[Congressional Record Volume 142, Number 6 (Wednesday, January 10, 1996)]
[Senate]
[Pages S133-S135]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        THE BUDGET NEGOTIATIONS

  Mr. DOMENICI. Mr. President, might I first indicate that my purpose 
in the next 10 or 15 minutes is to tell my colleagues, and to the 
extent possible the American public that might be watching, where I see 
things in this recessed budget discussion. I want to be very frank. I 
am disappointed and somewhat let down that we have not come to an 
agreement. I do not fault anyone for dedicating time and effort. In 
many respects, the time and effort spent in the White House is probably 
rather historic. I am not disappointed that that effort has taken place 
and that the President, Vice President, the leaders, Republican and 
Democratic, of the Congress, have indeed spent a great deal of time, 
effort, and energy in what I presume and must state, at least as I view 
it, to be a serious effort to try to get the American people what they 
so desperately want, and that is a balanced budget in 7 years, which is 
real, using Congressional Budget Office economics.
  So it is an understatement to say that I am disappointed, but I also 
do not know if we will be able to reach an agreement with the 
administration. I choose to try very hard to state it as best I can 
from what I know.
  It is quite possible, on the other hand, that working with 
congressional Democrats from both the House and the Senate that we 
could come to a proposal that would make fundamental reforms to Federal 
entitlement programs, make fundamental changes to Federal programs, 
redirect many of the programs out of Washington back to the States, and 
get a balanced budget in 7 years using the Congressional Budget Office 
estimates and economics. Maybe then the President and his 
administration would take more seriously the proposals we have worked 
so hard for over 1 year to reduce to a document called the balanced 
budget No. 1, which the President vetoed not so long ago.
  I would like to make it very clear, yes, the President finally 
submitted a budget scored by the Congressional Budget Office before the 
blizzard began last Saturday night that mathematically got to balance. 
But even some of the President's own people have admitted that that 
budget was designed to meet the requirement of the continuing 
resolution, the targeted resolution, the continuing resolution to put 
all of Government back to work and which had as a condition of its 
effectiveness that the President submit for the very first time a 
balanced budget using the Congressional Budget Office figures.
  Let me repeat. That 1996 blizzard budget that the President 
submitted, many believe was given to the American people and to us so 
as to comply with the technical requirements, and that it was not the 
kind of budget the President could have expected we would accept. Even 
some of the President's people have stated that it was designed to give 
us the requirements of that continuing resolution to reopen Government 
on Monday.
  The Washington Post criticized that blizzard budget as ``paper 
balance.'' Mr. President, I ask unanimous consent the Washington Post's 
editorial, a rather lengthy one, styled ``Paper Balance,'' be printed 
in the Record.
  There being no objection, the editorial was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, Jan. 9, 1996]

                             Paper Balance

       The balanced budget plan that President Clinton submitted 
     Saturday night would achieve all kinds of things, but a 
     balanced budget is likely not among them. In submitting a 
     plan that on paper would balance the budget in seven years 
     using Congressional Budget Office economic and other 
     assumptions, the president met the condition set by 
     congressional Republicans for reopening the government. He 
     may have helped to move along the budget talks as well, and 
     the plan would largely protect the major forms of federal 
     assistance to the poor, an important goal.
       That's the good news. The bad is that to get to balance 
     while achieving a string of other policy goals the plan 
     relies on gimmicks that almost no one believes would survive 
     and produce the deficit reduction claimed for them. It's true 
     that some of the same or similar gimmicks can also be found 
     in the Republican proposal to balance the budget. No doubt 
     the fact that they're gaming the issue in similar ways is a 
     comfort to both sides. It ought not comfort anyone else.
       1. The president persists in giving a tax cut. His is 
     smaller and better targeted than the one the Republicans 
     propose. It nonetheless is more revenue than a government 
     looking at deficits approaching $1 trillion a presidential 
     term should forgo. To get to the promised balance by the year 
     2002 despite the tax cut, the president then pretends that 
     the cut will be allowed to lapse in the year 2000, and no 
     matter that that year, like this, happens to be an election 
     year. Once the cut lapses, even if only on paper, there isn't 
     any revenue loss to record--not for now, anyway. For now, you 
     tell the voters they can have it all--yes to a tax cut, yes 
     to a balanced budget but no to spending cuts in programs they 
     like. It will be up to someone else to tell them later--
     always someone else and later--that the math can't be made to 
     come out that way.
       2. Half the spending cuts in the president's plan would be 
     achieved by imposing tight caps on the part of the budget 
     subject to the annual appropriations process. It's a 
     wonderful way to cut spending, because once again the hard 
     decisions are deferred. You don't have to say which programs 
     or which constituencies you expect to bear the burden; that 
     will be up to the appropriators to decide as they apportion 
     the available funds year by year. For now, you just get a 
     free vote in favor of economy in the abstract. The vote is 
     all the easier because, in the president's plan as in the 
     Republicans', the caps are backloaded. Sixty percent of the 
     cuts would be deferred until the last two of the seven years, 
     after the turn of the century.
       Assume that almost all the cuts would occur in domestic 
     appropriations as distinct from the military budget, which 
     the president has said he thinks should remain pretty much on 
     the current path. In real terms, this domestic total--the 
     operating budget for the entire domestic side of government--
     would have to be cut about a third to stay beneath the cap in 
     the seventh year. Hardly anyone, least of all anyone in the 
     administration, thinks a cut of that magnitude is possible 
     without doing enormous damage to government services. The 
     president makes the math even more implausible by saying he 
     intends to protect the chunks of the budget having to do with 
     education, the environment and such that he particularly 
     supports. That means he would have to cut the balance all the 
     more. What will it be? Housing programs? Veterans programs? 
     Highway grants? The space program? You wait in vain for the 
     answer.
       3. A lot of economists think that if the budget is 
     balanced, interest rates will ease, and that the lower rates 
     will stimulate greater economic growth. The government would 
     then reap a double dividend. Its own considerable interest 
     costs would go down and tax revenues, up. Call it a reward 
     for good behavior. The Republicans claimed the reward and 
     folded it into their budget estimates in advance. The 
     administration is doing the same thing on perhaps an even 
     weaker basis.
       The Republican budget contains its own illusions. The tax 
     cuts the Republicans propose are heavily backloaded. They 
     were carefully designed to keep their full effect from being 
     felt until after the seven years for which, under the rules, 
     the budget estimates were made. From just the seventh year 
     through the 10th, the likely revenue loss from their 
     enactment would increase by 75 percent. You balance the 
     budget in the seventh year, then begin to unbalance it all 
     over again unless deeper spending cuts are made.
       If the goal is to balance the budget, there ought not be a 
     tax cut. Not the modest one proposed by the president, and 
     surely not the Republican gusher, either. If the further goal 
     is to achieve a durable balance or near enough without 
     inflicting an undue burden on the poor, you have to go after 
     the major programs that benefit the middle class, in 
     particular the two great forms of aid to the elderly that 
     dominate the budget, Medicare and Social Security. The 
     Republicans proposed a restructuring of Medicare this year, a 
     mix of some good ideas and some bad, for both of which they 
     are being made to pay at the polls. The Democrats have 
     positioned themselves as protector of the program, and never 
     mind the pressure it puts on the rest of the budget and other 
     programs they also seek to protect. Neither party wants to 
     cut, or to be the first to propose cutting, Social Security, 
     even by limiting the cost-of-living increases in benefits for 
     a number of years.
       As a partial alternative to going after these programs, the 
     president has now proposed cutting some of the tax breaks 
     that go under the label corporate welfare. But it isn't clear 
     how hard he will push for those in what is likely to be an 
     inhospitable Congress; he hasn't pushed much in the past. 

[[Page S134]]
     Both parties now claim to want to neutralize the deficit. To do so 
     without also doing social harm, each has to abandon some 
     political reflexes, the Republicans above all on taxes, the 
     Democrats on Medicare. What we find out now is whether they 
     can or will.

  Mr. DOMENICI. Maybe, as one of our Senators has indicated, since it 
was a blizzard budget it should be categorized as ``snow job,'' 
because, although it gets to balance in 2002, only by raising taxes in 
the last year and back-end loading 70 percent of the nonfreeze 
discretionary savings in that year could you get there. The plan made 
little or no fundamental changes to Medicare, which is going broke, and 
which many say we cannot afford in its current form; Medicaid, which is 
growing at 10.5 percent, and everyone says we cannot afford and must be 
reformed to save money and become more flexible at the State level.
  It made no serious change to Federal welfare programs that had been 
supported in the Congress in a bipartisan manner here on the Hill. 
Indeed, as we know today, the President has now even vetoed the welfare 
reform bill that we sent him before the holidays.
  I ask unanimous consent to have printed in the Record, so that those 
who want at least my version of where we are, and I hope it is 
authentic, a table that compares the President's blizzard budget of 
last Saturday night compared to the Republican bipartisan plan which we 
submitted to the President. My best analysis of that is encapsuled in a 
table which is called ``Comparison of Latest Offers.'' One is called 
``Clinton'' for the President. I am referring to that in these remarks 
as the blizzard budget. The bipartisan Republican budget is one that we 
melded from various reforms that were supported by significant numbers 
of Democrats. Those who will take time to study this comparison will 
discover that the Republican bipartisan budget proposal attempts to 
fundamentally change entitlement programs by over $400 billion, over 
the next 7 years, nearly $132 billion more than the President.
  There being no objection, the table was ordered to be printed in the 
Record, as follows:

                COMPARISON OF LATEST OFFERS--JAN. 6, 1996               
        [Seven-year total deficit impact, in billions of dollars]       
------------------------------------------------------------------------
                                               Bipartisan/              
                                    Clinton    Republican     Difference
------------------------------------------------------------------------
Discretionary:                                                          
  Freeze.........................      -258            -258  ...........
  Additional.....................       -37             -91           54
    Subtotal discretionary.......      -295            -349           54
Mandatory:                                                              
  Medicare.......................      -102    -154 to -168     52 to 66
  Medicaid.......................       -52             -85           33
  Welfare programs...............       -39             -60           21
  EITC...........................        -2             -15           13
    Subtotal.....................      -195    -314 to -328   119 to 133
  Other mandatory................       -69             -69  ...........
    Subtotal mandatory...........      -264    -383 to -397   119 to 133
Revenues.........................        24             177         -153
CPI assumption...................       -17             -17  ...........
Debt service.....................       -57             -60            3
    Total deficit reduction......      -609    -651 to -665     42 to 56
------------------------------------------------------------------------
Note.--Revenue reduction shown as positive because it increases the     
  deficit.                                                              

  Mr. DOMENICI. Now, the Republican, GOP balanced budget versus the 
budget that we offered, that we call bipartisan--when you do that you 
get an explanation of how far we came in what we offered--and let me 
just describe those changes. They are as follows.
  From $226 billion savings in Medicare over 7 years, we proposed 
Medicare, Mr. President, between $154 and $168 billion. These are 
numbers endorsed by bipartisan groups in both the House and the Senate; 
from $226 to $154 and $168 billion as the parameters for a new program.
  Let me say, parenthetically, if you choose to do those reforms, which 
are substantially less, $60 billion less at the minimum, you can get 
there as far as the premiums to seniors with the premiums never going 
up beyond the $77 that the President recommended many, many months ago. 
So, while the Republicans moved nearly $60 billion lower in Medicare, 
the President, by his own numbers in the blizzard budget, reduced 
Medicare savings instead of increasing them, reduced the savings from 
$124 billion, which the President had heretofore said, in June, to $102 
billion.
  I understand that late yesterday there may have been some adjustments 
to that number. I did not get them in their final form. But I gather, 
if anything, Medicare was returned to its $124 billion level which is a 
level that is 6\1/2\ months old. So, in neither case did much happen 
there: While we came a low of $60 billion down, nothing happened in the 
blizzard budget, or the supplement to it, which I do not have in its 
final form.
  Those who understand the budget know that we cannot achieve real 
balance unless we address these programs that make up over 50 percent 
of total spending in the Government. And these are the programs that we 
call mandatory, or entitlements. And, in the comparison chart that I 
had printed in the Record, I have taken the four that we have not been 
able to agree upon--Medicare, Medicaid, welfare programs, and I choose 
to put the earned income tax credit in it--the difference between the 
Clinton proposal and the bipartisan proposal is shown in this box, and 
it is a rather enormous number: $195 billion in savings versus 
somewhere between $314 and $328 billion.
  Therein lies the major problem in getting a budget that is not 
mathematical--as alluded to by the Washington Post--but, rather, 
substantively alters the course of spending in programs that are 
increasing the most rapidly in the Federal Government, three of which 
grow at more than 10 percent a year, not sustainable with a gross 
domestic product growth of 2\1/2\ percent. That means the difference in 
just those programs is between $119 and $133 billion in savings.
  Fortunately, there are some other entitlement programs that we seem 
to get close to agreement on. They are also shown in my comparison and 
they are the rest of the entitlements. And we are close enough to say 
that somewhere between $66 and $69 billion is where we are. And that is 
a significant achievement.
  Let me close by speaking for a moment about the tax reductions. 
Republicans have also significantly and substantially reduced their 
proposal on tax cuts while protecting and insisting on protection for 
the family tax credit and a capital gains program which has a serious 
positive effect on long-term economic growth. While protecting those, 
we have dropped our tax reductions by $50 billion from the package that 
the President vetoed. That, too, is shown on the comparison chart which 
I will have printed in the Record for those interested in seeing 
precisely what is going on.
  I believe that the bipartisan GOP proposal which I have been 
discussing, which has reforms encapsulated in the entitlement changes--
that is, returning more of the moneys to the States with flexibility in 
both welfare and Medicaid--envisioned that the Governors of America 
will work on those programs with us. So that in saving the money we 
plan to save, we give them the discretion they need to get the job done 
better and cheaper. Yet, we are willing to have those Governors work on 
trying to make certain that some of the people have guarantees of 
coverage and perhaps even to change the way we have funded the Medicaid 
block grant in terms of what States are entitled to in the event of 
disasters economically speaking, or natural, and what they might be 
entitled to in the event there is sustained caseload growth in their 
State.
  Obviously, we have also said that, if this tax cut in the final year 
or two--that is, the Republican plan to give middle-income Americans a 
child tax credit which essentially in its basic form means that a 
family raising children in America gets a $500 tax break for each 
child--we believe that should be the cornerstone I repeat, along with 
capital gains, which I have just described. But we also have said in 
the event when you put all these reforms and expenditures down on paper 
and get them costed out by the Congressional Budget Office, if you do 
not meet the targets of balance in the last year, some portion of the 
tax cut can be sunsetted in the last year or two as stated by Speaker 
Newt Gingrich heretofore, and Chairman John Kasich yesterday at a press 
conference.
  I repeat that I am very hopeful that the President of the United 
States with his Democratic allies will submit an offer, a new offer 
that comes in the direction that I have been discussing today of more 
significant savings from entitlement reforms, the four that I have 
described: Earned income tax credit, welfare reform, Medicaid reform, 
Medicare for the solvency of the fund for a very long period of time, 
and an adjustment in the premiums to meet the needs of our times. 

[[Page S135]]

  My view is that the staff can do some work in the next few days. I am 
hopeful that we can reach some kind of accord on that. But I do believe 
it is fairest to categorize the status of the discussions as anxiously 
awaiting a new offer from the President.
  Perhaps as my last chart, I would put a composite in the Record that 
I choose to call how far we have moved.
  I ask unanimous consent that the chart be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                         HOW FAR HAVE WE MOVED?                         
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                          Balanced                      
                                           budget     Latest            
                                            act:    GOP offer   Movement
                                           vetoed                       
------------------------------------------------------------------------
Discretionary..........................        409        349        -60
Medicare...............................        226    154-168        -72
Medicaid...............................        133         85        -48
Welfare................................         64         60         -4
Revenues...............................        222        177        -45
                                        --------------------------------
    Total deficit reduction............        750        651        -99
------------------------------------------------------------------------

  Mr. DOMENICI. Mr. President, in the first chart I have the Balanced 
Budget Act that was vetoed. In the second column, Mr. President, I have 
the latest Republican bipartisan offer. And in the last column I have 
the difference. How far have we come?
  In discretionary, we have agreed over 7 years to go from $409 billion 
to $349 billion; $60 billion additional discretionary.
  Let me say right now that there is no longer any reason for the 
President of the United States to say we need a budget that meets the 
values of the American people. That does not. That takes care of 
education and takes care of environmental needs. It is obvious to 
everyone that that $60 billion that we have agreed to add more than 
covers those two and any other priority discretionary programs the 
President has been alluding to. Point No. 1. We went $60 billion their 
way.
  Medicare--we went $72 billion their way from $226 billion to a range 
of $154 to $168 billion. Take the lower of the higher of them, and it 
is $72 billion their way.
  Medicaid--from $133 billion in expected reform savings to $85 
billion; $48 billion their way.
  Welfare--from $64 billion to $60 billion; $4 billion their way. And 
the reason that is not a bigger number and need not be is because the 
U.S. Senate passed a bill with 87 votes. We are basing this principally 
upon that welfare reform measure. That one may require a couple of 
billion dollars additional perhaps for child care, or more workfare 
aid.
  Last, on revenues from $122 billion to $177 billion, a $45 billion 
movement in their direction.
  Frankly, I think anyone who will look at the two charts--How far have 
we moved?--and the comparison that I have alluded to of latest offers 
dated January 6, 1996, should have a pretty good picture of Republican 
negotiators led by Speaker Newt Gingrich, Congressman Dick Armey, and 
majority leader Bob Dole on our side. We have made significant movement 
yet holding to the basic principles which I believe are about fourfold.
  First, a significant tax break for working income-producing Americans 
who have children.
  A capital gains tax to stimulate the economy, No. 1.
  A reform of welfare as we know it turning it to workfare with a time 
limit of 5 years imposed on those who use it rather than a lifetime 
welfare program.
  Third, a serious and dedicated effort to make Medicare work without 
it having to grow at 10\1/2\ percent a year. Most medical costs are 
going down. Our programs of Medicare and Medicaid--because we run them 
as a country, as a Government--continue upward.
  So our third principle is returning that program with some 
flexibility to the States and saving money, yet building in some kind 
of guarantee which we think the bipartisan Governors can accomplish.
  Our last point is that we believe Medicare ought to be made solvent 
as to the hospital portion--not for 7 or 8 years but hopefully for 
longer than that. And in that we must have reforms which permit the 
seniors of America to stay where they are in the current program, or 
choose other programs which will save money and provide them a 
different kind of coverage, whether it is HMO's, managed care, new 
professional service organization delivery systems, or whether it is 
major medical coverage with savings accounts. We need to reform the 
system so that it complies with the needs and delivery systems of 
today.
  Why should we shortchange seniors and keep them tied to one kind of 
policy of coverage when all Americans have many other choices?
  That is our fourth.
  And in doing that we believe we will have reshaped Government 
significantly. But ultimately, so there is no mistake about it, we 
believe we will have made a significant positive decision regarding 
interest rates in the future; jobs of the future, they will be better.

  Instead of being locked in stagnation, there is a real chance that a 
balanced budget will turn loose the energy of the marketplace so jobs 
can increase, so that we are not the generation that says for the first 
time that the next generation lives more poorly than we did. We want 
them to have more opportunity. The balanced budget has a chance to do 
that.
  Interest is on everything imaginable, from college tuition to your 
1st home or your 2d home, your 1st car or your 10th car. The interest 
rate is a burden. If it comes down dramatically, everybody gains, 
businesses flourish because it does not cost them as much to do 
business.
  So the big principles I have enumerated and the big effect is a 
better life for our children, getting rid of the legacy that we leave 
them now, which is, ``you pay our bills,'' to a legacy of ``we pay our 
bills. You save your money for what you need. You don't pay your hard-
earned money for what you didn't choose to pay for by way of programs 
we give to the American people that we cannot afford.''
  Mr. President, I thank the Senate for this time. I yield the floor 
and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DOLE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________