[Congressional Record Volume 142, Number 12 (Tuesday, January 30, 1996)]
[House]
[Pages H956-H959]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  GETTING OUR FINANCIAL HOUSE IN ORDER

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from Connecticut [Mr. Shays] is recognized for 
30 minutes as the designee of the majority leader.
  Mr. SHAYS. I thank the gentleman from Hawaii, and I thank you, Mr. 
Speaker. It is unusual to have a special order with such a seasoned 
veteran at the helm as Speaker. I thank you for your willingness to 
take this time from your busy schedule to allow the gentleman from 
Michigan [Mr. Upton], and myself to make a few comments about what we 
have been faced with and what we will be facing in the months to come.
  I would start by saying a lot of good people are leaving Congress, a 
lot of people I have tremendous respect for. One of their comments is 
they are leaving because it is not a fun place anymore; that there is 
some animosity between parties and among chambers. I was thinking, you 
know, the reason goes far more than that, because there is some 
disagreement that is quite significant.
  But I contend that some of my colleagues who are leaving are leaving 
when we need them the most and when the heavy lifting has really begun. 
In a way, they are escaping the responsibility for dealing with the 
crisis that has just been pushed for that next Congress to deal with.
  For decades we knew that we were getting ourselves deeper in a hole. 
At the end of the Vietnam war, if I went to 1974, the national debt was 
about $430 billion. That is the debt, not the deficits. That national 
debt has grown to $4.9 trillion, a tenfold increase since the last 
great war. We have a tenfold increase since the last great war in 
Vietnam. It was not called a war, but it clearly was a major 
expenditure on the part of the United States.
  So we fought the Revolutionary War, we fought the War of 1812, we 
actually fought the war with the pirates and their taking some of our 
sailors in the Mediterranean. We fought the Civil War, we fought the 
war with the Indians throughout the course of our history, the Spanish 
American War, World War I, World War II, Vietnam war, the Korean war, 
and we have a debt of $435 billion. Then what happened? That debt has 
just gone up almost exponentially in the last 22 years.
  I contend it has gone that way because both Republicans and Democrats 
have, for whatever reason, agreed that they would not give in on what 
they did not want to give in on. Democrats did not want to give in on 
the growth of entitlements, and some of my Republican colleagues did 
not want to give in on defense spending. They both agreed to deficit 
spend in the process. We find ourselves in a tremendously difficult 
situation with a lot of large debt, and now the heavy lifting begins.
  We are taking on a lot of special interests, because this Republican 
majority, candidly, wants to get our financial house in order. 
Ultimately we can only succeed if the President wants to be part of 
that effort. He should be an equal partner to it.
  The bottom line is we need to do some heavy lifting. So yes, this is 
not a fun place anymore. It is not a fun place because we are having to 
do some very significant effort.
  I will just make a few more comments before I yield to my colleague 
from Michigan. Prime Minister Rabin, before he died, made it very clear 
that he was elected by adults to represent the children. I think that 
is a good message for all of us, we are elected by adults to represent 
the children. If we are concerned about the children, we have to be 
concerned about the national debt and the kind of burden we are placing 
on our children and our children's children.
  So we are setting about to accomplish three major tasks: One is to 
get our financial house in order and balance our Federal budget in 7 
years or less; another is to save our trust funds, particularly 
Medicare, from bankruptcy. I know my colleague at the chair, 
representing Florida, is representing so many constituents who in fact 
are receiving Medicare. This fund is going insolvent, Medicare part B 
is going insolvent this year. More money is going out of the fund than 
coming in from the payroll tax. We want to save the trust fund from 
insolvency.
  The third thing we are eager to do is to transform this caretaking 
social and 

[[Page H957]]
corporate welfare state, it is just not welfare for the poor, it is 
welfare for corporations, and move it, transform it, into a caring, 
opportunity society, where everyone has an opportunity to succeed. It 
is not a hands-off, we do not care. It is a very much hands-on. But 
instead of giving the people the food, we want to give them the seed.
  In the process of doing these three things, getting our financial 
house in order and balancing the budget, saving Medicare from 
bankruptcy and transforming the social and corporate welfare state into 
an opportunity society, we are talking about change.
  In the process of this change, we have made a number of people who 
want the status quo, we are confronting them. I would contend rather 
than being critical of my colleagues, and particularly our freshmen, 
bless our freshmen's hearts, that we should be appreciative that these, 
many of them business men and women, said ``I ran for this job to get 
our financial house in order. If I lose the next election, so be it. 
This is not my life. My country is my life, my family is my life, God 
is my life. But being here is not my life.'' They are willing to risk 
defeat in the process of doing something right.
  So we have this special order just to talk about some of what we want 
to do and why we think it is so important.
  With and I yield to my colleague from Michigan.
  Mr. UPTON. Mr. Speaker, I thank the gentleman from Connecticut, my 
good friend, for yielding during this special order. I must say a 
couple of things to begin with. One of the things I have said a lot as 
I have gone around my district and around the State of Michigan and 
here in Washington too is in this Chamber, sometimes it seems as though 
we have too many Republicans and too many Democrats, and not enough 
U.S. Congressmen and women willing to make some tough choices. We have 
got to do that. I am 42 years old. You and I are about the same age.

  Mr. SHAYS. A little older.
  Mr. UPTON. But, you know, back in 1980 when I first came to this town 
and worked for President Reagan, the baby-boom generation, our 
generation, was 30 years away from retirement. The deficit then was a 
lot smaller, the national debt was a lot smaller. The amount of 
interest that we paid on that debt was about $50 billion.
  Today, 15 years later, 16 years later, we are now 15 years away, our 
generation, from the big retirement age, with all the entitlement kick-
ins and all of that, and we are not spending $50 billion on interest, 
we are spending $250 billion on interest, and the debt, not being $1 
trillion or so, is now actually over $5 trillion, and in 2 years, we 
will be spending more just on the interest, servicing that $5.5 
trillion national debt, than all of defense, foreign aid, Congress and 
the Intelligence budgets put together.
  We have got to make some tough choices. It is not easy to say no to 
some of these different groups that are coming in. The easy vote is 
always yes. Somehow in this Chamber, working with the administration 
downtown, because we do not have the votes, let us face it, to override 
a veto, we have got to work together and bridge the gap to get the job 
done.
  I have a 4-year-old and I have an 8-year-old, and a newborn child 
today is going to pay, their share of what we owe is $185,000 in taxes 
just to pay the interest on the national debt. Somehow I think that it 
should be incumbent on everyone in this Chamber, as we think about our 
kids and their kids and this country, to work together in a bipartisan 
fashion to do a number of things.
  First of all we have got to come up with a balanced budget. Why did 
our side pick 7 years? Because the markets, those folks running the 
markets say if it is not 6, 7, or 8 years, it is not going to be 
credible; you put it off in the future and no one will believe it.
  We need declining deficits each and every year. None of this stuff 
where you have a straight line deficit, and then the last 2 years it 
falls off to zero. They have to be real, and they have to come down in 
benchmark fashion each and every year.
  The other thing, we said this on our side and so has the President 
and the Democrats, is we have got to have an honest scoring mechanism, 
the Congressional Budget Office.
  I want to share a story. Back in 1990, when President Bush was in 
office, you probably went down there, as well as I did. In fact on the 
budget agreement in 1990, President Bush, I spent a lot of time with 
him. I worked with him. I worked with President Reagan, as I said 
earlier, for a number of years. His office was around the corner when 
he was Vice President, and my office, I was in charge of congressional 
affairs at the Office of Management and Budget.

                              {time}  1715

  President Bush called me down to his office and put his hands on my 
shoulders. He said: Fred, you can vote for this. You are going to get 
reelected. I have been to your district. I know you. You are going to 
win your race, and I need your vote for this. This is so important. We 
have the gulf war coming up, and we need to get this off the table and 
get this country on a sound fiscal basis.
  And I said: Mr. President, I cannot vote for this because I did not 
run for office, and I do not feel in my heart that I can vote to 
increase spending and increase taxes, and that is what your budget 
does.
  And as I look back at those numbers, back then, in 1990, in my notes, 
his statisticians told him if his budget passed, and it did, we would 
have a surplus in 1995 of $63 billion. Well, they are off only by $250 
billion.
  Mr. SHAYS. Mr. Speaker, if the gentleman would yield, I have the 
other side of that story.
  Mr. UPTON. Mr. Speaker, we cannot allow those phony assumptions to 
come into place. That is why, as we make the tough decisions today, 
Medicaid, Medicare, what size of the tax cut, if any, that ought to be 
there, all the tough choices, we do not want to go through this drill 
again and come up $250 billion off when we say it is going to be 
balanced.
  Mr. SHAYS. Mr. Speaker, if the gentleman would yield, I happen to 
have voted for the 1990 budget. I voted for it because I was willing to 
even vote for a tax increase where there was a slight tax increase to 
balance the budget. But I used those numbers that were done not by the 
Congressional Budget Office, but by the Office of Management and 
Budget, and they were basically the President's numbers. They were 
basically Dick Darman's numbers, the head of the budget office, and 
they simply turned out to be extraordinarily unrealistic.
  I vowed that I would never ever again be unmindful of how the numbers 
were calculated, and that is why we want the President to be willing to 
use basically conservative numbers, certainly not numbers that just 
estimate ourselves out of the problem. What I did like about that 
budget agreement, and I think my colleague would agree it was an 
important part, Gramm-Rudman, which was a 5-year plan to get to a 
balanced budget and sequestered funds. In other words, if one did not 
reach one's deficit target, there would be automatic cuts. It only 
dealt with one-third of the budget. Appropriations. Half of the budget, 
though, are entitlements.

  This gets me into the whole point of the challenge of balancing the 
budget. Our first task is to balance our Federal budget, and get our 
financial house in order. We cannot do it just looking at 
appropriations. I think my colleague in the chair would recognize that 
we have been squeezing what we call discretionary spending. We have 
been cutting back traditional government, but we have allowed the 
entitlements, in other words, someone who fits the category gets the 
money, Medicare, Medicaid, welfare, foods stamps and so on, certain 
agricultural subsidies. Fit it and get the money. That is on automatic 
pilot. It continues each and every year.
  What the 1990 agreement did, one of the good parts, it said, if we 
increased the entitlement, we had to come up with the dollars to pay 
for it, either with a tax increase or a spending cut. What Congress had 
done to get around Gramm-Rudman was we squeezed the discretionary 
spending coming out of the Committee on Appropriations, and they 
increased the entitlement. They did not get it through an annual vote 
of Congress; they did it through a mandatory expenditure.
  We are taking on entitlements. We are not cutting them. We are 
slowing the growth. One of the big criticisms is that we are doing cuts 
to the earned income tax credit, a very important program for the 
working poor. They pay 

[[Page H958]]
no taxes because they do not make enough. The Federal Government gives 
them something back to get them to get beyond that working-poor status.
  We want to slow the growth of that program because under existing law 
that would go to $35,000. We want to keep it around $30,000, and we 
want it to apply to families and not to single individuals in 
particular. But we still allow that program to grow from $19.9 billion 
to $25.4 billion. That is an increase in spending; not a cut. We are 
changing the program but we are increasing spending.
  The School Lunch Program, which was something that has always 
distressed me, and I bring it up when we have the opportunity, the 
President is going to schools and telling young children that they are 
not going to have a school lunch, when we are going to go from $5.2 
billion to $6.8 billion. That is not a cut; that is an increase. We are 
allowing it to grow about 4.5 percent a year instead of 5.2.
  Mr. UPTON. Mr. Speaker, as I understand, it was a $200 million 
increase each year for 5 years.
  Mr. SHAYS. Mr. Speaker, whatever the numbers ultimately that have 
come through the addition of negotiations in the budget agreements that 
happened since, the bottom line is that we were spending hundreds of 
millions of dollars more each year and to get up to $6.8 billion in the 
7th year.
  The student loan is the one that really gets me the most. We are 
going to allow that to grow from $24.5 billion to $36 billion. That is 
a 50-percent increase. It is not a cut; it is an increase.
  We do something. We are saying to students they have to do something 
they have not done in the past. Present law is, when they graduate, for 
6 months they pay no interest. The Government, taxpayers, pay the 
interest. Then what we have said is no, students will pay the interest 
not when they are in school; they pay no interest when they are in 
school. They will have a 6-month grace period when they pay no return 
on the loan. But 6 months on, they start to pay the loan back, and we 
amortize the interest as soon as they graduate. It is a 6-month period.
  Ultimately, we are saying, yes, students are going to pay more. They 
still get the same loan. They are going to pay $9 more a month. It is a 
movie and a Coke. It is a pizza. The bottom line is, it is something 
that a working person now, having graduated, can pay. It saves the 
taxpayer $4 billion in the course of 7 years. We still allow that 
program to grow, though, notwithstanding, from $24.5 billion to $36 
billion.
  Mr. Speaker, just take two more numbers, and then I would like to 
yield back to my colleagues. On Medicare and Medicare, our numbers were 
$89 billion; they grow to $127 billion. Only in this place, and in the 
Senate, maybe at the White House, not maybe, but at the White House, 
really in this city, when we spend so much more, do people call it a 
cut.
  Or in Medicare from $178 billion to $289 billion in the seventh year. 
This is the number that really gets me. We are going to allow for a 
significant increase in Medicare on a per beneficiary, per elderly 
citizen, they get an equivalent of $4,800. In the seventh year that is 
going to grow to $7,100 per beneficiary. All of our constituents, that 
is what they will get. Hardly a cut. A very definite increase.
  We are looking to, what? Control the growth in spending. We spent $9 
billion in the last 7 years. We want to spend $12 billion in the next 
7. We just do not want to spend $13.3 billion. We want to slow the 
growth in spending.
  Mr. Speaker, I would like to yield to my colleague, and then I notice 
my colleague from Delaware has come, and we can perhaps yield to him.
  Mr. UPTON. Mr. Speaker, it was about a year ago that this House first 
took up some of the contract items and passed a number of things the 
first day and the first month, certainly. As I recall, one of the 
things that we passed on the very first day was a change in the House 
rules to allow for honest budgeting.
  As my colleague pointed out, school lunches are going up at least 
$200 million each and every year. I can hardly wait next fall to go to 
the schools where they believe that school lunches are going to be over 
and sit down and have lunch with my fourth and fifth graders and say, 
``Oh, my gosh, we are still having lunch.''
  I signed some mail today, people complaining about Medicare cuts. It 
is going up any way you look at it, 50 percent over 7 years in the plan 
that we passed and the President vetoed. And it is going up on a per 
beneficiary basis by $2,100.
  But I thought it was in this House that it passed almost unanimously, 
not quite, 390-something to 12 or something like that, to use honest 
budget numbers. And what that meant to me was that we were not going to 
start looking at these things as cuts, unless they actually went down. 
Is it a violation of the House rules to talk about cuts when in fact 
they are going up?
  Mr. SHAYS. Mr. Speaker, the way this started, we are talking about a 
baseline, and we figured in inflation. Then we said last year, even 
though we spend more, it is not an increase in spending.
  I remember when I was first elected in 1987, I would go back home and 
say, ``We cut spending here and here and here,'' and my constituents 
would say, ``If you cut spending, how come the spending keeps going 
up?'' That was a very logical question, and I realized I was using that 
concept of a baseline budget.
  Mr. UPTON. Mr. Speaker, we changed the House rules, but we are not 
living up to them. Maybe we should get the mace out.

  Mr. SHAYS. We are trying to. It is a different kind of mace. It is 
the mace you hold.
  But bottom line, Mr. Speaker, we want to get our financial house in 
order and balance the budget.
  I get into this whole issue of Medicare, which is really trying to 
save our trust funds. There is not a Member of Congress who does not 
represent a number of seniors, and we have had to talk to our 
constituents about this issue. It has been very interesting to me 
because what they want, we are giving them.
  I, as a Member of Congress, pay 28 percent of my health care like any 
other Federal employee. I do not get anything other than any other 
Federal employee. I pay 28 percent, and the Government pays 72 percent. 
The wonderful thing is that we get choice. What do we do with Medicare 
is we do not increase the copayment or increase the deductible. We keep 
it at 31.5 percent; the taxpayers pay 68.5 percent, and we give choice. 
We allow recipients to join plans where they might get eye care, dental 
care, hearing aid assistance, where they might have their copayments 
paid for by an HMO if they choose to join an HMO, but they can stay 
where they are.
  Mr. UPTON. Mr. Speaker, I would note that there is no decline in 
benefits. They cannot say no, they cannot blackball one from enlisting 
in any of the programs, and benefits cannot be cut. One has got to have 
at least a standard benefit package that is there today. It can only be 
broadened, not lessened.
  Mr. SHAYS. The bottom line is the only private plans that can be 
offered are plans that offer something better, the same or better. But 
in order to get people into those private plans, they will have to be 
better; otherwise the people will stay in the fee for service.
  Mr. Speaker, at this time I yield to the gentleman from Delaware [Mr. 
Castle].
  Mr. CASTLE. I thank the gentleman from Connecticut [Mr. Shays] for 
this opportunity to just address for a few minutes the issues of 
budgeting and balancing the budget here in Congress.
  One point I thought of as I was on my way over, and I hope my 
colleague did not make it because I was on my way over, is that there 
are so many Members of this House of Representatives, and actually the 
U.S. Senate as well, who are focusing on balancing the budget. It is 
not just John Kasich, God love his soul. He is a wonderful person. Or 
Newt Gingrich and a few others. There are groups of moderate 
Republicans that we might belong to. There are groups of Blue Dog 
Republicans and Democrats that are conservative Republicans and 
Democrats. There are all kinds of groups in this Congress who realize 
how important it is, and I think sometimes we do not state that enough.
  There is a view that maybe one or two leaders are trying to drive the 
need to balance the budget. The freshman class of the Republican Party 
has taken some lumps, but they came down 

[[Page H959]]
here with a concept to make Government more efficient. I think they 
deserve tremendous credit for that.
  Then I hear the pundits and a lot of critics out there saying, well, 
Congress can never balance its budget because of entitlements and 
because of interest payments and various reasons. I say that is 
absolutely wrong.
  I come from Delaware, and for 8 years Pete du Pont was Governor of 
Delaware. He was the one who made up his mind that we could balance the 
budget in Delaware. We had not done that, and then we did it. I was 
Governor for 8 years, during that period of time, and it continued on 
with Tom Carper, the Democratic Governor of the State of Delaware. We 
not only balanced our budget; we have had a series of tax cuts, and we 
have two rainy day funds on top of each other. We take care of almost 
every possibility in terms of being able to keep in balance from year 
to year, and I am absolutely convinced that it can be done.

  I would tell my colleagues that there is a lot of protection, not 
just in this Congress, but by constituent groups on the outside, and 
particularly by the press, who try to protect the status quo. They do 
not welcome true innovation or change.
  In just one area of tremendous concern, people will say to us, why do 
not you cut your salaries, and you can balance the budget? That is 
100th of 1 percent of the budget. Or cut foreign aid. That is a small 
percent.
  But get into Medicaid and Medicare, which is the fastest growing 
segment of the budget, 17 or 18 percent collectively between them now 
in the budget of the United States, and there is an area which has 
grown from zero about 30 years ago to where it is today, which is 
growing faster than everything else which we need to address.

                              {time}  1730

  I do not know of any Member of Congress, if these seats were all 
filled, who would not say ``I want health care for the poor and I want 
health care for our senior citizens.'' We all feel that way.
  So the question is, how can you reduce those expenditures in those 
particular programs but still provide the health care. There is a very 
simple lesson. Look at today's newspapers. Today's newspapers brought 
us the news that there was a slight increase in the cost of health care 
to the private insurers last year. I think it was about 2 percent or 
something. When you had HMOs, it was actually a decrease in the amount 
they spent. When you had regular health care, it increased by about 2.5 
percent or something of that nature. Yet, we have these Government 
programs which are still going up at the rates of 10 percent or 11 
percent or 12 percent. That is well beyond population growth.
  The truth of the matter is that we deliver health care at the 
Government level exactly the way we have done all along, and perhaps we 
should innovate. There are innovations out there. There are HMO's. The 
medisave account is something which could work. We do not know that for 
sure. But if you are doing what some people have talked about doing 
here, I am sure they are going to cut into health care, and they might 
do some of the things you are talking about.
  You can get your prescription eyeglasses, perhaps, or your 
pharmaceuticals which you need as part of the plan you get into because 
we let people expand and go to a market-based system. I am convinced we 
can do this same thing with welfare. We have done this in Delaware. We 
have basically told people they have to start going to school, that 
they had to get a job after a period of time. They started going to 
school.
  I thought it was going to be a very difficult thing to do. We went 
down and visited these people, and they were perhaps the most contented 
citizens I visited in the whole time I was Governor. They were being 
given an opportunity. One-third of those people are working today, and 
one-third are off of welfare altogether as a result of that. That is a 
pretty good result. I would like it to be a 100 percent, we all would, 
but that is a pretty doggone good result.
  But I think there are ways in which we can come up with creative and 
good opportunities for people to improve their lives and still provide 
the same services we have today, but do them in a different way, and 
balance our budget. Yes, we have to work at it, but there are a lot of 
experts in this room. I think given that opportunity, that could 
happen, and we could really do what we have to do, which is to balance 
the budget in 7 years. It is tough, but is not impossible. We should be 
doing it.

  Mr. SHAYS. Mr. Speaker, the bottom line to this is that people have 
said, ``Well, we got into this over 30 years. It should take us 30 
years.'' No, we got into debt in 1 year. We are not looking to pay back 
the debt. We were simply saying, ``Let us not make the debt any 
larger.'' So we have a 7-year plan. Frankly, a number of us here have 
said, ``Let us balance the budget sooner with no tax cut,'' but the 
issue is ultimately balancing the budget, getting our financial house 
in order.
  Mr. Speaker, we are not paying back that debt, we are simply saying, 
``Let us not make the debt any larger.'' When you talk about the 
innovation, we have seen extraordinary innovation on the State level. 
You were a Governor for 8 years. I can remember that we looked at how 
you did it when we were in the State of Connecticut, because Delaware 
was doing innovative programs. We looked at what Tennessee is doing and 
what Arizona is doing with managed health care for nursing care and so 
on.
  Why is it that the working American basically is under managed care, 
but the elderly, who are under taxpayer expense, and the poor, who are 
under taxpayer expense, are under the traditional old system of fee-
for-service? We are still going to allow them to have fee-for-service, 
but we are eager to encourage them to get into plans that save money 
and are more efficient and provide better service.
  Mr. Speaker, we could talk about a lot of issues, and we are 
basically, I think, running out of time in the next few minutes. We 
have about 3 minutes. I would be delighted to yield to my colleague, 
the gentleman from Michigan.
  Mr. UPTON. I would just like to make this point, Mr. Speaker. As I 
look at my State of Michigan, a few years ago we had a debt of about 
almost $2 billion, which is a lot for any State. Our Governor and our 
legislature went after spending, tightened everybody's belts. Today 
they have cut taxes 23 times in the last 3 years. We can do the same 
here, but we have to focus on the spending side. We have to do 
something about deficits that average somewhere between $150 billion 
and $250 billion over the last couple years, and we have to do it 
together. That means this side of the aisle and this side of the aisle 
working together to get the job done, and really get the budget 
balanced.
  Mr. CASTLE. If the gentleman will continue to yield, just briefly, I 
could not agree with the gentleman more. I worry a little bit when I 
read in the press that some of the leadership here in both houses and 
even the White House are beginning to say, ``I do not think we can get 
to a balanced budget.'' I certainly have not given up on that. I think 
this is the time to do it.
  People do not realize how close we are. We have really narrowed the 
differences. Yes, there are some policy differences that need to be 
resolved as well, but from a numbers point of view, we are as close as 
they have ever been to do this. I think to give up on it now would be a 
huge mistake. I hope we push hard in the remaining weeks of this spring 
and hopefully get this done sometime before we go too much further into 
the fiscal year.
  Mr. SHAYS. I thank my colleague for making this point. The bottom 
line is we have an extraordinary opportunity. We want to seize this 
opportunity and we want to work together with the President, who came 
in with a very conciliatory message, I thought, and with our colleagues 
on the other side. But we want them to be real numbers, we want there 
to be structural change in the program. We want to save this country 
for future generations.

                          ____________________