[Congressional Record Volume 142, Number 1 (Wednesday, January 3, 1996)]
[Senate]
[Pages S8-S9]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  THE BUDGET AND ENTITLEMENT SPENDING

  Mr. GREGG. Mr. President, I rise to address what I think is a farce. 
Obviously, we are hearing about what are some very significant 
individual concerns and legitimate individual concerns about Federal 
employees who are being put through significant stress as a result of 
their inability to be paid, which I would note in many instances, such 
as the FBI and the DEA, result from the fact that the President vetoed 
appropriations bills which would have funded those agencies.

  But independent of that really personal and traumatic event which is 
occurring for many Federal employees, there is a much more significant 
event occurring here which is the question of how, after 26 years, we 
begin to put fiscal discipline into the Federal Government. And that 
has a lot of stories, too, a lot of personal stories.
  In fact, in our Nation today where there are approximately, I guess, 
50 to 70 million children, depending on how you define a child, every 
one of those children are a personal story of the fact that we have not 
balanced our budget. A child born today will have to pay almost 
$170,000 just in interest during their working lives in order to pay 
out debts which our generation has put on their backs. That is a pretty 
big bill.
  Just 2 weeks out of work is a big deal, too. Nobody wants to put 
people through that burden. But what we are doing to our children as a 
nation is even more significant. So what is really the core issue of 
this debate is how we straighten out our fiscal house so that we do not 
end up passing on to the next generation of Americans a country without 
an opportunity for prosperity, and that comes down to being responsible 
in the managing of our Government.
  I want to talk a little bit today about what I would perceive as 
being a responsible solution to this balanced budget event, because we 
are hearing a lot of discussion and a lot of debate about how this 
should occur or how that should occur. But let me just note there are a 
few benchmarks upon which we can evaluate whether or not there has been 
success in getting under control the Federal spending, the rate of 
growth of Federal Government and, therefore, the opportunity to bring 
under control the Federal debt burden that we are passing on to our 
children.
  The real benchmark of this exercise is not quite honestly whether we 
meet a technical balanced budget in the year 2002, although that is 
absolutely critical that we do that, because such a balanced budget can 
be reached, unfortunately, through the adjusting and tinkering with 
assumptions. For example, if you change what the estimated inflation 
rate is over the next 7 years by just a percent or you change the 
estimated rate of revenues by the Federal Government by just a percent, 
you adjust by hundreds of billions of dollars 

[[Page S9]]
the amount of money flowing into or out of the Federal Government. As a 
result, you can reach balance.
  Of course, assumptions have been part of the debate. That is why we 
have insisted there be a core score of assumptions called the 
Congressional Budget Office. But that really is not the essence of how 
you resolve the issue, because the essence of how you resolve the issue 
is what structural changes, what changes have you made in the way this 
Government functions that will guarantee or at least give us 
significant hope that we will be able to bring under control the 
expenditures of Government or the rate of growth of the expenditures of 
Government in a manner which will allow us to be able to afford the 
size of the Federal Government over the next 7, 10, 15 years.
  If you are going to address that issue, it is not so much reaching a 
balanced budget, it is the programs that drive Federal spending. So as 
we evaluate the process of reaching a balanced budget and what is 
occurring at the White House, I suggest we look at a few issues because 
those are the issues that are going to really determine whether or not 
we are successful.
  It is not so much whether the numbers that are put on the table after 
this meeting at the White House, which hopefully will be successful, is 
arrived at that say, yes, there is a balance by the year 2002; it is 
not so much those numbers that are important, it is the programmatic 
activity that underlies that.
  In this area, the core issue is the issue of entitlement spending. 
Entitlement spending are those programs which people have a right to 
have the Federal Government spend money on them because of their 
physical situation, their financial situation, because of their 
situation in their lifestyle. Those entitlement programs are the core 
problem that is driving the Federal debt.
  In fact, in the year 2015, all the revenues of the Federal Government 
will be absorbed by the entitlement programs. We will not have any 
money to spend on national defense or cleaning up the environment or 
having better schools. We will be spending everything just on 
entitlement programs.
  So the issue of whether or not we are going to bring under control 
Federal spending and whether or not we are going to be able to pass to 
our children and this country a fiscally solvent one versus one that is 
bankrupt, and whether our children will have an opportunity for 
prosperity really comes down to how we address these entitlement 
programs during this process.
  In doing that, I think we can score the activities by looking at a 
few specifics. If the proposal that comes out of the agreements or the 
discussions which are now going on with the White House--assuming there 
is a proposal; and I certainly hope there will be--but if such a 
proposal does not aggressively and affirmatively address those 
entitlement programs, then it will be essentially a facade, and we will 
have accomplished little. The pain that these Federal employees are 
going through subject to the continuing resolution failure will be for 
naught, and how can we know whether or not there has been substantive 
change or substantive action taken on the entitlement programs.

  Let me lay down a few benchmarks that I think we should look at. 
There are three basic programs that we are talking about here: 
Medicare, Medicaid, and welfare reform.
  In the Medicare accounts, clearly there has to be a new way to 
deliver services. There has to be more opportunity for competition. Our 
senior citizens have to be given more choices, more opportunity to go 
out in the marketplace, like their kids today, and be able to purchase 
services other than just what is known as fee for service. Thus, any 
reform that comes out of this process must involve the use and the 
utilization of marketplace forces in a very aggressive way. It must 
allow seniors to do as their children are doing today, which is to opt 
into other types of health care delivery, whether it happens to be an 
HMO, a PPO, or a group of doctors, or a PSO, which is another form of 
doctors and hospitals practicing together. Those various options must 
be made available to our seniors. And I hope that in any resolution of 
this matter--it must have that type of a choice program in it, a real 
choice program, and it cannot be just what we presently have in our 
Medicare system, which is basically an illusory choice program.
  You can also look at the Medicare reform effort and determine whether 
or not it is real by what the rate of the premium payment is. If we go 
back to a 25-percent rate of premium as being the part B premium borne 
by senior citizens, then we will know that basically there has been a 
sellout, that nothing has really happened.
  The fact is that 31.5 percent is what is needed as the part of the 
part B premium to be paid by seniors if we are going to have a solvent 
trust fund. Seniors cannot expect that the Medicare trust fund will 
remain solvent if they are going to ask their children to basically 
subsidize, at an ever-growing rate, the cost of the part B premium.
  The seniors cannot expect the Medicare system to remain solvent. 
Seniors have to be willing to pay their fair share. By paying their 
fair share and maintaining the premium at 31.5 percent is clearly a 
core test issue.
  Another test is whether or not there are copayments, especially 
whether or not we have a situation where, on the part B premium, people 
with high incomes are required to pay the full cost of the premium. 
Today, we have the top 500 of retirees from IBM last year being 
subsidized by the folks who are working at the restaurant, down at Joe 
and Mary's Diner or at the local gas station, and it is not right, it 
is not fair. They are being subsidized to the extent of almost 68.5 
percent, the cost of their part B premium, and that is not correct.
  So any reform that comes out of this agreement has to have some sort 
of understanding that high-income individuals will bear the full cost 
of their part B premium.
  In the Medicaid accounts, it is very obvious that Medicaid has not 
worked the way it was supposed to. Nor has welfare. If we are going to 
make them work effectively, we have to give the States the flexibility 
to run the programs and to initiate original and imaginative approaches 
to running the programs. We have to end this huge drainoff of funds 
which is going into bureaucracy instead of going into care in the area 
of Medicaid and going into direct support in the area of welfare.
  Today, I think it is less than 40 cents of every welfare dollar 
actually gets to the recipient. The rest goes to overhead. In most 
States, the administrative costs represent about 15 percent of what the 
operating costs are of a program. So the difference between those two 
numbers is what States feel they can have available to address the 
needs of people versus ending up funding bureaucracies.
  So any program that is going to effectively address the outyear 
drivers of our budget problems, specifically the entitlement programs, 
must address the fact that Medicaid and welfare must be decoupled from 
the entitlement train and be returned to the States to be operated as 
States' programs with the flexibility being given to the State 
governments where there is as much compassion as in Washington to 
deliver these services to the less needy and to the more needy 
individuals.
  So these are some of the tests of whether or not we will reach an 
agreement which is real versus one that is illusory, and in looking at 
any balanced budget agreement, it is essential that we look at those 
tests because it is essential that we have an agreement that is real.
  I thank the Chair for his courtesy and yield back my remaining time.

  Mr. GLENN addressed the Chair.
  The PRESIDING OFFICER (Mr. Thomas). The Senator from Ohio.

                          ____________________