[Congressional Record Volume 141, Number 180 (Tuesday, November 14, 1995)]
[House]
[Pages H12324-H12326]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           THE BUDGET IMPASSE

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Iowa [Mr. Leach] is recognized for 5 minutes.
  Mr. LEACH. Mr. Speaker, I rise to attempt to put the budget impasse 
in an historical, economic, and constitutional context.
  The big secret in Washington that Republicans won't acknowledge and 
Democrats won't admit is that the rhetoric of the parties doesn't fit 
the circumstance. The change in course that is underway in Congress is 
neither as revolutionary as conservative leaders suggest nor as radical 
as the liberals would have it. It is an effort to move the ship of 
state gradually from a slightly left-of-center to slightly right-of-
center direction.
  The macro-economic goal is to achieve a balanced budget in 7 years 
with 3 percent a year increases in Federal spending. A year ago 
consensus economic models pointed to a 3.1 to 3.2 percent inflation 
over this time period. More recently inflation projections have been 
revised downward, with Lester Thurow of M.I.T. startling the economic 
community with the declaration that inflation is dead. Whether or not 
Thurow's assertion as Mark Twain might quip is premature, the new 
Congress has put in place a program that in outline is intended to 
represent an inflation adjusted freeze on spending. Rather than 
radical, such an approach is common-sense; rather than revolutionary, 
it is revolution-avoiding.
  The question that remains in the executive-legislative dialog of the 
month is whether enough good will can be marshalled or enough 
confrontational bluff avoided to allow politicians who feed off each 
other to advance the common good. In this context, the Republican case 
to stick with firm macro-constraints would appear compelling, but 
flexibility to accommodate certain executive branch requested changes 
in priorities can credibly be considered. As long as the foundations 
and walls of the new programmatic discipline follow the balanced budget 
blueprint of Congress, the living-room furniture in the new house of 
Government can be rearranged. The Republicans aren't infallible; the 
Democrats have no monopoly on compassion.
  While the President has assiduously made political points with 
program constituencies, it is impressive to note how few issues he 
appears committed. Part of the President's lack of resolve may be due 
to the fact that he understands deficit reduction will reflect well on 
his Presidency, part may be due to the fact that in our constitutional 
system the Congress is principally delegated purse-string authority. 
The first and second estates of Government may be co-equal, but not in 
all areas. While the executive has primacy in foreign policy, decisions 
on taxing and spending are disproportionately the responsibility of the 
legislature.
  Nevertheless, the Presidency is always more powerful than the 
President and however strong or weak one assesses the current occupant 
of the White House, legislators should be cautioned to recognize the 
power of the veto and the authority of the bulliest pulpit in the 
world.
  Likewise, the President should be cautioned not to be so intent on 
trying to establish a macho image--what the press has reported as a 
White House effort to show that the President stands for something--
that accommodation with Congress becomes impossible.
  What the public must keep in mind in the budget showdown is that the 
current process is so ad hoc. Washington has no relevant modern day 
experience in dealing with a divided Government in which the executive 
branch is 

[[Page H 12325]]
more liberal than the legislative. This leads to the a-historical 
phenomenon that the veto is being used or threatened to keep general 
levels of spending up rather than particular program levels down. For 
the first time in decades roles have been reversed. Congress rather 
than the Executive is stressing the need for overall budgetary 
constraint. Congress rather than the Executive is trying to veto 
special interest spending.

  Since the 1960's the impulse to spend and micromanage the Federal 
Government has come from a Congress where committee and subcommittee 
chairmen have established reputations of leadership and compassion that 
comes from spending other peoples money in programs under their 
jurisdiction. Budgets couldn't be constrained because egos couldn't be 
controlled.
  Ironically, for all the tough rhetoric America's two political 
parties are not that far apart, at least in relation to other Western 
democracies. Indeed, despite the hullabaloo of the week, statistically 
the difference is about 2\1/2\ percent. The Democrats favor a multi-
year plan increasing Federal spending at a 5\1/2\ percent per annum 
clip; the Republicans 3 percent.
  In this regard it is noteworthy that rather than Reagan Redux, which 
beltway pundits have suggested is underway, the new Republicans are 
uniquely committed to advancing, rather than simply professing, 
achievement of a balanced budget.
  What the Reagan years were all about was a President who sought an 
increased defense budget while philosophically assaulting Washington's 
social agenda. The compromise with a liberal Congress was an increase 
in defense spending, but a bigger increase in social spending.
  Federal spending under President Reagan as a percent of GNP grew by a 
whopping margin, from 21\1/2\ percent to 23\1/2\ percent. Federal 
revenues, meanwhile, remained static, varying each year from 19\1/4\ to 
19\1/2\ percent of GNP. Taxes, in other words, were realigned, not cut, 
and the Reagan deficit was classically liberal: spending driven.
  The goal of the new Congress is less governmental activism; the 
intent is to bring the budget into balance at a GNP level closer to 
that which President Reagan began in the 1980's. Despite the rhetorical 
division, this is a modest objective. Indeed, my guess is the new 
Congress which has come under such public fire for going too far is 
going to come under increased private criticism for not going far 
enough. The issue is Keynesianism as modified by demographics. 
Keynesian, in the sense that just as John Maynard Keynes argued that a 
country could deficit finance to even out downturns in the economy or 
deal with national emergencies, it is obligated to pay back debt in 
good times. And these, after all, are good times. The country is 
secure; employment is strong; the economy is growing. America is at 
peace with the world, if not quite with itself.
  In terms of demographics, the baby boom generation is at its 
productive peak. Shortly into the 21st century, sometime in its second 
decade--demographers suggest 2011 or 2012--the number of working 
Americans supporting each retired citizen is likely to decline from a 3 
to 1 ratio to 2 to 1. If at that time interest on federal debt is more 
burdensome than Social Security obligations, it is difficult to believe 
Federal concerns can responsibly be addressed. As we look to the 
immediate future even more than the recent past, it would appear there 
is simply no justification for deficit financing at this time.
  In this context, the most emotive issue of the week--Medicare--could 
not be more symbolic or consequential.
  What makes Medicare particularly difficult in a legislative context 
is that it represents the conjunction of an economic reality--the fact 
that the Medicare system is fast becoming insolvent--and a moral 
imperative--the obligation to provide compassionate health care to our 
senior citizens at an affordable rate.
  While differences of judgment will always exist on systemic changes 
in programs of this nature, the big picture is that the new Congress 
has worked to establish medium-term solvency and stability of the 
Medicare system without sparking a generational conflict.

  Despite the rhetoric of division that surrounds the Republican 
approach, it deserves stressing that the Medicare program is authorized 
to grow annually at 6.4 percent, which is more than double the 
projected rate of inflation over the next 7 years. Relative to 
inflation, this decade's rate of growth of Medicare spending will thus 
be similar and quite probably greater than that of the last decade.
  Two changes of significance in Medicare are relevant for rural 
States, and the 1st District of Iowa in particular.
  The current Medicare reimbursement formula contains a differential 
based on the fact that rural States were early practitioners of 
progressive cost containment. Ironically, rather than being rewarded 
for prudence, citizens in rural States have found themselves penalized 
as yearly percentage adjustments in Medicare reimbursements accentuated 
differences in the country.
  Because of the efforts of rural State representatives--in particular, 
Representatives Ganske and Gunderson, and Senator Grassley--more than a 
third of the differential has been eliminated and a formula to reduce 
it further is being put in place. These changes will result in more 
Medicare revenues for rural States like Iowa than would have been the 
case under the President's approach. More needs to be done on the 
differential issue, but a giant first step has been taken.
  Indeed, many rural counties currently have per citizen Medicare 
reimbursement formulas of $200 to $250 per month. Under the new 
congressional plan the lowest reimbursement for any county in the 
country will soon be $350. The Medicare reimbursement base will thus be 
moved up over 50 percent for the most disadvantaged counties in America 
today and annual percentage increases for these counties will be triple 
the inflation rate until greater parity with higher reimbursement 
counties is obtained. When these adjustments are added to the 
innovative aspects of Medicare reform, senior citizens from rural 
States will in short order have a far stronger, more flexible, choice 
oriented system than is currently in place.
  The economic segregation that characterizes the current rural health 
care delivery system will be replaced by a much fairer, more 
equalitarian Medicare delivery system.
  The new approach adopted by the House also creates a trust fund to 
finance teaching hospitals and graduate medical education programs, 
which will be of particular significance for the University of Iowa 
hospital, the largest teaching hospital in the world. This change, 
coupled with the higher rural reimbursement figures could be critical 
to saving the patient treatment capacities not only of the University 
Hospital in Iowa City but of teaching hospitals throughout the country, 
particularly those in rural states.
  For all the vitriolic arguments on the floor and the sophisticated 
public opinion research that has gone into television commercials which 
are designed to show that the President cares about something--in this 
case the young and the old--the fact is that the debate is about 
whether to balance the budget in a sensible and socially acceptable 
time frame.
  In this regard, it should be stressed that all Americans have a 
vested interest in greater fiscal restraint--young Americans in 
particular. It is those just about to enter the work force, after all, 
that will find themselves paying taxes over their entire working lives 
to pay off the national debt for past legislation excesses.
  Of all the issues that should galvanize young people, the deficit 
should be the largest. But deficits aren't simply younger Americans' 
concern. Those in the so-called baby boom generation who are 40 to 55 
today don't want to inherit an insolvent Medicare system when they 
retire. They don't want to retire when Government debt obligations are 
so great that the capacity to fund Medicare and Social Security is too 
much of a burden on too small a work force.

  As for those who have already retired, they don't want to see 
inflation ravage their savings as it did in the late 1970's. They have 
every reason to look at 20 to 40 years of retirement made possible by a 
health care system that has been advanced by modern science and made 
economically sound through responsible fiscal policy.

[[Page H 12326]]

  In this regard, it needs stressing again and again that no one is 
going to be happy with anyone else's budget priorities. I, for one, 
prefer a number of aspects of the President's education approach, am 
appalled by the Congress's refusal to fully fund the United Nations, 
and would be more sympathetic than the majority in my party to NPR and 
the Endowments on the arts and humanities. Yet, I am convinced America 
must come to grips with the budget and strongly support the faster 
Republican timeline for deficit reduction.
  On process, let me stress that the Democrats have fairly criticized 
my party. The appropriations bills have not been completed on time. 
This is partly the case because of the heavy schedule earlier this year 
related to Republican efforts to fulfill a campaign pledge--the 
Contract With America. But, ironically perhaps, the primary reason for 
delay relates to the Republicans attempting to give the minority party 
expansive opportunity to amend bills brought to the floor under open 
rules. In a body of 435, extensive use of open rules assures a slow 
down of the legislative process.
  Finally, let me stress that at issue are not only budget balancing 
and spending priorities but the question of whether a politically 
divided American Government can work and maintain the confidence of the 
American people.
  As emotive as the issues are, we have a responsibility to see that on 
an orderly, fair, and timely basis they are resolved.
  In this process we have an even larger responsibility not to divide 
America with inflammatory rhetoric or undercut the stature of this 
chamber with irresponsible choice making. The public's business 
requires decency of approach as well as purpose. Now is the time for 
personal pride and partisan ambition to be checked at the cloak room.

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