[Congressional Record Volume 141, Number 193 (Wednesday, December 6, 1995)]
[Senate]
[Pages S18050-S18051]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          BUDGET NEGOTIATIONS

  Mr. GRAMM. Let me, Mr. President, talk about the budget negotiations. 
I am concerned that if we let this budget impasse go past the first of 
the year, that the financial markets in America are going to begin to 
react to the fact that no deficit reduction has occurred.
  I want to remind my colleagues that the election which occurred in 
1994 is one of the clearest examples that I have ever seen of how 
elections can have tremendous economic consequences. If I were still 
serving in my role as a professor of economics at Texas A&M instead of 
serving in the role, as I often feel, of trying to teach economics here 
in Washington, DC--students at Texas A&M were a little more attentive--
I would use the plotting of interest rates in America as a perfect 
example of how elections have profound economic consequences, because I 
know that the people who have looked at the data are as astounded as I 
am at the results we would see.
  Interest rates were rising steadily until the day of the 1994 
elections. When we had the most decisive election since 1934, interest 
rates suddenly started to decline. They have declined ever since, and 
as a result, the average annual mortgage payment on a 30-year mortgage 
in America has been reduced by about $1,200. That is a dramatic change.
  Now, it seems to me that the logic of this change is based on the 
rational expectation that the 1994 election, which brought a Republican 
majority in both Houses of Congress, was going to produce a dramatic 
change in the spending patterns of our Government. As we all know, 
Republicans had promised in the election that they would institute such 
a change, that we would balance the budget, that we would let working 
people keep more of what they earn, and that we would make some very 
modest changes to try to promote economic growth.
  Now we are on the verge of going into the new year without any of 
those changes having occurred. We have passed a budget, but the 
President is going to veto it. That means we have to start the whole 
process over. I simply want to raise a warning and a red flag that if 
we do not stand our ground on the 15th of December, if we simply give 
President Clinton another credit card without forcing him to sit down 
with us--the way families sit down at their kitchen table with a pencil 
and piece of paper and write out a budget that everybody agrees they 
are going to stick with--if we simply give President Clinton another 
credit card 10 days before Christmas and do not exact for that, some 
change that begins to implement a balanced budget, I am concerned that 
after the first of the year the markets that had changed their 
investment patterns on the belief that we would see a dramatic change 
in the fiscal policy of the country are no doubt going to reevaluate 
their position and interest rates are going to start going up.
  I believe that if we do not do something about this deficit before 
the first of the year, then we risk a rise in interest rates. I know it 
is very tempting to say, 10 days before Christmas, we do not want a 
confrontation with the President. It is also fair to say that, 10 days 
before Christmas, the President does not want a confrontation with us 
either. I do not think this is the time to fold up our tent and go 
home. I 

[[Page S 18051]]
think this is the time to stand our ground, demand that the President 
sign on to a budget in order to get this new credit card, and I am 
committed to the principle that we do just that.
  I think we have written a budget which fulfills what we promised we 
would do; I intend to stand with that budget. My proposal, which I have 
made on several occasions in the past is this: we have set out what we 
can spend over the next 7 years and still balance the Federal budget; 
we should ask President Clinton to sit down with us and to try to reach 
agreement as to how that money is spent. I do not believe we ought to 
go back and rewrite our budget and let the President spend tens of 
billions of dollars we do not have on programs that we cannot afford.
  I think the best Christmas present we could give America is a 
balanced budget. Maybe my perspective is different because I am 
spending more time outside Washington than many of our colleagues, and 
I am in a mode where you tend to listen a little more intently than you 
might otherwise. I believe that the American people are not so 
concerned about the Government being disrupted as they are about the 
fact that a baby born in 1995, if the current trend in spending 
continues, is going to pay $187,000 in taxes, just to pay his or her 
share of the interest on the public debt. This is not just economic 
suicide, it is immoral, and I think we need to do something about it. I 
submit, that if we cannot do it now, how are we going to do it next 
year when we have to turn right around and write another budget?
  I simply raise these alarms because I believe we need to stand firm 
on our commitments to the American people. After all, we did not say we 
were going to balance the budget only if it was easy. We did not say we 
were going to balance the budget only if Bill Clinton went along. We 
said we were going to balance the Federal budget. So I think the time 
has come--in fact, in my opinion, it is long past--to say to the 
President, if you do not sign on to a budget, then we are not going to 
give you another credit card. It seems to me, the last time we went 
through this exercise the President got the credit card and we got this 
vague language about how he was going to support balancing the budget 
in 7 years under all these circumstances and all these conditions. The 
President was doing a lot of nodding and winking and good gestures 
during the negotiations, but once he got the credit card he said we 
have either agreed on everything or we have agreed on nothing, and 
since we have not agreed on everything, we have, therefore, agreed on 
nothing.

  I think we need to stop debating statements of policy. I think if we 
are going to give Bill Clinton another credit card, we need to have 
written into law limits on how much he can spend. Finally, we need to 
require that, in return for getting another credit card, the President 
join us in a budget which meets the spending levels we set out in the 
original seven year balanced budget resolution.
  I see we have another colleague who is here to speak. So, to 
accommodate him, I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. GRAMS. I thank the Chair.
  (The remarks of Mr. Grams pertaining to the introduction of S. 1452 
are located in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  Mr. GRAMS. Thank you, Mr. President. I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Coats). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. HOLLINGS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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