[Congressional Record Volume 142, Number 1 (Wednesday, January 3, 1996)]
[Extensions of Remarks]
[Page E2]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          BUDGET NEGOTIATIONS

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, January 3, 1996

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, December 20, 1995, into the Congressional Record.

                 The Status of the Budget Negotiations

       The negotiations between Congress and the President over a 
     balanced budget are now entering a critical phase. Hoosiers 
     tells me they want to get these budget issues resolved. They 
     want Congress and the President to work together to get the 
     government's business done. They do not want government 
     furloughs and they see the threat of default on the national 
     debt as very much to be avoided.
       The President and the Republican leaders in Congress agree 
     on the need for a balanced budget in seven years. There are 
     very good economic arguments for a balanced budget, which 
     will reduce interest rates and free up capital to enhance 
     America's global competitiveness, but the real political 
     passion for fiscal responsibility flows from people's 
     opposition to sadding their children with a huge public debt.
       Medicare continues to be a major sticking point in 
     negotiations. Congressional leaders have proposed cutting 
     back Medicare by $270 billion, raising premiums and reducing 
     consumer protections for beneficiaries. The President has 
     proposed $124 billion in cutbacks and more modest changes in 
     the program, consistent with the recommendations of the 
     Medicare trustees. While we should go after cutbacks in 
     Medicare in a serious way, we should preserve Medicare to 
     protect older persons.


                                Medicaid

       Medicaid is another crucial battleground. Medicaid is the 
     insurer of last resort in the health care system today, 
     providing services to poor families and children, and nursing 
     home care for the elderly. The Republican leadership wants to 
     replace the Medicaid guarantee with a block grant; cut 
     projected federal spending sharply on the program; and let 
     the states decide how and on whom the money would be spent. 
     The President wants to preserve the guarantee, but would cut 
     projected costs by capping the annual increase per 
     beneficiary.
       Medicaid must be preserved to protect the vulnerable, while 
     made more efficient and effective. The alternative would be 
     more poor people uninsured, and the poor, the states and 
     hospitals that serve the poor would all be stranded.


                                Welfare

       The current welfare program embodies a federal guarantee of 
     aid to needy single parents and their children. The 
     congressional leadership has proposed eliminating the 60-
     year-old federal guarantee and turning the program over to 
     the states as block grants. The President apparently supports 
     this basic reform, but has said that the Republican plan 
     bites too deeply into cash assistance, child nutrition, child 
     care and food stamps. He accepts the principle of allowing 
     states to set eligibility requirements and benefit levels, 
     but he would maintain the federal entitlement for the poor.
       I support welfare reform that rewards work over welfare and 
     encourages responsibility. Welfare reform should limit the 
     time families could remain on welfare, require parents to 
     support their children, and provide the states with 
     flexibility to set eligibility and benefit levels.
       Welfare reform has stalled in Congress because of 
     differences between GOP leaders in the House and Senate over 
     the school lunch program. I agree with those in the Senate 
     who want to keep the entitlement status of the school lunch 
     program. The House leadership, in contrast, wants to turn the 
     program over to the states.


                                tax cuts

       Congressional leaders propose to cut taxes by $245 billion 
     over seven years, $140 billion more than the President 
     proposes, but they are now hinting they might be willing to 
     trim the level of cuts and target them more to low and 
     moderate income families, rather than the well-to-do. My 
     preference is to cut the spending first. I would defer a tax 
     cut until the budget is balanced or the deficit is 
     neutralized, and would not increase taxes on the working 
     poor, as proposed in the congressional leadership budget. One 
     other problem with GOP tax cuts is that the revenue losses 
     explode after the seventh year. No sooner would the budget be 
     balanced than the tax cuts would threaten to unbalance it all 
     over again.


                          spending priorities

       Both the President's and the Republican proposals call for 
     significant savings by cutting domestic spending. I agree 
     with this approach, but also believe that the spending cuts 
     favored by congressional leaders are much larger than needed 
     in order to finance large tax breaks to the well-to-do. I 
     oppose laying the burden of deficit reduction largely on 
     poorer Americans. Other problems with the current proposals 
     are that too much of the savings come from unspecified 
     domestic programs and come late in the seven-year process.
       We must exercise care in where we cut. The idea behind 
     eliminating the budget deficit is that savings and investment 
     count--that a balanced budget raises savings which in turn 
     fuel investment. But just as business invests in machinery 
     and equipment, the government must invest in education, 
     research and development, and infrastructure to boost growth 
     in a world of fierce international competition. That means 
     that investments in human and physical capital are necessary 
     and vital ingredients for faster growth in the American 
     economy.
       This Congress is not being tough enough in reducing 
     ``corporate welfare.'' The mining industry still gets a huge 
     discount on mining federal lands. California's agribusiness 
     has access to very low-cost federal water. The timber 
     industry enjoys subsidies for cutting in federal forests. And 
     livestock owners, particularly in the West, benefit from 
     minimal grazing fees on federal lands. We need to reduce or 
     eliminate these subsidies, particularly when budget proposals 
     today are clearly skewed against poorer Americans.


                               conclusion

       The key now is that the two parties work together to 
     fashion a compromise that balances the budget in seven years, 
     but in a way that does not devastate key federal programs, 
     particularly Medicare, Medicaid and education. I believe a 
     decent deal is within reach. I have staked out a position 
     with other moderate and conservative House Democrats to 
     achieve these goals, and my sense is that the President and 
     congressional leaders have been moving toward this position. 
     All differences may not be settled before the end of the 
     year, and those which can't be resolved ought to be taken to 
     the voters in 1996. But, in the interim, we should work to 
     compromise in areas where we can.

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