[Congressional Record Volume 141, Number 188 (Tuesday, November 28, 1995)]
[House]
[Page H13663]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                AMERICA BETTER OFF WITH BALANCED BUDGET

  The SPEAKER pro tempore (Mr. Barr). Under the Speaker's announced 
policy of May 12, 1995, the gentleman from Ohio [Mr. Hoke] is 
recognized during morning business for 5 minutes.
  Mr. HOKE. Mr. Speaker, I want to address the House this morning about 
an article that appeared yesterday in USA Today. It was entitled ``What 
Life Would Be Like In 2002 With A Balanced Budget.'' It is a survey of 
a number of different economists and analysts and consultants who have 
been asked about what the impact would be on our economy over a 7-year 
period of coming into balance with the Federal budget.
  It starts out by saying,

       Mortgage rates near 5 percent. An economy that purrs along 
     with a steady jobless rate around 5.5 percent. A standard of 
     living that's on the rise again because wages are finally 
     growing at a decent rate. A trade surplus.

  Economists are nearly unanimous in their answers that for most 
people, in fact 80 percent or more, life would be better. Says Michael 
Englund, who is chief economist at consultants MMS International, ``I 
have to believe a rising tide does raise all boats. Probably 80 percent 
or more would gladly benefit'' with a balanced budget that helps 
bolster the economy.
  Todd Buchholz, author and economist who is the author of a book 
entitled ``From Here to Economy'' says, ``I can tell you things will 
only get worse if we don't balance the budget or come close to that.''
  Now why is that? What is at the bottom of this? At the bottom of it 
is the ability of the Government to borrow in a way that sucks capital 
out of capital markets that would go to productive activity in the 
economy.
  In other words, if there is a deficit that is running, right now the 
deficit is about $164 billion, then it has to borrow that money in the 
capital markets. That means that that money is not available to be 
borrowed by individuals for the purchase of homes or consumer goods, or 
by businesses for capital investment that would create more jobs.
  Because we do spend more than we collect, the Federal Government has 
to borrow from investors to pay its bills. The article goes on by 
saying it borrows by selling Treasury bonds, notes and bills on which 
it pays interest. That borrowing, most economists agree, keep interest 
rates higher than they would be otherwise.
  I can tell you that the Chairman of the Federal Reserve Bank, Mr. 
Greenspan, testified before my committee, the Committee on the Budget, 
earlier in this year, and said that on average he believed that 
interest rates would drop 2 percent as the result of balancing the 
budget.
  ``The government is tapping into our savings pool,'' says Nancy 
Kimelman, chief economist at Investment Advisors Technical Data in 
Boston. It lures investors' money the only way that a borrower can, by 
offering tempting yields on bonds.
  When you subtract the Government from the competition for investors 
money by balancing its budget, then the effect would be immediate and 
interest rates would head down. Here are some of the estimates.
  Lawrence Meyer and Associates, which is a St. Louis-based economic 
consulting firm, estimates that by 2002 short-term interest rates would 
be close to 3 percent, as opposed to 5.4 percent today, and long-term 
rates would be just about 5 percent, versus 6.2 percent today.
  With rates that low, the economy would surely be far better off. 
Businesses would invest more because they could borrow more at lower 
rates. Investment in computers, in buildings and equipment, would boost 
productivity even further.
  There is another issue at stake here besides all of these economic 
benefits that would inure not only to the economy generally but to 
individual people, both in terms of lower interest rates that they 
would pay for mortgage payments and car payments and school tuition 
payments as well as the capital formation aspects that create a lot 
more jobs and a lot more opportunity. The other issue that I want to 
talk about with respect to a balanced budget is the one that goes to 
the question of how we define what Government should be, what its 
appropriate role is, and what its appropriate role ought to be in the 
American scene.
  The way that this idea of a balanced budget comes into play with 
respect to that is that the most perfect way, the most compelling way, 
the most clarifying way to define as a people what we believe 
government's role ought to be is what we as a people are willing to pay 
for it on a pay-as-you-go basis. So that if we say to each other, to 
ourselves, look, we are only willing to spend what we are willing to 
pay for, then that is the most perfect way to define what this 
Government should be and should do. It also has the added benefit of 
not putting on our children the borrowing that we enter into and engage 
in today. It very perfectly defines what we ought to be as a 
government.

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