[Congressional Record Volume 142, Number 29 (Wednesday, March 6, 1996)]
[House]
[Pages H1759-H1766]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          BALANCING THE BUDGET

  The SPEAKER pro tempore (Mr. LaTourette). Under the Speaker's 
announced policy of May 12, 1995, the gentleman from Maine [Mr. 
Longley] is recognized for 60 minutes as the designee of the majority 
leader.
  Mr. LONGLEY. Mr. Speaker, it is a privilege to be here in the House 
this afternoon, and I would like to discuss one of the aspects of the 
budget debate that I think we have not been paying enough attention to, 
and that is that, and I know that there is a great deal of concern 
amongst the public in terms of what is really happening in Washington, 
and I guess I have got some reassuring news.
  The reassuring news in that I think this Congress has succeeded in 
stopping the spending train in Washington dead in its tracks, and in 
all honesty I wish that we could have done it in, perhaps, a cleaner 
and a more polished manner.
  But I would like to offer a little bit of historical perspective on 
some of the difficulties that we have been facing, and what this 
Congress really means, particularly in comparison to prior Congresses, 
and what prior Congresses have attempted to do to control spending, and 
I would like to go back to 1975.
  1975 was the year that my father was elected Governor of Maine, 
Governor Longley. He was an independent, and I had just graduated from 
college, was doing some volunteer work, not only in his campaign, but 
later in his term of office, and at that point first became personally 
aware and met many of the members of the Maine congressional 
delegation, which at that point, in 1975, included Senator Muskie as 
well as Senator Hathaway, both very well respected Members of the U.S. 
Senate, also Congressman Emery and Congressman Olympia Snowe of Maine 
who were representing the State of Maine in the House of 
Representatives. And knowing and having met these individuals on a 
personal basis was, of course, a very special experience for myself as 
a recent graduate of college and as a law student, and I took 
particular notice of the fact that at that time the Congress was 
grappling with the issue of the Federal budget.
  In fact I believe it was 1975; it was very significant in the sense 
that Congress passed the Budget Reform Act which was attempting to 
address what was then viewed as a systemic problem in the Congress, in 
the U.S. Government, in terms of how we really dealt with managing the 
spending of the Federal Government, and in that year we created the 
House Committee on the Budget in the House of Representatives, in this 
Chamber, and we also created the Senate Budget Committee, and 1975 also 
marked the establishment of the Congressional Budget Office which was 
to be a special office of the Congress that was going to be geared to 
address fiscal issues in this country and provide honest advice, 
nonpartisan advice, to those of us here in Washington who were 
attempting to deal with the issue of how to control Federal spending.
  I mention that because at that point the Federal debt was somewhere 
below a trillion, possibly about a half a trillion dollars, and yet is 
was still viewed, the national debt was still viewed, as a serious 
potential crisis, and the level of federal spending and the deficits 
were also viewed as a crisis.
  Now mind you that was almost 20 years ago, but as a country we had 
accumulated a record of unbalanced budgets, of running deficits, that 
were exceeding the prior 30 or 40 years.
  I believe that presently, here in 1996, I have been advised that we 
have only balanced our Federal budget in 9 or 10 of the last 60 years, 
and clearly we have almost 50 years, going back 60 years where we did 
not balance the budget, and so 20 years ago, to put this in context, we 
had acquired a record of unbalanced budgets, felt it was a serious 
crisis, needed to act on it. And again I need to underscore that that 
was 20 years ago.
  I had another personal connection in this issue, and that was that 
the following year, in 1976, Governor Longley was appointed as one of 
the first national cochairmen of the Committee for a Balanced Budget 
Amendment, and so against a member of my family, somebody that I love 
very much was given this responsibility of calling the country's 
attention to the crisis that our budget deficits represented.
  Now I mention that as backdrop to the fact that I asked Greg Winter 
of my staff to go back and look at the major congressional actions 
taken to

[[Page H1760]]

deal with the budget crisis and give me a breakdown of the different 
acts and what they might represent, and I am stunned to discover that 
going back just to 1980 there have been 16 major pieces of legislation 
designed to deal with the Federal budget crisis.
  In 1980 we passed, the Congress passed, the Omnibus Reconciliation 
Act. 1981, we passed the Omnibus Budget Reconciliation Act. In fact 
that title became so popular that we later passed six additional acts 
with that same title over the last 15 years. And of course in 1982 we 
had the Tax Equity and Fiscal Responsibility Act. It is famously known 
as TEFRA to nearly every accountant in the United States. 1983, we 
passed Social Security amendments again designed to deal with 
controlling the growth of spending particularly in the Social Security 
System and to bring the revenues at that point which were under threat 
based on the increasing payments, it was felt 12 years ago that we 
needed to act to protect the integrity of Social Security. 1984, we had 
the Deficit Reduction Act, and then in 1985 we had the Balanced Budget 
and Emergency Deficit Control Act. In fact some of these titles 
actually become somewhat ridiculous. We have the Omnibus Reconciliation 
Act of 1986, and then the following year, in 1987, the Balanced Budget 
and Emergency Deficit Control Reaffirmation Act.
  In fact in audiences, as I have spoken to audiences in my district, I 
have joked that the only thing that we have missed in the last 18 years 
is the words really, really, really serious about balancing the budget 
act, and the underscores, I think, a great concern that many of us 
have, and I know that the public and certainly this Member feels very 
strongly that we need to work together, Democrats and Republicans, to 
deal with this important issue. Balancing the budget should not be a 
partisan political issue.

  But I also have to say that there comes a time when you must focus on 
what your objectives are, and unfortunately partisan fights do arise 
and occur, and maybe sometimes for good reason, but I would point out 
that in looking at these 16 pieces of legislation that were passed that 
each of the parties at different times supported 12 of the 16 acts, and 
on 8 instances majorities of each party in this Congress supported the 
acts, which basically means that both majorities, of both the Democrats 
in the Congress and Republicans in the Congress, passed or supported 8 
of the 16 acts, and, as I indicated, the Republican Party per se 
supported 12 of the 16 pieces of legislation, and the Democrats 
supported, again also supported, 12 of the 16, and in 8 of those years 
they were in agreement in passing these bills.
  Now what was the problem? Well, I think, first of all, the focus was 
on the deficit, and when you get right down to it, I think that one of 
the lessons that we have learned in the last 2 years is that the 
deficit per se is not the issue. The deficit is the symptom; spending 
is the issue. And controlling spending has become, I think, a priority 
in this Congress.
  But something else is important to understand. Many of these pieces 
of legislation contain fiscal notes that called for in some cases 
revenue increases, in many cases spending cuts. But when you look at 
the actual numbers, the fact of the matter is that in no single year 
over the last 16 years has the Federal Government ever reduced 
spending, and by that I mean actually spent less money in 1 year than 
it had spent in the prior year.
  And the message is clear, that spending has continued to increase 
unabated for the last 16 years, despite the fact that we have had 16 
major pieces of legislation designed to deal with reducing spending so 
that we could get spending in line with revenues and work towards 
balancing the budget.
  The point that I would like to make, and I see that Representative 
Neuman has come into the Chamber, and I would just end with this one 
comment and then perhaps ask for some comments from the gentleman from 
Wisconsin, Mr. Neumann. But the point that I would make is this:
  I think many of us who were just elected to this body realize in 
hindsight that this Congress, albeit well intentioned, was focusing on 
the wrong aspects of the problem and was attempting to deal with the 
symptom; i.e., the deficits, and not the fundamental problem which was 
overspending; and the second recognition that we all have is that what 
we have seen truly is a failure of will, a failure of Congress to 
insist on the measures that were necessary to actually bring revenues 
in line with expenditures, and I would suggest that one of the major 
mistakes that we want to avoid, that this Congress wants to avoid, is 
that it would be very easy for us to enter into a look good, feel good 
agreement with the administration on a budget, and we could all hold 
news conferences and pat each other on the back. But unlike prior 
congresses, none of us wants to be in a position where in 10 or 20 
years we find out that our children are really paying the bill.
  And I notice that the gentleman from Wisconsin, Mr. Neuman is here, 
and, Mark, welcome to this special order.
  Mr. NEUMANN. I will just carry on a little bit on just what you were 
just saying here, that when I go home to our district, and I turn on my 
TV set, and I hear about cut, cut, cut, cut, and then I come back out 
here to Washington, and I take a look at the numbers, and the numbers 
are not going down, they are going up in spending; spending today is 
about $1530 billion or about $1.530 trillion, and by the year 2002 that 
spending is slated to go all the way up to 1.8 or $1,835 billion.
  So when people talk about these spending cuts, I think it is 
important to note that they are not cuts in spending. What they are is 
reductions in the amounts of increases, and in fact, as you can see 
looking at these numbers in the spending line, we have got spending 
increases of $350 billion from the year 1995 to the year 2002. Spending 
is continuing to go up. And you are right on the money with what you 
are talking about, that the real goal here needs to be to get the net 
revenues into line with the amount of spending that we are doing. That 
is how you get to a balanced budget.

                              {time}  1700

  The way to get a balanced budget is to control the amount of money 
that you were spending out here. In fact, that is what the Republican 
plan would have done had it been signed into law by the President. Of 
course, it was most recently vetoed. I think it is real important to 
know that that spending and bringing that spending into line is what is 
absolutely essential.
  Again, when we look at this chart, we see revenues of 1.356 or $1,356 
billion today, going all the way to 1,841. The problem with charts like 
this one I have in my hand here is there are so many numbers in my 
charts that we lose sight of what this really means. What this really 
means, it is not about these numbers. It is about the next generation 
of Americans. It is about our children, it is about our grandchildren.
  If we do not accomplish this, the picture is not very bright for our 
children. But if we manage to bring this about, it opens all kinds of 
opportunities for our children that absolutely were not there before. 
Balancing the budget, according to Alan Greenspan, means a 2-percent 
reduction in the interest rates. That means our children, that means 
young Americans, get to buy homes and get to buy cars.
  Mr. Speaker, what a lot of people forget when they go down this road 
of discussion is that when these young people buy homes and when they 
buy cars, somebody is going to be building those homes and somebody is 
going to be putting those cars together and building those automobiles. 
That means jobs. So we are not only talking about the ability for them 
to live the American dream, to own their own home, we are really 
talking about them being able to live the American dream and have a job 
that allows them to work and provide for their families. This is truly 
the opportunity to achieve the American dream.
  This is absolutely essential. These numbers are nice, but it is not 
about numbers. It is about our children and the opportunities they have 
here in America. It is about keeping our jobs here at home instead of 
watching them to overseas. It is about the job opportunities and the 
opportunities to live the American dream. That is what this chart is 
really all about.
  Mr. LONGLEY. That is very important.
  Mr. Speaker, I yield to the gentleman from Connecticut [Mr. Shays].

[[Page H1761]]

  Mr. SHAYS. I thank the gentleman for making sure we kept this time.
  Mr. Speaker, this is an extraordinary opportunity that we have to 
just really clarify certain issues and just make sure that we are all 
focused on our ultimate objectives. We want to get our financial house 
in order and balance the budget, and we want to save our trust funds, 
particularly Medicare, from bankruptcy. We thought they were going to 
start to go insolvent and be bankrupt in the year 2002, if we did not 
do anything. Now we learn it started to go insolvent last year, and 
will be bankrupt just at the turn of the century, so we have some heavy 
lifting to do to save our Medicare plan for seniors, even present-day 
seniors.
  Then that third issue, and it all relates, we want to transform this 
caretaking social, corporate, even farming welfare state into what we 
would call a caring opportunity society. We want to help people kind of 
grow the seeds instead of just hand them the food.
  Mr. Speaker, the gentleman related it so well to our children. It is 
amazing to me that in the last 22 years we have allowed the national 
debt to increase 10 times, from about $430 billion in 1974 to about 
$4,900 billion; just 22 years in a time of relative peace. There it is. 
It is growth out of control. In that case you are doing it from 1960. 
But if we notice the number of 1975, down there, it just starts to go 
up at an alarming rate.
  I think former Prime Minister Rabin, who was assassinated, he was a 
politician, and he used to enjoy telling people and reminding all 
politicians around the world that elected officials are elected by 
adults to represent the children. We are going to be judged on our 
success on what kind of world we leave our kids. The kind of world we 
are leaving our kids is not a hopeful one unless we get this incredible 
runaway debt in line.
  I thank you for letting me share this time with you which you have 
claimed, and I am grateful you have.
  Mr. LONGLEY. Mr. Speaker, I would just add to that particularly with 
reference to the chart of the gentleman from Wisconsin, [Mr. Neumann,] 
that what we do not hear our attackers saying, and we hear an awful lot 
about, for instance, how much money we are going to be spending on 
medical care for our senior citizens, and believe me, that is a very 
important priority; but what our attackers do not acknowledge is that 
there is one program for which we will pay more money in the next 7 
years than we will spend on medical care for our seniors. That is 
interest on the Federal debt.
  I think that the public would be absolutely amazed to learn that we 
will spend more money on interest on the Federal debt in the next 7 
years under any of the programs being discussed than we will spend on 
medical care for our seniors. That is how critical the issue has 
become.
  Mr. Speaker, I notice the gentleman from Georgia. [Mr. Kingston], has 
arrived, and I yield to him.
  Mr. KINGSTON. I think it is important to follow up that comment, Mr. 
Speaker, in saying that that interest does not pay down one dime of the 
principal, that people will still continue to pay all the other taxes 
involved in it. The gentleman from Wisconsin [Mr. Neumann], has said 
that two reasons, real quickly, to balance the budget is it saves 
America from economic disaster. We are paying almost $20 billion each 
month in the interest on the debt already. Nations cannot survive with 
that much debt service.
  No. 2, the gentleman had said that there is a great interest or 
dividend in terms of the homeowner. If you have a 30-year home mortgage 
for a $75,000 house, a 2-percent drop in interest rates, which is what 
the Federal Reserve would estimate balancing the budget would bring 
permanently, bringing lower interest rates permanently, that would mean 
$37,000 less that American homeowners would pay on that mortgage. If it 
is a $15,000 car loan, American consumers would pay $900 less.

  One thing that the gentleman from Wisconsin [Mr. Neumann] did not 
mention, a third reason you want to balance the budget is because it 
will lower your taxes. Middle-class America right now has gone from 
paying about 5 percent Federal income tax in the 1950's to, currently, 
24 percent. In all State, local, and Federal taxes, middle income, it 
is about 45 percent for Americans now. If President Clinton had not 
vetoed our bill this April, this April, 6 weeks from now, Americans who 
have children would have $500 in their wallet.
  Mr. SHAYS. Per child.
  Mr. KINGSTON. In their wallet, right here. I do not know how many 
American families would benefit from that in Maine or the other States, 
but I can promise you, in Georgia it would mean a tremendous amount. 
That is real money. The gentleman from Wisconsin [Mr. Neumann] said let 
us get off the chart. That is what we are talking about, a $500 per 
child tax credit in your wallet today.
  Mr. SHAYS. If you had three children you would get $1,500. It is 
important to point out, we did not just have a tax cut without paying 
for it. The way we pay for it is cut government spending or slow the 
growth of some programs in order to afford to reduce taxes by probably 
about $180 billion by the time we ultimately have an agreement with the 
President. If we do, it is in that range, we want it about $240.
  That $140 billion was paid for by reducing government more so we 
could afford that tax cut.
  The thing that just simply amazes me is we have some of our 
colleagues who say, ``I want to balance the budget, but I do not want a 
tax cut for the wealthy,'' quote unquote. The irony of that is that our 
$500 tax credit is going to families who make less than $75,000. That 
is the bulk of our tax cut. They are hardly wealthy people.
  But they say they do not want that, as if they want to balance the 
budget. The crazy thing is they want to still balance the budget in 7 
years without a tax cut, so it means that they are going to spend the 
money that we save for a tax cut, they are going to take and spend it 
for more government. So they are not balancing the budget any sooner. 
They are just making government larger than we would make it.
  Mr. NEUMANN. Mr. Speaker, if the gentleman will yield, I think that 
point is so important. I have found that to be such a big 
misconception, talking to folks here in Washington versus talking to 
folks at our town hall meetings back in Wisconsin. The people back in 
Wisconsin think if we do not do the tax cuts, that means we will borrow 
less of our children's money and get to a balanced budget sooner. If 
that were the case, I would sure listen to that argument.
  But that is not what is being talked about here in Washington. That 
is Wisconsin. Out here in Washington what we want to do or what is 
being discussed is getting rid of the tax cuts and spending the money 
on more bureaucratic programs here in Washington. That I am opposed to.
  If we talk about what the Wisconsin people think we maybe ought to be 
thinking about doing, and that is getting to a balanced budget sooner 
and borrowing less of our children's money, that is a good 
discussion. But that is absolutely not the discussion going on out here 
in Washington. The discussion out here is totally centered around if we 
do not do the tax cuts, then we get to spend more money, like somehow 
that money belongs to us. That is not our money. That is the American 
taxpayers' money. It is our children's money that we are borrowing 
here. It is not our money to spend.

  Mr. KINGSTON. Mr. Speaker, if the gentleman will yield, one thing 
that is very important for us to remember, and I believe all four of us 
here worked for that lockbox provision in an appropriations bill that 
said when you reduce spending by x amount of dollars, that money goes 
to deficit reduction, rather than just being unearmarked and open for 
the general budget to spend any way you want.
  What is so important about that is the Washington liberals and the 
administration fought that lockbox provision, and now we have been 
unable to pass that. It passed out of the House, but we cannot get it 
out of the Senate because of the Washington liberals fighting it.
  That is the very thing people in Wisconsin are saying. If you are 
going to put that $500 directly into deficit reduction, that is one 
thing, but we know what it is going to do is to feather the bed of 
another bureaucracy, and another bureaucrat is going to spend it.
  Mr. LONGLEY. Mr. Speaker, this goes back to a point that I attempted 
to make before each of the Members arrived on the floor.

[[Page H1762]]

  Mr. SHAYS. You mean while we were running to get over here, when you 
took over the floor?
  Mr. LONGLEY. I had gone back, actually, and I had mentioned 1975 and 
Senator Muskie's appointment as chairman of the Senate Committee on the 
Budget, and that was the year the House Committee on the Budget was 
established and the Congressional Budget Office was established, 
because 20 years ago we viewed the debt and spending as a serious 
problem, and we created special committees to deal with it. Yet, 20 
years later, we are still struggling with the same issue.
  Mr. SHAYS. In fact, it has gotten much worse.
  Mr. LONGLEY. What has been amazing to me is, as I mentioned, from 
1980 forward, there have been 16 major pieces of legislation. Most of 
this legislation passed on a strong bipartisan basis. I do not say this 
to be critical.
  Mr. SHAYS. What was this legislation intended to do?
  Mr. LONGLEY. To reconcile spending.
  Mr. SHAYS. It is more process-oriented?
  Mr. LONGLEY. The Omnibus Reconciliation Act. There were seven omnibus 
budget reconciliation acts. We had a Balanced Budget and Emergency 
Deficit and Control Act. Then we later had a Balanced Budget and 
Emergency Deficit Control Reaffirmation Act. We literally had 
everything except the we are really, really, really serious about 
controlling spending act.
  I just checked this afternoon the yearly rates of increase in Federal 
spending in the 1980's. I say this, whether we are Republican or 
Democrat, let us deal with the facts. The facts are that spending 
increased at tremendous rates during the 1980's. Yet, at the same time, 
we had Congress working together on a bipartisan basis, probably 
everyone believing they were trying to do the right thing, but what 
they were trying to do is, frankly, nibble around the edges of the 
problem. We were tinkering with Social Security, we were tinkering with 
retirement programs, we were tinkering with details of the bureaucracy. 
We were talking about spending cuts, but yet, my research tells me 
there is not a single year in the last 20 years, if any even in the 
history of this country, where the Federal Government has spent less in 
1 year than it has spent in the prior year.

  Mr. SHAYS. Really what the gentleman is describing, if the gentleman 
will yield, he is describing a situation where people think we have a 
revenue problem, and we know that we have a spending problem. Revenue 
keeps going up every year. It is just that our spending is going up by 
a greater amount.
  Mr. KINGSTON. I think it is also important, Mr. Speaker, that as an 
outsider, I am relatively new to Congress, but it looks to me that 
every time Congress has made a deal in a bipartisan fashion, the tax 
increase came at the beginning of the deal and the savings or the cuts 
came later, and then that was the time for a new Congress to come in, 
and the cuts never happened.
  Mr. LONGLEY. It is even worse than that, I would say to the 
gentleman. The revenue increases always happen. The spending cuts, 
reductions, never happen. There had never been a cut in Federal 
spending in the last 15 years. The Federal Government has consistently 
spent more money each year than it did in the prior year. All of the 
talk about spending cuts or spending reductions was part of the 
hypothetical wherein you created an artificial level of increase, then 
said you were going to reduce the artificial increase, but you did not 
tell people that you were not cutting, you were still increasing 
spending.
  Mr. SHAYS. If the gentleman will yield, this is just an exact 
circumstance. When I was first elected in 1987 I kept hearing that we 
were cutting spending, and we actually had bills that said we were 
cutting spending. I would go back to my district and say, ``We cut so 
much.'' At one community meeting someone said, ``Young man,'' and I was 
younger then, ``how come the budget keeps going up?'' A good question.
  I went back to my office, and we learned about this amazing thing 
that started to happen in 1974, which was called baseline budgeting. We 
spent $100 billion this year, and then they said it would cost to run 
the same level of service $105 billion and Congress spent $103 billion, 
and they would call that a $2 billion cut, even though we were spending 
$3 billion more.
  One of the things I hope we do in this special order is to really 
just talk about where are we cutting, where are we freezing, and where 
are we allowing growth to continue to grow, quite frankly, at a 
significant rate.
  I know our colleague from Michigan, Mr. Smith, is here. I don't know 
if he wants to be on theme. If he is going to be on theme, we would 
welcome him to participate.
  Mr. KINGSTON. He is always on theme.
  Mr. SMITH of Michigan. Mr. Speaker, if the gentleman from Maine will 
yield, I think the theme is to remind ourselves how bad it is for not 
only making our kids and our grandkids pay all this overspending and 
what we borrow back, but it is also tremendously negative on the 
economy. So what we have said is such things as a child born today is 
going to have to pay $187,000 in their lifetime just to pay their share 
of the interest on the national debt.
  Mr. SHAYS. Not to pay back the national debt, just to pay the 
carrying charge.
  Mr. SMITH of Michigan. Just to pay their share of the interest. It is 
time everybody, that is, however you want to put it, you are a young 
man relatively, I would say to the gentleman from Connecticut [Mr. 
Shays], but everybody had better start looking at what this Government 
is doing to their lives and the lives of their children.
  Not only is it immoral to make our kids and grandkids pay our bills 
today, like they are not going to have their own problems when they 
grow up, but it is tremendously negative on the economy, because our 
demand for money, for more borrowing, has driven up interest rates by 2 
percent.
  Mr. KINGSTON. One of the things I wanted to point out is that on the 
chart that the gentleman from Wisconsin [Mr. Neumann] showed us 
earlier, there is an urgency. When you have a Federal budget that has 
been going like this, or excuse me, a deficit, and then it goes like 
that, people have said particularly to the freshmen, ``You are going 
too far too fast.'' I disagree. When it is the third largest 
expenditure in the national budget, the national debt----
  Mr. SHAYS. If you can clarify.
  Mr. KINGSTON. I am trying to turn this thing around. If you are 
trying to balance this budget and bring down that orange peak line, 
what you are trying to do is do it in 7 years. The folks back home, the 
business people I know say, ``Why can't you do it in 1 year?'' 
President Clinton as a candidate on June 4, 1992, promised to do it in 
4 years.

                              {time}  1715

  I believe we should be arguing, is 7 years not waiting too long? 
Should we not try to balance it in 3 or years? Indeed I supported the 
balance that the gentleman from Wisconsin [Mr. Neumann] had, which was 
a 5-year.
  Mr. NEUMANN. I would just add on that, it is possible to do this even 
faster than 7. Seven is a compromise that is putting off how long it 
takes us before we start this line going back in the other direction.
  Again, this line shows the growth in the Federal debt over the past 
years, and we are on a steep incline. I told my folks back home at the 
town hall meetings that my goal was to someday stand before them, my 
dream for the future of this country, and say, yes, here is what we 
have done in Congress. We have stopped that growth and we have started 
it back down again so that our children have a future in this country 
of ours. That is my goal for my service here.
  Mr. LONGLEY. If the gentleman would yield, if I could add to what he 
is saying, and I do not have a chart to go with it, but I also added up 
the, quote, ``Tax increases that were called for in these 16 pieces of 
legislation.''

  Mr. SHAYS. Does the gentleman mean since 1984?
  Mr. LONGLEY. Since 1980. Theoretically Congress has only raised taxes 
by just about $500 billion over the last 16 years. The reality is we 
have increased spending somewhere in the vicinity, in other words, if 
one took the baseline approach which was at $590 billion a year in 1980 
and carried that forward, despite officially raising taxes only by

[[Page H1763]]

$500 billion, there has been over $5 trillion of increased spending.
  What is going on? What has really happened is because much of the tax 
system is on a percentage basis, we have built in automatic tax 
increases into the Tax Code that generate more and more revenue every 
year, whether or not the tax increases were legislated. Then on top of 
those increases, we have added additional increases in taxes in a 
manner that has always protected the Government, always made the 
Government look as if we were the innocent party.
  Mr. SHAYS. The bottom line to this issue, though, is that revenues 
are increasing significantly, and the challenge is that expenses are 
increasing even at a greater amount. We need to start to slow the 
growth of spending.
  I am seeing where the gentleman from Michigan [Mr. Smith] is, and 
basically the minority has accused us of, say, cutting the earned 
income tax credit, which is a tax credit that was designed to help 
working poor, transition them to a point where they are actually making 
enough to not be poor. They do not pay any taxes, they actually get a 
credit back from the Government.
  We are expanding that program. But this is what we are being told. We 
are being told that we are cutting the earned income tax credit, that 
we are cutting the School Lunch Program, that we are cutting the 
student loan program, that we are cutting Medicaid and Medicare. That 
is what we are being told, and they call it a cut.
  This is what is happening. Our bill increases the earned income tax 
credit from $19 to $25 billion. It increases the School Lunch Program 
from $5.2 to $6.8 billion in the seventh year. The student loan 
program, and that is the one that really gets me, is going from $24 to 
$36 billion. Only in this place and in this city when you spend 50 
percent more, it is $24 billion now, we are going to add $12 billion to 
be $36 billion in the seventh year, do people call it a cut.
  Mr. NEUMANN. If the gentleman will yield, I would like to ask the 
gentleman a question, again, that I ask at all the townhall meetings. 
You talked about the student loans, you used the $24 billion and $36 
billion numbers. I would like to ask how many of the American people 
would be willing to accept a pay cut from $2,400 a month to $3,600 a 
month. Let me ask that question again. How many would like a pay cut 
from $2,400 to $3,600?
  Mr. SHAYS. In other words, a 50-percent increase. I think we would 
all like it, especially if we could get away with calling it a cut.
  I am not proud that there are certain parts of the Government that 
are going up. I would like to be able to get a better handle on 
spending. It is just that I think if you tell the American people the 
truth, they will tell you to do the right thing. If you kind of 
obfuscate it and you distort it, they are going to give you a mixed 
signal back.
  The fact is the earned income tax credit is going up, the School 
Lunch Program is, the student loan, and Medicaid. Medicaid is going 
from $89 billion, which it was last year, to $127 billion.
  Medicare is growing from last year, $178 billion to $289 billion. We 
are going to spend 7 percent more each year on Medicare, we are going 
to spend 60 percent more in the seventh year than we did now. And on a 
per beneficiary, because everybody says we have more seniors, you have 
more seniors, but even if we take all the seniors, we are going from 
$4,800 to $7,100 in the seventh year, $7,100 per senior, a 49 percent 
increase in the seventh year over now. Hardly a cut.
  Mr. SMITH of Michigan. If the gentleman will yield, when I go to my 
town hall meetings, and you can picture that group of people out there 
that are having a hard time with their own budgets, they start saying 
when we hear what the gentleman from Connecticut [Mr. Shays] has just 
said: ``Well, why aren't you cutting faster? Why don't you cut more? 
Why are you spreading it out so long?''
  Then they hear that even with the Republican plan we are still 
borrowing $100 billion a year, even at the end of 7 years, from Social 
Security and the other trust funds.
  Mr. SHAYS. We will still be borrowing from the trust funds, the 
gentleman is right.
  Mr. SMITH of Michigan. They say, ``Look, you've got to do better than 
this.''
  Is it not sad that we cannot get some of the liberals, the President 
of the United States, to say, Yes, we are going to do the right for the 
future and we are going to stop playing political games? It is so 
frustrating that we cannot cut some of this spending and make this 
economy stronger, and leave our kids a paid-off mortgage rather than 
the big debt.
  Mr. LONGLEY. Just to pick up on one example, I think if someone asked 
me what has bothered me the most perhaps since I came to Washington, I 
have to say the lack of honesty, the lack of directness, being candid 
about the difficult issues that we are confronting.
  Mr. SHAYS. The gentleman likes that Maine honesty. You want people in 
here to speak like the people in Maine.
  Mr. LONGLEY. It is hard, I think, for people across the United States 
to recognize the extent to which people in this body frankly can become 
so clever with language and words that they have made an art form out 
of disguising the truth. As an example, let us just take the Medicare 
situation.
  I campaigned 2 years ago on the fact that the Social Security 
trustees, and this was in 1994, actually 1993 and 1994, that the Social 
Security trustees had reported that the system was in serious 
difficulty, and in 1994 they projected that the three major Social 
Security funds, the disability fund, the Medicare fund, and the Social 
Security retirement income fund were all going broke. Specifically they 
projected that the disability fund was going to be broke last year, 
that the Medicare fund would be broke in 2002, and when I say broke, 
there would not be a nickel left in it, and that the general trust fund 
for Social Security would be broke as early as 2029.
  I have a number of insurance and financial companies in my district. 
I checked with some of the professional economists and they said that 
the private projections are that Social Security could be broke as 
early as 2010.
  I say to people, when you have an official report, signed by the 
Secretary of Treasury, the Secretary of Health and Human Services, and 
the Secretary of Labor telling you that three major Social Security 
trust funds that the public depends on, particularly the Medicare fund, 
which right now is a very critical program for our senior citizens, 
when you are told by your Government that the program is going 
bankrupt, what do you do?

  Then I told people that when I came to Washington, I had people 
seriously tell me, ``Don't worry about it, they say that every year.'' 
When I go back to my district, they are astounded.
  But I go one step further. It turns out, in the middle of this budget 
crisis, that as early as November, that the Medicare trust fund went 
into deficit a year earlier than it was projected because spending was 
almost $5.5 billion more than the trustees had estimated, and we did 
not even hear about it.
  I have to question who is in control and why are they not being 
truthful with us about the nature of the problem we are trying to 
confront?
  Then I say to my audiences, particularly in my district, young and 
old alike, a lot of business people, individuals, I say, Now what do 
you do if you are in that situation? Let me tell you the piece that is 
not being talked about when it relates to Medicare reform.
  We are hearing all the attack ads about Medicare and we are being 
accused of just the most cold-blooded actions that anyone could 
conceive of, putting our seniors on the street, et cetera. Nonsense. 
Clear scare tactics designed to prey on a very vulnerable population.
  I say, put those attacks aside. Who is talking about what our 
alternatives are? What happens if we do not do what we are trying to 
do? Let me tell you the options. I say this to an audience, Anybody 
here in favor of cutting benefits? Nobody responds.
  How about doubling or tripling payroll taxes? And have we forgotten 
that barely 2 years ago the administration had a request on the table 
in the Committee on Ways and Means to increase payroll taxes by 10 
cents a dollar of wages? I say, Anybody here think that increasing 
payroll taxes or doubling or tripling them is going to solve the 
problem?

[[Page H1764]]

  That would just be wonderful for employment, because what also 
happened in the middle of this debate is AT&T laid off 40,000 workers, 
and across the country it has become an epidemic for large companies 
and small companies to realize they cannot afford to pay the tax burden 
and the liability burden that Government is imposing on them for the 
workers they are hiring.
  Mr. SHAYS. So what is the bottom line?
  Mr. LONGLEY. First let me tell what the third option is. We ruled out 
cutting benefits, we ruled out increasing payroll taxes. If anything, 
we said, we need to reduce payroll taxes and lower the tax burden, 
particularly on working people.
  The third option is, we will borrow the money. We will borrow our way 
out of the crisis. Then I tell them that do you know that we are going 
to be spending more money on interest on the Federal debt in the next 7 
years than anyone is going to spend on Medicare?
  Of course we reject those three options out of hand because not a 
single one of them deals with the real problem. In fact, every single 
one of those measures creates more problems than it solves.
  I say we settle on the one choice that made the most sense, which is 
make the tough decisions to reform the program, create options for 
senior citizens, protect those who want Medicare but give other 
choices, and that if we give more power--and this is a radical idea for 
this city--if we give senior citizens the right to make choices about 
their own health care, I mean, the very idea that we are going to give 
the beneficiaries of a program the right to make choices, and I 
describe to people in Maine that in Washington that is sacrilege.
  Mr. SHAYS. If the gentleman will yield, the bottom line is we did the 
heavy lifting with a lot of programs, but in some cases, and 
particularly with Medicare, we have a better program and yet we save 
about $240 billion. We do it by not increasing the copayment, not 
increasing the deductible, not increasing the premium for Medicare Part 
B. The seniors should have still paid 31.5 percent, which is what they 
paid last year. That is what we said, just keep it at that rate.
  We did say that the very wealthy in our society would pay more for 
Medicare. If you make more than $125,000 of taxable income, you would 
pay more for Medicare Part B.
  Then we get into how are we able to make the savings? By, as the 
gentleman has pointed out, giving seniors choice. They are allowed to 
go into a variety of private health care plans. We still keep Medicare. 
No one has to leave. But we allow seniors to get private care, and the 
private care has to be as good or better, otherwise they are not 
allowed to participate. They cannot offer seniors less service and 
charge them less. They have to provide equal to or better, and the way 
they are going to attract them is by providing eye care or dental care, 
prescription drugs, allow copayment rebate or deductible rebate or even 
give MidiGap.
  Mr. LONGLEY. If the gentleman will yield, more astounding, we are 
actually increasing spending on the program, in that the average 
payment per beneficiary this year is $4,800 a year and within 7 years 
it is going to exceed $7,000 a year. That is actually a healthier rate 
of increase than the administration itself proposed.
  What we are going to be doing, and this is what will save the 
program, is that we will be running it more efficiently, managing it 
better, giving more people control over their health care and 
eliminating a lot of fraud and waste, particularly as it relates to 
unduly burdensome regulatory structures. We are going to run a better 
program, we are going to be providing more money for the beneficiaries, 
they are going to have more choices and, frankly, we will be able to do 
it in a manner that will bring revenues in line with expenses.
  Mr. SHAYS. Before the gentleman yields to my colleague, I just want 
to make sure that we cover this, because we do not want any senior to 
think that they have to participate in choice. They can keep their 
traditional fee-for-service, their 1960 Blue Cross/Blue Shield model. 
If they choose to get into private care and they do not like it, they 
have 24 months, each and every month within these next 2 years, they 
can get out of the private care and right back under the system they 
had.
  I know my colleague wanted to speak.
  Mr. NEUMANN. Just a couple of things on this. I think all of this 
discussion about what is happening in Medicare, I just reemphasize that 
if our seniors do nothing, they keep Medicare as they know it today.
  A lot of times people forget that our friends and our own parents are 
on Medicare, and they forget how concerned we are about the senior 
citizens we know. When I jog with George, a good friend of mine, he 
talks to me about his mother. When I ride to basketball games with Tom, 
where our kids play on the same team, we talk about his parents and we 
talk about the meaning of Medicare to these senior citizens.

                              {time}  1730

  Somehow in this whole discussion we lose the fact that we care a lot. 
We have a responsibility. It is like this with Medicare today. They are 
writing out checks for more money than they have in their checkbook. We 
all know they cannot keep doing that.
  We have a responsibility to George's parents and to Tom's parents and 
to George and Tom and our responsibility to these people, to the people 
we represent, is to make sure we do not allow this system to go 
bankrupt so their parents can continue to receive these benefits.
  We would be totally out of line to allow the Medicare system just to 
continue down the road it is going down right now. I care too much 
about Tom's parents and George's parents and the other parents like 
them across our district.
  Mr. LONGLEY. Not only that, it is clear that we have people in this 
city who have made a career out of taking more and more and more money 
from the public for their purposes, not for the public's purposes.
  Mr. SMITH of Michigan. Mr. Speaker, I think there are a lot of people 
watching maybe that are saying, well, look, you are the Congress of the 
United States. You have the majority. Why do you not do it? What has 
happened is Congress has given away the ability to control spending 
over the last 40 years. We have, in effect, passed into law so-called 
entitlement programs that say the money is going to be there 
automatically without being appropriated on a yearly basis from 
Congress, and so into these laws of food stamps and AFDC----

  Mr. SHAYS. Basically, it is half the budget.
  Mr. SMITH of Michigan. The blue part represents these welfare 
entitlement programs. A majority of Congress cannot reduce these 
programs and change spending without the consent of the President, and 
the President has now vetoed changes in the Food Stamp Program. The 
President has now vetoed changes in the work requirement in the welfare 
program.
  Mr. NEUMANN. Just to comment on that, it is very important for the 
American people to know that on that half where we do not get to vote 
on it, spending went this year from last year to this year, went up by 
$46 billion. That money is spent and it is gone. We have no control 
over that, no vote over that. It went up $46 billion. Contrast that to 
the part that we do have control over, about $500 billion out of a $1.6 
trillion; that went down by $14 billion.
  Mr. SMITH of Michigan. Let me show you where that is on this little 
pie chart. That is the little red section on this pie chart that 
represents the 12 appropriation bills other than the defense 
appropriation bills. This is where Congress has control. If we do not 
pass the appropriation, if the President vetoes it, there is no money 
there, so we have been unsuccessful here, and by the year 2002, we are 
going to see the welfare entitlement portion of this budget grow to 
almost 60 percent, and then you have got the interest on the national 
debt. The service, paying the interest on the national debt, is also on 
automatic pilot unless we follow what these gentleman have been saying 
and we started reducing the rate of increase in spending.
  Mr. SHAYS. If the gentleman will yield, the bottom line is this: As 
you point out, the gentleman from Wisconsin [Mr. Neumann], 50 percent 
of the

[[Page H1765]]

budget is on automatic pilot. It is entitlement. We do get to vote on 
it, but if we do not vote on it, it stays the same, and so Congress 
simply never voted on it.
  I have been in Congress since 1987. I never got to vote on changes. 
The majority party never wanted to change the entitlements and to 
control their growth. So I never had an opportunity to vote.
  Mr. SMITH of Michigan. Up until now, in the Balanced Budget Act.
  Mr. SHAYS. Up until now, with the balanced budget, for the first 
time, this is the Congress that is willing to take on the heavy lifting 
of controlling 50 percent of the budget that is basically on automatic 
pilot. We voted on a third, as the gentleman pointed out so well, those 
appropriation items, defense and nondefense, that come out of 
appropriations. There is the 15 to 16 percent of interest on the 
national debt which we do not vote on. We have been voting since I have 
been here on a third of the budget, trying to control it. For the first 
time, we are trying to control the entitlements. All we are trying to 
do is slow their growth to 5, 6, 7 percent a year. We are not cutting 
them. We are allowing them to increase. That is just bottom-line issue.
  You know, I would love to just get into this issue. I would like your 
reaction, I have been here now for about 9 years, and I am seeing good 
men and women not run again, and some of them have very real personal 
reasons. I just want to express my concern about some of them.
  I happen to think of myself as a moderate Republican. I think of 
myself as a centrist in terms of my ideology. I like to think of myself 
as passionately moderate. I am in the center. I am seeing some of my 
fellow moderates quit. They say this is not a fun place anymore. I am 
thinking to myself, with all due respect, when has it ever really been 
a fun place? I get up in the morning and say I have one of the best 
jobs in the world. To call it a fun place, I have never known it to be 
a fun place.
  Now, to listen to them further, you know, people are getting nasty 
with each other. I see that. I mean, to the public this must look like 
a food fight when really what it is about is some very heavy lifting 
about whether we end those obscene debts and annual deficits that we 
have, whether we stop adding to the national debt, and this is what my 
colleagues are saying. I think the Senator from New Jersey, even your 
own Senator, with all respect; in my judgment, they have participated 
in our getting deeper and deeper and deeper in debt by their silence, 
in some cases, by their willingness not to step and stand out and say 
no more, we are going to call the question.
  So now that we are deeper in debt and we are clawing our way to get 
out of this means, people are quitting, and then some, not your 
Senator, but some Senators have said, ``You know, now I can be honest 
with the American people. I can tell them now, since I am not running 
again.'' And I am thinking, why did you not just be honest with them 
when you were a candidate? Tell the American people the truth. They 
will have you do the right thing.
  So I just wanted to express some disappointment with some very good 
people who are leaving, and my take on it is they are leaving now that 
we have got to do heavy lifting, now that we have got ton confront 
seniors, young people and everyone else and say, you know, we have got 
to address this issue. Some things you may not like, but we have got to 
do it for the sake of our country. I do not know if any of you have had 
that same reaction.
  Has this place been a fun place? No. Is it going to be a fun place? 
No. Do we have heavy lifting? Yes. Are we deep in the hole? You darn 
right, and we are clawing our way to get out of the hole.
  Mr. LONGLEY. I think you are making an outstanding point. This is one 
of the reasons I went back and looked back over these 16 years of 
legislation. Literally, of these 16 acts, at different times the 
Democratic Party supported 12 of the 16 acts, and the Republican Party 
supported 12.
  Mr. SHAYS. Both parties, not just one.
  Mr. LONGLEY. That is exactly it.
  Now, you look in the early 1980's in spending, 1981, spending went up 
almost 15 percent; 1982, 10 percent; 1983.
  Mr. SHAYS. The point is we are not blaming parties. But now we have a 
chance.
  Mr. LONGLEY. Not only, this is particularly with respect to the 
current debate and the impasse between the administration and the 
Congress, and clearly, as the gentleman from Michigan [Mr. Smith] 
pointed out, the President has vetoed welfare reform. He has vetoed a 
balanced budget. He has vetoed literally every significant initiative 
that we are trying to bring to the table to deal with this crisis, and 
the easiest thing in the world for us to do would be to pretend the 
crisis does not exist, to just cook up some, come to some agreement 
even though philosophically we are miles apart on some issues, we come 
to some common ground, and we have editorial writers across the country 
hailing our bipartisanship, the television crews showing up and just we 
are all standing there smiling at each other and patting each other on 
the back.
  But the bottom line is, when we leave here, our kids are paying the 
bill. I am not willing to do that.
  Mr. NEUMANN. That is really the point. We keep talking about the debt 
and deficit. It is not about the debt and the deficit. It is about a 
moral and ethical responsibility that our generation has to stop doing 
what has been going on for the last 15 or 20 years. This is a moral, 
ethical, it is a values problem in our country. What kind of a society 
would be willing to spend their children's money? Ask yourself, what 
kind of society would do that? It is a moral and ethical responsibility 
to stop the growth of this debt.
  Mr. SMITH of Michigan. If the gentleman will yield, I would suggest 
this borrowing obscures the true size of Government. You know, if 
people have to pay their taxes to afford this huge bureaucracy, they 
would be saying, wait a minute, but we have somehow, politicians have 
discovered if they borrow this money and say somehow, well, we will pay 
this back later, our kids and our grandkids are going to have to do 
it, but what we have done is we have had a Government become larger and 
larger, and the bureaucracy so big now that almost half my time as a 
congressman is spent being an ombudsman to help people move through 
this political maze of this huge overbloated Government. If we stop 
borrowing and people have to start digging into their pockets for this 
size of a Government, they will say, no, wait a minute.

  Mr. LONGLEY. We cannot even go, to go just one step beyond what you 
are saying, most people cannot even afford the tax burden now, even 
though we are not even paying for the entire Government. That is the 
difficulty we are trying to confront.
  Mr. NEUMANN. I would just add, if you would be interested, I have one 
more chart left.
  Mr. SMITH of Michigan. We like your charts.
  Mr. NEUMANN. Would you like to know how much more an American family 
of four would have had to pay in taxes over the last 15 years in taxes 
in order to pay their share of what the Government spent? If the 
Government were to break even over the last 15 to 20 years, an average 
family of four in America would have had to spend or pay to the Federal 
Government $76,000 more in taxes over that period of time if our 
generation had paid for what they bought through this.
  Mr. SHAYS. That is a great illustration of why it did not happen. 
There is no way a family of four would have tolerated paying $76,000.
  Mr. SMITH of Michigan. Now, the little young tots in that family of 
four are going to be obligated to account for that money later on in 
their lives. No. 1, it is immoral. No. 2, balancing the budget is going 
to strengthen the economy.
  Mr. NEUMANN. That is what this chart is showing. This is showing our 
total debt as of right now. This is the amount they borrowed per 
person, $19,100 for every man, woman and child in America, which has 
been borrowed basically over the last 15 years. The kicker on this 
chart is really the bottom line. The bottom line is our family of four 
today has to pay $440 a month just to pay the interest on the Federal 
debt. It is not for any goods or services, not for Medicare, Medicaid, 
or any of the rest. The family of four today has to pay $440 a month 
just to pay interest on the Federal debt.
  I always like to reduce it down to what the actual impact is on my

[[Page H1766]]

friends and our constituents across our districts, and that really is 
what it translates into. A lot of times they say, ``I don't pay that 
much in taxes.'' I would like to remind, every time we walk in the 
store and buy a loaf of bread, that store owner makes a small profit on 
the loaf of bread bought in the store. When the store owner makes a 
small profit on it, some of that profit comes in here to the Federal 
Government in the form of taxes. When it is all added up, they are 
paying, in fact, paying that $440 a month.
  Mr. LONGLEY. This comes back to the point the gentleman from 
Connecticut [Mr. Shays] made so well several minutes ago, that the 
easiest thing in the world any of us can do is say, well, we are going 
to create a program. Sure, we will give you more money, even though you 
are getting increases and spending, we will double the rate of 
increase. We can all look like heroes until the American public has got 
to show up with the tax dollars to pay for it or to deal with the mess 
that we have created.
  Mr. SHAYS. One reason I like my community meetings, I call it my 
community test, if I have got to go to my community in a community 
meeting, I have got to tell them what we are doing, and if it does not 
pass, you know, if I cannot pass it through my constituents in a 
community meeting, I do not vote for it. There is no way I can justify 
seeing what has happened in the last 22 years, and my constituents have 
told me almost to a person, ``You get a handle on this Federal budget. 
You stop the obscene annual deficits.'' Revenue is here, spending is 
here, at the end of that year the deficit is added to the national 
debt; they want us to end it. That is what we are going to do.

  I mean we have three objectives. We want to get our financial house 
in order and balance the Federal budget. We want to save our trust 
funds, particularly Medicare, from bankruptcy, and we want to transform 
this social and corporate welfare state into a true caring opportunity 
society. We are not going to give up.
  I noticed, you know, I just am in awe of my freshmen. I mean, I wish 
I could be an honorary freshman. I know you all have taken some 
criticism, but my take on what you have done is you basically watched 
what we have done and said, ``I can't believe it.'' Men and women have 
run and owned businesses, and you said, ``You know I am going to end 
this.'' You do not care if you get reelected, and that is your 
strength. If you do not care whether you get reelected, you are going 
to do the right thing, and I tell my people, thank God for the 
freshmen.
  Mr. NEUMANN. If the gentleman will yield, we are nearing the end of 
the time. I want to close my part by reminding us all this is still the 
greatest country in the world. Sure, we have got some problems. As a 
country, we have had problems before. What is going on out here right 
now is a new era in America, and we have started down the right path 
here toward restoring this great country of ours.
  I have 100 percent confidence that we together, the people that are 
here, along with the American people out there, are going to restore 
this great Nation of ours. I have a lot of faith in the future of this 
country. I know we are going to make a great country to pass on to our 
children and to our grandchildren.
  Mr. SHAYS. I just would like to thank both of you. You claimed the 
time, and I thank the gentleman from Maine for doing that and just say 
that we do live in the greatest country in the world, and we are going 
to save it. I mean, we are not going to listen to polls. The polls are 
not going to guide us. We are going to do the right thing. If Abraham 
Lincoln had listened to polls, we would not be one Nation under God, 
indivisible. We would be two nations very much divided. We are going to 
stay one Nation, and we are going to pursue this.
  Mr. LONGLEY. Just to end on that note, I think it is easy to forget 
we as a country have faced greater crises in the past. We are going to 
face greater crises in the future. What we have learned as a country, 
and particularly I know the senior population understands this, the 
generation that confronted the depression, that confronted World War 
II, that put an end to the world fascism and another generation that 
put an end to world communism, yes, we have had some big crises to deal 
with. We have identified the problem. We have looked at the options. We 
have acted to get the problem dealt with, and we move on.
  I am very confident that we are going to deal with the issues we need 
to deal with and that the public realize that it is in their best 
interests, and we are going to move forward.
  I thank the gentleman from Wisconsin [Mr. Neumann], the gentleman 
from Connecticut [Mr. Shays], and the gentleman from Michigan [Mr. 
Smith] for your participation tonight.

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