[Congressional Record Volume 141, Number 185 (Sunday, November 19, 1995)]
[Senate]
[Pages S17496-S17497]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      GOOD NEWS FOR THE GOVERNMENT

  Mr. CONRAD. Mr. President, this is good news tonight. The impasse has 
been broken. It is certainly good news for the country, and good news 
for the hundreds of thousands of Federal workers who have been 
furloughed and who have been wondering if this Thanksgiving would be a 
happy one for their families. It is good news for citizens around the 
country who are wanting to have their Government back in action.
  Mr. President, now that we have achieved this breakthrough tonight, 
in what was really an initial skirmish on a much larger issue about how 
we bring balance to the budget, and how we bring the fiscal affairs of 
this country into balance, I think now, perhaps, is the time to start 
looking ahead at how we could achieve the greater agreement, how we 
could balance the budget in a unified way over the next 7 years, and 
how we could do it within the constraints of this agreement.
  I say to my colleagues that there are a number of ways that we could 
have a breakthrough on the larger debate that is underway. I urge my 
colleagues to look at CBO and OMB economic forecasts as one way out of 
the morass that we are headed into with respect to a long-term 
agreement.
  Mr. President, we could settle this dispute, balance the budget on a 
unified basis by 2002, but do it in a balanced way, in a way that was 
fair to all interested parties. Just so my colleagues have something to 
think about over the week break that we are about to have, I am going 
to put in the Record one possible compromise. I stress that it is a 
compromise, because this is not a proposal that will find favor among 
every Democrat, it is not a proposal that will find favor among every 
Republican; but I think we have to remember that a Democrat controls 
the White House, the Republicans control the Congress, and the 
President can maintain a veto with the number of Democrats that are in 
the House and in the Senate.
  So, ultimately, we are going to have to compromise between what the 
Republicans want to do and what the Democrats want to do. Both sides 
are moving from principle, both sides have strong views about what is 
in the best interest of the country. Ultimately, neither one is going 
to get everything they want. We are going to have to compromise. It 
will be a principled compromise when it is finally made, but I urge my 
colleagues to take a look at what I am going to outline this evening, 
as they take this break for Thanksgiving and see if it is not at 
least an outline of what we can achieve if we worked in good faith and 
sat down together and reasoned out a final agreement.

  Mr. President, first of all, you take the 7-year goal. I think the 
vast majority of Members of Congress agree that 7 years is an 
appropriate goal to bring balance to the unified budget of the United 
States. I want to stress that that is not the end of the job, because 
to achieve real balance, we are going to have to balance without using 
Social Security trust fund surpluses. But the first step is to achieve 
unified balance, and to do that in 7 years is a good goal.
  One of the great disputes we have had is whether we ought to use CBO 
economic forecasts or the OMB economic forecasts. I think a lot of 
people get lost and say: What is CBO? What is OMB? Simply, for those 
who are listening, CBO is the Congressional Budget Office; OMB is the 
Office of Management and Budget. The Office of Management and Budget is 
controlled by the President; the Congressional Budget Office is 
controlled by the two Houses of Congress. They have two different 
scenarios for what the economic growth is going to be in this country 
over the next 7 years. CBO says 2.3 percent; OMB says 2.5 percent. 
Interestingly enough, over the last 20 years, economic growth has 
averaged 2.5 percent. Interestingly enough, the Wall Street Journal, 
last week, endorsed the President's economic assumptions. But they said 
that both of them are too pessimistic.
  Well, what would happen if we just compromised between the OMB and 
CBO economic forecast? That would provide an additional $225 billion 
that we could distribute over the next 7 years, if we used the OMB 
economic forecast. Again, the Wall Street Journal says it is too 
pessimistic. If we did that and we went down the large categories of 
spending that we have to decide on, if we are going to achieve a 
balanced budget on a unified basis by 2002, one can see the possibility 
of a compromise that would look something like this: In the Republican 
bill, in domestic discretionary spending, they have achieved savings or 
cuts, if you will, of $440 billion over the next 7 years.
  In a potential compromise, we might have a hard freeze, and just 
freeze domestic discretionary spending for 7 years--freeze it. That 
would save $289 billion. We have had intense debates on this floor 
about Medicare. In the Republican proposal they have saved $270 billion 
out of Medicare. On a compromise that would balance on a unified basis 
in 7 years, we could have a savings of $140 billion. That would 
preserve and protect Medicaid. It would strengthen the program, and it 
would do what the trustees say is necessary. But it would not threaten 
to close rural hospitals in the same degree as the Republican plan. It 
would not put the same burden on beneficiaries as the Republican plan.

  I suggested to my colleagues a potential compromise. On Medicaid, the 
Republican plan calls for $163 billion of savings, or cuts, if you 
will, over the next 7 years. A compromise might follow more closely the 
commonsense plan introduced by conservative Democrats in the House and 
Senate, an $80 billion savings out of Medicaid.
  On agriculture, the Republican plan is to cut $12 billion. Here it is 
not restricting the rate of growth. Here it is a real cut--no question 
about it. It is $12 billion less in agriculture. An alternative would 
be the President's number of $4 billion.
  Mr. President, the Republican plan goes too far. It goes too far. 
They eliminate the authorization for an agriculture program that has 
been in the law since 1938. They eliminate it. I think everybody 
recognizes agriculture needs some changes, but we should not be 
eliminating the farm program in this country. We certainly should not, 
when our competitors are already spending three or four times as much 
as we are on agriculture, and just waiting for us to wave the white 
flag of surrender. That does not make sense.
  So I submit to my colleagues that perhaps a $4 billion reduction 
could be part of a final package that achieves balance on a unified 
basis by the year 2002. 

[[Page S 17497]]

  Student loans. The Republican package calls for a $5 billion 
reduction. Mr. President, this is one area where I think most Members 
on our side--certainly, I think every Member on our side--would say we 
should not cut student loans by a nickel. That is not good for the 
future of America, to restrict people's ability to go to college. So 
let us eliminate that one area of cuts--the $5 billion that is in the 
Republican plan.
  Welfare reform. The Republican plan has $107 billion.
  An alternative would be a number, about $47 billion, again, close to 
what was in the commonsense plan offered by conservative Democrats in 
the House and the Senate.
  I say to my colleagues, this difference is important because if we 
are serious about our rhetoric, if we really want people to go to work 
and not be on welfare rolls, we have to understand that will cost some 
money.
  The Republican Governor of Wisconsin has reminded people if you 
really want to put people back to work, you have to have the child care 
that will allow them to go back to work. We know that means a savings 
of less than what is in the Republican plan.
  In addition, in the Republican plan, they dramatically reduce the 
earned income tax credit. Ronald Reagan said the earned income tax 
credit was the best profamily, prowork program that ever came out of 
Congress.
  Mr. President, I do not think we want to be cutting the earned income 
tax credit that will actually mean a tax increase for some 7 million 
families in America. We should not be increasing their taxes.
  On veterans, the Republican plan calls for $7 billion of savings; the 
alternative, $5 billion.
  Now, some people are beginning to wonder, where do you get this extra 
money? First of all, remember, we have adopted a compromise between the 
economic assumptions of CBO and OMB. When we do that, we have $225 
billion of additional resources that can be used over the next 7 years.
  I want to swiftly point out that every forecaster in the private 
sector has suggested that OMB is actually quite conservative with their 
economic forecasts. Most of the private-sector forecasts are more 
optimistic than either OMB or CBO.
  Another way we get additional resources is by an adjustment in the 
Consumer Price Index. The Consumer Price Index is used to adjust Social 
Security payments. It is used to index the income tax system. The whole 
idea of the Consumer Price Index and using it has been that we are 
adjusting to the cost of living.
  The experts are now telling us that the Consumer Price Index 
overadjusts for the cost of living. It is making too big an adjustment. 
In fact, we just had a commission that reported to the Finance 
Committee and said that we are overcorrecting from 0.7 of 1 percent to 
2 percent a year in the Consumer Price Index.
  If we would adopt just a half-a-point correction, 0.5 correction in 
the Consumer Price Index, that would save $139 billion over the next 7 
years.
  Other mandatory spending, the Republican plan, $16 billion of 
savings; this alternative that we propose, $58 billion.
  Then we go to revenues. Loophole closures: In the Republican 
conference report they call for $18 billion of loophole closures. In 
the alternative, we double that and call for $37 billion in loophole 
closures.
  I might just say to my colleagues, the biggest pot of money that we 
have are the tax entitlements. We have heard a lot of talk about 
reducing the spending entitlements--Medicare, Medicaid, a lot of talk 
that they are growing too fast. Indeed, they are. So we achieve savings 
in the spending entitlements of Medicare and Medicaid.
  The tax entitlements are the biggest pot of money of all. We are 
going to have $4 trillion of tax entitlements over the next 7 years, 
compared to $3 trillion spent on Social Security, about $2 trillion 
spent on Medicare. So the biggest pot of money of all is the tax 
entitlements.

  We could achieve $39 billion of savings out of a pool of $4 trillion 
without any heavy lifting around here. It ought to be done.
  Mr. President, the Republican plan calls for $245 billion of 
additional tax preferences--tax cuts. Very frankly, a compromise would 
require something less than that. There are many of us that do not see 
the wisdom of reducing revenue when we are adding $1.8 trillion to the 
national debt that already stands at $5 trillion.
  Why are we cutting taxes when we already have a debt of $5 trillion 
and we are adding $1.8 trillion to it over the next 7 years?
  We will have to borrow every penny of that tax cut. So compromise 
might be to reduce that proposed tax cut in the Republican plan from 
$245 to $131 billion.
  Then we get to the so-called fiscal dividends. In the Republican 
plan, the CBO says they get a fiscal dividend of $170 billion. Fiscal 
dividend, Mr. President, simply means that once we move toward balance, 
the markets in this country are going to adjust. They are going to 
lower interest rates. We are going to get greater economic growth, and 
that will produce a fiscal dividend of $170 billion. The alternative 
plan I am discussing tonight, that would be a fiscal dividend of $114 
billion.
  Then, of course, because we substantially reduce the deficit under 
the Republican plan, there would be $150 billion of debt-service 
savings. Under this alternative plan that I am discussing tonight, the 
debt-service savings would be $113 billion.
  Then, of course, there is the difference in the economic assumptions 
that I mentioned at the beginning, the bridge between the Congressional 
Budget Office economic forecast and the Office of Management and Budget 
economic forecast. That is a difference of $225 billion.
  The bottom line: deficit reduction in the Republican plan of $1.131 
trillion over the next 7 years. In the Democratic plan --I will not 
label it a Democratic plan because really this would be a compromise. 
This would be a compromise between the Democratic alternatives that 
have been offered previously, the Democratic priorities and the 
Republican priorities. Maybe we ought to call it the American plan.
  It would achieve deficit reduction of $1.121 trillion. It would 
achieve unified balance in the year 2002. We would have done it with 
much less in the way of cuts to Medicare and Medicaid, no cuts to 
education. We would have done it with much less in the way of cuts in 
reductions to food programs and agriculture. It would still be a tax 
reduction, but would not be as big as the Republicans have been calling 
for.
  There would be more money for highways and bridges. There would be 
more money for research, which I think is critical to the future of 
this country.
  Mr. President, I will ask that a table that outlines this potential 
compromise be printed in the Record. I hope my colleagues and the 
staffs of my colleagues would take a look at this over the break 
period, because at some point we will have to come together in the 
House and the Senate between the Congress and the White House. This is 
at least an outline, a suggestion, something to think about, about how 
we could bring the two sides together and achieve something great for 
America.
  I ask unanimous consent to have the table printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                COMPARISON OF ALTERNATIVE BUDGET PACKAGES               
                       (Changes from CBO baseline)                      
                (7-year changes; in billions of dollars)                
------------------------------------------------------------------------
                                                 Republican   Potential 
                                                 conference   compromise
------------------------------------------------------------------------
Discretionary: Discretionary savings..........         -440         -289
Mandatory:                                                              
    Medicare..................................         -270         -140
    Medicaid..................................         -163          -80
    Agriculture...............................          -12           -4
    Student loans.............................           -5            0
    Welfare reform (includes EITC, nutrition).         -107          -47
    Veterans..................................           -7           -5
    CPI.......................................          -18         -139
    Other mandatory...........................          -16          -58
Revenues:                                                               
    Loophole closers..........................          -18          -37
    Tax cuts (shown as positive number b/c                              
     they increase the deficit)...............          245          131
Fiscal dividend...............................         -170         -114
Debt service..................................         -150         -113
CBO/OMB baseline bridge.......................            0         -225
                                               -------------------------
      Total deficit reduction.................       -1,131       -1,121
------------------------------------------------------------------------

  Mr. REID. I advise the chairman that Senator Heflin does not wish to 
use his time. Therefore, I believe that all speakers have since 
departed the Chamber. 



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