[Congressional Record Volume 142, Number 3 (Friday, January 5, 1996)]
[Senate]
[Pages S92-S96]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
A CLEAN CONTINUING RESOLUTION AND BALANCED BUDGET ACT
Mr. DOMENICI. Mr. President, we are here tonight to talk about two
important issues--one is the short-term outlook for the operation of
the Federal Government, and the other is the long-term economic future
of the Nation.
The Senate is now considering a continuing appropriations resolution
[CR] that will reopen the Federal Government and put our Federal
employees back to work with pay. This CR will operate the Federal
Government for 3 weeks through January 26 and give the congressional
leadership and the President the opportunity to again try to agree on a
balanced budget plan.
This CR has a reasonable requirement that the President should now
present a budget plan that reaches balance over 7 years using CBO
estimates. The President committed to this goal when he signed the
continuing resolution last November (H.J. Res. 122 Public Law 104-56),
but he has yet to submit a balanced budget by CBO scoring.
chronology for bba
Mr. President, the President submitted his fiscal year 1996 budget to
Congress on February 6. At the same time, the new Republican Congress
was undertaking the long overdue task of balancing the Federal budget.
[[Page S93]]
Congress has worked for over a year now, Mr. President, to bring that
goal to a reality. The Senate Budget Committee, which I chair, held 22
hearings on the budget through early August.
The Senate Budget Committee held 4 days of markup and considered 36
amendments in fashioning the balanced budget resolution. The Senate
debated the budget resolution for the full 50 hours over 6 days during
which time 76 amendments were offered.
To carry out the reconciliation instructions of the budget resolution
to develop the Balanced Budget Act, 11 Senate committees drafted
legislation. The reconciliation bill was considered by the Senate for
45 hours over 3 days, during which 66 amendments were offered.
After a conference on this significant legislation, the House and
Senate approved the conference agreement on the Balanced Budget Act
before Thanksgiving, and the President came back and vetoed the bill on
December 6.
bba negotiations
Mr. President, I am not one to give up on a difficult task, and the
President's veto did not deter me. Since the veto, I have met with
White House officials and congressional leaders to try to find common
ground on a Balanced Budget Act.
I am not alone in this effort. Republicans have been willing to move
toward the President's position on many major issues. In a proposal
Republicans made to the President, we proposed providing another: $24
billion to medicare; $16 billion to medicaid; $12 billion to welfare-
related programs, including the EITC; and $25 billion in funding for
education, the environment, and other domestic priorities.
In total, Republicans offered to add back $95 billion to move toward
meeting some of the President's concerns about the Balanced Budget Act.
Republicans have also made it clear that all issues are on the table
for the negotiations. We have had discussions with the White House on
the tax cuts included in the Republican BBA.
medicare
Medicare spending in the Republican Balanced Budget Act grows at an
average rate of 7.4 percent a year over the next 7 years, that's well
more than twice the rate of inflation. Just 2 years ago, the President
said that if you slow the growth of Medicare to twice the rate of
inflation, you are not cutting Medicare.
Our Medicare savings are down from $226 billion over 7 years under
CBO's reestimate of the BBA to $202 billion in our latest negotiations
with the President. We would spend $1.7 trillion over the next 7 years
on Medicare under this proposal.
In addition, the President expressed concern about the Medicare part
B premium, and we have offered him a compromise on that issue.
Our goal is to make the entire Medicare Program sustainable in the
long run, and Republicans believe our plan makes a significant start on
this path. Under our plan, the Medicare part A trust fund would be
solvent past the year 2017. Our plan would also slow the growth of part
B spending to move it toward a sustainable path.
In all of these negotiations we have indicated our willingness to
further discuss with the President the changes we propose to make to
the Medicare Program to ensure its solvency.
medicaid
Medicaid under the Balanced Budget Act that the President vetoed,
would grow at an average annual rate of 5.2 percent over the next 7
years. This translates into Federal spending of $700 billion over the
next 7 years. When you add in State spending, that doubles to $1.4
trillion.
I think the issue in Medicaid is not the level of savings or the
growth rate of Medicaid spending, but how much flexibility we are going
to give the States to innovate within their own Medicaid programs.
The President says we are cutting Medicaid, but he ignores the fact
that spending for Medicaid will go up each and every year under our
budget plan.
The President has expressed concern about the need for Medicaid
funding to adjust for changes in population and for economic
fluctuations. I think the President has a good point, and I think it is
worth looking at modifications to our Medicaid plan that can meet these
needs.
welfare reform
On welfare-related programs, Republican's have added back $10 billion
plus another $2 billion for the EITC.
For welfare programs, as for Medicaid, the President wants to keep
more control here in Washington; we want to give that power back to the
States and allow them to meet the real needs of their citizens by
designing their own welfare and Medicaid plans.
other budget plans
In addition to the modified Republican BBA, the House Coalition, Blue
Dogs Group, has offered its own balanced budget proposal, which meets
the CBO test.
Senate Democrats have offered their own BBA--Daschle, Simon, and
Conrad--as has the Bipartisan Senate Group--Chafee, Breaux, and
others--that all reach balance under CBO scoring--see attached table.
In addition 2 days ago, Senator Moynihan offered his own balanced
budget proposal, which would also get us to a balanced Federal budget.
Mr. President, the only party that has not met this challenge is the
President of the United States.
It is now time for him to come forward, to present a balanced budget
plan under CBO's scoring, to sign this continuing resolution to reopen
the entire Federal Government, and join Congress in serious
negotiations to balance the Federal budget for the Nation's future
economic well-being.
fiscal dividend
A balanced Federal budget is good for the country. In CBO's December
update of the budget and economic outlook, CBO finds lower interest
rates and more robust economic growth generated by a balanced budget
yielding $282 billion in deficit reduction over and above specific
policy savings.
Additional deficit reduction is generated because: real GDP will grow
0.1 percent per year faster than it would absent a balanced budget;
corporate profits will reach 8.2 percent of GDP by 2002 compared to 7.1
percent without balancing the budget; short-term interest rates on
Treasury bills will drop from a 1995 level of 5.5 percent to a 2002
level of 3.9 percent. Under the status quo, they would be 5.1 percent
in 2002; and long-term interest rates on Treasury notes will fall from
a 1995 level of 6.7 percent to a level of 5.5 percent. Without a
balanced budget, the rate will remain at 6.7 percent.
Mr. President, this is only a broad brush of the CBO update, however,
the new assessment represents a $112 billion increase over the $170
billion fiscal dividend included in the balanced budget resolution.
A balanced budget is good for all Americans. It will provide lower
interest rates for home mortgages, college loans, car loans, and so
forth, an increase in savings rates spurring real, job-producing
investment, increased productivity, higher standards of living, a lower
national debt and therefore lower Government interest costs, and less
reliance on foreign borrowing.
It is time for Congress and the President to renew efforts to reach
agreement on a balanced Federal budget by the year 2002 under CBO's
scoring.
I ask unanimous consent that two tables and an explanation of how
American families benefit from a balanced budget be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
CHANGES TO BALANCED BUDGET ACT OF 1995 \1\--GOP OFFER NO. 1
[In billions of dollars]
----------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 Total
----------------------------------------------------------------------------------------------------------------
December BBA reestimate......... 151 159 127 97 73 34 -3 ........
Changes to BBA:
Nondefense discretionary.... 4 6 5 5 5 ........ ........ 25
Medicare.................... 3 6 5 4 3 3 ........ 24
Medicaid.................... ........ 2 5 4 4 1 ........ 16
[[Page S94]]
Child care, social services,
foster care, children's
SSI, family support, and
child nutrition............ \3\ 1 2 2 2 2 2 10
EITC........................ \3\ \3\ \3\ \3\ \3\ \3\ \3\ 2
Technical changes \2\....... -2 1 1 1 \3\ -1 -2 -2
Revenues.................... 6 -6 \3\ -1 -1 -2 -2 -5
Subtotal policy changes... 12 10 18 16 14 3 -1 71
Debt service.................... \3\ 1 2 3 3 4 4 17
Resulting deficits.............. 164 170 146 115 90 41 -0 ........
----------------------------------------------------------------------------------------------------------------
\1\ As reestimated by CBO, December 12, 1995.
\2\ Corrections of drafting errors, timing changes in FCC spectrum auction, foster care, and graduate medical
education provisions.
\3\ Less than $0.5 billion.
Note: Details may not add to totals due to rounding. Revenue increase shown as negative because it reduces the
deficit.
Prepared by SBC/HBC Majority Staff, Dec. 15, 1995. Based on CBO estimates.
SEVEN-YEAR DEFICIT REDUCTION ALTERNATIVES--CBO ESTIMATES
[Deficit impact, 7-year totals, in billions of dollars]
----------------------------------------------------------------------------------------------------------------
BBA 1 Senate Senate
BBA I (HR modified (12/ Clinton (12/ Coalition Democrats bipartisan
2491) 15/95) 15/95) (12/19/95) (12/20/05) (12/21/95)
----------------------------------------------------------------------------------------------------------------
Discretionary:
Freeze.................. -258 -258 -258 -258 -258 -258
Additional.............. -151 -126 -1 -69 -39 -10
-----------------------------------------------------------------------------------
Subtotal discretionary -409 -384 -259 -327 -297 -268
===================================================================================
Mandatory:
Medicare \1\............ -226 -201 -97 -157 -90 -154
Medicaid................ -133 -116 -38 -85 -51 -62
Welfare programs \2\.... -87 -78 -38 -38 -44 -58
Other mandatory:
Farm................ -5 -5 -2 -4 ............ NA
Student loans....... -5 -5 -4 ............ ............ NA
Civil Service \3\... -10 -10 -2 ............ -10 NA
Spectrum............ -15 -15 -21 -21 -21 NA
Veterans............ -7 -7 -4 -5 -7 NA
CPI change.......... ............ ............ ............ -29 -12 -63
GME/health care..... 14 14 26 ............ ............ ............
Other............... -12 -12 -1 -18 -3 -52
-----------------------------------------------------------------------------------
Subtotal other.. -39 -39 -8 -77 -52 -115
===================================================================================
Subtotal
mandatory...... -484 -434 -176 -357 -237 -389
Revenues \4\, \5\........... 222 217 70 -60 -56 58
Debt service................ -80 -63 -47 -99 -69 -62
===================================================================================
Total................. -750 -663 -412 -843 -659 -661
----------------------------------------------------------------------------------------------------------------
\1\ Coalition budget medicare savings include $127.3 billion in outlay reductions and $25.4 billion in revenue
increases.
\2\ Excludes EITC revenues. BBA I Modified shows preliminary CBO cost estimate of the conference agreement on
H.R. 4. Clin * * * include medicaid impact (no estimate available).
\3\ BBA I Modified and Senate Democrat include $3.5 billion in revenue increases.
\4\ Includes EITC revenues for all plans. Excludes BBA I Modified and Senate Democrat civil service revenues.
Excludes Coali * * * Includes Coaltion welfare reform revenues ($5.7 billion). Includes increased revenues
from CPI change for Coalition ($21 bil * * * ($7 billion) and Senate Bipartisan ($47 billion).
\5\ Clinton includes proposal to ``trigger-off'' tax cuts if balanced budget targets are not being met. JCT
estimates savings of $29 b * * * $45 billion.
Note: Pereliminary CBO estimates--subject to change. Revenue reduction shown as positive because it increases
the deficit. Details may not add to totals due to rounding. NA indicates not available or no agreement.
Prepared by SBC Majority Staff, Jan. 5, 1996.
how american families benefit from a balanced budget
Balancing the budget will provide direct and tangible
benefits for American families--benefits they will be able to
feel in their pocketbooks.
Economists agree that balancing the federal budget will
lead to: Higher standards of living; Faster real economic
growth; Drop in interest rates, including those that families
pay on home for home mortgages, car loans, and student loans;
An increase in savings rates, spurring real, job-producing
investment; An increase in productivity; Lower national debt,
therefore lower government interest costs; and Less reliance
on foreign borrowing (more American ownership of assets).
Home mortgages
Mortgage rates will drop from 8.2 percent, to 5.5 percent
(according to the National Association of Realtors using
projections by DRI/McGraw-Hill).
A family buying a home in 1995 with a $100,000 loan and
refinancing in 2002, when the budget is balanced, will save
$2,576 a year.
A family who buys a home in 2002 will save $2,162 a year
because of the lower interest rates. Over the 30-year life of
the mortgage, the savings will total $64,860.
The value of existing home will grow by about 8 percent.
Household net worth will expand by $1.1 Trillion. The
increased home values will not make homes less affordable
because financing costs for a home will decline by 15
percent.
Demand for homes will increase. Families will ``trade up''
so existing home sales will rise by 11 percent by 2002.
Construction will increase as new housing starts grow by
65,000 units.
Auto loans
Car loan payments decline by $180 annually, for a total
savings of $900 for a typical loan (assuming a 2-percentage
point drop in interest rates on a five year, $15,000 auto
loan at 9.75 percent).
College loans
College loan payments will drop by $216 annually, for a
total of $2,617 for a typical loan (assuming an $11,000 loan
paid over 10 years starting at 8 percent).
Savings for these three loans total $2,558 annually (Car--
$180, Student--$216, Mortgage--$2,162).
Interest rates
Federal funds rate lowered from baseline estimate of 5.2
percent in 2002 to 3.5 percent in that year. Thirty year
treasury bond rates reduced from 7.2 percent to 4.5 percent
in 2002.
National debt
In the current services baseline, outstanding national debt
rises to $7.5 trillion by 2002, with an annual debt servicing
cost of $290 billion. Budget Resolution would reduce total
debt to $6.5 trillion in 2002, with a debt service cost of
$182 billion. The savings in interest does half the work of
balancing the budget, which means the Congress only has to do
the other half.
The economy
Inflation is essentially unchanged. Real gross Domestic
Product will increase relative to baseline by almost $100
billion per year by 2005. Balancing the budget by 2002 has a
positive impact on the overall economy and the housing
market. Eliminating deficits allows interest rates to decline
and redirects the economy from government spending and
consumption toward savings and private investment.
Mr. DOMENICI. Mr. President, the hour is late. Much has been
accomplished today.
I want to extend my congratulations to the distinguished majority
leader, Senator Dole. The day before yesterday, all was not so pleasant
for there were many who were second-guessing our majority leader who
used the phrase ``enough is enough,'' and proceeded to send to the
House a targeted appropriations bill which broke the ice and which
brings us here tonight.
As I see it, we are now given 21 days without the problem of the
Federal Government workers being out of work and unpaid--21 days, if
the President of the United States will submit his first balanced
budget using the Congressional Budget Office estimates. If he does
that, all of Government will be
[[Page S95]]
open for 21 days, which means for the next 3 weeks congressional
leaders from both sides--the executive branch, the President, and
others--can meet day and night if they like, as long and as hard as
they want to work, and Government will be open. The people of the
United States can focus on what we are doing in our efforts to get a
balanced budget instead of on the current problems which, day by day,
grow worse for many innocent people, including many Federal workers who
are hostage to this crisis.
I personally believe, as one who is in the middle of all of these
negotiations, that we can accomplish much more with the pressure of
day-to-day problems of our Government being part closed, part
furloughed and part working behind us. I believe we have an opportunity
to use our good judgment to see if we can really come to an agreement
with the Executive Branch and the Democrats on a balanced budget.
Mr. President, I have outlined the history of how we got to where we
are tonight. I want to summarize a little bit of it.
First of all, after months of work, scores of hearings, scores upon
scores of amendments on the floor of the Senate, both on a resolution
and on a bill, we sent the President a balanced budget. He vetoed it.
The full impact of what happened on that ominous day of veto was lost
because we were already in the crisis of Government being half
shutdown, half furloughed, and the attention of the American people
taken away from that by the more daily crisis of our Government in
crisis, our day-to-day Government operations in crisis. But when that
budget was vetoed, we worked very hard to get the people back to work,
and we passed a continuing resolution.
That continuing resolution we thought said that the President would
produce a balanced budget using the Congressional Budget Office
conservative numbers. But the President and his people construed it
differently, and construed it to mean that finally and ultimately when
we were all finished we would use the Congressional Budget Office. In
that resolution, the Democratic leaders and the President said there is
another part to it--that continuing resolution, that short
appropriations for the continuation of Government--there is another
portion of it that says you have to look at, or take another look at,
education, the environment, Medicaid, Medicare, and myriad things
amounting to about 10 specific items.
Mr. President, again, Republicans--and I was one that took the lead--
did not want to give up on the balanced budget that was vetoed. So what
we did was to ask the Congressional Budget Office at the particular
time of year that they are supposed to look again at budgets to take
another look.
Mr. President, they said the balanced budget has done such a good job
that there is actually a surplus of $135 billion that you did not
expect you were going to have because of changing economics and
estimates. In response to that continuing resolution, we made another
offer to the President of the United States. It got lost in the myriad
of noises because the Government was in chaos.
What did we do with that? We took that $135 billion surplus and said,
``Mr. President, we take you at your word. You want us to change some
of our balanced budget, and we changed it, Mr. President.'' In fact, we
put in sufficient money to take care of the education concerns of the
President, and that should no longer be an issue. It is still being
touted, but we have already submitted an offer that puts back the money
for education, for the environment, and for other appropriated
accounts. We already did that. We put back $5 billion in outlays in the
year 1996, which is more than has been sought for those particular
programs and others. And then, Mr. President, we said, let us look back
through our proposals and use some of that $135 billion to change the
situation where it would move more in the direction of the President.
We put $25 billion into Medicare, $16 billion into Medicaid, $12
billion into related welfare programs, including EITC, $25 billion was
the funding for education and environment, and other domestic programs.
What was left of that $135 billion we put on the deficit, and we said,
here is a new proposal.
Again, there are not 10 people that know that occurred, but it did
occur. So we did relate totally and respond totally to our commitment
under the continuing resolution that we would do better in these areas
and at the same time have a balanced budget.
Mr. FORD. Mr. President, will the Senator yield for a question, a
serious question?
Mr. DOMENICI. Sure. I am only going to be 5 more minutes. Is that
your question?
Mr. FORD. No. It is my understanding that when you related to figures
that you reduced the amount of reduction using $135 billion, that the
White House on December 15th moved toward your figures--moved toward
your figures on discretionary, moved toward your figures on Medicare,
moved towards your figures on Medicaid, did not move toward your
figures on earned income tax credit--you did come down $12 billion on
that over the 7 years. I kind of thought that both sides were beginning
to work together.
Mr. DOMENICI. I am not arguing about whether we did or did not.
Mr. FORD. I am not arguing with you either. But I want to be clear. I
worked Saturday. I worked Sunday. I put in what I thought were long,
hard days, and we moved toward you. And I congratulate you, you were
moving toward us. I just thought we were on the right track rather than
getting into the mess that Senator Hatfield and others think we are in
as it relates to appropriations bills.
Am I correct in my statement?
Mr. DOMENICI. No, the Senator is not correct.
Mr. FORD. What is wrong with it then, if I might ask?
Mr. DOMENICI. Whatever you submitted--and I do not have the numbers
here, but the one missing part of it was you never got to a balanced
budget. Whatever you submitted, you did not get to a balanced budget.
Mr. FORD. The Senator does not have one now either unless you use
Social Security.
Mr. DOMENICI. Wait a minute now. I am not going to yield any longer.
I yielded for a question.
Mr. FORD. That will be fine. But you are out here saying a lot of
things.
Mr. DOMENICI. No, I am not.
Mr. FORD. I apologize; the Senator is saying a lot of things that I
disagree with.
Mr. DOMENICI. Fine.
Mr. FORD. I do not want to leave it without having some opportunity
to defend our side of the aisle.
Mr. DOMENICI. To my knowledge, the Senate will be open here for a few
more minutes.
Mr. FORD. I am going to take time.
Mr. DOMENICI. I welcome the Senator's remarks. I really do. I just
want to finish my thoughts because I wanted to get to a very simple
point, that we have modified our proposal and we are still in balance
under that proposal. And as my friend, Senator Gorton, who occupies the
Chair now, clearly said, not only did we resubmit another balanced
budget using the Congressional Budget Office, but the blue dogs in the
House--that is a group of Democrats--have submitted one that gets to
balance. A group of Senators, 20 in number, 10 from each side, has
submitted the framework for one that is in balance using the
Congressional Budget Office. Senator Moynihan within the last 3 days
has submitted one. And frankly, I think the House did us all a service
when they sent us a continuing resolution that will open all of
Government if just one simple thing is done, and that is if the
President will join this litany of different institutions within our
framework that have produced a balanced budget using CBO. If he will
join us, then all of Government is opened and funded at reasonably good
levels for 21 days from today.
Now, having said that, I wish to make sure that everybody understands
I am not trying to say everything my way. I will state it as I view it
and the Democrats can state it as they want to. But when they submitted
a counterproposal, they did not move an inch on Medicare, an inch on
Medicaid, in December from their June proposal.
That is the statement that I will stand by, and if the Senator can
dig up a budget and say that that is not the case, then I will be glad
to revoke this.
Now, I am here because I still believe the American people should
know that this is not a mere philosophical difference between Democrats
and Republicans. This is an issue of whether we
[[Page S96]]
want to make America a better place in the future by balancing our
budget sooner rather than later. It is a question of whether we want
interest rates to come down and stay down, save millions and millions
of dollars for average Americans in houses they buy and mortgage, in
cars they buy and mortgage, in school tuition where they borrow money,
in every aspect of America's life, to make it easier and better and
make America grow stronger through the private-sector growth that a
balanced budget will permit us to accomplish.
That is what this whole debate is about. And frankly, tonight I am
grateful to our leader, Senator Dole, to Speaker Newt Gingrich, who
apparently had to argue loud and strong in the House to get these
resolutions passed and get them to us here tonight, to rid us of the
confusion of a half-open, half-closed American Government. I believe we
have a real chance.
I do not know how close we are, Mr. President, and to those who are
listening, I do not know how close we are to getting a balanced budget,
but I tell you, everybody has to give. Everybody has to give. And I
believe we are prepared to give. I will state once again that we
already put $95 billion more on the spending side into the budget that
the President vetoed--that is over 7 years--in areas that the President
was concerned about. That has already been done as another marker of
our good faith, of our movement in the direction that we have been
asked to move in. Now, in the next week, 10 days, we will see if there
is additional movement both ways. I hope there is.
I yield the floor.
Mr. WARNER addressed the Chair.
The PRESIDING OFFICER (Mr. Gorton). The Senator from Virginia.
Mr. WARNER. Mr. President, before the distinguished Senator from New
Mexico leaves the floor, I would like to express my views, and I think
I express them for Senators on both sides of the aisle, not only to the
Senator but the Senator from Nebraska, the ranking member on the
committee, Senator Exon, for their leadership in this crisis. I have
been privileged to be in a number of meetings with the Senator, the
majority leader, the Speaker of the House, and others, Mr. Kasich, his
counterpart in the House, and I wish to commend the Senator.
Mr. DOMENICI. I thank the Senator very much.
Mr. WARNER. When the history of this unusual chapter in the 206-year
life of the Senate, indeed, the Congress is written, there will be a
prominent place for the Senator despite his humility.
Mr. DOMENICI. I thank the Senator.
Mr. FORD. Mr. President, may I join in. I do not want to leave the
impression that I do not feel the same way about the Senator from New
Mexico that the Senator from Virginia feels toward him----
Mr. DOMENICI. I thank the Senator.
Mr. FORD. Personally, his effort, the long hours and how hard he
works. It is just like the distinguished Senator in the chair has
indicated: We have a difference, and we need to let everything else go
on while we settle that difference. And I thought--and I still
sincerely believe it--that there was an offer to move toward you. The
Senator says no. I say yes. And that seems to be the budget problem
here.
But I do want people to know I like him personally. He is my friend.
He works hard, and we are very close to being together. So I did not
want the Senator to leave and the people viewing to think we had
anything personal.
Mr. DOMENICI. I thank the Senator.
Mr. FORD. It was just a disagreement on how we are going to get to
the balanced budget. I thank the Chair and the Senator for giving me an
opportunity.
Mr. DOMENICI. Mr. President, I say to the Senator, the feeling is
mutual. I thank the Senator for his kind words, and I extend the same
to him. Thank you very much.
Mr. WARNER addressed the Chair.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. WARNER. I also wish to include Congressman Armey, who was in most
of the meetings in which I joined.
____________________