[Congressional Record Volume 142, Number 2 (Thursday, January 4, 1996)]
[House]
[Pages H156-H158]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            MR. PRESIDENT, IT IS TIME TO BALANCE THE BUDGET

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Jersey [Mr. Saxton] is recognized for 5 minutes.
  Mr. SAXTON. Mr. Speaker, I came down out of my apartment this morning 
and picked up the Washington Post on the front porch and, as I looked 
through it, I turned finally to page A-

[[Page H157]]
11 and in the Washington Post was this article. It says, ``On Balance, 
Budget Deal Could Offer a $1,000 Bonus'' to each family in America.
  Then a few minutes ago, frankly, I had not read it, but a few minutes 
ago I heard the gentleman from Michigan [Mr. Ehlers] talking about the 
effect of the balanced budget, the effect that it would have on our 
families by relieving a payment that they would have to make to the 
Federal Government each and every year to pay the interest on the 
national debt.
  I went back and read this and it says something different, and I will 
tell my colleagues about it in a minute, but I think it is very 
important to put this in the context of what the gentleman was talking 
about.
  See, the national debt has risen to approximately $5 trillion. Now, 
that for me and my colleagues, for me at least, that is an 
incomprehensible figure. I do not know, I cannot put $5 trillion into 
context. But when you look at it, as the gentleman from Michigan was, 
what he was saying is that if you take the $5 trillion national debt 
and figure out what each of our share of that is; in other words, 
divide $5 trillion by 260 million people which represents the number of 
people that live in our country, we find out that each of our share of 
the national debt is about $18,000.

  Now, to bring that just a little closer to home, we can all relate to 
this. If we went down to the bank, if we went to our hometown bank and 
we said ``I need for some purpose to borrow $18,000,'' the banker would 
say, fill out the application, and we need to make you aware, because 
the State and Federal laws provide that we disclose to you, that it is 
going to cost you an annual sum, an interest payment. And if on your 
$18,000 we charge you 7 percent interest, 7 percent of 18,000, if I am 
doing my math right, is close to $1,200 a year.
  Mr. Speaker, what that means is that for each of our individual 
shares of the national debt, which is $18,000, just like we would have 
to pay the bank interest, we have to pay our share of the interest on 
the national debt. So, when we make out our income tax checks on April 
15 of each year, somewhere between $1,100 and $1,200, which the 
gentleman from Michigan pointed out correctly, goes out of each of our 
pockets to pay the interest on this debt that we have further 
accumulated.
  On to this article, ``On Balance, the Budget Deal Could Offer a 
$1,000 Bonus.'' This is alluding to the fact that there are other 
savings which families will be able to reap. For example, because of 
lower national debt, each family will save an average of $500 a year by 
the year 2002.
  In addition to that, because interest rates will drop according to 
most economists by about 2 percent, according to most estimates, that 
the economy will begin to grow, and economists project that additional 
income will be earned by families of somewhere between $400 and $600 a 
year. Take the lower figure. Just take the $400. Then they say in 
addition to that, because interest rates will be lower, our mortgages, 
our mortgage payments will be lower; our car payments will be lower; 
our student loan payments will be lower. That would amount to, on 
average, another $100.
  So, if we add $500 in savings to $400 in savings to another $100 in 
savings, in addition to the check we would no longer have to write to 
the Federal Government of $1,100 or $1,200 a year, this article says 
that we would get an additional bonus of about, on average, $1,000 per 
family.
  Mr. Speaker, this begins to make a real difference to the middle-
class families that I represent. An additional couple of thousand 
dollars of savings a year amounts to real money. It is our job. This is 
what this debate has really been all about for all of these months for 
the last year. We have been trying to arrive at a consensus between 
Republicans and Democrats as to how we can balance the budget to save 
American families these moneys.
  So, I commend this article to everyone's reading. It is on page A-11 
of today's Washington Post written by Steven Pearlstein and it is news 
analysis. I think it is very accurate and I think it is something that 
we should be able to relate to on an individual basis, dealing with the 
national debt, how it affects each and every one of the families that I 
represent and that my colleagues represent.
  So, Mr. Speaker, let us proceed together. We have bickered long 
enough about this subject. It is too important. The President knows it. 
He has committed to balancing the budget in 7 years using what we here 
in Washington call real numbers, what my constituents call numbers 
without smoke and mirrors, and we have also agreed to that on, I think, 
both sides of the aisle.
  Mr. Speaker, let us proceed to do it so that American families can 
actually realize the bonus that is pointed out in this article.
  Mr. Speaker, I submit the following newspaper article for the Record:

                [From the Washington Post, Jan. 4, 1996]

           On Balance, Budget Deal Could Offer a $1,000 Bonus

                         (By Steven Pearlstein)

       With the budget crisis slowly suffocating Washington and 
     mystifying the rest of the country, it may be easy to 
     overlook the payoff if President Clinton and leaders of the 
     Republican Congress agree on a plan that balances the budget.
       The benefits could total roughly $1,000 a year for every 
     American family, according to economists and budget analysts.
       The math goes something like this: Balancing the budget 
     stems the flow of income that now runs from future 
     generations to our own.
       At today's interest rates, the $1 trillion in government 
     debt that would be avoided by gradually eliminating the 
     deficit over the next seven years would save taxpayers $60 
     billion in interest payments every year. That works out to an 
     average of $500 a year for every household beginning in 
     2002--money that could be used to reduce taxes or increase 
     the government services they receive.
       Balancing the budget also should generate extra economic 
     growth from lower interest rates and a higher national 
     savings rate. Even if the effect is just an additional 0.1 
     percent in output each year, as the Congressional Budget 
     Office predicts, it would boost national income by one 
     percentage point by the end of a decade--$400 for the average 
     household.
       Additionally, the CBO calculates that balancing the budget 
     will reduce prevailing interest rates by about 1.5 percent. 
     Some of that reduction already is reflected in market rates, 
     but with average household indebtedness now running around 
     $45,000, including mortgages, lower rates eventually could 
     reduce interest payments by $675 a year per family.
       But not all of those savings will make their way to our 
     bank accounts. That's because the flip side of interest 
     savings for borrowers is a corresponding reduction in 
     interest income for savers. Over the course of a lifetime 
     savers and borrowers turn out to be many of the same 
     Americans. But even so, it's pretty safe to figure about 
     another $100 annual bonus per family for balancing the 
     budget.
       All told, it's worth about $1,000 a year to our children 
     and grandchildren for us to cut back on our consumption of 
     government subsidies and services. ``From an economic 
     standpoint, everything else about this budget debate is 
     insignificant,'' says William Niskanen, President Reagan's 
     economic adviser and now chairman of the Cato Institute.
       But while the future payoff is fairly clear, the process of 
     getting there is not without pain. Nobody has yet invented a 
     way to suck a trillion dollars out of the economy over seven 
     years without anyone noticing. Indeed, some economists 
     predict if spending is cut too fast, it could tip the economy 
     into recession.
       Even if the economy can withstand the shock of sharply 
     reduced government spending, there are two groups of people 
     for whom this budget debate has serious consequences: the 
     poor and the elderly.
       The big nut to be cracked is health care costs, which 
     effectively represent half of the policy dispute between the 
     president and the Republican Congress. What they're really 
     wrestling with is how to ration medical care for the 60 
     million Americans who rely on government to pay for it.
       Although rationing is a dirty work in politics, it goes on 
     every day all over the United States, where more than half 
     the working population is now enrolled in some form of 
     managed health care plan.
       The key feature of these plans is that a group of doctors 
     and hospitals agrees to provide all medically necessary 
     services for a fixed fee per person per year. This fixed-fee 
     concept has helped slow the medical inflation rate to its 
     present 4 percent. But the government's two big health care 
     programs, Medicare and Medicaid, continue to operate largely 
     on the blank check philosophy of health insurance, giving the 
     poor and elderly free reign to consume whatever health 
     services they think they need and reimbursing doctors and 
     hospitals according to a fee schedule.
       Both Clinton and Congress have effectively embraced the 
     idea of extending the managed-care concept to Medicare and 
     Medicaid. What the fuss is all about is how--and how fast.
       The other big sticking point concerns the rest of the 
     government's social safety net. While just about everyone 
     concedes that welfare programs have largely failed to end 
     poverty, few can point to alternative programs 

[[Page H158]]
     that work much better. Any reform, then, is something of a leap into 
     the unknown, and at the heart of the budget battle is the 
     question of exactly how big a leap to take.
       It was candidate Clinton who first promised to end welfare 
     as we know it, and now the Republican Congress has gone him 
     one better. Its proposal would fold welfare, food stamps and 
     a panoply of other federal programs into one, consolidated 
     grant to be sent off to each statehouse. The Republican plan 
     is exquisitely precise on how and when welfare mothers will 
     be forced off the dole, but considerably more vague on 
     exactly how these people will find jobs or how they will pay 
     for day care and health care even if they do.
       ``What concerns me in all this is the treatment of the 
     poor,'' says Charles Schultze of the Brookings Institution, 
     the top economic adviser to President Carter. ``For them this 
     represents a terribly risky roll of the dice--one that I 
     think is likely to come out wrong.''
       It is not only economists with Democratic leanings who 
     worry about the budgetary impact on the poor. Listen to 
     Herbert Stein, an analyst at the American Enterprise 
     Institute and an economic adviser to President Nixon:
       ``If you cut Medicaid and welfare and food stamps, will 
     these people descend into misery or straighten up, fly right, 
     get a job and wind up with an apartment on Park Avenue? 
     Frankly, I think it's a risky strategy for the very poorest 
     people. I think many won't be able to adjust successfully.''
       But if doing something is risky, so is doing nothing. Even 
     the supposedly harsh measures proposed by the Republicans 
     will keep the federal budget in balance only for the first 
     decade or so of the 21st century. After that, demographic 
     forces will once again overwhelm the Treasury as the giant 
     baby boom generation moves into its retirement years, 
     expecting the same level of pensions and health care as the 
     generation that preceded it. Without further increases in 
     taxes or reductions in Social Security and Medicare benefits, 
     the government is now projected to once again find itself 
     drowning in red ink.
       ``Even if we can balance the budget in the next few years, 
     it is really only the first step,'' warns Stanford 
     University's Michael Boskin, top economist in the Bush White 
     House. ``What lies beyond the year 2002 simply dwarfs what we 
     are dealing with here.''
       Put another way, if you think this budget battle is tough, 
     wait till next time.

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