[Congressional Record Volume 141, Number 172 (Thursday, November 2, 1995)]
[House]
[Pages H11747-H11754]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              THREE MAJOR GOALS OF THE REPUBLICAN MAJORITY

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from Connecticut [Mr. Shays] is recognized for 
60 minutes as the designee of the majority leader.
  Mr. SHAYS. Mr. Speaker, thank you for taking the time to allow me to 
address the House. I would like to say that I will basically be making 
some comments and then yielding to my good friend, the gentleman from 
Kansas [Mr. Tiahrt], who will demonstrate some of what I am saying and 
amplify and also go on into other areas.
  Mr. Speaker, really what I wanted to address the House about was why 
we are doing what we are doing and what are we doing.
  Mr. Speaker, we have three basic goals as this Republican majority. 
Our first goal is to get our financial house in order and balance our 
Federal budget. We would like to do that no later than 7 years. We 
would like to do it sooner, but 7 is the outer limit to balancing that 
Federal budget.
  Our second task is to save our trust funds, particularly Medicare, 
which starts to go insolvent next year and becomes bankrupt in 7 years.
  Our third effort is to transform our social and corporate welfare 
state into an opportunity society.
  Mr. Speaker, the bottom line to this effort is: Get our financial 
House in Order; balance our budget; save our trust funds, particularly 
Medicare, which is going bankrupt; and transform our social and 
corporate welfare state into an opportunity society.
  Mr. Speaker, we have heard a lot of dialog in the last few months 
about whether we are cutting or increasing. The gentleman from Kansas 
is going to be able to demonstrate what truly is a cut and what is not, 
but I would like to begin to start that dialog by dealing with five 
issues that our colleagues on the other side of the aisle refer to as 
cuts.
  One is the earned income tax credit; another is the School Lunch 
Program; another is the Student Loan Program; a fourth is the Medicaid 
Program; and a fifth is the Medicare Program.

[[Page H 11748]]

  Mr. Speaker, in none of these five areas did we cut the programs. We 
increased spending. We allow these programs to grow significantly. What 
we did is we slowed their growth, and slowing their growth is 
absolutely essential.
  I have been in Congress now 8 years, but before that I was in the 
State House in Connecticut. As a State legislator, I had to balance our 
State budget. I was basically amazed that a Member of Congress could 
seven vote for a budget that was not balanced. Unless, obviously, our 
country is in hard economic times and we need an economic generator, 
but to do it continually when times were bad and when times were good, 
to continue to deficit spend.
  I always vowed that if I came to Washington, that my first issue 
would be to get our financial house in order and balance our Federal 
budget. One of my first recognitions was, however, that I only got to 
vote on a third of the budget. I only got to vote on what came out of 
the Committee on Appropriations.
  Mr. Speaker, we refer to what comes out of the Committee on 
Appropriations as discretionary spending. It is the spending that funds 
the domestic discretionary funding, and also foreign aid, what we call 
international expenditure, and the third is defense spending. All of 
that is voted out on 13 separate appropriations bills by the Committee 
on Appropriations. Sometimes we collect them all into one bill.
  Mr. Speaker, what we did not get to vote on, and what I have never 
voted on in my now eight years in Congress, I have never been able to 
vote on significant changes to entitlements. Entitlements are Social 
Security; they are Medicare; they are Medicaid; they are certain 
welfare programs; they are certain farm aid programs. If a citizen fits 
the title, they get the expenditure.
  Mr. Speaker, this Republican majority made a determination that we 
were not going to change Social Security, but the rest of the budget, 
the 75 percent that is left over, 76 or 77 percent that is left over, 
we would begin to address; not just the one-third that is the 
discretionary spending.
  We made a determination with our Contract With America, which by the 
way is a positive plan that does not criticize Democrats, does not 
criticize President Clinton. It was a plan that we agreed to. Not just 
the individuals who are incumbent Members, but those who were 
challengers. We agreed that if we were elected and were the majority, 
we would move forward on 8 reforms in the opening day of the session 
and 10 reforms during the first 100 days.
  One of those reforms was a balanced budget amendment. We made a 
determination with the balanced budget amendment that we would not just 
vote for a balanced budget amendment, but we would vote to balance the 
budget. The only way we can do that is to address the incredible 
challenge that we have with our entitlements, particularly Medicare and 
Medicaid.

  Now, what happens with the earned income tax credit? This is 
basically an affirmative payment that the Government makes to those who 
make the very least amount in our country. It is basically for the 
working poor, primarily. It is an attempt to get them off of welfare 
and not see a significant drop where they start to pay a lot of taxes. 
It is an effort to say they will actually get an assistance from the 
Government to get them up to the level where they get a livable wage.
  Democrats, the minority party on the other side of the aisle, they 
say that we are cutting the earned income tax credit. What is happening 
with the earned income tax credit is that it is going from $19.8 
billion this year to $27.5 billion in the seventh year, the year 2002. 
Only in this place, in Washington, when we go from $19.8 billion to 
$27.5 billion could anyone literally call it a cut.

                              {time}  1645

  It is nothing, it cannot even come close to being called a cut. It is 
going to grow, and it is going to expand. We are going to see a 
significant increase. Same thing with school lunch. School lunch over a 
5-year period, now it is $6.3 billion, it will grow to $7.8 billion. 
How can you say when something goes from $6.3 billion to $7.8 billion 
it is a cut? You cannot call it a cut. You could say we slowed the 
growth of spending, but that even is a 5-year plan. It continues to go 
up even more.
  Student loan really gets me. The argument that we are cutting student 
loans is an absurdity. It goes from $24.5 billion this year. In the 
fifth year it grows to $33 billion. In the sixth year, it grows to $36 
billion.
  In the 7th year, so from 24 to 36, it grows by 50 percent basically 
in 7 years. Only in Washington when you see such a large growth in 
student loans do people call it a cut.
  What are we doing? We are saying that grace period, when you have 
left school and then you get a job, that grace period where the 
Government would pay the interest rate, we defer the payment for that 
grace period, but then you have to pay the interest rate. If you had a 
loan of $17,000, and that $17,000 loan during the course of payment, 
you would be paying an additional $9 more a month, basically the cost 
of a movie and a soda, popcorn or basically the cost of a pizza, once a 
month.
  Now, I am just going to address two issues, Medicaid and Medicare, 
and then I am going to yield to my colleague from Kansas.
  I serve as the chairman of the task force, the working group on the 
Committee on the Budget overseeing health. We basically served into 
this process the issue of Medicaid and Medicare.
  Medicaid and Medicare collectively are 17.6 percent of our budget. 
They are growing, doubling basically every 6 or 7 years. They are 
becoming so large in their expenditure that they are squeezing out the 
rest of the budget, so that our domestic discretionary, our defense 
spending, our international, that appropriated item keeps coming down 
and down. We even spend, because of our incredible deficits, $233 
billion just on interest on the national debt. But what are we doing 
with Medicaid and Medicare?
  We are going to allow Medicaid to grow with what it is today at $89 
billion to $124 billion in the seventh year. We are going to spend, we 
spent in the last 7 years $444 billion on Medicaid. In the next 7 years 
we are going to spend $773 billion. We are spending $329 billion more 
in the next 7 years for Medicaid. That is a 73 percent increase in 
spending over the next 7 years as opposed to the last 7 years. Only in 
this place, in this city, when you spend so much do people call it a 
cut.
  Now, what are we doing with Medicare? Medicare is where I will end by 
basic comments and then yield to my colleague from Kansas. Medicare is 
a plan that I am so excited about. Yet, when I have gone back into my 
district, I have had people describe to me a plan they think we are 
voting on that has nothing to do with what we are voting on. I think I 
am against that plan. What are we doing? We spend $178 billion today. 
In the seventh year we are going to spend $273 billion. That is a 54-
percent increase from now until the seventh year.
  In the last 7 years we spent $926 billion. In the next 7 years we are 
going to spend $1,600 billion, or $1.6 trillion. That is $674 billion 
of new money in the next 7 years, a 73-percent increase again. But 
people say, OK, you are spending more, but what about all the new 
beneficiaries, all the new elderly? Had you added up all the new 
elderly on a per beneficiary, per elderly basis, we are going to go 
from $4,800 per beneficiary today to $6,700 per beneficiary in the 
seventh year, a 40-percent increase. So we are going to spend 40 
percent more per beneficiary. Only in this city when you spend 40 
percent more per beneficiary do people call it a cut.
  We are spending far more than the inflation rate necessary to have an 
excellent program. What we are going to do is slow the growth of this 
program. But to do that, we have no increase, we create no new 
copayment and increase no copayment. We create no new deductible or 
increase any deductible. The beneficiary premium, part B, stays at 31.5 
percent, and the taxpayer pays 68.5 percent. That is the difference, 
that is what the taxpayers are paying. They will continue to pay 68.5 
percent. The beneficiary will continue to pay 31.5 percent. As health 
care cost go up, that 31.5 percent will mean that beneficiaries from 
part B will pay an additional amount per month as they have during each 
of the last 7 years where they have paid more.

[[Page H 11749]]

  Then people say, OK, I see that. I understand that. No increase in 
deductions. No increase in copayment. My premium stays the same. It 
does change for one group. If you make over $100,000 and you are 
single, you pay all of Medicare part B. If you are married and you make 
over $150, you pay all of Medicare part B. You still get Medicare part 
A as is. That has not changed.
  Then the last argument is, the gentleman from Connecticut [Mr. Shays] 
and the gentleman from Kansas [Mr. Tiahrt], can I keep my doctors? Why 
are you kicking me out of this program? We are not. You can stay in 
this program. If you want the traditional Medicare Program, this 1960's 
model fee-for-service program with your doctors, just the way it has 
gone before, you get to keep that plan.
  But if you want to get eyeglass care or dental care or a rebate in 
your copayment or a rebate in your premium or a no deduction, you will 
be able to join a host of plans that will be provided giving you this 
kind of choice.
  Concluding my remarks, I get health care from the Federal Government. 
I pay 28 percent of the cost. The Government and the taxpayers pay 72 
percent of the cost. I get choice in my health care plan. My 
constituents have said, I want choice like you have it. We are allowing 
Medicare patients to have choice. They can keep what they have or they 
can get into whole new different programs that are going to be provided 
which we call MedicarePlus.
  I will conclude my comments. I am delighted to yield to my colleague 
from Kansas who really can show much of what I have said and elaborate 
on that, but candidly provide new information just illustrating from 
charts that he has how important it is for us to get our financial 
house in order.
  I intend to be here for part of his dialogue. I might interrupt him 
on occasion, but I yield to the gentleman from Kansas [Mr. Tiahrt]. I 
look forward to hearing what he has to say.
  Mr. TIAHRT. Mr. Speaker, I think it is very interesting as you were 
laying out the Contract With America provisions and talking about the 
balanced budget provision, the Reconciliation Act, that you have got 
very good reasons why we should support the President's plan, our plan 
to balance the budget, and why the President should sign the Seven-Year 
Balanced Budget Reconciliation Act.
  Not only are there important points there to sign but also, as you 
talked about the Contract With America, I want to make the point that 
it is really capturing the vision that Americans have. There is a 
passage in Proverbs that says, without a vision, the people perish. I 
think the people of America have had a vision for a very long time.
  For 2 decades they had a vision of a balanced budget, just like this. 
They sit down at their kitchen table on a weekly or a monthly basis. 
They balance their budget through their checkbooks, paying their bills, 
weighing it with what their income is. So it is their vision that this 
Government should be balancing its own books.
  I think they have had a vision of a retirement plan that is free from 
worries about health care. So we are in this Reconciliation Act trying 
to preserve and protect Medicare, as stated so eloquently by the 
gentleman from Connecticut. I think the people of America have also had 
a vision of safe streets, of safe schools, of safe America.
  I think that provisions that we are putting in, if you look at any 
yardstick in America today, whether it is drug abuse or illegitimacy or 
domestic violence or just violence itself, we are failing miserably. I 
think many of these problems have their roots in our current welfare 
system that is obviously broke. It is antifamily, it is antiwork, it 
teaches exactly the wrong thing for a free economy and a system of 
self-governance.

  So I think as we look at this, and the last thing that I want to pick 
up on what the gentleman from Connecticut [Mr. Shays] said was that he 
talked about some of these tax credits. I think it is very important. I 
think we are alluding to it, that it is really their money. It is not 
our money. As was mentioned, the taxpayer is paying for a portion of 
our health care, it is their money. I think that, if there is a legacy 
that this Congress can leave behind, it is that it is not the 
Government's money that we are dealing with. It is the taxpayers' 
money. It is your money.
  In the past, I think the people have felt out of touch with the 
Congress. Last November 8, almost a year ago to the day, many of us 
freshman Congressman came in and joined individuals like the gentleman 
from Connecticut who were in touch with America and saw what their 
vision was, saw this vision of a balanced budget, preserve Medicare, 
welfare reform and of tax breaks.
  They kind of have sent a message to us. I think we are still hearing 
it today in our town halls. We are hearing it in the coffee shops, Main 
Streets. I hear it when I visit manufacturing facilities in the Fourth 
District of Kansas.
  I have brought a chart to kind of illustrate the marching orders that 
we have been given, this 104th Congress. In this chart it starts out 
saying, Congress' marching orders. The very first thing is balance the 
budget in 7 years. I think we cannot emphasize enough how important 
that is.
  I would like to elaborate on it a little more as we go through. 
Briefly the rest of the marching orders are saving Medicare from 
bankruptcy, preserving and protecting it, as the gentleman from 
Connecticut talked about reforming welfare, and again providing tax 
relief for families and job creation. I think understanding back to 
this first one, balancing the budget, we really should illustrate it by 
showing what the real problem is.
  I have a chart that illustrates that. It is called The Debt: 1960 to 
2000, ``Growing Out of Control.'' On this chart, briefly, it is 
difficult to see, I know, but it starts out in 1960. It goes to 2000 
across the bottom. On the left side it starts at 0 trillion and goes to 
7 trillion. As you can see, the red indicates how much Federal debt we 
have. It stays pretty well below $1 billion until we get to the middle 
of the 1980's. At that time when our social programs kind of started 
spinning out of control, it started to climb until today, this year, we 
are right at approximately $5 trillion in Federal debt. We are 
approaching $5 trillion.
  This is a legacy that we are passing on to our children. I have three 
children, and my older is 14 years old, Jessica. It has been 25 years 
since we have balanced this budget. If I look at the next 7 years, that 
makes her 21 years. If it takes as long to get out of this problem as 
it did to get into the problem, my daughter will be 53 years old. We 
have literally passed our problems onto the next generation. I think 
that we have an obligation, a moral obligation to our children and to 
this country to see that we have a balanced budget.
  Mr. SHAYS. I would just make the point that, even with our 7 years 
plan, the national debt goes on another trillion dollars. Here we are 
having people saying we cannot do it in 7 years and that we need to 
stretch it out. Even then, we are allowing the debt to go up because we 
are trying to have a glide path where ultimately our expenses, slowing 
the growth of our expenses runs into revenue. But to me that 7 year 
balanced budget is the outer limit of what we should be doing.
  Mr. TIAHRT. I think the glide path is a good example.
  On my next chart, I am showing the difference between the second 
budget that we received from the administration and what we are looking 
at with this Reconciliation Act. You can see the glide path. Those who 
fly, it is very clear. As you approach a runway, you get down to touch 
down, and that is called the glide path. As you are slowly descending 
to the runway, this looks to go steeper than I like to land. But it 
illustrates the point fine. The administration's budget really does not 
balance over the next 7 years. But the plan that we have before us, in 
the Reconciliation Act and why it is so important for the President to 
sign, is that it does get to a balanced budget by the year 2000.
  Mr. SHAYS. Just looking at that, the point needs to be made that the 
Congressional Budget Office has scored the President's budget and said 
his annual deficits are over $200 billion during each of the next few 
years. That blue line just shows how we are going to get those deficits 
down to zero in the seventh year.
  Mr. TIAHRT. As the gentleman pointed out, I want to talk to why we 
think it is important. Again it goes right back to the children. This 
chart 

[[Page H 11750]]

says why the Republican Congress is balancing the budget. First, for 
our children. I have three children, Jessica as I mentioned earlier. I 
also have two boys, John and Luke. I am worried about their future. The 
reason I got into politics is because I want to secure a future for 
them.
  Just about a year and a half ago, there was a survey where two-thirds 
of Americans believed that their children would not have the same 
opportunity that they had. I think that is a sad statement for a system 
of self-governance. So we are trying to restore hope for our children 
so that they have more hope for the future, more opportunities for the 
future than we had growing up.
  Number two, to accelerate long-term economic growth, if we do want to 
balance long-term economic growth, if we do want to balance the budget, 
we have to see our economy grow. A balanced budget does do that.
  Number three, it reduces long-term interest rates. We will talk a 
little bit more about the significant impact it has on the American 
family and on the college students to reduce interest rates.
  And to strengthen the financial markets, and again that is tied to 
number 2. If you hope to have long-term growth, you have to have a 
strong financial market.
  Number five is to raise productivity. Number 6, reduce inflation, 
very important. And number 7, to strengthen our dollar. We have seen a 
dramatic slide in the dollar over the last 20 years. It is time for us 
to strengthen the dollar to keep those strong markets that we have.
  I think that this was illustrated again by Alan Greenspan, who is the 
chairman of the Federal Reserve. I have a chart here that shows some of 
the things that he named as the benefits of balancing the budget. They 
are significantly common to what the Republicans are trying to do.
  Number one, he says that the children will have the higher standards 
of living than their parents. We are talking once again about restoring 
the hope for our children. I want to pass on a legacy to my children so 
that they will have more opportunities, a better future than I had 
growing up. I have had some wonderful opportunities.
  So I agree with Alan Greenspan, the chairman of the Federal Reserve.
  Number two, improvement in the purchasing power of incomes. We have 
seen a dramatic slide. I think the working man has been hit the worst. 
Inflation and loss of purchasing power has really hit them in the 
pocketbook. It has made it difficult.

                              {time}  1700

  And I think that is quite often why we see two-income families now, 
because if you look at the taxes that we have here at the Federal 
Government, which is about 25 percent of the income, you add in the 
State taxes, local taxes, hidden taxes. When I think about the wheat 
farmers in Kansas and how they start to pay taxes on their land, and 
some of their equipment, and their parts, sales taxes, how they are 
tied in there, that the wheat goes to the miller to make flour, and 
then to the baker to make bread, and then to the grocer to be 
distributed, and there is taxes that are hidden in there, and by the 
time you add all those up, Americans pay more than 50 percent of their 
income to taxes. So it is no wonder we have two incomes. One person 
works just to pay the taxes while the other one tries to provide 
something for their family.
  So we are trying to improve their purchasing power. Again rising 
productivity; we have done it with the previous chart; reduction in 
inflation. We have seen, as you mentioned, double-digit inflation in 
the past, and we want to keep our inflation rate down. Strengthening of 
financial markets--and, coming from the chairman of the Federal 
Reserve, I think that is a significant statement--acceleration of long-
term economic growth and a significant drop in long-term interest 
rates.
  Now I think that when you talk about the American families and how 
this is going to impact them, I have got a chart----
  Mr. SHAYS. Before you leave Alan Greenspan, I would just like to 
mention that he made a point to us in the committee. Some members said, 
``Well, Mr. Greenspan, isn't there a danger that Congress could cut too 
much and slow the growth of our economy?''
  And he gave a very interesting response. He said to this 
Congressman--he said, ``Congressman, Congressman I don't go to sleep at 
night fearful that when I wake up the next morning Congress will have 
cut too much.''
  His biggest point to us, his biggest point to us was, that, if we 
balance the Federal budget, interest rates will drop significantly, and 
I think you have a chart that illustrates the significance of that, if 
you, for instance, could just explain it.
  Mr. TIAHRT. The chart starts out by saying Benefit to an American 
family of a balanced budget: Annual savings from a 2-percent interest 
reduction, just a reduction of 2 percent, and again it goes back to Mr. 
Greenspan saying that, if we would balance the budget, interest rates 
would drop 2 percent because the Government would not be out there 
competing for debt, which in turn competes for credit. So this is a 2-
percent reduction in interest rates. On the average car loan of $15,000 
it would be an annual savings of $180. On a student loan of $11,000, it 
would be savings annually of $216. But the biggest-ticket item of 
course is the mortgage, and right now, about the average mortgage, 
somewhere around $100,000. If it was $100,000, it would be reduced, 
just by going down 2 interest points, $2,162 per year, a total annual 
savings of $2,558.

  And I think that talks about, you know, it reflects restoration of 
hope, getting more purchasing power for the dollar. It is a very 
important issue, that we balance the budget.
  Mr. SHAYS. The other point I would just make, that if businesses have 
less interest to pay on their plant and equipment, they are going to 
invest more in higher productivity, they are going to build new plant 
and equipment, create more jobs, and the American worker, the American 
worker, is going to be more productive. If the American worker is more 
productive, they are going to get more dollars for what they do.
  Mr. TIAHRT. You made a point earlier when you talked about student 
loans, Chris and I just want to follow up on that because I have a 
chart that has exactly the same numbers that you referred to. We have 
heard that we are cutting student loans; we heard it just earlier this 
afternoon; but we are not cutting student loans. This is the estimated 
annual student loan spending starting in 1995 and going to the next 
year's budget. This is in the reconciliation plan, and you can see it 
is an increase. It starts at $24.5 billion and it goes up to $36.4 
billion by the year 2002.
  Now I do want to make one point, that we are going to take away some 
of the subsidies on interest payments for students once they graduate. 
There used to be a period of 6 months from the time they graduated 
until they made their first payment that the Government picked up those 
interest payments, but we do think people should work, and we want to 
encourage them to get into the work force and be productive, so we are 
not going to subsidize those, and it is going to mean about $7 or $8 a 
month, which we do not think is a significant fee.

  Mr. SHAYS. That is for the student who has borrowed the maximum of 
$17,000, and there still will be the grace period. We defer the payment 
on that interest and allow them to amortize it over the course of their 
entire loan.
  Mr. TIAHRT. When we talked about a student loan--I am glad you 
pointed out the maximum amount of $17,000--but I am going to go back to 
$11,000 student loan just to match my chart here.
  A 2-percent interest reduction, which is $2,167 over the life of 
$11,000 student loan; you know, there is a big current 8-percent 
interest rate. It is going to cost for that $11,000 loan $18,574 by a 
simple reduction of 2 percentage points. This is why it is so 
important, even for the student. It goes down to $16,411.
  So now we are increasing spending. I do not want to confuse this 
because we are increasing spending for each student, as we mentioned on 
this chart, going from $24.5 billion to $36.4 billion.
  Mr. SHAYS. If I can just qualify that and make the point that no 
student is going to be allowed a student loan. They are going to get 
their student loans. What we do with this increased money is allow for 
more student loans. So we are going to go from about 

[[Page H 11751]]

6,700,000 in the 5th year, which is that $33 billion. There are going 
to be 8,400 students getting student loans.
  So more students are going to get student loans, and that is why this 
number goes up. There is going to be a lot more money in this system.
  Mr. TIAHRT. More money in the system, student loans are going up, but 
for the individual student himself, for the one who is going to make 
the payments after he has received his education, if we can just lower 
his interest rate 2 percent, we can save that person some money, that 
American, that person with a vision for the future.
  Mr. SHAYS. Significantly less more money.
  Mr. TIAHRT. It goes from again $18,578 down to $16,411, a savings of 
$2,167.
  Now we are--I want to talk next about how the balance budget will 
lower interest rates, and in this chart here I think that we have 
talked--we have heard a lot about cuts, cuts here and cuts that, but in 
balancing the budget over the next 7 years we are still going to 
increase spending, and I brought a chart to illustrate that. And I 
think there has been kind of a misconception that is nothing but cuts, 
cuts, cuts, cuts. There really are not any cuts. We are really slowing 
the growth of Government, is what we are doing. We are slowing the 
growth of Government, not cutting. There are some true cuts like in 
defense, on outlays. Our outlays last year for fiscal year 1995, for 
defense was $276 billion. This year, fiscal year 1996, is going to be 
$267 billion in outlays. So there are some cuts, in defense for 
example, but overall Government, if you look between 1989 and 1995, we 
spent $9.5 trillion, and looking forward over the next 7 years, 1996 to 
2002, we are going to increase spending to $12.1 trillion.

  Now, if we did not do anything, if we did not try to balance the 
budget, and progressed, for example, on the President's plan, we would 
be spending $13.3 trillion, so what we are doing is limiting the size 
of growth in the Federal Government, and I think that is one of the 
things that is very important.
  Mr. SHAYS. I would just like to elaborate on this. I mean the 
significant point is that in overall spending of the Government and the 
taxpayer we are going to spend $12.1 trillion in the next 7 years. We 
could, if we did nothing, like President Clinton basically advocated in 
his February budget and his budget of 2 years ago, we would go to $13.3 
trillion. What we are trying to do is slow the growth so ultimately 
spending will intersect with revenue in that 7th year, and I just make 
the point that I want to elaborate a little bit about we made some 
cuts, and we are proud of some of the cuts that we have made. We slowed 
the growth in other programs, and our disagreement with our colleagues 
on the other side of the aisle is sometimes they call a cut a cut when 
the spending is going to go up significantly, and that is where we 
disagree with them. It is true we have a cut in foreign aid. We cut 
foreign aid. We are going to spend less dollars next year than we spend 
this year. That is a cut. I am willing to take the heat for that, but 
we did not cut EITC, we did not cut Medicare, we did not cut Medicaid, 
we did not cut the School Lunch Program, we did not cut the Student 
Loan Program and so on. A lot of the entitlements will still be allowed 
to grow.
  Mr. TIAHRT. Those are excellent points, and I want to talk just 
briefly about one of the areas that we did cut just as an illustration.
  We are going to dismantle the Department of Commerce and save, I 
believe, about $3 billion, and this chart kind of symbolizes how we are 
going to do it. Basically what we are doing is we are eliminating 
duplication inside the Government. We are trying to do away with any 
waste, if we can find it, and then we are getting rid of some of the 
unnecessary bureaucracy, but you can see some of these areas, like the 
National Institute of Science and Technology, is going to be 
consolidated along without others, some of them like technical policy 
are going to be eliminated, so through a process of consolidation and 
elimination we are going to get rid of the waste, we are going to get 
rid of any abuse, we are going to consolidate part of the bureaucracy, 
and that is part of the cuts that I think are good, commonsense guts 
that people do in their everyday lives when they have to limit their 
growth.
  Mr. SHAYS. One of the points that I love about what we are doing with 
the Commerce Department, we are going to take all the trade functions 
and put them under one category because we do believe that a 
significant part of our economic growth is going to be the products 
that we export overseas. So we are going to consolidate our Trade 
Representative and all the trade functions within the Commerce 
Department under the Trade Representative. Makes a lot more sense, it 
seems to me, to do it that way.
  Mr. TIAHRT. This is one of the items that was in the Seven-Year 
Balanced Budget Reconciliation Act that we hope the President will 
sign. Next year we are going to look at some other agencies like the 
Department of Energy and see if there is some duplication we can 
reduce. I think that the balanced budget is, again, restoring the 
vision of the American people, trying to get government to conform with 
the way they live their lives, and I think if we are successful in 
doing this, we will help fulfill the promises that the American people 
want from Washington, DC, not necessarily from a Republican, or from a 
Democrat, or from the administration, but from all of us here in 
Washington, DC.
  That brings us to the second point that I think we want to talk about 
because we have heard so much about the cuts in Medicare. I first want 
to emphasize the point that we have a problem with Medicare, and it was 
emphasized on April 3, 1995. The top of this chart says the conclusion 
of the Medicare trustees. The quote here is, and it is right out of 
their report----
  Mr. SHAYS. Will the gentleman slow down a little bit? This is really 
important, and we have time to really make sure that we are making this 
point clear.
  Mr. TIAHRT. OK. I guess I am getting just a little bit excited.
  Mr. SHAYS. Yes, there is plenty to talk about, but this is very 
important.
  Mr. TIAHRT. The President's board of trustees for Social Security and 
Medicare issued this report. We have duplicated three of the 
signatures. There are other signatures there, but these are the Members 
from the President's Cabinet. This report talked to us about the 
impending crisis in Medicare. It says the present financial schedule 
for Medicare programs is sufficient to insure that payments and 
benefits only over the next 7 years, and I have a second chart that 
will kind of help illustrate how Medicare is in fact----
  Mr. SHAYS. This is the President's own Cabinet that said this in 
addition to the head of the Social Security trust fund, basically 
saying that Medicare becomes insolvent next year, and then what 
happens?
  Mr. TIAHRT. This chart illustrates that, as the gentleman from 
Connecticut is pointing out. The part A trust fund is going to be empty 
in 2002; in other words, it is going to be bankrupt. This chart is in 
billions of dollars on the left-hand side, it has zero in the middle, 
the bottom being minus 150 billion, the top being 150 billion, which is 
approximately where the fund is today, and over the next 7 years you 
can see this red line goes down until it crosses zero, and in 2002 we 
actually would achieve bankruptcy if we do not do anything to preserve 
and protect Medicare.
  Mr. SHAYS. I wonder if I could just point out what those numbers are 
in the trust fund in 1995 there is $136 billion. It only drops a 
billion next year to 135, but in 1997, it goes to 129, then it goes to 
117, then it goes to 98. In the year 2000, it goes to 72; in the year 
2001 it drops 37, and then in the year 2002 it will have a minus 7 
billion. That is the fund that pays for all the hospital care. And then 
the only way that if we do not save this fund from bankruptcy the only 
way hospital care will be taken care of is, as the payroll tax brings 
in money it immediately is grabbed out, but there is not enough to pay 
for all the costs of the Medicare part A trust fund needs of hospital 
care.
  Mr. TIAHRT. I have a chart here to illustrate how spending is going 
to increase in Medicare and still save what is going to be a bankrupt 
fund if we do not do something about it. We have heard, and the reason 
I bring this chart I think is important to note and we have heard it 
here on the floor this 

[[Page H 11752]]

afternoon, that there are cuts in the Medicare program of $270 billion. 
This is something that has been spread, I think, nationwide. I have 
heard it in some of my town meetings, and so I go to great pains to try 
to explain to people how we are increasing spending in Medicare and 
still going to make the funds solvent, as the gentleman from 
Connecticut [Mr. Shays] has pointed out.

                              {time}  1715

  This chart says ``Medicare spending per recipient in the Republican 
budget.'' It starts out here in 1995 with $4,816, and then projected 
over the next 7 years we will be spending $6,734. I think you made a 
very good point when you were speaking earlier. You said there will be 
more people in the Medicare system in 2002, more people in the system, 
and they will be receiving more financial benefits and still make the 
system solvent.
  Mr. SHAYS. It is really amazing when we think about it. We have taken 
a program that will have $4,800 per beneficiary and in the 7th year 
they will have $6,700 per beneficiary, so that takes into consideration 
all the new people in the system, more than we need even to deal with 
the basic inflation. Yet people, and you have it right at the bottom of 
your chart, where is the cut? Where is the cut? Where is the cut?
  Mr. TIAHRT. To try to make it a little more understandable, if you 
were a baseball player, maybe you could understand it if we put 48 
baseballs in one basket and in another basket we put 67 baseballs, and 
ask them, ``Which basket has more balls?'' I think they would say the 
one with 67 baseballs in it has more. That would be an increase, would 
it not?
  Mr. SHAYS. Yes, it sure would.
  Mr. TIAHRT. Like a golfer. If you had 48 golf balls in one cart and 
67 golf balls in the other cart, is that an increase or decrease in 
golf balls? It is very simple.
  I want to emphasize this, I would say to the gentleman from 
Connecticut, because I think what is important here is that we have 
heard so much about cuts. We are starting to see a widening gap in 
credibility. There are no cuts. As this chart says: ``Where is the 
cut?''
  Mr. SHAYS. Mr. Speaker, does the gentleman have another chart on 
Medicare? I would love to just make the point by saying we save money 
in the program by doing a host of things, but one of the things we do, 
we provide that health care fraud will now be a Federal offense, and 
not just Medicare frauds, but Medicaid fraud and other not private 
health care fraud will be a Federal offense, and we are going to go 
after the extraordinary waste in the system.
  Do you know that in Medicare, I would just make the point, when we 
look at what HCFA, who runs this program, is able to do, believe it or 
not, HCFA cannot tell you what hospitals were given what money a month 
after the fact, 2 months after the fact. They cannot tell you why the 
hospitals were given certain sums of money.
  Home Depot, on the other hand, when they open their store at 6 
o'clock in the morning, at 9 o'clock in the morning they can tell you 
what products sold in their store from 6 to 8:59. They have already 
started to reorder their inventory.
  There is extraordinary waste, fraud, and abuse in this system. I have 
men tell me that they have been sent bills for giving birth. I have 
women tell me that they have been charged for operating that are not 
humanly possible on a woman. We have had story after story of how 
people can abuse this system, and we are, for the first time, going to 
be in a very focused way getting at the waste, fraud, and abuse in this 
system.
  That is where we get some of the savings. We get some of the savings 
by the fact that people will opt into private care, which is far more 
efficient, and will provide a better service for a lower cost. So the 
actual beneficiary, though, pays no more in copayment, no more in 
deduction. The premium stays the same, unless you are very affluent. 
You can stay in your fee-for-service system, and if you want, and only 
if you want, you can leave. If you leave and you do not like it, for 
the first 2 years you can go back every month into your old fee-for-
service system. Only in the 3d year are you locked into that program 
for a whole year.

  Mr. TIAHRT. I think you make a good point, that if you just do 
absolutely nothing and you are a senior, your Medicare benefits will 
continue as they were before, but if you choose to move into a managed 
care plan, another type of plan, then it is your selection, it is your 
alternative, it is your choice.
  I think that is a very important difference between what we saw with 
the old Medicare plan, which was a 1960's Blue Cross-Blue Shield plan 
that has been frozen in time for 30 years, the rest of health care 
increasing, maturing, developing for 30 years. Now we are just trying 
to bring Medicare up to date, allow some options. But if a senior, 
again, chooses not to do a thing, they will stay in the current 
Medicare program.
  Mr. SHAYS. If they stay in the current system they cannot be removed. 
In other words, they can only be changed into private care if they 
proactively ask to. It is not like the telephone, where you find 
yourself switched. You can stay right where you are.
  Mr. TIAHRT. I want to talk about one of the visions I think the 
American public had, and that is reforming our welfare system. We have 
heard a lot about it in the campaigns for the last dozen years. Now we 
have a plan that is in our 7-year Balanced Budget Reconciliation Act. 
This is, again, another reason why we think the President should sign 
this bill into law.
  In welfare reform, I think we have been kind of attacked in saying 
that we are cutting spending for welfare. If you look at the chart I 
have brought, it talks about welfare reform the last 7 years compared 
to the next 7 years. On the left side here we have spending which is in 
billions, and across the bottom we have three columns. The first is 
1989 to 1995, or in other words, the last 7 years. That is $492 
billion, which is a lot, half a trillion, a lot of money. The next 7 
years we are going to increase that $346 billion over what we did in 
the first column of 1989 to 1995. So from 1996 to 2002 we are going to 
increase spending.
  If we did nothing and took current projections, we would spend up to 
$949 billion, but by moving block grants on welfare to the States and 
trying to get the solution closer to the problem, we are going to save 
some money over the next 7 years.
  I just have to tell you one story about a lady that I talked with in 
Wichita, KS. She works for the Social Rehabilitation Services, which is 
how welfare is conducted, the agency that conducts welfare in the State 
of Kansas.
  She said, ``I am very concerned about block grants, because how will 
this Federal guideline be affected and how will that Federal guideline 
be affected?'' I said, ``Ma'am, if you could have the autonomy and the 
authority to take this money that you receive in your budget and apply 
it to the problem, could you do a better job than what these guidelines 
say?'' And she said, ``Oh, absolutely.'' I said, ``That is what we are 
trying to do. We are trying to move the solution closer to the problem 
and give that worker in Wichita, Kansas, the autonomy and the authority 
to meet the problem, the funding to meet the problem.''
  Mr. SHAYS. I would love to weigh in on this. I represent an urban 
area, I think I am one of the probably few Republicans that represents 
an urban district. I represent Stanford, Norwalk, and the city of 
Bridgeport. The city of Bridgeport--a few years ago--attempted to go 
bankrupt and, candidly, it is getting itself back in line and getting 
its financial house back in order as well. As someone who has been 
involved in government and has voted for a lot of welfare programs, I 
have had to ask myself, what have I done?

  This is what I look at and see. I see 12-year-olds having babies, I 
see 14-year-olds selling drugs, 14-years-olds. I see 15-year-olds 
killing each other. I see 18-year-olds who cannot read their diplomas. 
I see 24-year-olds who have never had a job, or if they had a job, say, 
at McDonald's', they would say it was a deadend job. If I ever said 
that to my dad, he would say, ``Son, how many hours are you working?'' 
and if I said ``Dad, I am working 10 hours,'' he would have said ``It 
just increased to 15,'' because he knew the value of waking up in the 
morning, earning my 

[[Page H 11753]]

keep, and being of service, being useful to society in a very proactive 
way.
  Then I think of my 80-year old grandparents. We have created a legacy 
that has to change. We have to be willing to confront how we have voted 
in the past, how we can change it.
  I want to be part of a caring society. We have been a caretaking 
society. In the process of being a caretaking society, I think we have 
destroyed generations of young people who now cannot be productive. We 
have given them the food, we have not taught the how to grow the seed. 
For our Republican revolution to have a positive impact ultimately, we 
have got to teach people how to grow the seed. That is what we are 
trying to do with our welfare reform.
  Mr. TIAHRT. Exactly right. Mr. Speaker, I want to tell the gentleman 
about some of the other things we have. We are going to consolidate 
some of these programs, 22 current programs to eliminate child abuse, 
consolidate them, again reducing some of the redundancy, making it more 
efficient. We are going to consolidate child care programs, increasing 
the spending to $2 billion per year, and nutrition programs. I think 
this is something that the Republicans took an unfair hit on.
  We heard last spring that the Republicans were cutting what was going 
to be spent for children and that they would be starving. I have heard 
absolutely no reports in the Fourth District of Kansas or anywhere in 
the Nation that there are kids starving right now. In fact, I was in 
the Dodge Edison School in Wichita, KS, and saw the lunch program. They 
are doing very well. They are thinking about contracting it outside. 
Overall, we are increasing spending for nutrition programs 4.5 percent 
per year, and over the next 7 years that is going to be a $1 billion 
increase. There will be no starving children under this.
  Mr. SHAYS. Could I just jump in here under the school lunch program, 
Mr. Speaker, because we talk in our circles about not ever being 
school-lunched again. It was the first time we encountered where we 
were going to increase a program and people called it a cut. Instead of 
it growing 5.2 percent a year, we allow it to grow 4.5 percent a year.
  But we do something very important. We allow the local communities to 
adjust 20 percent of the cost, because a lot of wealthy communities get 
30 cents per child. We are going to allow States to say wealthy 
communities maybe should not get that, and a poorer city, maybe like 
Bridgeport, can have a breakfast program. So we are going to allow 
States the discretion to focus these programs where they think it is 
most needed, but they are going up.

  Mr. TIAHRT. I want to move on to the last thing. This is talking 
about the reduction in taxes that we have in the 7-year Balanced Budget 
Reconciliation Act, and why I think it is important to fulfill the 
vision of the American people, and also to stay on this plan, why the 
President should stay on it.
  The President did say on October 17 in a roomful of people, he said, 
``The people in the room are still mad about the 1993 budget, and they 
think I raised their taxes too much.'' He said, ``It might surprise you 
to know that I think I raised taxes too much, too.'' I just illustrate 
a point, because I think what he has captured here is the vision of the 
American people. We have to go back to the premise that it is not the 
Government's money, it is the taxpayers' money, it is their money. I 
think the President has captured that.
  When we look at who is going to be benefiting from this family tax 
credit of $500 per child, and now this is based on the plan that went 
out of the House, and because of your committee work, I would say to 
the gentleman from Connecticut [Mr. Shays], I know he has some further 
information and may want to correct the chart a little.
  First I want to say one thing, I heard there was a person who was 
going to get a $20,000 break in their taxes, some alleged rich 
individual. I got to thinking about that. At $500 per child, he would 
have had to have had 40 children to get a $20,000 tax break. I hope 
that he is wealthy if he has 40 children. But if you look at the plan 
that we have, 75 percent of the people, 74 percent of the people, who 
will benefit from this make below $75,000, and 10 percent only make 
over $100,000. So a large majority of the people who will benefit from 
what is in the current plan are making less, they are not the wealthy 
people.
  Mr. SHAYS. I would love to weigh in on this issue. My parents raised 
four boys. I was the youngest of four boys born in the mid-1940's. My 
parents, in today's dollars would have been able to deduct, per child, 
$8,200 per child. That is $32,800 off the bottom line of their income. 
But a family today can only deduct $2,500.
  What we are trying to do with our family tax credit is give families 
today the same basic purchasing power, at least get them closer to the 
kind of purchasing power, that my folks had. I might make this point as 
well. My parents probably paid less than 12 percent of their total 
income in Federal, State, and local taxes, maybe 15 percent, Federal, 
State, and local. A family today pays anywhere from 25 percent to 40 
percent, plus, in Federal, State, and local taxes. This eminently makes 
sense. We may end up where, when we agree with the Senate, that it will 
apply to any family making less than $100,000. So then what you will 
have, you will have it focused primarily on those with the most need.

  Mr. TIAHRT. I am not here to defend the rich, because that has been 
kind of the premise of the argument, is that the rich are getting the 
tax break. I really do not think that is true at all.
  Mr. SHAYS. That is not true, to start with.
  Mr. TIAHRT. No. 1, it is not true, and No. 2, it is not fair. But I 
want to say one thing, I received some information, it was published in 
Human Events, on page 9 of their November 3 issue. It says that the top 
29 percent of individuals who pay income taxes, they pay $4 out of 
every $5 that is paid into the Federal Government in the form of taxes.
  The top 25 percent, which a lot of people think that is the 
wealthiest people, and they should be paying $4 out of $5 in taxes. But 
let me tell you where the top 25 percent hits. That is everyone who 
makes $41,000 or above. If you make $41,000, I do not consider you 
rich. In fact, to get to the top 5 percent, you go up to $87,000. There 
is some question there, if people are well off at $87,000, but the 
bottom 50 percent of individuals who pay Federal income taxes only pay 
5 percent of the tax burden. That is $1 out of every $20 that comes 
into the Government. Really, that is what this per-child tax credit is 
designed to hit, that bottom 50 percent. It will mean the most to them. 
They need the break.
  I think about my brother-in-law who is currently on strike, an 
employee at the Boeing Co. They are on strike. He has three boys. I 
want him to know there is $1,500 available for him next year to catch 
up from the strike. It may go on through the rest of the year.
  Mr. SHAYS. What it is is a tax credit. In other words, the taxes he 
paid, he will get $1,500 back in taxes he paid.
  Mr. TIAHRT. That is exactly right. That makes a very good point.
  I want to go back to the point the gentleman made earlier about the 
earned income tax credit, because we heard that we were dramatically 
cutting and trying to balance the budget on the backs of the poor 
people. If you look at the last 7 years, how much spending there has 
been in the earned income tax credit, it was $71 billion. We are going 
to increase that, under this plan that we hope that the President will 
sign, we are going to increase it to $173 billion.

                              {time}  1730

  Now, that is a very big increase, a 144 percent increase. So we are 
not balancing the budget on the backs of the poor.
  I want to talk a little bit about where the cuts are coming from, 
because they are not coming from Medicare, they are not coming from 
Medicaid, they are not coming from nutrition, they are not coming from 
the earned income tax credit.
  Mr. SHAYS. Mr. Speaker, if the gentleman will yield, it is because we 
are spending more money in all of those areas.
  Mr. TIAHRT. Mr. Speaker, that is absolutely right, and a very good 
point. We are spending more money in all of those areas.
  These are where the cuts are going to come from, the tax cuts, and 
they are already paid for; I want to emphasize 

[[Page H 11754]]

that, they are already paid for. We have made $151 billion worth of 
cuts in the discretionary spending.
  Mr. SHAYS. Mr. Speaker, if the gentleman would further yield so that 
I could just elaborate, that is what we do in our appropriations votes, 
when we vote out our appropriations bills to fund the Treasury 
Department or to fund HUD or any of these other programs, we reduce the 
amount of money that we are allowing these departments to have.
  Mr. TIAHRT. Mr. Speaker, we are just trying to run government more 
effectively.
  The next one is by consolidating. We went through some of the 
programs and we are consolidating and reducing some of the growths 
through block grants to the States, and we are going to reduce our 
welfare through welfare reform $89 billion; through reform in the 
Federal workplace and retirement, we are going to reform that $10 
billion.
  We are going to save, by extending the spectrum, when we auction off 
different waive lengths for radio and television, we are going to see a 
tax cut paid for with $15 billion from extending the spectrum auction. 
We are going to sell off some of the raw resources we have. The uranium 
enrichment privatization plan is going to save $1.7 billion.
  Our total spending cuts are $268.3 billion, if we add all of that up, 
and what are our tax cuts? Our tax cuts are $245 billion.
  Mr. SHAYS. Mr. Speaker, I don't see anywhere in there, any savings in 
Medicare or Medicaid that contributed to the tax cuts. The tax cuts 
were funded, taken care of before we ever voted on Medicaid or 
Medicare.
  Mr. TIAHRT. Mr. Speaker, the gentleman from Connecticut [Mr. Shays] 
makes a very good point. It is totally unrelated, and it addresses the 
credibility gap that we have seen widening.
  Mr. SHAYS. Mr. Speaker, if the gentleman will yield, we have about 3 
more minutes, and I want to make sure that the gentleman is able to 
finish up on those issues that are important to him.
  Mr. TIAHRT. Mr. Speaker, I want to quote my Uncle John Armstrong. He 
said, ``If you want something bad enough, any excuse to get it is a 
good excuse.''
  I think about how we have had a shift in power and we have seen some 
of the top switch and we have had kind of a problem or a widening in 
the credibility gap. They said we are cutting student loans; they are 
going up. They have said that we are cutting Medicare; we are 
increasing spending. The income tax credit, we just talked about that. 
Nutrition programs, we just talked about that.
  What we are talking about, though, is restoring the vision of the 
American people. That is why I believe that the President should sign 
the Seven-Year Balanced Budget Reconciliation Act. That is why I think 
the American people want him to do that.

  Mr. Speaker, if my colleagues would look at the provisions inside the 
bill, it encapsulates the visions of America, to having a balanced 
budget to secure hope for the future for their children, to preserve 
and protect Medicare, to reform welfare, and to give the tax breaks to 
the kids so that the parents can spend the money on them rather than 
the government. I think that restores the vision that the American 
public holds. So I hope that the President will sign the bill.
  Mr. SHAYS. Mr. Speaker, I would like to thank the gentleman from 
Kansas [Mr. Tiahrt] for joining me in this effort, and I have learned a 
lot from his charts.
  I would like to say that I have never been more proud to be part of a 
new majority than this Republican majority that candidly is trying to 
take on getting our financial house in order, balancing our budget, 
saving our trust funds, particularly Medicare, and transforming the 
social and corporate welfare state into what has to become an 
opportunity society. All of the new Members that we have have made an 
incredible difference in this effort. They have been the driving force 
with some of the sophomore class as well, and it has just been 
absolutely a thrill to welcome our new Members and it has been a 
wonderful opportunity for me to share in this essential order, and I 
thank the gentleman from Kansas for his extraordinary good work, his 
dedication, and giving us the opportunity to be in the majority.

                          ____________________