Congressional Record, Volume 142 Issue 30 (Thursday, March 7, 1996)

[Congressional Record Volume 142, Number 30 (Thursday, March 7, 1996)]
[House]
[Pages H1973-H1981]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

CRIME OF THE RISE UNDER THE CLINTON ADMINISTRATION

The SPEAKER pro tempore. Under the Speaker's announced policy of May
12, 1995, the gentleman from Kansas [Mr. Tiahrt] is recognized for 60
minutes as the designee of the majority leader.
Mr. TIAHRT. Madam Speaker, this country is facing an increasing
problem with youth violence and drug abuse. After 3 years of reducing
the effectiveness of fighting against drug abuse, Mr. Clinton is trying
to salvage his image by appointing a new drug czar. Despite the
rhetoric, President Clinton has been unable to win the war on drugs.
When President Clinton swore in his new drug czar, he said a lot of
positive things against the country's battle against drugs. But let us
not be fooled by President Clinton's claim to have made a sizeable dent
in the war on drugs. If he had, we would not have such an increase in
drug use and a decrease in drug arrests.
According to Investors Business Daily, two articles, one by Matthew
Robinson on September 11, 1995, and John Barnes, June 6, 1995,
``President Clinton has failed to properly fight the war on drugs.''
DEA, our Drug Enforcement Agency, their arrests fell from 7,878 the
last full year under the Bush administration to 5,279 in 1994 under the
Clinton administration.
Drug-related arrests, made in cooperation with overseas law
enforcement agencies, fell from 1,856 in 1992 to 1,522 in 1994.
Although 140 new DEA intelligence specialists were trained in 1992,
zero were trained in 1994. President Clinton slashed the Office of
National Drug Control Policy by 84 percent, cutting the staff from 116
to just 25. He eliminated 355 DEA agents and 102 personnel from the
Justice Department's organized crime enforcement task force.
President Clinton dropped the drug issue from the top to the bottom
of the National Security Council's list of 29 priorities.
In a household survey on drug abuse, as shown on this chart, it was
published in September 1995, the estimated number of 12- to 17-year-
olds who have reportedly smoked marijuana grew from 1992, 1.6 million,
to 1994, 2.9 million. In the 14- and 15-year-old age group, it saw a
200-percent increase in the use of marijuana.
I have another chart that talks about how drug enforcement has been
down under the Clinton administration. This depicts the number of
Federal marijuana defendants, which has dropped 18.6 percent, in 1993
it was 5,500, to 4,100 by 1995.

Also, the prison time is getting shorter. In this chart, the average
prison sentence for marijuana defendants is down 13 percent. In 1992,
the sentence was 50 months. By 1995, it has dropped down to 43 months.
It is not just confined to drug abuse, either, Madam Speaker. We have
a problem with violent juvenile crime. The juvenile crime clock, which
is published by Crime Strike, says that a juvenile is arrested for
murder every 2 hours and 10 minutes; for rape, every 51 minutes; for
robbery, every 13 minutes; and an aggravated assault, every 8 minutes.
Juveniles are not tried as adults as often. Despite the increasingly
violent nature of juvenile crime, as well as the increased number of
juveniles involved, the percentage of juvenile cases referred to adult
courts has actually declined. In 1984 it was 5.2 percent, approximately
54,000 cases out of 1 million. By 1993, a decade later, the adult court
referrals had grown to 61,000, approximately, but it was just 4.8
percent of the 1.29 million offenders taken into custody.
I believe the liberal Clinton administration is part of the basic
problem. In our war on crime, the liberals have become soft on
criminals, and it is making it hard for the rest of us. I think this is
why many Americans are losing faith in our court system. One of the
most recent examples is an appointee by President Clinton, Judge Harold
Baer, a liberal judge in New York City.
I have two articles I would like to refer to. One is in the Columbus
Dispatch. It was published on February 5. It is entitled ``Outrage in
New York.'' To give you kind of a background, I will just take some
excerpts from this article.

Judges routinely make close calls in dispersing justice.
Sometimes, though, a judge makes a decision so mind-boggling,
so dumb, that it makes people wonder what planet he is living
on.

Such has been the case in New York City, where on January 24, U.S.
District Court Judge Harold Baer, Junior, let a confessed drug courier
walk free after police officers observed 80 pounds of cocaine and
heroin being loaded into the trunk of her car. The mayor, the police
commissioner, and nearly everyone else in New York is up in arms over
this nonsensical ruling.
I have a chart here that just kind of depicts how many drugs were in
the trunk of that car when the arrest was made. There was 75 pounds of
cocaine, and actually 4 pounds of heroin.

{time} 1945

That was heading toward Michigan, according to the confession of
Carol Bayless, who was at the wheel of the car. That is enough so that
every school child in Detroit would have one dose of cocaine. This
appeared to be an open-and-shut case, but in a bit of twisted
reasoning, Judge Baer said that the officer had no reasonable suspicion
to pull over Bayless. He excluded the drugs and the confession, a
videotaped confession where Bayless admitted that she was paid $20,000
to take the drugs to Detroit, something she had done at least 20 times
before, either for her son or for other dealers. But this evidence was
thrown out. No drugs, no case.
Bayless was facing the possibility of life in prison. She whooped in
celebration. If this was not bad enough, Judge Baer's written decision
reeked with contempt for the police, particularly Officer Carroll who
made the arrest, who has 10 years of experience on the street and a
spotless record.
Senator Daniel Patrick Moynihan, who got President Clinton to appoint
Baer to the bench, has had some buyer's remorse, according to the
article. He suggested Baer be sentenced to live in that neighborhood
for a year to see if that would change his mind.
Federal prosecutors are pondering appeal. They hate to overturn a
judgment based on a subjective matter like reasonable suspicion, but in
this case prosecutors should appeal, and the courts should overturn
Baer's judgment and put Bayless on trial because justice demands it.
On ``ABC World News Tonight'' at 6:30, February 8, eastern time,
there was an article run. Part of it was talking about this same
ruling. Part of the report said: ``Last month Federal Judge Harold Baer
ruled that neither the woman's confession nor the drugs found in her
car could be used in court because police lacked sufficient reason to
stop her or search her car.''
Here the police saw four men dumping duffle bags into the woman's car
at around 5:00 in the morning and when the men saw the police, they ran
away. This was not sufficient suspicion for Judge Baer, who wrote that
in Washington Heights residents regard police officers as corrupt,
abusive, and violent. Had they not run when the cops began to stare at
them, it would have been unusual.
Well, in Wichita, KS, the fourth district of Kansas, I think that
type of behavior would have been reason to stop someone, and I think
that the abuse that has occurred from the excessive amount of drugs in
our society justifies having this ruling overturned.
Mr. SHADEGG. Would the gentleman yield?
Mr. TIAHRT. I would be glad to yield to the gentleman from Arizona.
Mr. SHADEGG. I just listened to this story, and it kind of amazes me.
If you would be willing to, I would like to enter into a little
colloquy to see if I really understand this and see if we can flesh
this out a little bit.
You are telling me that the essence of this judge's ruling was that
the

[[Page H1974]]

search, the stop made by the police and the search which led to the
evidence which showed enough cocaine to give every single child in
Detroit one administration or one dose of cocaine, the search led to
that, they found that much cocaine and the judge threw it out. And the
reason he threw it out is because for people to run from the police is
normal conduct in that neighborhood, and does not justify the police in
having suspicion that some criminal activity has gone on?
Mr. TIAHRT. Yes, the judge felt that that was not reasonable
suspicion. Let me just read through the facts of this case.
Mr. SHADEGG. This is a city in America, and this is a judge now
appointed by the Clinton administration to the Federal bench, and his
decision is that when police look at somebody engaged in what they
believe is strange activity, those people decide to cut and run, the
police are not entitled to determine that there is something suspicious
going on and make a stop?
Mr. TIAHRT. Let us go over the facts of the case and then you can
make a judgment yourself.
Early in the morning on April 21st, I assume this is 1995, Officer
Richard Carroll sat in his unmarked car staking out a street on
Washington Heights known as a prime location for drug dealers. At 5:00
a.m., it was early in the morning, he observed a double-parked rental
car with Michigan plates.
Four men walked up to the car without speaking to the driver. They
put two black duffle bags into the trunk of this car. When they spotted
the officer, they all ran off in different directions.
Officer Carroll then pulled over the driver, Carol Bayless, again,
searched the car, finding the cocaine and the heroin with a street
value of at least $4 million.
Subsequently, there was a videotaped confession where she said, yes,
she knew what she was doing. She has done this 20 times before. It goes
back to most people would probably consider running from the police
some type of reason for suspicion. I think that is the way it is viewed
in Wichita, KS, and I am sure it is probably viewed that same way in
Arizona.
I think it is just cause, and it probably shows why we have lost some
faith in our judicial system when we have liberal judges turning loose
criminals, confessed criminals, on what has been termed a technicality,
or his term was, not enough reasonable suspicion to make this arrest.
It is, I think, a poor excuse for why we are having problems turning
criminals loose.
Mr. SHADEGG. If the gentleman would yield, I would be happy to talk
about some other points on this particular topic. And I do want to
address this issue of illegal drugs and what has gone on in America
since the beginning of the Clinton administration, but I just want to
bring this one point home.
At least in Phoenix, AR, we have told the police in my district that
if you have a reasonable suspicion, you can stop someone and inquire
into their activity. That is in fact the law in America.
In Phoenix, AZ, if police see some group of individuals at 5:00 in
the morning or midnight or practically any time of day, and upon those
individuals recognizing them as police the individuals scatter and run
in six different directions, that certainly would be for any judge in
Arizona articulable suspicion and reasonable grounds for them to stop
those individuals, to make an inquiry, to require them to produce some
identification, and to find out whether or not criminal activity is
going on.
I, myself, signed a letter today calling for Judge Baer to
immediately resign from the Federal bench.
If you contemplate the society which he is calling for, it is a
society in which the norm is citizens may run from police, and when
police see them run, they are to assume, well, there is nothing wrong.
I guess if we have understood what he said, he said, well, in this
particular community the norm would be that it would have been strange
if they had stood silent.
I guess the standard Judge Baer is calling for is that if the
citizens of that community see a policeman and they stand still or they
continue what they are doing, then the police have the rights to come
up to them and say, ``This is awfully strange. Judge Baer tells us that
normal conduct would require that you run away from us, but we will
require you to stay here. He thinks it's odd only if you do not run.
Therefore, since you didn't run, we're going to ask you for
identification and determine whether or not illegal activity is going
on.''
It is hard for me to believe that that is the standard set by a judge
in America. It is hard for me, even further more difficult for me to
believe that that judge has now been appointed by this administration
to the Federal bench, and I can see why the good Senator would have had
perhaps some buyer's remorse on this recommendation.
Mr. TIAHRT. If we take a practical application of what Clinton's
appointee, Judge Baer, would view, his view of America as you have
expressed, suppose you are a common citizen and you are driving your
automobile, and for some reason a policeman acknowledges that they are
behind you by putting on their lights. The normal behavior, according
to the Clinton appointee, would be for you to speed off and try to
elude the police. I cannot imagine how dangerous our highway system
would be every time a police officer attempted to stop someone for
perhaps having a headlight burned out or an unsafe condition ahead
where they would speed ahead.

I think that Judge Baer here is exactly wrong. I think this
exemplifies what is wrong with liberals in our judicial system, and it
exemplifies why many people are concerned and frustrated by our current
court system.
There is another program that was thwarted by the Clinton
administration, and it was a successful program. It was put in an
article in the Policy Review written by Charles Molony Condon, who is
the attorney general of South Carolina.
While he was working as a circuit solicitor in South Carolina, he
became aware of the problem that this Nation is having with crack
babies, and he became aware of its through the Charleston Medical
University of South Carolina's hospital. He said that he found out that
about 1 in 10 children born nationwide has been exposed to cocaine in
the womb, and this affects approximately 350,000 babies every year.
The hospital, MUSC, the Medical University of South Carolina, said
that they have seen bills reach $750,000 from crack babies, for one
crack child. Most are born to welfare mothers, so Medicaid and the
hospital end up picking up the bill. In one instance, the General
Accounting Office had found that a single cocaine baby can run up a
lifetime tab of $1 million in medical costs and educational costs.
Mr. Condon decided that he would try to do something about it, and
working with the hospital, they aggressively confronted pregnant women,
talking to them about the consequences of their drug abuse. They were
having trouble getting women to voluntarily seek help, but in this
program they were given a choice: either seek drug treatment or face
arrest and jail time.
They did this over a 25-year period, and over that 25-year period
they were able to see crack babies in this hospital going from
approximately 24 per month down to about 5 to 6 per month. It was
called an amnesty program and it had a very positive effect.
But then in came the Clinton administration with allegations of
discrimination and accusing the hospital of violating privacy rights.
The Clinton administration, along with the ACLU, threatened to cut off
the $54 million in Federal assistance that MUSC was receiving, which
was about 60 percent of their annual budget. This boiled down to,
according to the article, the Clinton administration protecting not the
children but the right of the mothers to escape the consequences of
their neglect.
As reported by Health and Human Services Secretary Donna Shalala,
South Carolina's crack baby program was discriminatory. But according
to Charleston police Chief Rubin Greenberg, he said the program
benefited the black community most of all.
I want to quote from the end of this article. It says:

One of the most basic responsibilities a mother has is to
her child. If a mother injected cocaine into the tiny arm of
her infant, causing permanent brain damage or death,
certainly that mother would be arrested and prosecuted. Yet
that is exactly what addicted mothers do when they consume
cocaine throughout their pregnancy. In South Carolina, we
tried to do something about it. The program we created was
working. Now it is no more. And as long

[[Page H1975]]

as the powerful Federal bureaucrats continue to manipulate
Federal funding to serve a bizarre agenda that is deaf to the
cries of damaged babies, there is nothing more we can do. Why
is the Clinton administration stopping us from protecting our
children?''

Here we have an effective program that was dealing with some of the
core issues, some of the heart-rending problems that we are having in
our society, unborn children being abused by drug abuse. They developed
a program. It was being studied and sought out by other States, other
States were looking at it as a model, and yet it was effectively shut
down by the Clinton administration.
I think that this program and others leave us puzzled. Why do the
liberals in the Clinton administration oppose getting good sentences,
allow criminals to be released, and when an effective program is in
place, they move in with a force, with a vengeance, and shut down a
program that has been successful.
Even though we have drug abuse, especially through teenagers, it is
not doing enough. I think we have not gone far enough. Overall drug
abuse seems to be waning or being leveled off, but teenage drug abuse
is up while enforcement is down.
I think President Clinton has not only ignored the drug problem but
he has actively hampered the efforts of drug control agencies. In
February 1993, less than 1 month in office, President Clinton
eliminated 83 percent of the staff at the Office of National Drug
Control Policy. Continuing the abdication of leadership, the President
also eliminated the drug testing program for the White House staff.
Mr. SHADEGG. Would the gentleman yield?
Mr. TIAHRT. I would be glad to yield.
Mr. SHADEGG. I would like to make a few points here. I come to this
Chamber as former assistant attorney general. I spent 7 years in the
Arizona attorney general's office, in the fight against crime and in
the fight against drugs.
I think there are some points that need to be made that I am gravely
concerned about. I am concerned about them because I am the father of a
14-year-old daughter who is in junior high this year and next year will
begin high school, and I am told that drug use will be prevalent and
drugs will be available in every high school she can go to, no matter
whether we select a private high school or a public high school.
Today I want to compliment the chairman of the Government Reform and
Oversight Subcommittee on National Security, International Affairs, and
Criminal Justice, the gentleman from New Hampshire, William Zeliff.
Today they released, and it will be made public 5 days from now, their
``National Drug Policy: A Review of the Status of the Drug War in
America.''
Now, many people listening tonight might say, ``Well, we can really
win the drug war in America,'' and they would make that argument. What
this report shows and what is of grave concern to me is that one thing
is clear. We may not be able to win the war against drugs, but when we
surrender any effort to stop drugs, when we give up on that war, there
are consequences, and I would like to talk about some of those
consequences.

{time} 2000

First let me talk about Arizona. In Arizona we are a border State.
Seventy percent of all of the illegal drugs which come into this
country come across the Mexican border. The efforts of Chairman Zeliff
and of his subcommittee on which I serve could not be more timely in
terms of Arizona.
Let me talk about what is going on in my home State. Current use of
all illicit drugs is up among public school students at both high
school and junior high levels. The 1995 Substance Abuse in Public
Schools Survey put out by the Arizona Criminal Justice Commission says
that current use of methamphetamines, hallucinogens, and marijuana
amongst high schoolers is at the highest level it has been since 1988:
21.8 percent of all Arizona high school students reported using
marijuana in the last 30 days; 16.8 percent of those students reported
using marijuana within the last 10 days.
Equally frightening, as the gentleman from Kansas has pointed out, is
the link between this drug use and crime. The crime rate in Arizona has
doubled, from roughly 19,000 in 1985 to more than 28,000 violent crimes
by 1995.
Ask yourself why. Why do we have this surge in violent crime? Why do
we have this dramatic surge in juvenile drug use? Let me recite the
record of the Clinton administration.
First, upon taking office, President Clinton gutted 80 percent of the
staff of the Office of National Drug Control Policy. He took the staff
from 146 at the level when he acquired office to 25, an 80 percent
reduction.
One of the first announced goals of Attorney General Janet Reno was
to reduce the mandatory minimum sentence for drug trafficking and
related Federal crimes.
The Clinton administration national security policy subsequently
passed and the President signed a new directive ordering a massive
reduction in Defense Department support for interdiction efforts.
And, as we all recall, President Clinton's Surgeon General called
repeatedly for serious consideration of drug legalization.
We have a problem in this Nation. It is a serious one. It is one
where we have abandoned the war on drugs. My friend the gentleman from
Kansas pointed out early on that the President was AWOL in this fight.
I think he indeed is AWOL in this fight.
Almost a year ago, former First Lady Nancy Reagan came before our
subcommittee and asked a very telling question. How could it be that we
had gone from winning and making serious progress in the war to stop,
at least to stop the ever increasing use of drugs by more and more of
our children and the use of dangerous drugs? How could it be that we
had in a span of just 3 years dropped so dramatically from significant
success in that area to significant failure?
Chairman Zeliff's subcommittee in the writing of this report held 5
oversight hearings during 1995 to assess the status of the Nation's
drug control strategy. While I will not belabor each of the points,
some are worth making note of.
First of all on March 9, 1995, Bill Bennett, a respected scholar in
this area, a respected leader in this Nation, and the former drug czar
and former Office of National Drug Control Policy Chief of Staff John
Walters both testified, and I quote, if the drug use trends continue,
by 1996 the Clinton administration will have presided over the greatest
increase in drug use in modern American history.
What has that led to? Let me cite just some of the sad statistics. I
note that the President today has convened a conference to address this
issue. I applaud him for that effort but I am concerned that it is only
an election year effort.
Casual drug use in America is dramatically up in virtually every age
group and for every illicit drug, including heroin, crack cocaine,
hydrochloride, LSD, non-LSD hallucinogens, methamphetamines, inhalants,
stimulants and marijuana.
Ask yourself why. For one reason, the nationwide street price for
most illicit drugs is lower than at any time in recent history. It is
because this administration reduced its efforts to interdict the flow
of drugs into this country. It has also dramatically reduced its
efforts to cut off source production.
The potency of the drugs, the same drugs, particularly heroin and
crack, is higher according to the nationwide survey than any time in
recent history and nationwide drug-related emergency room admissions
are also at an all-time high.
It is a situation which has gone unnoticed by the press and which
must not go unaddressed by our Nation. We are at risk of losing a
generation of Americans and we must do something about it.

I could cite a great deal of statistics. I am sure the gentleman has
them of his own. For example, the nationwide Pride survey of 200,000
students showed that 1 in 3 American high school seniors now smokes
marijuana. There has been a 36-percent increase in cocaine use among
students in grades 9 through 12 just since 1991 and 1992. Hallucinogen
use by high school students has risen by 75 percent since the 1988-1989
reporting period. Cocaine-related episodes in 1994 reached their all-
time high in U.S. history, a 15-percent increase from 1993 and a 40-
percent increase from 1988.

[[Page H1976]]

These statistics cannot be ignored. It is time that the President
address this issue. it is critical that the Nation do something about
this. I think the statement of the gentleman from Kansas that the
President has been AWOL, absent without leave, on this issue are
exactly right. It is time that he did appoint a tough drug czar, it is
time that we went back to working interdiction, it is time that we went
back to examining the transit zone, it is time that we made a serious
effort to go at source production in the source-producing countries. We
know those countries. We had effective efforts before them to begin
with.
But more than any of that, it is time for this President to lead
nationally, to set an example. He has to take the bully pulpit and talk
about this scourge or he will be responsible for the loss of a
generation of Americans to illegal drugs and their corrupting
influence.
Mr. TIAHRT. I could not agree more with the gentleman from Arizona.
We have fundamentally three problems in the United States today:
One is economic and that is where we are struggling to balance the
budget. If nothing else we would create more jobs, and I think that is
very important for people who are trying to rise out of poverty and get
out of the situation where drug abuse is so prevalent.
The second major problem is kind of our social structure, how we deal
with people truly in need. Our welfare system needs to have the work
ethic put back into it. Many people are trapped into a system that is
hopeless. They cannot see a way of dealing with it. And so they resort
to drugs to escape temporarily.
One thing that we could do in our legislative process is get the work
ethic back into the welfare system so that people can have hope. We
have heard so much about self-esteem. But we cannot have self-esteem
without accomplishment, and we cannot have accomplishment without work.
It is so important that we get our work ethic back into our system.
We also have got to provide opportunities for people as they rise out
of poverty. That is why this Congress has supported increasing college
loans. It is very important for the future of this country. But we must
also, in order to effectively progress in education, eliminate the
deadwood, like programs of Goals 2000, which has been largely
ineffective. We spend hundreds of millions of dollars in the
bureaucracy here inside the Beltway and do not educate one child. it is
wasted money. That money would be more effectively spent by States
directly in the classroom.
But we also must look at our criminal justice system and how we deal
with those who by their very violent acts and by their total excessive
abuse and by pushing drugs on minors and young people, that we deal
with them quickly and harshly.
We must enforce the hot stove principle. When someone puts their hand
on a hot stove, it does not take long to figure out that that is not
the type of action that we want to follow up on or do again. So should
our crime system be. That when someone commits an act that is not
acceptable to our society, like pushing drugs to minors, like violent
acts of criminals, then they should have quick and just punishment and
not let it linger on. That is the second major problem and it is part
of the social structure that we can deal with in some part through
legislation.

But the third problem in our society is a crisis of the soul, a
problem of the heart. This is a problem, and this is not going to go
away by spending more money on social programs. This country has spent
since the 1960s $5 trillion on our social programs. Yet every social
indicator that we have, drug abuse, violence, divorce, domestic
violence, child abuse, is all getting worse. We have spent a tremendous
amount of money.
In order to make $1 trillion, one would have to make about $1 million
dollars a day for 2,000 years just to get $1 trillion. It is a
tremendous amount of money. People do not realize how much money that
is. But yet we have spent it trying to increase the lot for people who
are truly in need and it has been wasted. We must change the system.
But in dealing with the crisis of the soul, the money is not going to
be solving the problem. Instead, we are going to have to each take
ownership of the problem and it is going to have to start with
individual responsibility, inside our home.
If we want a better family, we must be better spouses, better
parents, spend more time with our children. If we want to have a better
church, it is important that we be involved in the church, through
attendance and through helping with classes like Sunday School. If we
want a better neighborhood or a better community, we have to be a
better neighbor. It is this type of ownership that is going to change
the problem.
There is a gentleman who owns a machine shop in Wellington, KS, just
north of Wellington, KS. In about the mid 1960s, he grew tired of
driving back and forth to Wichita, KS, where he had a job as a
machinist at Boeing Company and he started his own machine shop. He had
4 employees to start with. Now he is up to 200 employees.
Last August I was in his brand new building which sits across the
street from his original facility. In that building he has a machine
that is 30 feet wide and 200 feet long. It sits on 21 tons of concrete.
The surface which is stainless steel is totally flat. You can drop a
marble or a ball bearing on it anywhere on that surface and it will not
roll. It is a 3-spindle 5-axis machine, and it cost $7 million for him
to procure the machine and get it placed in this building.
As I looked at this machine, having come out of the aerospace
industry, I asked him what parts was he going to manufacture on this
machine. Bill Meredith is his name.
He said, ``You know, I don't know at this point. I'm looking at
several different things.''
I was astounded. I thought, how is it that this man is successful
when he does not even know what parts he is going to be running across
this machine which costs $7 million?
So I asked him, ``Bill, why is it you're so successful? Is it because
you're willing to take the risk, to borrow $7 million and employ
additional people? Or is it because you're on the leading edge of
technology?''
Bill said, ``It's really neither of that. It's not because I have
borrowed the money or because I'm willing to take the risk. The reason
I'm successful is because I have good people working for me.''
I thought, that is probably the solution to our problems. We need to
get good people involved in the process, to take ownership in the
problems that we have in this country.
In a book written by Marvin Olasky, who is a history professor at the
University of Texas, called the Tragedy of American Compassion, he
talks historically how we dealt with people who were truly in need over
the years and how we used to require something from the people as they
received benefits. The men would chop wood in the time when wood was
used as a source of energy and women would sew or take care of other
children and they learned to read and they got involved back in the
system and it helped them rise out of their temporary position of
poverty into successfully participating in society.
What we have now too often is a situation where people have relied on
the Government to provide for those truly in need. We pay taxes. It is
the Government's problem. We have lost that ownership in solving the
problems. Mostly it was charitable organizations that dealt with people
who were truly in need. Now we have moved it to the Government and it
has not worked effectively.
In order for us to make that transition back to successfully moving
people out of temporarily being poor as opposed to being caught in the
welfare cycle, second and third generation being caught, get them
involved in moving into a productive time, Marvin Olasky advocates each
of us being involved, good people being involved.
I think that that is what this country is going to have to do. We
cannot rely on the Federal Government to solve our problems. We have a
30-year history after spending $5 trillion proving that the system does
not work. It is broke, it is anti-family, it is anti-work, it is anti-
property accumulation. It teaches the wrong example for a system of
free enterprise. Each of us must answer the call and take ownership in
the problem. If we do, I think that we will have a much better country.

[[Page H1977]]

{time} 2015
DEBT, DEFICITS, AND BALANCED BUDGETS: THE TRUE DEBT

The SPEAKER pro tempore (Mrs. Waldholtz). The gentleman from
California [Mr. Horn] is recognized for 60 minutes.
Mr. HORN. Madam Speaker, today I want to continue the discussion of
the debt, deficits, and balanced budgets. This is a true debt speech.
Some of the debt you hear about is only part of the debt. We are going
to get into the unfunded liabilities again and what is really out there
for ourselves, our children, and our grandchildren.
``Blessed are the young, for they shall inherit the national debt,''
said President Herbert Hoover in a statement made in jest over six
decades ago. Today the young, the old, and those of us in between have
a significantly lower standard of living than we should have.
Why is that? Federal deficits and unfunded promises have eaten away
at the investment capital, the seed capital, if you will, that America
needs to grow.
In the first chart here, we look at family income with and without
deficits between 1980 and 1996.
If Congress and the President for the last 26 years had run the
country as most of us have run our family finances--matching what we
earn to what we spend--an average family would have had at least $5,000
more to spend each year; that is, roughly $100 per week. Or they could
also have paid a lower rate of interest on their home and their car.
With 2 percent savings in interest, a $100,000 mortgage payment on a
house would be $2,000 less each year, or nearly $200 per month, and
greatly improved family job opportunities would have resulted from
that.
The Federal Government deficits as well as unfunded promises,
including the loan and credit guarantee losses experienced by the
Federal Housing Administration, education loans, farm ownership, rural
development loans and guarantees, insurance programs, including deposit
insurance, the Pension Benefit Guaranty Corporation, the Federal
Emergency Management Agency and its flood insurance, and potential
losses from the government-sponsored enterprises have contributed to
reducing our standard of living even though a lot of good is done by
all of these programs.
The intent of many Federal promises is good, but the overall result
has been that Uncle Sam has made over $50 trillion, that is a ``t'' for
trillion, in promises that we might not be able to afford, including a
$4.9 trillion national debt, which is what we are grappling with this
month, plus farm subsidy payments, inadequately funded civil service
and military retirement, Medicare, Medicaid, an ever-widening variety
of programs and other unfunded entitlements.

New Federal promises have often produced costs adding to the debt and
potential liabilities, and those costs have risen beyond their authors'
wildest dreams.
During the next several minutes I will explore the issues surrounding
Federal debt, including the yearly Federal budget deficits, unfunded
Federal promises, which together create the yearly deficits, and Uncle
Sam's potential bankruptcy.
Let us look a little bit at history. Ancient Athens, the world's
first democracy, it prospered during the sixth century before Christ.
Athenians had no notion of deficit budgeting or of a national debt. In
brief, budgets had to be balanced. If expenditure exceeded income, then
either revenue had to be increased or spending reduced.
``Prudent provision might build up reserves against rainy days,''
said Professor David Stockton, in his book ``The Classical Athenian
Democracy,'' that was published by the Oxford University Press in 1990.
Athens eventually fell to Sparta, but it was not because of any debt.
Even though there was no notion of deficit budgeting or of a national
debt in part of the ancient world, Rome briefly resorted to forced
loans to the state during the Punic Wars. Coins, worth their content in
precious metal, were the currency of ancient Rome and Greece. Printing
of currency to finance governmental activities would be centuries away.
In the modern era, government debt has achieved its full potential.
As the economists noted, ever since King Edward III of England
defaulted on his debt to the Italian bankers in 1335, international
investors have fretted about the high levels of government
indebtedness.
A recurring theme throughout the history of the United States is that
the Federal debt should be avoided. Thomas Jefferson, Andrew Jackson,
the populists, Dwight Eisenhower, Ross Perot, and numerous others have
decried excess Government spending.
For instance, President Dwight D. Eisenhower, in his 1955 budget
message, noted that ``one of the first problems of this Administration
was to bring the budget under control.'' Jefferson, our third
President, warned that the ``public debt is the greatest of dangers to
be feared,'' and that ``debt and taxes were public evils of the first
magnitude. They drained capital away * * * diverted it from productive
enterprise, and supported a system of coercion, corruption and
privilege that was the bane of every government and necessarily fatal
to a free one.''

Andrew Jackson believed that the national debt diverted funds from
productive private uses into the unproductive ones of providing
Government services, and taking from the poor to the rich. During the
Jackson administration in 1835 and 1836, the Federal debt was actually
paid off.
President Martin Van Buren, Jackson's successor, found that the
creation in time of peace and a debt likely to become permanent is an
evil for which there is no equal.
Even Franklin Delano Roosevelt, who led us out of the Depression of
the 1930's, warned us about peacetime debt. Said Roosevelt, ``Let us
have the courage to stop borrowing to meet continuing deficits. * * *
Any government, like any family, can for a year spend a little more
than it earns. But you and I know that a continuation of that habit
means the poor house.''
Our effort in this Congress is to stop big Federal deficits, and that
effort has been supported for years and during most of his Presidency,
by Ronald Reagan. He warned in his 1981 inaugural address that ``You
and I, as individuals, can, by borrowing, live beyond our means, but
only for a limited period of time. Why then do we think that
collectively, as a Nation, we are not bound by that same limitation?
For decades, we have piled deficit upon deficit, mortgaging our future
and our children's future for the temporary convenience of the present.
To continue this long trend is to guarantee tremendous social,
political and economic upheavals.''
What is past is prologue is chiseled on the front of the National
Archives, located between Constitution and Pennsylvania Avenues in
Washington. Ignoring our forefathers' warnings about debt and deficits
is done at our own peril. What is past is prologue is a good guide. I
recall one taxi driver who had an elderly lady he was touring around to
see the sights of Washington. When she wondered what was meant by what
is past is prologue, the driver translated it. He said, ``Lady, it
means you ain't seen nothing yet.'' And that seems to be the situation
we are in. How right that taxi driver was.

The much complained about national debt under Franklin Roosevelt is
minimal compared to the deficits run up based on 40 straight years of
control of the House of Representatives by the Democratic majority.
Balancing the budget, reducing debt and ending government deficits are
part and parcel of the same economic theme. This theme has been played
out within Congress and the White House every year regardless of party.
In the 208 years since the adoption of the Constitution, the Federal
Government has balanced the budget 105 times, a slight majority.
Unfortunately, in this century, the budget has only been balanced 27
times out of 96, and the last balanced budget was in 1969.
Large budget deficits in the 1980's, and the 1990's have resulted in
a soaring national debt. The debt will continue to rise precipitously
even with the balanced budget initiatives recently enacted by Congress
despite the veto of the Balanced Budget Act initiative by President
Clinton.
No matter how much of a spender the President is, he can not expend
funds if we do not appropriate them. That is the difference between the
Democratic and a Republican Congress.

[[Page H1978]]

Federal debt, despite our efforts, will approach $6.7 trillion by the
year 2002 when, if we reach final agreement with the President, we will
have a budget with no annual deficit, and that equivalency of going
from the $5 trillion national debt now to the $1.7 trillion more to
reach $6.7 trillion by the year 2002 will cost over $25,000 for every
man, woman and child in the United States.
The Federal debt will continue to grow even after the budget is
balanced in the year 2002, with the elimination of the annual deficit.
And why is that? Because through accounting manipulation only part of
the debt increases are recorded in either the President's
recommendations, in his submitted budget, and the budget as finally
approved by the Congress. Interest on Government trust funds, for
example, is not included in the current budgets. That amounts to nearly
$100 billion a year paid to the trust fund because the trust funds have
been borrowed by Presidents, both Republican and Democratic, to give
the illusion of reducing the annual deficit. Thus, the President's
budget recommendation and the congressional budget hide the Federal
trust fund yearly increase, and between 1991 and the year 2000, this
will amount to over $1 trillion addition to our national debt.

In 2002, after the so-called balanced no-deficit budget has been
achieved, assuming the President signs off on it in the next few
months, budgetary surpluses using the current checkbook budgeting
mechanism will have to exceed $100 billion each year to end the
increases in the national debt.
Current debt management procedures are akin to a homeowner not
recognizing the interest expenses on the home mortgage. After 30 years,
the heirs will discover that accumulated interest expenses exceed by
many times the home's purchase price.
If we are going to continue our imprudent policies, then your
grandchildren will have to pay for them. Imagine, your grandchild in
the year 2050, which might seem a long way away for many, but it is
right around the corner once you hit your 20's and the world goes
faster and faster; let us say the grandchild in 2050 is ready to
retire, and instead he is told, ``Your grandfather and others left this
debt for you to pay. You cannot retire now. In fact, you own over
$200,000 in interest and other liabilities.''
Since 1970, the massive runup of the Federal debt has had no
precedent in peacetime America. Major increases in Federal debt
occurred during the Revolutionary War, during the War of 1812, during
the Civil War, and certainly during the First World War and the Second
World War, and of course the cold war which followed.
As the Constitution took effect in 1788, the debt had risen to $73
million for the cost of fighting the American Revolution. Just before
the War of 1812, the debt had actually decreased to $45 million.
Deficits during that war resulted in the debt increasing to $127
million by 1815. In 1835, a Federal debt was paid off with a surplus,
and with a surplus, an extensive debate occurred as to how that surplus
might be returned to the people and to the States.

{time} 2030

The Civil War saw the end of that talk. The debt increased from $65
million in 1860 to over $2.7 billion by 1866 to fight the bloodiest war
in our history.
The debt declined to $1.2 billion just before the First World War. In
only 2 years during that war--America's first real entry into an
international conflict--the Federal debt rose by almost a factor of 10,
to $25.5 billion.
Between 1932 and 1940, during the presidency of Franklin Roosevelt,
the Federal Government ran annual deficits between $2 billion and $4.3
billion. With the start of the Second World War, deficits increased
dramatically to approximately $50 billion per year between 1943 and
1945 as the war grew to a peak in the production of armaments. By 1946,
the national debt had reached $270 billion.
In the 1950's, the budget was balanced three times, and in the
1960's, it was in balance only once. Our budget has not been in
balance, as I mentioned earlier, since 1969, the last year of the
Johnson administration, the first year of the Nixon administration.
Large deficits were run up in 1959 at the end of the Eisenhower period,
almost $13 billion. In 1968, the end of the Johnson period, we had $25
billion.
During the 1970's, the early 1980's, large deficits in the $20
billion to $80 billion range were experienced annually. From 1982 to
today, deficits have averaged over $200 billion per year.
Now the bad news. The yearly deficits as reported in the recommended
presidential and ultimately enacted in the congressional budgets are
only a part of the story. The total debt increase each year nears $400
billion, when you include the interest paid on those Federal trust
funds which I mentioned earlier. That is a cost per family of almost
$4,000 per year.
Our national debt is a Federal liability or a promise to pay to the
people that hold the bonds that are needed to be issued to manage that
debt. It is the link between Federal liabilities and budget spending
and revenues. Other Federal promises or liabilities often reflect
Government spending decisions, but the debt is the single-most
important link between governmental decisions to spend and governmental
reluctance to collect needed revenues, taxes, to cover the
expenditures.
The arithmetic of Federal deficits is very simple. Regretfully, it is
an easily understood subtraction. Each year since 1969, the last year
the budget was balanced, the Federal Government has spent more than it
has received in revenues. Thus, yearly revenues minus spending equals a
surplus, or, if spending has exceeded revenues, a deficit. The excess
spending has obviously resulted in an annual deficit. So we have the
yearly deficit plus last year's debt, plus the interest on the trust
funds, equal what is really the national debt of the United States.
Congress in its budget resolution projects that the debt will reach
approximately $6.7 trillion by the end of fiscal year 2002. At that
rate, interest will consume over 20 percent of the Federal budget by
2002, up from 3 percent in 1955.
As I recall, the first time we had a $100-billion, operational budget
was 1965, the height of the Vietnam War during the Johnson
administration, the beginning of the domestic Great Society. Now, that
$100 billion ran the whole government and ran a war abroad that was a
very difficult war. And yet that is what we willy-nilly provide as
interest on the debt. Essentially what we pay for interest today is 2
Johnson administration years at their height. That is our cost to
manage the national debt of today.
The debt has increased 600 percent since 1980. It will go up another
$1.7 trillion between 1996 and the year 2002. Since the founding of the
Republic, few issues have received the continuing attention that the
annual Federal deficit and increasing national debt have attracted.
Until this century, Federal deficits have been scrupulously avoided in
peacetime. It has only been since the 1930's that Federal deficits have
become commonplace.
Some blame the English economist John Maynard Keynes. Keynes stressed
that in order to revive a depressed economy government should spend
more than it received in revenue in time of unemployment. When the
economy was prospering, however, the debt added to regain prosperity
would be reduced by increased taxation during that now new prosperity.
President Franklin Roosevelt understood very well the first part of
the Keynes theory of unemployment, the spending part, that would reduce
unemployment. But he failed to adhere to the second part--the
recoupment part--of recouping what you spend to get the economy moving
again in better time.
When the economy was booming and there was full employment stimulated
by the Second World War, Government should have financed our armaments
through increased taxation on individuals and corporations. Instead,
the Government took the easy way out; it issued Government bonds. Those
are the bonds on which we pay interest and which we use to manage the
national debt.

Most legislators obviously do not want to raise taxes. That is not a
popular thing to do. So your only other choice is to cut spending. Most
Presidents do not want to recommend new taxes. So both the Congress and
the President, since the Great Depression of 1929, have to accept blame
for the

[[Page H1979]]

current $5 trillion national debt. But mostly the Congress over the
last 40 years has to accept it because, very frankly, the President
cannot spend a dime unless Congress appropriates it or by back-door
spending authorizes a blank check which the President can use any time
of night or day.
Federal deficits and debt run counter to American thriftiness. The
``penny saved is a penny earned'' ethic is a vital part of our American
heritage. Most of the children's stories of the 19th century stressed
that work ethic, that ethic of a penny saved is a penny earned. We all
know the children's story about the wise ant who prepared for winter by
storing up on food and doing one's duty to one's family, and the
grasshopper that blithely played and played and did not work and simply
did not save a thing. Of course, the grasshopper had problems. The
grasshopper froze during winter. If the grasshopper did not starve to
death, perhaps the ant was charitable enough to provide food through
the bad times of the storms.
Thrift has guided our day-to-day living for many generations. Today
Americans are demanding that the Federal Government practice thrift as
we practice it in our families, in our businesses, in our schools, in
our religious institutions. It is clear to most Americans that we must
stop spending more than we take in. We must reduce taxes, and we must
keep Federal programs that work and get rid of those that do not work.
When will we see Federal budget makers practicing good old American
thrift? Not until Congress and the President have the will to cut more
spending, reduce taxes, and, thus, balance the Federal budget.
This Congress has the will. A majority of us have the will. It
remains to be seen if the President has the will.
There is both good and bad news about America's debt and deficits.
The good news is that this Republican Congress has turned away from
deficit spending. By our votes in committee and in the full House of
Representatives, we have cut spending and reallocated funds among
programs. We have eliminated programs.
The President claims he wants to cut spending, but he has vetoed
several appropriations bills that did cut spending. Republicans,
through our continuing resolutions, CR's, as they are called, have
continued on the path to a balanced budget by the year 2002 or sooner.
We have done that without passing a balanced budget amendment to the
Constitution. We passed it in this House. We had the two-thirds vote.
We had a number of Democrats join us on that. We could not pass it in
the Senate by one vote because about eight members of the Democratic
Party who promised their constituents they would vote for that
constitutional amendment did not vote for the balanced budget
amendment.
The Congressional budget for the fiscal year 1996 requires that the
Federal budget be balanced in 7 years. In his preliminary year fiscal
year 1997 budget, President Clinton has jettisoned budget deficits of
$200 billion for a budget surplus by 2002.
The bad news is that waiting until 2002 to end the deficits by
balancing the budget will add $1.7 trillion to the national debt. That
will ensure, at a 5-percent interest rate, $85 billion in additional
yearly interest payments. In order to manage the national debt, which
is steadily rising from $5 trillion to nearly $7 trillion over the next
few years, we must engage in hard choices and we must set priorities.
We cannot do all the things we have been doing. It is simply not
prudent.
The test of our political system will be whether it will jettison the
debt and the deficit strategy of the past 50 years and adopt an
economic growth strategy that will ensure our children and our
grandchildren's economic future.
Why is it better to balance the budget sooner rather than later? The
sooner the rise in the debt is stopped, the better is the chance that
America will enjoy healthy economic and social growth. Family incomes
would increase by many thousands of dollars if the budget is balanced
sooner rather than later.
Our Nation's economic health is at stake. Our Federal Government's
health and the economy will depend on how well we manage our debt and
the potential liabilities and promises, such as those in welfare,
Medicare, Medicaid, and Social Security, among others.
The members of the Social Security System deserve better than they
have received. They deserve a better investment strategy than has been
used for the last few decades.
Growing Federal debt is like a fever. The higher it gets, the sicker
the patient.
Let us take a look at a chart that reflects the economic fever of a
number of countries. In Europe, an economically healthy government is
defined as having a government's debt to the gross domestic product--
some of us grew up calling that the gross national product--ratio of no
more than 30 percent of debt to GDP. The national debt of the United
States to gross national product ratio is 70. Belgium and Italy have
the highest debt to GDP ratio in Europe, namely 142 and 125. They have
a very bad fever.
As the fever debt to GDP ratio goes up, a nation's output goes down.
Economists estimate that doubling the current fever level of the United
States would reduce our country's input by 6 to 12 percent. But, more
important, as the fever rises, investor confidence falls. There is a
limit to how much debt investors are willing to hold in Federal bills,
notes and bonds. As the debt goes up, the risk of default goes up.
At some point, domestic and foreign purchasers of our debt will begin
liquidating their holdings. Disaster could strike with interest rates
skyrocketing and the stock market falling in a panic. That will not be
the first time or the last.
The economic psychology could mean depressed investment, reduced
output, declining family wages, with parallel reductions in household
spending.
In addition, the exchange rate declines as investors sell dollars.
Widespread bankruptcies would occur. Even a Government default could be
possible.
With all this, we would be in the middle of a financial and economic
disaster.
Looking around the world, those nations--a few of them called the
little and big tigers, as you know--that are economically the
healthiest, have very low economic fevers. Let us name a few:
Singapore, Chile in Latin America, the Republic of China on Taiwan,
Korea, Hong Kong, Thailand, Indonesia, Malaysia. They all have low debt
to gross domestic product ratios.

{time} 2045

And guess what, these are the countries that over the last quarter of
a century have had deficits which were less than half of those in other
countries. The net result of budget surpluses is a stable well-valued
currency, interest rate stability, and single digit inflation.
Let us look at the weaker dollar and what that means for this
country.
Over the last few decades the dollar has crashed against the German
mark and the Japanese yen, as foreign exchange traders around the
world, continue to show their concern about governments with large
debts including Mexico, Italy, France, and even Orange County, CA. The
foreign exchange traders are shifting their anxiety to the United
States as a whole.
We are being taken to the woodshed by the world's foreign exchange
managers for excessive debt and excessive promises. Historically this
is surprising. As noted earlier, throughout most of America's history
our political leaders have clearly opposed an increase in peacetime
debt.
Economists for the most part agree that Federal borrowing, over the
last 25 years, has led to higher interest rates. Higher interest rates
cost consumers dollars, dollars that they could have used to advance
the good of themselves, their families, to provide for education and to
provide for better housing whatever. For instance, a 1-percent increase
in interest rates costs a family obviously $1,000 each year for every
$100,000 in mortgage payments.
If the Federal Government had balanced the budget each year since
1980, the debt would be one-fifth of what it is today, or $1 trillion,
not the $5 trillion that faces us during this month as we seek to raise
the debt ceiling to manage that debt. That level of debt would have
left trillions of dollars available for productive private sector
investment. Balanced budgets would have

[[Page H1980]]

meant more business investment, thus more jobs and more personal
savings. The result would have been more revenue for Government since
the economy would have been in good health and productive, and
Government could have pursued relevant taxes on that economy, and the
fever would be very low.

Americans have over $12 trillion in corporate and individual debt
outstanding. Just a 2-percent reduction in interest rates means a
savings of roughly $240 billion or nearly $2,600 on average, for every
American family. Alan Greenspan, Chairman of the Federal Reserve, has
told congressional committees that a balanced budget--or assurance that
we are on a glide path to a no deficit budget which would be credible--
would mean if done by 2002, a drop of 2 points in interest for the
citizen. If you had an 8 percent mortgage, it would be a 6 percent
mortgage. If you had a 10 percent interest on your consumer debt, it
would become an 8 percent interest rate. If you had a student loan, you
would save money and so on. Federal deficits mean lower investment,
consumption, and savings.
Personal savings are vital for citizens' retirement, for home
purchases, for education, for health care expenses, as well as for the
Nation's economic growth and development. Excessive Federal debt is
cheating our citizens, it is cheating our children and our
grandchildren out of a higher living standard by providing them with
less money to save, less money to consume, less money to invest.
Today, a rising Federal deficit has cheated the average citizen out
of the opportunity to save, to consume, or to invest thousands of
dollars since 1969. It is much more desirable for the average family to
be able to choose among alternative goods, or to choose to save or not
to save as they might desire. Business investment has suffered the same
consequences--less money to save has led to less money for business
investment. What does this mean? It means fewer jobs and lower profits.
Now let us talk about hot money.
The Federal debt and the unfunded promises are mostly hot money. As
noted above, hot money are the dollars stolen from future generations.
It is the benefits that Members of Congress and the President have
often agreed upon in order to assure their reelection.
This hot money expended over 25 years has significantly lowered each
American family's standard of living. Hot money not only breeds
intergenerational inequity, it also is simply reckless money in that it
encourages those types of political programs and political payoffs. It
is unjust by cheating taxpayers with higher interest rates, and it has
immoral consequences in that it cheats the poor and the middle class
out of jobs.
Let us talk about the lower standard of living that results.
According to Martin Feldstein, the President of the National Bureau of
Economic Research, the costs of the last 16 years of deficits to an
average American family has been a loss of $500 per month. With this
$500 loss each month, you family could have bought a nice car, could
have bought a house perhaps worth $50,000 more than the one you live
in, could have paid for your children's college education, could have
paid a lot of hospital bills.
For each of the last 26 years of Federal deficits, which has led to a
weaker dollar, which has led to higher interest rates, it has led to
lower investment and lower savings. The result is a lower standard of
living for the average American family.
Trade deficits and the Federal debt are increasing. Federal debt and
international trade deficits are the two major constraints limiting
private investment. Thus, economic prosperity is closely tied to the
Federal debt. Government surpluses are a key factor in increasing
prosperity and raising the standard of living.
When does Government debt become excessive? Well, debt by itself is
only a partial measure of whether Government fiscal policy is
sustainable.
After the Second World War the United States and Great Britain had
debt to gross domestic product ratios of 114 and 260 percent
respectively. Winning the Second World War was absolutely crucial for
democracy. By 1974, the United States had an economic fever, a debt to
GDP ratio, reduced to roughly 34 percent for the gross Federal debt and
25 percent for the publicly held debt. What really counts is keeping
the peacetime debt, the economic fever, very low. A high debt growth
rate, a rising fever, foreshadows fiscal difficulty.
Today, besides the United States, Sweden, Italy, and Canada, several
other so-called developed countries have rapidly growing national
debts. Italy has one of the world's largest debts. Financial markets
have penalized Italy for its growing debt by demanding a 5 percent
premium on Government bonds, and this is just the beginning. The
economic penalties for large debts can include insolvency, hyper
inflation, illiquidity, depression, broken promises to pensioners and
tax rate increases, and, needless to say, when you sum it up, it is a
greatly reduced standard of living for all concerned.
When I talk to my constituents back home in the Long Beach to Downey
area about the Federal budget, they often wonder why we here in
Congress cannot balance the Federal budget this year. They reason that
their family, their business and their State and local government with
which they are familiar in a similar position would be able to balance
the budget in a year or maybe two at the longest.
Let us look at the Federal deficit as an average American family
might look at it if it was their deficit. If the Federal Government
were an average American family, it would be earning $40,000 a year and
spending $44,000, running a 10 percent of $4,000 yearly deficit.
Cutting back spending by $4,000 or $350 per month could be accomplished
with some minimal financial pain by most families.
For instance, a family might decide to vacation at a local beach
instead of at Disneyland or family members may decide to reduce their
premium cable channels and their lottery ticket purchases. A new car
purchase might be delayed for a year.
The point here is that a 10-percent cutback in spending is not
inconsequential, but it would have only a short-term impact on
lifestyle. If it were the average family, the Federal Government would
run about a 10-percent deficit of this year's congressional budget
resolution.
This same budget resolution balanced the budget over 7 years. This
seems like a long time to me and many others and certainly to most of
my constituents. The Federal dollar chain, as you look at it, and it
gets a little complicated, it has several links which, as in many
chains, are interrelated. The Federal dollar chain is 75 years long. It
begins with today's taxes paid by each citizen; that is the purple part
of the chart, and ends with social security promises to the 18 year old
just entering today's work force. That 18 year old will probably live
to be a 93 year old. These links also relate to what the Government
owns. Those are the assets, the Federal revenues, income received by
the Federal Government and over 1,300 Federal spending programs and
accounts. Like all chains it is only as strong as its weakest link.
The Federal dollar chain links are very critical to each other. Weak
links limit the capability of the Federal Government to meet the needs,
pay for the promises and perform at peak efficiency. At the top of the
Federal dollar chain is the U.S. net worth, the black link. Attached to
this link are assets in green and promises liabilities in red and the
last promise in red, the link, is to the national debt.
The debt, as I noted earlier, is the result of very simple
arithmetic. Revenues in purple minus spending in yellow. Revenues in
purple and spending in yellow are what we often focus on here in
Congress. Today the link between net worth, national assets and
promises or fiscal liabilities to spending and revenues is critical in
our examination of what is the true national debt. Our true national
debt, the sum of all Federal promises, including our yearly deficits,
is overwhelming us. It is time that Government starts using a balance
sheet to track its long-term promises. These promises must be matched
with assets. Government's ability to pay for promises can be predicted
by how they match up with various Government assets.
Now most of these assets you obviously cannot sell and you do not
want to sell. We do not want to sell any national parks or anything
like that. But

[[Page H1981]]

we have to take a very careful look at public land and other aspects
and see if it is not of recreational cultural historical heritage
value, could there be some investment there that helps us reduce the
debt. It might be minimal, but it is more than we are doing now.
Today the Federal Government's elected Representatives and the
President focus almost exclusively on this year's income, the revenues
from the taxes, and its expenses, the outlays. Little consideration is
given to long-term promises and how they will be paid. Promises have
been made to fund entitlements; that is, mandatory spending such as
Social Security, Government workers' retirement benefits, veterans'
pensions, black lung programs, Federal workers' compensation, and
welfare and unemployment benefits. Over a 25-year period these promises
are estimated to total nearly $25 trillion according to a study
completed by citizens for budget reform drawing on data from the
Department of the Treasury's financial management service and other
Federal and credible private sources. These entitlement programs are
nearly 49 percent of the Federal Government's long-term liability. What
about the other 51 percent?
Other promises include Federal insurance, deposit insurance for
banks, flood insurance administered by FEMA, the Federal Pension
Benefit Guarantee Corporation. That amounts to about $5 trillion; those
and similar comparable entities total 11 percent. Health includes
Medicare which is roughly $10 trillion in financial liabilities. That
totals 19 percent. Government-sponsored enterprises such as Fannie Mae,
Fannie Mac, all the Federal home loan banks total $1 trillion or 2
percent. Loans and guarantees in general amount to another trillion
dollars or 2 percent.

{time} 2100

The national debt is the direct link between the long-term promises,
the liabilities, and income and expenses. Every year since 1969, the
last year we had a balanced budget, Federal expenses have exceeded
Federal income, the revenues.
Fiscal discipline, balancing budgets, reducing promises, are key
features for restoring our Nation's economic health and assuring our
Nation's future prosperity. Typically, Government budget deficits
reduce savings. Lower individual and corporate savings are a prelude to
less investments and falling exports. Investment falls because reduced
savings and the limits of them limits the amount of loanable funds,
pushing the interest rates up. Exports are reduced because rising
interest rates cause the dollar to rise in value. In the end, trade
deficits lead to money being taken out of the United States.
Over the long haul, the Nation's capital stock declines with lower
investment. The net result here is less productive capacity, and the
Nation's output declines. As investment and capital are crowded out,
productivity grows slower and slower, and real wages decline more and
more. The bottom line is very simple: The people earn less. A most
disturbing trend occurs as assets are reclaimed by foreigners.
Each of us has less and is left with less as foreigners earn our
interest, collect our rents, earn our profits. Balancing the Federal
budget must be combined with policies that simplify and reduce both
individual and corporate taxes, establish adequate currency reserves,
provide for an open economy, allow imports and foreign competition,
strongly support American exports, provide domestic economic stability,
and reform Federal insurance programs, the retirement security system,
and the various health systems.
When the Federal Government makes a promise, it should be kept.
Promises made, promises kept. We have heard a lot of people make
promises. They have not kept them. Many of us have tried to keep them,
and have kept them.
Through our oversight program in Congress, we must review every
single program for not only its economy and its efficiency, but we also
must assure that our customer, you, we, the taxpayers, secure what was
promised. This is a very tall order. It is clear that for the United
States to remain the world's major economic, military, and political
leader, it must lead with fiscal policies that provide for a balanced
budget. It must adopt policies that encourage economic growth and
opportunity for all of our citizens. The Federal Government should not
spend more than the sum of what it has, and what it can raise from
future generations.

The benefits of deficit reduction are in the long-term. The currency
of the United States is strengthened. Domestic interest rates are
reduced. Federal bond rates decrease. The standard of living for all
American families will rise. Savings increase. Investment increases.
Foreign trade deficits over the long-term decrease. More and better
jobs are created.
What must really be done to ensure that these benefits result from a
prudent fiscal policy approved by Congress, and hopefully by the
President? We need to balance the budget as soon as possible. If it is
2002, fine.
Some of think we should have balance the budget faster. We need to
reduce the Federal interest payments as a percentage of the gross
domestic product. We need to decrease Federal spending, keeping high
priority programs, getting rid of low priority programs. In this, the
average citizen, the consumer of Government services, the taxpayer,
ought to be involved in telling us which programs are working
satisfactorily and which ones are not working satisfactorily.
We need to give tax reductions as the budget surplus kicks in. We
need to match long-term promises to what the Federal revenues will be.
Balanced budgets, reduced debt, should be sought with the following
outcomes in mind. These outcomes should include increased levels of
personal consumption, higher savings rates, reduced Federal Government
spending as a percent of gross domestic product; in brief, more money
in the pockets of the average American citizen, the American middle
class, the working people of this country.
We need to greatly reduce unemployment rates, with a special emphasis
on young and minority populations. That is the proper investment
policy, where the individual citizen can invest, where corporations,
business--small and large--can invest. It is investment which
stimulates the economy. We will hire more people. The result will be
productive economy.
I was tremendously impressed in listening to Governor Engler of
Michigan delivered his State of the State address. He said that if
every Michigan business hired one more individual, then the
unemployment roll in the State of Michigan would be eliminated. That is
probably also true for the State of California. But first we must have
incentives to encourage entrepreneurship.

Significant increases in economic growth throughout the Nation and
throughout urban and rural America are absolutely essential. That will
be one of the results of a prudent fiscal policy that balances the
budget. We will also have poverty reduction with an emphasis on
children--especially in the preventive health--when we balance the
budget and provide economic opportunity.
We will be more cost-effective, we will have higher quality health
care, education, and housing. There will be a greatly increased growth
in economic productivity. After these various accomplishments, and
trimming the national debt, President Hoover could change his paragraph
from jest to truth and say. ``Blessed are the young, for they shall
inherit prosperity.'' That should be the new goal. No longer would the
young inherit the national debt; that goal must be not only the guide
for those of us in positions of responsibility and trust, but also the
goal for all Americans.
Deficit and debt reduction are a central part of insuring economic
growth and individual and family prosperity. We are on the road to
ending Federal deficits and paying down the debt. We must maintain the
course. Our future and the future of our children and our grandchildren
are at stake.
Madam Speaker, I do hope that this Congress will be the first one to
balance the budget for the 28th time, in this century. It is about
time.

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