[Congressional Record Volume 142, Number 57 (Tuesday, April 30, 1996)]
[Senate]
[Pages S4369-S4375]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    THE CENTRIST COALITION PROPOSAL

  Mr. BREAUX. Mr. President, for colleagues who may be watching by 
their TV monitors, Senator Chafee and I have taken this time this 
morning to talk, once again, about the so-called Chafee-Breaux centrist 
coalition proposal, which I think is monumental legislation in that it 
presents to the Senate a way to achieve a balanced budget in a 7-year 
period and do so in a bipartisan fashion.
  A lot of people have said that something of this nature cannot be 
accomplished in an election year. Our operations and the legislation 
that we offer proves that it can be done. We have met since October 
1995, last year, on a regular basis, sitting down and discussing the 
difficult problems that are facing this Congress. It is very clear that 
the alternative of doing nothing is not a real alternative.
  Unless we get a handle on entitlement spending, and unless we make 
major changes in the entitlement programs, our country is going to be 
in very, very serious trouble. The alternative, I think, is a bright 
future for this country and for our children. With a balanced budget, 
people see a number of benefits that are real, that are tangible, that 
affect their daily lives--lower interest rates on home mortgages, lower 
interest rates on car notes, more spendable money to spend at home on 
the things that families need in terms of education and health care.
  We have presented a package for our colleagues to consider, and we 
hope that after reading our plan, they will join with us in a true 
bipartisan fashion and move on and enact a balanced budget in this 
Congress. It is not too late. It is only too late if we do nothing. It 
is absolutely critical that we take this step in this Congress.
  I point out that here we talked about how close we are in the various 
proposals. There is much similarity in the administration's latest 
proposal and the proposal from the Republicans and the proposal from 
our centrist coalition, the Chafee-Breaux proposal. There is no reason 
that, with all of these things that we have already agreed on, we 
cannot take the next step and work out the differences that still 
exist.
  All three proposals have a balanced budget using CBO numbers. We save 
between $600 and $700 billion over the life of this plan, and we do it 
while protecting the needs of the must vulnerable in our country--the 
people on Medicaid, Medicare, and welfare. So it is not to say that you 
cannot save between $600 and $700 billion and not at the same

[[Page S4370]]

time protect the most vulnerable in our population.
  Our Medicare proposal is real reform. It is not just cutting 
Medicare, but it is real reform in a major way in the programs, giving 
beneficiaries more choices, which will increase the solvency of the 
trust funds. We make reductions in spending. It is not as much as some 
would like, but it is more than others would like. In Medicaid, we have 
worked with the Governors in a bipartisan fashion to come up with our 
Medicaid plan, which I think has gotten a lot of support from the 
Governors. Democratic Governors have said they would like this to be 
done. Republicans, I think, would agree with the direction we are 
moving in. It maintains flexibility and some of the standards. It is 
basically a Federal program working with the States.
  Yes, there should be Federal standards about how the programs are 
going to be worked out. On welfare, as President Clinton said, a 
welfare reform bill should be tough on work but good for kids. Our plan 
does that. Our plan takes care of children. It provides more child 
funding for parents who are working, for child care and day care. At 
the same time, we have vouchers for children after their parents are 
terminated off of welfare. If the parents are able to work, they should 
work. Welfare cannot be a permanent way of life. We have time limits. 
We have a block grant to the States. Yes, there is more cooperation 
between the States and the Federal Government as to what they have to 
do.
  Yes, we have a tax cut. Some say we need a $245 billion tax cut. 
Well, we have a real $105 billion tax cut, with $25 billion of loophole 
closings, which I think most people can agree to. We have a tax cut for 
families, $250 per child tax cut, which goes up to $500 per child if 
they invest in an individual retirement account in that child's name. 
We have reductions for education. This is a family friendly tax 
proposal in the sense that it helps working families. We have some 
alternative minimum tax relief, which many people will agree we should 
have. We have a capital gains tax cut, which we think is important to 
create economic incentives for individuals and for corporations in this 
country.
  Finally, we have an adjustment in the Consumer Price Index. A lot of 
people said you cannot do that. Well, we have done that in a bipartisan 
fashion. Economists who are both Republican and Democrat have told us 
that the CPI, Consumer Price Index, which is the vehicle that is used 
to project all of the cost-of-living adjustments, is overstating what 
those adjustments should be.
  So we have taken the step of saying we are going to have a reduction 
of five-tenths of 1 percent, one-half of 1 percent for 2 years and then 
three-tenths of 1 percent for the remaining years in our budget plan. 
That saves $110 billion. For a Social Security recipient, it means, 
instead of getting the normal increase, they would still get an 
increase in their benefits, but it would be approximately $3 less than 
they would normally get per month. But what it does is help save the 
system.
  I suggest that most people who are on retirement programs would say 
it is important to save the system, not only for me as a selfish reason 
but for my children and my grandchildren, and we are asking everybody 
to have a more realistic adjustment in what their increases should be--
still get an increase if the cost of living goes up, of course, but 
guaranteed, guaranteed in a better fashion because the system is going 
to be stronger. All of the retirement programs will be stronger and 
more solvent as a result of our Consumer Price Index adjustment. People 
will get an increase. The increase will be smaller than it might have 
been, but the principle is that the formula is incorrect, and we are 
trying to correct the formula. What is wrong with that?
  So, Mr. President, let me reserve my time and conclude by saying that 
there is going to be an opportunity perhaps in the next couple of weeks 
to present our budget in this Chamber, to have our colleagues take a 
look at it and to, yes, vote for it because we think it truly 
represents the only bipartisan effort that has a real chance of passing 
and getting the job done.
  Mr. CHAFEE addressed the Chair.
  The PRESIDENT pro tempore. The able Senator from Rhode Island is 
recognized.
  Mr. CHAFEE. Mr. President, I want to ask the Senator from Louisiana a 
couple of questions, if I might, on my time.
  Mr. BREAUX. Sure.
  Mr. CHAFEE. I should like to say to the distinguished Senator that I 
encounter fellow Senators who say, ``I'm all for your plan except I 
don't like the tax cut,'' or, ``I am all for your plan except I don't 
like that change in the Consumer Price Index,'' or, ``That's an 
excellent plan, but the Medicare number isn't the one I like.''
  Now, my question to the Senator from Louisiana is, What other vehicle 
is going to be presented that fixes these problems? If they do not 
accept our proposal, the proposal of the distinguished Senator from 
Louisiana and I and this wonderful group of bipartisan Senators working 
with us, if they do not like that, what else has a chance at being 
enacted that is going to balance this budget, not only at the end of 
the seventh year but in the outyears as well?
  Mr. BREAUX. If the Senator will yield for a response to the question, 
the Senator has outlined a formula for failure, a formula for disaster. 
If every Member comes up and says, ``I like what you have done except 
one little item,'' we will never get any agreement. The essence of the 
agreement on this issue is a compromise between those who want to do it 
all one way or all the other way. So, yes, there will be differences, 
as there was--and I know the Senator remembers this--in our own 
discussions. The Members said, ``It is a little too far in this 
direction,'' or, ``It is not far enough in that direction.''
  What we have shown, however, is that you can come together in a 
bipartisan fashion and reach an agreement that gets the job done. I 
think it is a genuine compromise. That is the only way the job can get 
done.
  Mr. CHAFEE. The distinguished Senator from Vermont is here and has 
some comments on this, and I know he has duties presiding in a few 
minutes, so I would like to yield whatever time he wishes.
  Mr. JEFFORDS. I thank the Senator very much, my good friend from 
Rhode Island. I am pleased to be here again this morning to talk about 
the importance of adopting a balanced budget in this Congress.
  As the speakers before me have outlined, it is extremely serious, and 
this may be the only opportunity we have now that we have a group of 
moderates who believe very strongly that there is a solution and that 
if we all sit down together and reason, we can have a balanced budget. 
I believe that very strongly.
  The last time I spoke here, I spoke as a member of the Appropriations 
Committee and of the dire need with respect to the ability to 
appropriate to bring the entitlements under control. I suggested at 
that time that we had some difficult decisions to make in that regard. 
In particular, we have to look at the CPI and also we have to look at 
entitlements, especially those in the area of Medicaid and Medicare, to 
find ways to better handle them so that we do not continue the rapid 
increase we have in expenditures, which has made it imperative that we 
get together on a balanced budget.
  Today I would like to speak to you as the chairman of the Senate 
Education Committee. Those of us who depend upon discretionary funds to 
accomplish those goals which we have set out look at the future and 
realize that with the increasing needs we have because of international 
competition in the area of education, there is no way we can reach 
those by depending upon our State and local governments to raise those 
funds, especially if you take a look at what the present trends show 
would be necessary to cut back on discretionary spending, especially 
the nonmilitary discretionary spending.
  Let me briefly outline to you some of the dire consequences with 
respect to education.
  On the one hand, we have recognized now for over a decade the 
incredible need we have to improve our educational system, in 
particular to meet the demands of international competition. Study 
after study has shown that if we do not change and improve our 
educational system, then in the next century the United States will no

[[Page S4371]]

longer be an economic power but will be a second-rate power.
  What is the rationale and what are some of the reasons for that 
conclusion? First of all, international studies comparing our young 
people with those of other nations have shown that this country, which 
has been proud of its educational system, ranks dead last when it comes 
to the ability of our young people with respect to mathematics, with 
China, a growing economic power, being by far the leader with respect 
to education of its students in mathematics.
  In addition, even a more horrible situation is the fact of the so-
called forgotten half. The forgotten half are those individuals who are 
not college bound. We have not paid much attention to that group. In 
fact, studies that have been done by those who measure literacy found 
that half of our students who graduate from high school are 
functionally illiterate. That has to be turned around.
  That is not even taking into consideration the fact that in some 
cases up to 30 percent of the students have already dropped out of high 
school. If you add those percentages together, you can see that this 
Nation's might with respect to education capacity is not there.
  What do we do to change that? I am not one who would be up there to 
disagree with those who say you just cannot throw money at and improve 
education. That is a fact. What you cannot do is say you must cut back 
on education. Now we have suddenly gotten the message, at least from 
the people as well as from those who are discussing it, that cutting 
education is the poorest thing we can do.
  But, again, I wish to point out that if we do not do something about 
balancing the budget, the impact upon discretionary spending is going 
to be so dramatic we cannot escape the fact we may have to start 
cutting back on education. That would put this Nation in dire peril. 
The public agrees with this; 86 percent say do not cut education, and 
80 percent of those who said balance the budget said, yes, but do not 
cut education.
  Congress heard that message this time, and we were able to escape. 
Due to the efforts of the Senator from Maine and others, we were able 
to stop, for instance, the tendency to seriously cut back on funding 
with respect to higher education. We were able to stop that and to keep 
it steady rather than having the dramatic cuts that were suggested by 
the other body.
  In addition to that, the work of the senior Senator from Pennsylvania 
was very dramatic in the final analysis on the need not to cut back on 
education, and we finally recognized that we could not and we did not 
this time cut education. But the pressures in the future are going to 
be very dramatic.
  Let me conclude by pointing out again there are dramatic needs in 
education that must be fulfilled. For instance, if we were to match 
what other countries do with respect to days spent in education--China 
spends 250 days a year in education; we spend 180, and all of the other 
nations, our international competition in Asia and Europe, average 
about 220 days--we would have to appropriate, in order to get even with 
the average, some $76 billion to spread over the States. That is just 
one example. I could go on.
  Let me just stop and say we have an opportunity here through the 
leadership of Senator Chafee and Senator Breaux to be able to bring 
into check the decrease in the spending of the discretionary funds 
which will be necessary if we do not adopt a plan such as theirs.
  I commend them for their effort. I intend to work as hard as I can in 
order to bring the spending under control so that we do not have to 
have the negative impact upon education which we will have to have if 
we do not do so.
  I yield the floor.
  Mr. CHAFEE addressed the Chair.
  The PRESIDENT pro tempore. The distinguished Senator from Rhode 
Island, Senator Chafee, is recognized.
  Mr. CHAFEE. Mr. President, first I would like to thank the Senator 
from Vermont for his effective comments.
  I notice the senior Senator from Pennsylvania is here. I would be 
glad to hear his views on this subject.
  Mr. SPECTER addressed the Chair.
  The PRESIDENT pro tempore. The able Senator from Pennsylvania, 
Senator Specter, is recognized.
  Mr. SPECTER. Mr. President, I thank the Chair. I thank my colleague 
from Rhode Island for yielding to me, and I congratulate him and the 
distinguished Senator from Louisiana, Senator Breaux, for the 
tremendous amount of work and success which they have brought into a 
program for a 7-year balanced budget.
  My sense is that with a centrist approach, which is represented by 
the charts which Senator Breaux has spoken about and the one which is 
next to Senator Chafee, we can have a balanced budget, and we can do it 
with a scalpel and not with a meat ax.
  The bill which we passed last week and which was signed by the 
President is illustrative, in my judgment, of what we can do if we 
really set our minds to it. I chair the Subcommittee on Labor, Health, 
Human Services and Education. And, as I have said on this floor, it has 
been an embarrassment to me that that bill could be brought to the 
floor at a much, much earlier time. I will not review the bidding as to 
why it could not be brought to the floor, but suffice it to say that 
there were riders which kept it from consideration by the Senate.
  Then Senator Harkin, the ranking member on the subcommittee, and I 
crafted an amendment to add $2.7 billion, significantly for education, 
but also for health, human services, and worker safety. That amendment 
passed the Senate by a vote of 84 to 16, which is obviously a very 
strong bipartisan showing.
  We then went to conference with the House of Representatives. The 
very difficult part is finding the figures which will be signed by the 
President and which will be acceptable to the House of Representatives. 
We had 20 hours of negotiations over 2 days, and we finally worked it 
through on the House-Senate conference with the House conferees to 
bring it to a narrow 6-to-5 vote, but it was accomplished.
  I believe that is indicative of what we can do with this centrist 
approach. It is my hope that this will be reduced to bill form and that 
we will put it forward.
  I have urged my colleague, Senator Chafee, to bring the proposal to 
the floor and to bring it to a vote because I believe that there are 
many Senators, besides the 20 or so who have joined in these meetings, 
who would be willing to support it if it came to the Senate floor for a 
vote.
  It is reminiscent of the tremendous job which the distinguished 
Senator from Rhode Island, Senator Chafee, did on health care back in 
1992, 1993, and 1994. He had so many meetings in his office at 8:30 in 
the morning every Thursday that most of us should have been lessees. We 
should have paid rent over there.
  One of the concerns that I had on the tremendous job which he did was 
that it never came to the floor for a vote under the time of pressure 
for which I think we would have enacted that bill. He did set the 
stage, I think, for those of us working with him, and under Senator 
Chafee's leadership, for the legislation which was passed last week, 
the Kassebaum-Kennedy bill. This bill, which is targeted, did not have 
the problems of the administration's bill which was a complete 
revolution.
  So that with this centrist approach, I think we have it. I hope we 
will bring it to the floor. I think it is the model for accommodation, 
and I am glad to be a part of the team.
  Again, I thank my colleagues who yielded the floor.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER (Mr. Jeffords). The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I thank the senior Senator from 
Pennsylvania for his kind remarks and for the wonderful work and help 
which he has given us on this.
  I would like to turn back, if I might, to the Senator from Louisiana 
because both of us have encountered, as I have previously mentioned, 
objections to specifics here. But this is not exactly unknown 
territory.
  Let me suggest to the Senator from Louisiana that a bill went through 
this body which had high tax cuts. It did not have the corrections to 
it in the CPI. And that bill, as I recall, did not get enacted into 
law. In other words, one approach was tried which many people here say, 
``Oh, we need more

[[Page S4372]]

taxes. We do not like this. You only have $130 billion in taxes. You 
ought to have $245 billion.'' OK. We tried that.
  Am I correct in saying that?
  Mr. BREAUX. The Senator is absolutely correct. We discussed and had 
heated discussions about the size of all of these reductions in 
spending as well as the size of the tax cut. But this is reflective of 
a genuine compromise reached between people of differing opinions. But 
it reflects, I think, the only way we can get the job done.
  Mr. CHAFEE. So when those others say do it this way or do it that 
way, there is no other train leaving the station that I am aware of 
that is going to reach the terminal point successfully. In other words, 
the President has indicated that, and the Democratic leadership has 
indicated that they do not want high tax cuts.
  Am I correct in that?
  Mr. BREAUX. The Senator is correct. I think both sides have sort of 
polarized on whether to have a tax cut or not. But we have tried to 
listen to both sides and try to come up with a recommendation that 
meets the concerns of both sides but reflects a true compromise.
  Mr. CHAFEE. That is the point that I would like to get across to our 
listeners and viewers--that it is easy to be critical. It is easy to 
say, ``oh, no. Do not fool with that CPI, that Consumer Price Index, 
and the Medicare figure is too high. We do not like what you have done 
on welfare. The Republican Governors do not like what you have done 
totally on welfare an area that has been mentioned before briefly.
  We make some savings out of Medicare, or actually what we do is we 
reduce the rate of growth over the next 7 years. Medicare, unless 
something is done, is truly going to go broke.

  People say, ``Oh, we have heard you people say that around here on 
this floor before.'' All right, let us just look and see what has 
happened. We have two recent reports. The New York Times reported last 
Tuesday that the Medicare hospital insurance trust fund--which is the 
fund that pays the hospital bills for the elderly--operated at a loss 
for the first 6 months of this current fiscal year. It fell short, the 
outflow as compared to the income, fell $4 billion short in that brief 
time.
  So once upon a time we were bringing in more revenue than we were 
expending and we built up a surplus. Now the lines on the graph have 
crossed and the expenditures are exceeding the income. That is not 
going to change unless we do some things.
  Yesterday's Washington Post reported the Congressional Budget Office 
now believes the Medicare trust fund will become insolvent in the year 
2001. When we started on this exercise just a few months ago we thought 
it was going to go insolvent in 2002, so in just a few months we have 
seen the fiscal situation of the trust fund deteriorate by a year. So, 
unless something is done in this Medicare Program, along the lines that 
we have suggested, the Medicare trust fund, which pays the hospital 
costs of the elderly in this Nation, is going to go broke. That is 
something we ought to take very, very seriously.
  I read a comment the other day in the newspaper where somebody said, 
``Oh, don't believe that. We are going to take care of it.'' It is not 
easy to take care of some of these situations once the downward spiral 
starts and the expenses exceed the income. Once that starts there is 
really serious trouble ahead.
  I would like to now touch briefly on the Consumer Price Index. The 
Consumer Price Index has clearly been overstated. What we do, as the 
Senator from Louisiana pointed out, in our group, we say let us state 
the Consumer Price Index accurately. So that is what we have done. That 
results, fortunately, in dramatic savings, not just over this 7-year 
period, but for the outyears as well. So, a key part of our proposal 
here is the recognition of the fact that the Consumer Price Index is 
overstated. We hope our fellow Senators, paying attention, listening 
and studying this situation, will come to the conclusion that we have, 
that it is essential to state the Consumer Price Index in an accurate 
form. That results, as I mentioned, in our calculations, of a $110 
billion savings over the 7-year period with dramatic savings in the 
outyears, and which will mean, as the Senator from Louisiana briefly 
said, that Social Security and Medicare will be here in the future 
years.
  Mr. BREAUX addressed the Chair.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.
  Mr. BREAUX. Mr. President, I yield myself such time as I may consume.
  I would like to ask a question of the distinguished Senator from 
Rhode Island, because he was talking about the Consumer Price Index 
adjustment. He and I served on the Senate Finance Committee together. 
We know we had asked for a study by a commission to report to the 
Finance Committee. I think the commission was asked for by the 
distinguished Senator from New York, Senator Moynihan, and, at that 
time, Senator Packwood, to report to us as to whether the CPI, the 
Consumer Price Index, was correctly reporting the cost of living or 
not. That commission made a preliminary report and said no, it is 
incorrect, in that it overstates inflation by anywhere between 0.7 
percent up to 2 percent.
  So what we have done is suggest we make an adjustment, that we make a 
correction, that we make it more accurate than it was before. Our plan 
says we are going to take a low estimate--let us use one-half of 1 
percent--and make the adjustment there.
  It seems to me, and I ask the Senator, that what we are suggesting 
makes such great sense I am wondering if he could comment on why there 
is so much opposition. It seems no one wants to touch this part of our 
plan for fear of the political consequences. Could the Senator shed 
some light on why something that seems so reasonable is such a problem 
to do?

  The PRESIDING OFFICER (Mr. Santorum). The Senator from Rhode Island.
  Mr. CHAFEE. I think the answer to this is that people really do not 
want to get into trying to solve these dramatic problems that are out 
there in connection with the entitlements. The word ``entitlement'' is 
one we toss around here, but what are entitlements? Entitlements are, 
principally, Social Security. But they are also Medicare, Medicaid, and 
welfare. We believe--and it is not just us but every serious student of 
the deficit of this Nation and the direction we are going has said so--
it is essential to get the expenditures in these entitlement programs 
under control or there just plain will not be money to pay for them in 
the future years.
  So when we began looking into this in the Finance Committee, as the 
Senator from Louisiana indicated, Chairman Alan Greenspan of the 
Federal Reserve came and testified before us and he said you should 
look into the Consumer Price Index, and whether it is accurately 
stated? It was his view, which was corroborated by further studies, 
that the Consumer Price Index is overstated and the Consumer Price 
Index is the basis on which the cost of living adjustments are computed 
for Social Security, for pensions, indeed, for the Tax Code.
  So we looked into this further. As the Senator said, we set up a 
commission to look into what is the accurate Consumer Price Index. As 
the Senator said, the preliminary report has come back saying that as 
currently computed it is overstated somewhere between, on the low side 
0.7 percent, on the high side 2 percent.
  So we looked at that, here is 2 percent way up here, 0.7 percent 
here. We said we will not go as high as either of those figures. We 
will only make an adjustment of 0.5 percent, from the Consumer Price 
Index. Actually, we would make really tremendous savings if we, for 
example, took the 2 percent.
  Mr. BREAUX. Yes.
  Mr. CHAFEE. But we chose not to do that, as the Senator recalls.
  Mr. BREAUX. Let me thank the Senator for that comment. I want to talk 
about why we did what we did with regard to the CPI adjustment, because 
it is controversial. But I think, as our colleagues understand better 
what it actually does in the real world, they will agree with us that 
it is the right thing to do. I think it is the correct thing to do, not 
only economically, I think politically it is the correct thing to do 
because we are telling senior citizens and everybody else who benefits 
from programs that are indexed for inflation, that we are going to take 
the steps necessary to make sure the program is there for the future. 
Unless some corrections are made, you are

[[Page S4373]]

going to have an indexed program that does not have any money in it. So 
if the program is broke, what in the world is the benefit of having it 
indexed to inflation if there is no money left in the Treasury?
  I will give an example. Just with the Social Security Program, the 
estimates are, by the year 2030, the number of people receiving 
benefits is expected to rise to 43 beneficiaries for every 100 workers. 
Right now it is 27 beneficiaries for every 100 workers. There is an 
explosion with the baby boomers who are going to be retiring. What that 
means in real terms is that by the year 2013, not that far off--by the 
year 2013, Social Security benefit payments will exceed the tax 
revenues dedicated to the program.
  That simply means we are going to be paying out more than we are 
taking in. So if we are going to pay out more than we are taking in, 
what benefit is it to say it is indexed and I will get an increase 
every year to make up for inflation? If you do not have any money left 
in the pot, it does not matter it is indexed to any kind of standard 
because there is no money left to pay a person.
  So what we have suggested is a fix in this area. It is not the only 
way to solve the problem, but it is part of a package. Increasing 
gradually the retirement age is part of that suggestion, and that I 
support as well.
  Let me tell you what that means in the real world. I ask unanimous 
consent to have printed in the Record a table which is entitled 
``Impact of 0.5 percent CPI Change on Social Security Beneficiaries.''
  There being no objection, the table was ordered to be printed in the 
Record, as follows:

                                            IMPACT OF 0.5 PERCENT CPI CHANGE ON SOCIAL SECURITY BENEFICIARIES                                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     1995       1996       1997       1998       1999       2000       2001       2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average Monthly SS Benefit......................................        637        656        676        696        717        738        761        783
Average Monthly SS Benefit CPI--0.5 Percent.....................        637        653        669        686        703        721        739        757
Average Monthly Difference......................................  .........          3          7         10         14         18         22         26
Average Yearly Difference.......................................  .........         38         79        121        166        213        263        315
--------------------------------------------------------------------------------------------------------------------------------------------------------

  Mr. BREAUX. What this simply shows is that it has a very small dollar 
impact on a retiree when you look at the great benefits of shoring up 
the system. For instance, the average Social Security monthly benefit 
in 1995 was $637 a month. With no change at all, that will go up to 
$656 a month in 1996.
  With our change--and people say, ``Oh, it's so difficult. It is 
impossible to do politically. You will have all the seniors unhappy. It 
is a terrible thing to do''--with our change the person who is 
averaging $637 per month in 1995 will still get an increase next year; 
it will go up to $653 instead of $656. That is $3 less. It still is a 
substantial increase.
  What is more important, it is a more accurate increase because it 
more accurately reflects what the adjustment should be. How can anyone 
stand up and say, ``Not only am I going to have my benefits increased 
for inflation, guaranteeing an annual increase, but I want it to be 
overstated, I want it to be inaccurate, and I want it to be a mistake, 
which determines how much I get.''
  How can anyone stand up and say, ``I want an error in the adjustment 
of what the increase should be to determine how much I'm going to get 
from my Government,'' putting in jeopardy the entire program for future 
generations? I cannot think of a senior who would ever want to stand up 
and say, ``I want more than an inflation adjustment accurately says I 
should get,'' when it runs the risk of destroying the very program that 
their children and grandchildren, as well as themselves, have come to 
depend on.
  So we have taken a great, courageous political step, some say. I 
think it is a factual step that has to be taken in order to preserve 
the system. I reserve the remainder of my time.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I agree with the Senator from Louisiana 
that this step is simply the right thing to do. All we are doing is 
saying, let the Consumer Price Index be accurately stated. That is what 
we have chosen to do here.
  Some have labeled that a very courageous step. We did not look on it 
that way. We think of it as the logical step to take to state the CPI 
more accurately. Likewise, there is, as the Senator from Louisiana so 
aptly stated, a tremendous benefit to doing that. Otherwise, unless we 
do it, the Social Security system is going to go under water.
  I see the Senator from Washington here, and I am glad to hear his 
comments.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, last Thursday, I appeared with the two 
distinguished Senators from Rhode Island and Louisiana and a large 
number of others to speak in favor of their bipartisan balanced budget 
proposal on which I have worked under their tutelage over the course of 
the last several months.
  I do not need to repeat the history which led to this point or, for 
that matter, the details of the proposal itself, except to say, Mr. 
President, that this is, in fact, a balanced budget, a truly balanced 
budget by making real changes in the way in which we manage spending 
programs in this country, true reforms in entitlement programs, to a 
certain extent, and, in particular, reforms that were not even included 
in the balanced budget that were passed by this body in December. So 
from a substantive point of view, it is very real.
  Mr. President, the only other comment about the program that I have 
to say is this. At one level, of course, balancing the budget is almost 
a moral course of action. It is simply wrong morally and ethically for 
us to continue year after year spending hundreds of billions of dollars 
on services that we want but are unwilling to pay for, and then sending 
the bill for those services to our children and to our grandchildren. 
Beyond it simply being wrong, Mr. President, it is destructive of 
opportunity for future generations.

  We are convinced and we are told by those who are economic experts 
that a balanced budget, even the clear promise of a balanced budget, 
with policy changes that will lead to that point, will mean more money 
for the Federal Government from the present tax system because of lower 
interest rates and greater prosperity, but, more significantly than 
that, more money in the pockets of American citizens, more jobs, better 
jobs, lower interest rates on homes and automobiles and other major 
purchases people make. There is a tremendous fiscal dividend to be had 
from a balanced budget, not only for the Government but more 
importantly for our citizens.
  I will conclude, Mr. President, by saying that I believe that the two 
Senators who have led this effort deserve the gratitude not just of the 
Members of the Senate and of the Congress, but of the American people. 
They have not to this point gotten the publicity, the public 
acceptance, the public knowledge, for that matter, of this proposal 
that they deserve. But they have soldiered on to a point at which this 
is a very real alternative and one I hope that Members of both parties 
and the President of the United States will accept.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I thank the Senator from Washington for 
those very generous remarks. I appreciate the kind words he said. Let 
me just say that we cannot go too far wrong if we are doing something 
right for the future generations of this Nation.
  It is absolutely clear that, if we continue on the present course, 
trying to fund these entitlements--Medicare, Medicaid, Social Security, 
welfare--without changes, it is clearly going to bankrupt the Nation. 
You see some projections that estimate an individual

[[Page S4374]]

will have to pay 80 percent of his or her earnings to the Federal 
Government in order to sustain these programs in future years. They are 
clearly out of control.
  That is why we try to bring them under control. It is not just us 
predicting this. It is already happening, and ahead of schedule, as we 
see with the Medicare Program.
  The Senator from Colorado is here, the senior Senator from Colorado. 
I will be delighted to hear his comments.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. BROWN. I thank the Senator from Rhode Island and the Senator from 
Louisiana for their leadership on this project.
  Mr. President, why in the world would you have a budget process going 
on separately from the committee? I think there are some simple truths 
that lay out why. The reality is that this Congress tried to control 
spending. They did it by proposing increases last year of roughly 3-
percent. That may not sound like cuts to people outside the U.S. 
Congress, but in reality a 3-percent increase was less than the rate we 
had been on and less than what the natural law provides with the 
automatic increases in a variety of programs.
  The President honestly, sincerely felt that we ought to increase 
spending at least 4, 4.5 percent. Thus, they did not reach agreement. 
Mr. President, that fact has not gone away. The reality is that the 
President of the United States wants much more in the way of an 
increase in spending than the Republican Congress wants. There is no 
way around that. It is not going to change tomorrow.
  I think we all hope that the President will sit down with Congress 
and work out an arrangement. But that has been tried, and the reality 
is, the two parties have dramatically different views of what is good 
for the country. The President sincerely believes we need to increase 
spending more than the Republicans want to increase spending.
  Mr. President, the only salvation for us is a bipartisan effort in 
Congress that comes up with enough votes to override the President's 
veto. That is a simple reality and a simple fact. If we did not develop 
a budget that does that, we did not achieve any progress. That is why I 
think this proposal has so much merit.
  It is a bipartisan proposal. Is it as strong as I would like? Of 
course not. The reality is we ought to be cutting spending, not 
increasing it at a slower rate. Anybody who looks at their family 
budget knows that. But this is dramatically better than no progress at 
all, and it is the one alternative we have this year to make some 
progress.
  There are some other facts that are realistic, too. Medicare is going 
to be insolvent. We can debate about whether it is going be 5 years or 
6 years or 4 years, but it is going to be insolvent. The American 
people are not well served if you let it go to a position where it is 
insolvent. Social Security is going to be insolvent. It may be 20 
years, it may be 25 years, but it will be insolvent.
  To pretend you are somehow helping the American people by running 
these trust funds into insolvency is ludicrous. The American people 
know it is ludicrous. The American people want a Congress that will 
deal with the problems, not hide from them, not gloss them over, not 
pretend they do not exist. They want it done fairly, they want it done 
evenhandedly. Mr. President, this budget offers a bipartisan way to 
resolve our financial difficulties.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. I thank the Senator from Colorado for those excellent 
remarks.
  I yield what time the Senator from Utah needs.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. BENNETT. Mr. President, I rise to pay tribute to the two Johns--
Chafee of Rhode Island and Breaux of Louisiana--for the leadership they 
have shown and for the tenacity which they have maintained throughout 
this process.
  As I go home to Utah, I have two reactions from people, as they go 
through the process and go through what we have done here. The first 
one that comes from people, who are, perhaps, more partisan than some 
others, is to find some aspect of this thing and complain. ``How can 
you, Senator Bennett, support''--fill in the gap--and the reaction is, 
``No, I do not support that. You are right, I campaigned against 
that.'' ``Well, how can you stand here and say that this was a good 
thing that you have been involved in?"
  And then we get to the second reaction, which comes from many of the 
same people, but includes a broader spectrum, and it is summarized, 
``Can you guys not get your act together back there and solve some of 
these problems?'' ``Why are you so partisan that you cannot address the 
fundamental issues of the country.'' ``Instead of a Democratic or 
Republican solution,'' one of my constituents said, ``is there not an 
American solution?'' I am not so filled with hubris as to say the 
result here is the ``American solution'' as opposed to the Republican 
or Democratic solution.
  I remember something my father used to say when talking about his 
experience in the Senate. He said, ``We legislate at the highest level 
at which we can obtain a majority.'' I think that is the driving force 
here--that we have recognized that there will be things in the bill 
that I will hate. There will be things in the bill that I will really 
like and that folks on the other side will hate. But we legislate at 
the highest level at which we can obtain a majority. And the way we 
obtain a majority is to talk to each other and work things out and make 
the kinds of changes and understandings that we have to make in order 
to get there.
  Unfortunately, in the circumstance we live in today, a majority is 
not 51 votes; a majority is 60 votes. And you cannot get 60 votes in 
the Senate if you do not have some give and take. So I salute the 
tenacity of the folks who have been involved in this process to keep at 
it and to keep both sides together and to keep both sides equal. I 
think that is a powerful, powerful idea.

  What are we doing, Mr. President? We are trying to solve the 
financial problems of the United States. What are the financial 
problems of the United States? Quite simply, spending exceeds income at 
an increasing rate. That is very fundamental. So we have to address 
ways of increasing income and ways of decreasing the growth of 
spending.
  The thing that I endorse the most out of this is the recognition that 
there are ways to increase income that defy the wisdom of the computers 
that make straightforward extrapolations. The willingness of everyone 
to put a capital gains tax cut in this package is the most encouraging 
thing for me. The computers say it is going to cost us money. I know 
the computers are wrong. I know that when we get actual experience, we 
will find that cutting the capital gains tax rate, as this package 
does, will increase capital gains tax revenue. Every time we have done 
that in history, that has been the result. Every time we have raised 
the capital gains tax rate, we have reduced capital gains tax revenue. 
Why we cannot get the computers programmed to recognize that fact is 
something I have quit arguing about, because I have been unable to 
budge anybody who programs the computers. But the willingness of both 
sides to say, OK, we will score this as a revenue loss, even though I 
know it is not, and we will pay for it because it is the right thing to 
do, shows a degree of understanding that I think is terrific.
  The other thing we do in this package that I salute is that we have 
the willingness to confront the CPI. We have the willingness to say the 
Consumer Price Index is out of whack. The Consumer Price Index is 
driving the increase in spending. We have to confront it, even though 
it produces a bonus for a lot of our citizens.
  I am heartened by the courage of all 22 members of this group, 
Democrats as well as Republicans, who looked each other in the eye and 
said, ``It is time for a little truth telling. Even though the CPI is 
politically sensitive, it is time to do the right thing.''
  So, Mr. President, as I said, I salute the two Johns for their 
leadership, and the other 20 members of the group, who stood together 
on these crucial issues. I recognized immediately that there are things 
in the deal I do not like. But, ultimately, the direction in which

[[Page S4375]]

it moves us is the direction in which the country must go, in a 
bipartisan manner, lowering the temperature of the partisan arguments 
that occur on this floor. I am proud to have been a part of the overall 
effort.

  Mr. BREAUX. Mr. President, I will yield whatever time he needs to the 
Senator from Wyoming. I will conclude by pointing out that I think we 
have laid out a good package. We have indicated that there will be an 
opportunity in the next week or so to present our package on the floor 
of the Senate as an amendment on a substitute to the Budget Committee 
resolution. We hope that between now and then we will have a chance to 
talk to our colleagues and go into greater detail with them as to what 
our package contains, to try and answer the questions they have, 
knowing that it is not perfect, but that we think it represents a true 
and fair compromise.
  With that, I yield to the Senator from Wyoming.
  Mr. SIMPSON. Mr. President, I ask unanimous consent that we continue 
for an additional 5 minutes in morning business, which will enable me 
to speak 4 minutes and conclude with either Senator Chafee or Senator 
Breaux.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SIMPSON. I am pleased to join with Senators Chafee and Breaux, 
and the others of the centrist coalition, in announcing this plan. This 
is very comprehensive. I hope our colleagues will take a very clear 
look at it. But I just so admire Senators Chafee and Breaux--tireless, 
able, caring, sensible people, trying to do a sensible thing. We cannot 
continue this raucous partisanship about who is doing what to who. 
Medicare cannot be touched and now, of course, it is going to go broke 
a year, maybe 2 years, earlier than we thought 6 months ago. Here we 
rock along and, finally, we are addressing it in this proposal.
  I am particularly pleased that we are looking at the Consumer Price 
Index, and that we propose to reduce that CPI by one-half of a 
percentage point in 1997 and 1998, and by three-tenths of a percentage 
point after that, for the purposes of computing the COLA's, the cost of 
living allowances. And, of course, the AARP will shriek like a gut-shot 
panther and leap off their pinnacle down there at their temple, for 
which they pay $17 million a year rent. Please go see it. I hope 
everybody goes there. Get your shoes cleaned off before you go in, or 
you will hurt the marble floors. It is quite a place. They will go 
crazy on this. They will wail about tearing the back door down and the 
terrible effort to get Social Security benefits. And we are not cutting 
Social Security benefits. That is not what is driving this issue.

  What we are striving to do is have a more accurate CPI that reflects 
the true level of inflation. This is the issue that is most important 
to the senior citizens of this country--inflation. This certainly does 
drive seniors into doubt and concern. That is what we must do. It is 
inflation that eats away the seniors' lifetime savings.
  So we have had the testimony from Alan Greenspan, and others, who 
believe the CPI is off the mark. We think this is a very valid step--
$110 billion in savings over 7 years. That may not be a popular 
proposal, but it is critically important. If we were to do that for 10 
years on a 1 percent, which we are not dealing with, but that would be 
$680 billion over 10 years. The figures are huge and, exponentially, 
they go on out.
  So it is a total package. Some are not going to like things here, but 
it is a very good first step. We achieve some really significant 
reversal of what is happening to us as a country. I served on the 
Entitlements Commission, and we all know where we are headed.
  I like the one about making Medicare eligibility link up with the 
Social Security retirement age by gradually increasing that eligibility 
age. That acknowledges that life expectancy is higher now.
  We are going to affluence test Medicare part B. I would have done 
more of that. We say those who have annual incomes exceeding $50,000 
and couples who have incomes exceeding $75,000 will be affluence 
tested. I certainly think we could do that at a lower income sometime, 
but we do not have the votes to do it at this time.
  We limit Medicaid. I would have liked to have seen more flexibility, 
but I am not going to let that deter me from supporting this.
  Everything here will have an objection from somebody, but the 
totality of it overwhelmingly outweighs the concerns I have about these 
other things.
  So in many other areas--taxes--I had my concerns. Here is a tax 
package. I did not think we should just give away $250 for every child 
under the age of 17, but in the spirit of cooperation and consensus, we 
were able to address some of my concerns. There was not a single thing 
I addressed that was not met with the finest courtesy and genuine 
regard of what we were trying to do.
  So I urge all my colleagues to consider the plan. Those who 
automatically reject the notion of a bipartisan budget will have no 
trouble at all finding one or two items to oppose it, but I am 
convinced anyone who approaches the plan with an open mind and a 
recognition that all true bipartisanship requires a great degree of 
compromise--compromising an issue without compromising ourselves--will 
conclude this as an impressive plan. No tricks, no gimmickry, none of 
the usual stuff. It makes the tough, politically unpopular decisions 
Republicans and Democrats alike have been putting off for far too long.
  I again thank sincerely Senator Chafee and Senator Breaux. They are 
statesmen.
  Thank you.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER (Mr. Campbell). The Senator from Rhode Island 
[Mr. Chafee] is recognized.
  Mr. CHAFEE. Mr. President, first, I want to thank each of the 
speakers who took the trouble to come here today in support of this 
effort that Senator Breaux and I have the privilege of leading.
  Second, I would like to say that what this is all about is future 
generations. Unless we do something about these entitlements, this 
country of ours is going to be in great financial and economic peril. 
If we take these steps now that we have outlined, then there is a 
wonderful chance--it is not only a chance, it is a fact--that we can 
reverse the trends that are now underway in our two largest spending 
programs--Social Security and Medicare--as well as Medicaid and 
welfare.
  So this is it. It is easy to criticize, and people, as I mentioned 
earlier, will say, ``I'm all for it, except for the CPI,'' or ``I'm all 
for it, except for the Medicare number,'' or ``I don't like your tax 
figure.'' But nobody else has come forward with a program that has the 
support of Senators on both sides of the aisle, Democrats and 
Republicans.
  So this is it, and we hope that everybody, every single Senator in 
this body will carefully consider what we have come up with. We 
sincerely hope that they will join with us. We want more people. There 
are 22 of us who have worked together on this since October. But 22 is 
not enough, and it is not enough for Senators to say, ``Well, that's 
pretty good. We'll see what else is going to come along.'' Nothing else 
is going to come along that we know of. We have been involved with this 
for some time.
  So we do seek support from our fellow Senators on both sides of the 
aisle. The beneficiaries will be our children and our grandchildren, 
and that is a pretty worthwhile goal.
  I thank the Chair and certainly thank my distinguished colleague, 
Senator Breaux, who has been terrific in the leadership he has given to 
this program right from the beginning.

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