1.6         -1.8         -2.1         -2.5        -10.7
        Hospital Insurance Tax..................         -1.1         -1.6         -1.5         -1.5         -1.4         -1.4         -1.3         -9.8
                                                 -------------------------------------------------------------------------------------------------------
          Subtotal..............................         -1.2         -2.8         -2.9         -3.1         -3.2         -3.5         -3.8        -20.5
                                                 =======================================================================================================
    Deficit.....................................        -15.5        -37.9        -55.5        -75.8        -97.5       -121.0       -147.7       -550.9
                                                 =======================================================================================================
Governmental Affairs:                                                                                                                                   
    Outlays.....................................         -0.5         -1.0         -1.0         -1.0         -0.9         -0.9         -0.9         -6.2
    Revenues\1\.................................         -0.2         -0.4         -0.6         -0.6         -0.6         -0.6         -0.7         -3.7
                                                 -------------------------------------------------------------------------------------------------------
    Deficit.....................................         -0.7         -1.4         -1.5         -1.6         -1.5         -1.6         -1.6         -9.9
                                                 =======================================================================================================
Judiciary: Outlays..............................          0.0          0.0          0.0         -0.1         -0.1         -0.1         -0.1         -0.5
Labor and Human Resources: Outlays..............         -1.3         -1.1         -1.4         -1.6         -1.7         -1.8         -1.9        -10.9
Veterans' Affairs: Outlays......................         -0.2         -0.3         -0.5         -1.3         -1.5         -1.4         -1.5         -6.7
Interactive Effects: Outlays....................        (\2\)          0.1          0.1          0.2          0.2          0.3          0.3          1.1
                                                 -------------------------------------------------------------------------------------------------------
Total:                                                                                                                                                  
    Outlays.....................................        -25.5        -47.6        -65.4        -87.4       -110.0       -132.7       -158.6       -627.1
    Revenues\1\.................................         -1.4         -3.2         -3.4         -3.7         -3.9         -4.1         -4.4        -24.1
    Deficit.....................................        -26.9        -50.8        -68.9        -91.1       -113.8       -136.8       -163.0       -651.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Revenue increases are shown with a negative sign because they reduce the deficit.                                                                   
\2\ Less than $50 million.                                                                                                                              
                                                                                                                                                        
Sources.--Congressional Budget Office; Joint Committee on Taxation.                                                                                     


  Mr. DOMENICI. I yield the floor.
  Mr. THOMAS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, let me first congratulate the Senator from 
New Mexico. This is a tough job. This is the toughest job in the 
Congress. Everyone likes the programs that we have. Everyone is 
involved in the programs. So you have to make some really tough 
decisions. It has not been done for 25 years. So I certainly 
congratulate the Senator, the Budget Committee, and the Finance 
Committee. They are doing tough work.
  So we say, why are we doing this? It is very tough. What is the 
benefit? Let me tell you that I think there are substantial benefits. 
As a matter of fact, I do not think there is any question whether we 
have to do it.
  One, if we are to be responsible, fiscally, morally, in terms of 
paying for what we ask for, you have to balance the budget. We have 
gone for a very long time, and we have known it, all of us, as citizens 
but we have not cared too much. But now we are at a time when, for 
example, interest on the national debt soon will become the largest 
single line item in the budget: $260 billion interest; not debt 
service, not a reduction, interest. That is one reason we do it.
  If you have a philosophy about government, should Government continue 
to grow and become larger, better Government, it has to do with 
balancing the budget. If we do not ask ourselves, are we willing to pay 
for the services that we ask for or are we going to put them on the 
credit card, as we have done for a very long time, then we will 
continue to have larger and larger Government.
  One of the benefits, I think, is to leave more money in the pockets 
of American families to spend as they chose to invest and create jobs.
  Of course, I mentioned the interest. We will, next month, I suspect, 
be asked to vote on raising the debt limit to $5 trillion--whatever 
that is--$5 trillion because that is where we have gotten ourselves 
over a period of time. These young people, like these pages here, have, 
I think, $180,000 debt each they will inherit because we have not 
balanced the budget.
  So that is what it is all about. It is not really a question of 
whether we do it, we must do it to be morally, fiscally responsible.
  So we are doing the business this week. This is a defining moment, I 
believe, in a very long time. This is my first year in the Senate that 
I have been here. But I have been here for several years, 5 years, in 
the House. We have not had a moment of that kind since I have been 
here. But more importantly, we have not had a moment of that kind for 
many years, a defining moment when we decide to make some fundamental 
changes in Government.
  It is not just the budget. The budget is reflective of it. The budget 
is the key to doing it. But much more will be changed besides simply 
balancing the budget.
  I do not think there is any question but what voters asked for 
change. I do not think there is any question, as you go out to your 
constituency and talk in town meetings, about where we are going. 
Everyone knows we have to do something different. Almost everyone knows 
that you cannot keep doing the same thing and expect different results.
  So we have before us this week and next week and will have before us 
next month the defining moment. We will have before us a budget that 
will bring us into balance in 7 years, the first time for a very long 
time.
  So I would like to talk a little bit about the process we go through 
to do that, as opposed to the detail, and it will be difficult. I would 
like to talk a little bit about philosophy, because it is quite obvious 
that there are two points of view. There is nothing wrong with that. 
There are, clearly, at least two points of views. There are many views, 
of course, and they center on the role of the Federal Government in 
America today. That is the reason we 

[[Page S 15265]]
have debate, that is the reason we have two parties, that is the reason 
we vote, to get a sense of direction as to how we want to go.
  Some, including the President, and many of the more liberal Members 
on the other side, support more spending. That is a legitimate point of 
view, to spend more in the Federal Government, have more programs, have 
larger Government. I do not happen to agree with that.
  My view is that we strengthen this country by having more personal 
responsibility, by having fewer programs that work better, that are 
efficient, that, in the case of welfare, are designed to help people 
who need help, but to help them back into a position to help 
themselves, not as a permanent establishment.
  We have had 40 years where we just generally added to the social 
programs. If they did not work quite right, we put some more money in 
them. Now we have an opportunity to examine some of these programs, to 
see, indeed, that they are accomplishing the purposes for which they 
were established; to see, indeed, if they are efficient in terms of 
delivering the services that we pay for; to consider if there is a 
better way to do it.
  This is, after all, a Union of States, and the basic governing unit 
are the States. They come together in the federation, and the more 
things, in my view, that the States can do, being closer to the people, 
the more likely they are to be effective.
  So there is a different point of view about that. The President 
promised a 5-year balanced budget as a candidate 3 years ago. Of 
course, that has not happened. What did happen, however, was the 
largest tax increase in the history of this country that still left us 
with a deficit.
  Voters rejected the proposal last year, of course, for the Government 
takeover of health care.
  So where are we now? We have to have a budget that really means 
something. The President's first budget this year was rejected 99 to 
zip in this place. The budget that followed was touted as a balanced 
budget, but CBO indicated that it will be $200 billion over at the end 
of the 10-year period and would never balance.
  There has to be a little pain in balancing, and it has to be real 
cuts. It is tough. It is where we are. We have to really come to the 
snubbing post and say are we going to commit ourselves to doing it and 
the time is now.
  I hope that we get some support and cooperation from the White House 
and the other side of the aisle. I do not suggest everyone is going to 
agree. There are, obviously, lots of points of disagreement in how you 
do this, but the point is that we have to do it.
  We have to save Medicare. If you like Medicare, if you want to have a 
health care program for the elderly, you have to change it. You cannot 
let it continue to grow at 10 percent a year, unless you want to double 
the contribution that is made to Social Security for part A. That is a 
fact.
  I am a little concerned that as we move toward these decisions in the 
public arena, making public policy, that we are moving more and more 
toward sort of merchandising, towards the idea of using fright tactics 
instead of facts.
  I picked up something in the Denver paper the other day on my way 
back. The Denver paper is not exactly a conservative bulletin, but it 
asserted the allegation under the Clean Water Act that we are going to 
dump arsenic in the water supply. Of course we are not going to dump 
arsenic in the water supply. Those are the kind of things that are 
being talked about as distortions, and they do not really come to the 
question of what we do to have a responsible Government, to be able to 
finance the kinds of programs that really are meaningful over time.
  So, Mr. President, I say, again, that we are approaching and involved 
in, and it is a treat for you and me and my associate from Minnesota in 
our first year here to be a part of the first time to have a real 
opportunity to balance the budget, and we have that. I certainly hope 
our associates in the Senate will cause that to happen.
  Mr. President, I yield the floor.
  Mr. INHOFE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma.

                          ____________________