[Congressional Record Volume 142, Number 2 (Thursday, January 4, 1996)]
[House]
[Pages H184-H185]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    IMPACT OF BALANCING THE BUDGET ON THE LARGEST STATE OF THE UNION

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California [Mr. Dreier] is recognized for 5 minutes.
  Mr. DREIER. Mr. Speaker, I want to take just a few moments, as we 
prepare to file a rule, which will be considered here on the floor 
tomorrow morning at 10 o'clock, to talk about a very important issue to 
me. I am privileged to represent one fifty-second of California. I am 
one of 52 members of the California congressional delegation, and I 
want to discuss the impact of our attempt to balance the budget on the 
largest State of the Union. It clearly would have an incredible impact.
  It seems to me that we need to look at what balancing the Federal 
budget would do to the State of California. If the Federal budget is 
balanced in 7 years, $140 billion in debt, California's share of the 
$1.2 trillion in additional Federal borrowing, would not burden our 
future. Each of California's 11 million children will not see their 
share of the Federal debt increased by $13,000 over the next 7 years.
  The balanced budget bonus of lower interest rates will create jobs, 
free local and State resources and increase the buying power of 
California families.
  Now, Alan Greenspan, the Chairman of the Federal Reserve Board, has 
stated on several occasions recently that the 2 percent drop that we 
have seen in interest rates is directly related to simply the 
discussion, the commitment and our quest for a balanced budget. Now, 
lower interest rates, and by the way, there is a direct line that can 
be drawn if one looks at election day 1994 downward, because this 
question for a balanced budget has led interest rates to drop further, 
and I am convinced that if we actually do put into place a balanced 
budget that we will see a further drop, and this has been predicted by 
many, of a percentage point or two.
  Lower interest rates will create over that 7-year period 497,000 new 
private sector jobs in California. The cost of borrowing by the State 
of California will be reduced by over $3 billion, resources that could 
be used to address real needs in California, which would provide a 
benefit of $262 in a State tax cut per household.
  Now, the point being that as interest rates drop, Mr. Speaker, we 
clearly would see a very beneficial impact in decreased interest burden 
paid by our State. The cost of borrowing by local governments within 
California will be reduced with the 12 largest cities in California 
seeing a savings of $1.38 billion alone, resources that, again, could 
be used for education, health care, and local law enforcement.

  The average California family that owns a home will save $4,757 per 
year through lower mortgage interest rates, freeing family income to 
provide for themselves a higher standard of living. A California 
student, with the average college loan in our State of California, 
would save $858 over the life of a 10-year student loan, if we were to 
bring about a balanced budget with those lower interest rates which 
would follow.
  California families will obviously pay less in Federal taxes. 
6,138,000 California children live in families that are eligible for 
the $500 per child tax credit, if we put our package through. The 
Republican family tax relief will reduce the taxes of California 
families by $21.6 billion over the next 7 years, money 

[[Page H185]]
that is earned by parents and can be spent by the family.
  Spending on priority social programs increases dramatically under our 
Balanced Budget Act. Total Federal spending in California would 
increase from $177 billion in fiscal year 1995 to $215 billion in 2002, 
an increase of 22 percent. Over the past 7 years, the Federal 
Government's spending in California was $1.11 trillion. Under the 
Republican balanced budget plan, total Federal spending in California 
will be $1.46 trillion, which is an increase of 31 percent.
  Social Security payments to Californians will increase $15.9 billion 
over the next 7 years under our balanced budget plan, and Federal 
welfare spending, and that means food stamps, child care, cash welfare, 
child protection, school nutrition, SSI, the earned income tax credit 
in California, that will increase by $40 billion over the next 7 years 
under our plan.
  Mr. Speaker, wasteful Washington mandates are lifted, giving 
flexibility to Sacramento and local governments to direct Federal and 
State resources to its highest priorities and to do this in the most 
efficient manner. Medicare payments to Californians, Mr. Speaker, will 
increase $9.2 billion over the next 7 years.

                              {time}  2315

  Medicare spending per senior will increase from $4,800 to $7,100 per 
beneficiary by the year 2002. California seniors will also be given a 
choice in the health care plan that they receive, rather than having 
their health care coverage dictated by Washington politicians and 
bureaucrats.
  Mr. Speaker, Medicaid payments to California will increase by $3.4 
billion over the next 7 years. The Federal Government would also 
reimburse to California hospitals swamped by illegal immigrants $1.6 
billion of the cost of emergency health care services, which currently 
is a cost placed on California hospitals and the California taxpayers.
  Lifting Washington mandates, increasing the cost of health care and 
diverting resources to lesser priorities, including mandates to provide 
health care to illegal immigrants and drug addicts, must be lifted as 
part of any plan to restrain the growth of Federal Medicaid spending in 
order to continue to provide equal health care to Californians who are 
in need.
  Obviously, Mr. Speaker, in closing, it is very clear that moving 
ahead with our Balanced Budget Act would, in fact, dramatically 
increase by 22 percent overall the level of spending for California 
over the next 7 years. So, we have not seen these Draconian cuts which 
many people have labeled our Balanced Budget Act as, and, in fact, we 
need to move ahead as expeditiously as possible because it is clearly a 
win/win for the people of California.

                          ____________________