[Congressional Record Volume 141, Number 184 (Saturday, November 18, 1995)]
[Senate]
[Pages S17441-S17444]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         DEFICIT REDUCTION ACT

  Mr. KERREY. Mr. President, as to the Deficit Reduction Act, I would 
like to make a few comments.
  First, we need to sort of check our own rhetoric and ask ourselves 
why. A lot of people come down and say we have unprecedented debt 
mounting on top of record debt. We do not have record debt. Our 
percentage of debt to GDP is going down. A lot of people say we have to 
do what we did in the cold war. During World War II, we accumulated 
almost 130 GDP of debt and won the war as a consequence, did the 
Marshall plan after that, rebuilt our own country as a consequence of a 
willingness to go into debt, no matter how we used that debt. I will 
get to that later.
  I am very much concerned that a growing portion of our outlays is 
going not to investments but going to current consumption. I think it 
is a significant problem. It is not a problem, by the way, caused by 
the poor. I voted against this proposal for a number of reasons. I do 
not think it is fair. I do not believe it asks people like myself with 
higher income to participate in deficit reduction, which I think is 
terribly important. I receive very little in the way of Government 
services. People with lower incomes do receive more in Government 
service. I am asking them to shoulder a disproportionate share of 
eliminating this deficit.

  Second, not only does it rend the social safety net, but it does not 
start us on the road to evaluating what kind of safety net do we need. 
I think most of us in this body now believe that we have to have 
economic growth, that our tax policies, which I do not think encourage 
savings and investment, need to be written so that we get the kind of 
investment and economic growth the country needs; that we have 
regulatory policies that are mindful of the risks that people take when 
they invest money.
  Most of us understand that we have to have an economy that is 
growing, but if you are going to have a vibrant market economy where 
people are making business and bottom line decisions, you also have to 
have some kind of safety net out there. We ought to be 

[[Page S 17442]]
thinking about how do we take the next step of how do we get it 
universal rather than moving away as I see this proposal doing.
  We ought to ask ourselves, as Senator Simpson and I did, how do we 
reform the Federal retirement program so that there is more 
flexibility, individuals get a higher rate of return, they have 
something they own and they can acquire wealth during the course of a 
working life that might not generate much opportunity for savings.
  We need to be asking ourselves how do we construct the safety net 
that enables us to have a vibrant market economy instead. As I see it, 
we rend the social safety net and then we really do not acknowledge 
that there is an importance and value to having it there in place.
  Again, perhaps as a result of our own orientation, the higher your 
income gets, there is a tendency to presume that everybody is living 
like you are and a presumption that, gee, everything is OK. Everything 
is not OK. You talk to people 50 years of age out there, men or women 
who tell you what it is like to get a pink slip in a downsizing 
operation after working 30 years on the job. They have a tough time 
getting health insurance. They have a tough time adjusting to not just 
the downsizing but the reduction in income that they face.
  If you want to have a vibrant economy, not only do we need to change 
our tax and our regulatory structure, we also need to change the safety 
net, and this proposal moves us in the wrong direction.
  Third, I talked at length about how it really does not solve the 
problem of growing entitlements at all. It postpones them. It says, 
well, we can deal with Social Security later. We can deal with Medicare 
later. Really, the long-term problems, we deal with them later.
  Mr. President, time is not on our side. Every year you wait you 
really deepen the cut or increase the possibility that working people 
are going to have to pay more taxes as a consequence of our 
unwillingness to face the problem.
  The next thing I did yesterday was go through a few things that I as 
a Democrat would be willing to support that would enable us, I think, 
to produce the savings needed to have more fairness in the proposal, to 
begin to consider what kind of safety net should we construct and would 
have us moving in the direction of controlling entitlements.
  On my list is I think we should drop the tax cut. I will describe a 
little bit later a rather remarkable letter from the Congressional 
Budget Office Director, June O'Neill. We should drop the $245 billion 
tax cut, commit ourselves to set a course so that at the end of 1996 we 
can enact fundamental tax reform that does encourage savings and 
investment; we understand that the current income tax system needs to 
be adjusted; that working families are having trouble saving money.
  Let us not do it piecemeal. Let us do it bigger. This tax cut 
proposal should be dropped because it enlarges the deficit in the short 
term. Again, I will discuss that later. I would be willing to vote to 
reduce the Consumer Price Index by half a point. The adjustment would 
save hundreds of billions of dollars. I would even go further than half 
a point, but half a point seems to be about where we are. I am just 
alerting my Republican colleagues there are ways for us to come up with 
additional savings that are needed to balance the budget but to do it 
in a fair way and the way that has us holding onto a safety net that we 
need in the market economy.
  I would be prepared to vote to phase in an increase in the 
eligibility ages both for Social Security and Medicare. It would not 
affect current beneficiaries at all. In fact, it does not have to 
affect beneficiaries over the age of 50. But to phase that in gives 
everybody under 50 time to plan and produces tremendous future savings.
  I would be prepared to vote for an affluence test on all Federal 
entitlement programs, including farm program payments, if it is fair. 
It generates tremendous savings in the short term. It seems to me easy 
for us to sell, and I consider it to be an attractive way again to 
preserve that safety net and keep fairness in this proposal.
  Mr. President, I would like to just sort of insert one other 
objection that I have that I failed to note earlier in my discussion.
  There is a so-called Freedom to Farm Act proposal that is tucked away 
in this reconciliation bill. You can imagine what the American people 
are going to say when they find out that somebody out there with a half 
section of land that they are not farming now--let us say they use it 
for pasture and they have a hobby farm going on out there. Maybe they 
raise horses, for all I know. Under this proposal, they are going to be 
encouraged to enroll. They are going to get paid whether they farm or 
not. They are going to get income whether they are producing any 
agriculture product or not. It converts a market based system to a 
welfare system I do not think the American taxpayers are going to like 
and I know American farmers are not going to like as well.
  Mr. President, there is a document I would urge colleagues to read. I 
will put in the first two pages. I ask unanimous consent that the first 
two pages be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                Washington, DC, November 16, 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 conference report on H.R. 2491, the Balanced 
     Budget Act of 1995, and has projected the deficits that would 
     result if the bill is enacted. These projections use the 
     economic and technical assumptions underlying the budget 
     resolution for fiscal year 1996 (H. Con. Res. 67), assume the 
     level of discretionary spending indicated in the budget 
     resolution, and include changes in outlays and revenues 
     estimated to result from the economic impact of balancing the 
     budget by fiscal year 2002 as estimated by CBO in its April 
     1995 report, An Analysis of the President's Budgetary 
     Proposals for Fiscal Year 1996. On that basis, CBO projects 
     that enactment of the reconciliation legislation recommended 
     by the conferees would produce a small budget surplus in 
     2002. The estimated federal spending, revenues and deficits 
     that would occur if the proposal is enacted are shown in 
     Table 1. The resulting differences from CBO's April 1995 
     baseline are summarized in Table 2, which includes the 
     adjustments to the baseline assumed by the budget resolution. 
     The estimated savings from changes in direct spending and 
     revenues that would result from enactment of each title of 
     the bill are summarized in Table 3 and described in more 
     detail in an attachment.
           Sincerely,
                                                  June E. O'Neill,
                                                         Director.
       Attachment.

                              TABLE 1.--CONFERENCE OUTLAYS, REVENUES, AND DEFICITS                              
                                    [By fiscal year, in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                           1996    1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
Outlays: Discretionary..................................     534     524     518     516     520     516     515
Mandatory:                                                                                                      
  Medicare \1\..........................................     196     210     217     226     248     267     289
  Medicaid..............................................      97     104     109     113     118     122     127
  Other.................................................     506     529     555     586     618     642     676
                                                         -------------------------------------------------------
    Subtotal............................................     799     843     881     925     984   1,031   1,093
                                                         =======================================================
Net Interest............................................     257     262     261     262     260     254     249
                                                         -------------------------------------------------------
    Total outlays.......................................   1,590   1,629   1,660   1,703   1,764   1,801   1,857
                                                         =======================================================
Revenues................................................   1,412   1,440   1,514   1,585   1,665   1,756   1,861
Deficit.................................................     178     189     146     118     100      46      -4
----------------------------------------------------------------------------------------------------------------
\1\ Medicare benefit payments only. Excludes medicare premiums.                                                 
                                                                                                                
Notes.--The fiscal dividend expected to result from balancing the budget is reflected in these figures. Numbers 
  may not add to totals because of rounding.                                                                    
                                                                                                                
Source.--Congressional Budget Office.                                                                           

  Mr. KERREY. As you can see, Mr. President, it is from June O'Neill, 
Director of the Congressional Budget Office. The CBO has been cited a 
lot as we go through this continuing resolution debate. This is written 
to Chairman Pete Domenici, November 16, 1995, with copies sent to the 
ranking member, Senator Exon of Nebraska, along with the chairman and 
ranking member of the House Budget Committee, John Kasich and 
Congressman Sabo.
  It is a remarkable document, Mr. President, and shows the folly of 
the tax cut. But it also shows that we really are postponing most of 
the difficult choices. No American should believe that because if we 
enact this reconciliation bill--let us say by some miracle the 
President changes his mind, which I do not believe he is going to do; I 
believe he is going to veto it. Let us say we enact this thing. All it 
does is commit it for a single year. Next year we come back and vote 
again.
  The year after that we have to vote again. I say to Americans, 
examine the 

[[Page S 17443]]
document. For gosh sakes, the deficit this year is $164 billion. It has 
been going down every year for the last 4 years. Next year the deficit 
goes to $178 billion, and the year after that it goes to $189 billion. 
I mean, this proposal increases the deficit next year and increases the 
deficit the year after that. This does not reduce deficits; it 
increases deficits.
  And to exclude Social Security--there is another letter coming from 
June O'Neill that says that because you include Social Security income, 
you are actually reducing the size of the deficit by some $60 to $100 
billion, depending on the year that you take. So we get an increase in 
the deficit, Mr. President, and we are postponing most of the difficult 
cuts.
  In the year 2002 this Congress is going to be expected to cut $70 
billion in a single year. Unlikely, Mr. President. If you look at the 
backdating of the difficult decisions, I think the American people 
begin to understand why this so-called revolution is a lot less than 
meets the eye, a lot less, and why they should insist, if they want to 
balance the budget and they want to do it in a fair way and in a 
fashion that enables us to have some kind of a reasonable safety net 
and vibrant market economy----
  The PRESIDING OFFICER (Mr. DeWINE). The Senator's time has expired.
  Mr. KERREY. Mr. President, I ask unanimous consent for 2 additional 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERREY. That we need a different reconciliation bill than the one 
that was passed by this body by 52 votes yesterday.
  Again, I would urge colleagues to look as well at the growth of 
entitlement programs. These are not programs for the poor. These are 
middle-class entitlements and most difficult of all. Almost half of the 
growth of all spending in here is Social Security, which is not even on 
the table in this discussion.
  So, look at the growth and then ask yourself, if you had $435 billion 
this year for defense and nondefense appropriations--which is what you 
have in the year 2002--construct the budget, build a budget with $435 
billion, go home and tell your citizens, OK, we are going to use $263 
billion for defense, and that gives me $174 billion for all other 
spending, you cannot do it, Mr. President. You are not going to be just 
closing down odds and ends; you are going to be shutting down NASA and 
shutting down the courts and significant functions of Government.
  You cannot get there from here, Mr. President, unless we come as 
Democrats and Republicans and say we are willing to do something, drop 
the tax cut, adjust the CPI, phase in changes in the eligibility age, 
consider an affluence test, do something with part B premiums. Those 
kinds of changes, Mr. President, would not only enable us to balance 
the budget in 7 years, but do it in a fair fashion, do it in a way that 
enables us to build a new safety net and a vibrant market economy, and 
I think restore the confidence of the American people, who rightly have 
concluded, by the way, even if this is enacted, that we are not going 
to be balancing our budget.
  Mr. President, I yield the floor.
  Mr. REID addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Before my friend from Nebraska leaves the floor, I want to 
state to him, through the Chair, and to my friend who is the chairman 
of the Budget Committee, that the two Senators from Nebraska are people 
who have credentials to speak about balanced budgets. The ranking 
member, Senator Exon from Nebraska, of the Budget Committee, former 
chairman of the Budget Committee, has worked for years on balancing the 
budget. My friend from Nebraska, the junior Senator from Nebraska, 
chaired the entitlement commission and has spoken out, to his detriment 
politically, on many occasions of what he sees as the wrongs of what we 
are doing with entitlements.

  So, the reason I mention that while he is here on the floor, the 
chairman of the entitlement commission, a Governor from the State of 
Nebraska, people who have credentials to talk about balancing the 
budget and who have actually done significant things to get us toward 
that direction, when you have the two Senators from Nebraska speaking 
out against the reconciliation bill that passed, I think the American 
public should be aware that it is not a good piece of legislation.
  Mr. President, before my friend leaves, I would also like to ask him 
a question as a former Governor of the State of Nebraska. Would the 
Senator, based upon his experience and expertise, indicate in his words 
why he thinks it is wrong to have the executive bound by numbers given 
to him by the legislative branch?
  Mr. KERREY. Mr. President, the Senator asks a question that I think 
is very relevant. I voted against the continuing revolution for 
precisely that reason. This Congress should not bind the President to 
use numbers that are developed by the Congress, just like I do not 
think we should be bound to accept carte blanche the numbers that are 
used by OMB. Indeed, when I came into office in 1983, there was a great 
political controversy that occurred as a result of nobody trusted the 
numbers. We actually created a statute, an independent agency, to 
produce the numbers that both sides trust. And a lot of the politics 
now has been taken out of it.
  I think the Senator raises what I consider to be a fundamental defect 
in the continuing resolution that was passed and the President vetoed. 
This body should not bind the President to use congressional numbers, 
just as this body should not write into statute that we are always 
going to use OMB numbers.
  Mr. NUNN. If my friend from Nevada would yield on that point, while 
the Senator from Nebraska is here.
  Mr. REID. Certainly.
  Mr. NUNN. I would like to make a few remarks on this very subject. I 
think the 7-year number for balancing the budget in 7 years is a 
reasonable goal. I would hope that the President would agree with that 
goal as we proceed to try to find a way to end this Government shutdown 
and pass a continuing resolution.
  Mr. REID. I would say to my friend, though, is it not a fact that the 
President has basically agreed to that anyway?
  Mr. NUNN. It is my understanding that is what is being talked about 
now. But the Congressional Budget Office [CBO], I happen to believe 
they have more conservative numbers and should be agreed to as the 
basis for the overall approach to get a balanced budget, because we 
have seen time and time again that we end up erring on the side of 
optimism, and we do not end up achieving the savings that were 
projected.
  But, having said that, I think no President of the United States is 
going to accept the CBO numbers for a 7-year period and have that 
dictated to by Congress in law. It is one thing to agree to 1 year as 
an estimate; it is another thing to have the congressional branch tell 
the executive branch that it has to abide by those numbers. Congress 
passes those numbers, can use the CBO numbers, but Congress then has to 
send the bill to the President. The President has a right to veto it 
under the Constitution.
  This business of shutting down Government if the President will not 
agree for a 7-year period to the congressional numbers is a way of 
trying to avoid the constitutional procedures that were set up by our 
Founding Fathers which have worked pretty darn well. Shutting down 
Government to prevent the President from using his veto is something 
that I think is a sad mistake and is going to hurt more and more people 
as time goes on.
  I say that as one who watched Republican Presidents make virtually 
the same point. I do not believe President Reagan or President Bush 
would have accepted a dictate by a Democratic Congress that they use 
CBO numbers during their periods in office. I have talked to the former 
Directors of OMB under the previous Presidents, and they have confirmed 
that opinion.
  I do not believe President Dole or President Gramm or President 
Specter or President Lugar would allow the Congress to say, ``You are 
going to use CBO numbers''--a Democratic Congress particularly, 
reversing the present scenario--``We are going to require you to use 
these numbers.'' Billions and billions of dollars are at stake, and 
also a separation of powers is at stake. 

[[Page S 17444]]

  So while I favor using the CBO numbers, I do not favor putting into 
law and holding the President hostage in terms of a shutdown of 
Government if he does not agree to that, because if I were President of 
the United States I would not agree to it.
  It does not have much to do with the question of the budget. It has a 
lot to do with the question of separation of powers. We are going to be 
visiting, as the Senator from Nebraska said, these issues every year, 
whatever the results of this compromise that I hope will emerge in 
negotiating a final reconciliation bill.
  We will have to have a compromise. These are going to be estimates. 
We are going to make mistakes. The Medicare-Medicaid savings--I applaud 
the Republicans for taking on these entitlements; I think it is long 
overdue. I think those of us on the Democratic side need to muster up 
some courage to begin to take on the entitlements also. But I believe 
we are going to have to go back and have a lot of corrections made to 
the changes that are being made because all of these are estimates.
  We do not know how much is going to be saved. That is one of the 
reasons I feel that going forward with a front-end tax cut is a mistake 
now because we are going to have to have some money to patch up the 
mistakes as we go along and we find out people are really being hurt in 
an unjustified way.
  So I hope out of all of this, we will reach some compromise very soon 
that will have the President basically agree to the 7-year target and 
goal but not have Congress impose by law the CBO numbers. There are 
lots of ways to be able to do that, and I hope we will find a way 
before too many more hours go by.
  I thank the Senator for yielding. I did want to comment on that one 
point.
  Mr. REID. I appreciate my friend's statement. In addition to the two 
Senators from Nebraska, the Senator from Georgia has a record of many, 
many years of being frugal and always trying to do something about a 
balanced budget and entitlements. He and the senior Senator from New 
Mexico have worked together on this for many years, and when we hear of 
the Senator from Georgia speaking out about the problems with the 
present reconciliation bill, it says volumes.
  Mr. President, I ask unanimous consent that I be allowed to proceed 
for 10 minutes.
  The PRESIDING OFFICER. The Senator has consumed 7\1/2\ minutes. The 
Senator's request is to speak for a total of how long?
  Mr. REID. I would like to speak for 10 minutes starting now, since my 
friends have used part of my time.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________