[Congressional Record Volume 142, Number 104 (Tuesday, July 16, 1996)]
[Senate]
[Pages S7878-S7880]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           DEFICIT REDUCTION

  Mr. DOMENICI. Mr. President, let me just take a few minutes of the 
Senate's time to talk about something that the President of the United 
States put in the news a bit last night, and then his various Cabinet 
people today have disseminated across the spectrum, to the media, and 
to various committees here in the U.S. Congress. It is called the Mid-
Session Review of the 1997 Budget. I only hold that up to show you the 
great lengths the President and the White House are going to to make 
the case that the deficit reduction that has occurred in the last 3\1/
2\ years, as if that deficit reduction was attributable to things that 
the President of the United States had recommend as a matter of policy.
  I would like to address that issue today in some detail. It has not 
been easy to get this point across to those who are observing the 
fiscal policy of our country. So let me start by saying today there is 
a new report out. The President's budget office suggests that this 
year's deficit will be reduced to $117 billion. This is more optimistic 
than the recent Congressional Budget Office estimate, this $117 
billion.
  Given that this is an election year, it should come as no surprise 
that the Clinton administration comes out crowing this morning. But the 
Clinton forces claiming credit for the deficit reduction that has 
occurred during the past 3 years is a little like the rooster taking 
credit for the sunrise.
  Do not get me wrong. I am very happy that the deficit has declined 
these last 3 years. I have spent my Senate career working on various 
approaches to trying to balance our fiscal books. But I also understand 
why the deficit has declined. And it is not because of any dramatic 
action by this

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administration. The bulk of the deficit reduction has been due to 
reestimates of the money needed to bail out ailing savings and loans. 
Let me talk a minute about what that means.
  When you put a budget together, and you have a program like the 
bailout of the savings and loans, which was not complete, you estimate 
how much it is going to cost the next year and the next year. What 
happened, plain and simple, is that the estimates of what it was going 
to cost to complete the bailout of the savings and loans across America 
was estimated way too high.
  What happened is that eventually, on the President's watch, the 
reality, not the estimate, occurred. What did it actually cost, not, 
what was it estimated to cost. So that when the President, in this mid-
session review, says that the deficit has been reduced by $406 billion, 
it is saying that the estimates were wrong and that the reality is that 
we are spending less for certain things.
  The bulk of the deficit reduction has been due to estimating the 
money to complete the bailout of the savings and loans. That is one 
aspect. Second, a very big amount is attributable to the President and 
the Democratic tax increases, and last, to spending curbs by the 
Republicans. So let me look here and give you this in a pie chart.
  The only deficit reduction in this chart--in this pie graph--that is 
attributable to policy changes by the President of the United States is 
this red piece of the pie, 30 percent. I hope the occupant of the chair 
can see what it is. Tax hikes of the largest tax increase in history. 
And $121 billion of that occurred during the period of time that the 
President is talking about cutting the deficit in half. So we will give 
him one positive policy change credit. And it is $121 billion in tax 
increases.
  But now let us look at all the rest. The 6 percent in green here is 
called spending cuts. Mr. President, and fellow Senators, the spending 
cuts are $26 billion, all of which came in the spending caps imposed by 
the budget that we prepared here on our side that the President 
ultimately accepted in the appropriations process. So I do not believe 
those are positive policy changes recommended by the President, because 
if you look at the President's budgets, he would not have had those 
coming down, he would have those going up. So we should get credit for 
that. But we said you cannot spend as much as you want. Clearly, he 
would not get credit for cutting the budget and cutting the deficit had 
we let him have his way.

  Now, looking here at 48 percent, this big orange part of the chart, 
that is made up of reestimates. The largest one is $80 billion. That 
means, of the $406 billion that this Mid-Session Review says the 
deficit came down over 3 years, of that $406 billion, $80 billion of it 
comes from the fact of the inability of Government budget analysts to 
accurately forecast the cost of the savings and loan bailout.
  In other words, it would not matter who was President, it would not 
matter if any budget was adopted, it would not matter if Congress did 
anything, $80 billion of this reduction in the estimated deficits would 
just happen. In other words, we got up one morning and there is $80 
billion worth of savings. That is why I was kind of prompted, in 
analyzing this, to say that taking credit for reducing the deficit 
during the past 3 years is a little like the rooster taking credit for 
the sunrise. I stand on that. The more I think of it and explain it, 
the better it sounds and the better it explains what is going on.
  Moreover, it is interesting to note that the policies put into place 
under George Bush resulted in the dramatic reduction in the S&L program 
costs, which the President now would like to take credit for. I do not 
believe there is any real credit. We spent way too much. But President 
Bush took the blame on the upside. When we finally resolved the problem 
and overestimated the cost, President Clinton would like to take credit 
for that $80 billion overestimate as part of deficit reduction.
  Second, some in the administration say the economic improvements have 
brought down the deficit. The truth is, improvements in the economy 
over the past 3 years have had only a marginal impact on the deficit, 
only 13 percent, roughly. That is about $50 billion in reduction in the 
estimate since 1993.
  Now, why is it small, some would say? Well, it is not small at all. 
The truth of the matter is we were estimating a pretty robust economy 
in those budget years, those 3 years. It did not do much better than 
the estimates that were in our budgets and in the documents assessing 
the budget by the Congressional Budget Office.
  Now, there are mistakenly claims of credit for this economic 
dividend. But, in reality, it is tied to an economic recovery that 
began 7 quarters before the President's inauguration and 10 quarters 
before his economic plan passed the Congress. In all honesty, we must 
give a lot of credit to the Federal Reserve System that steered this 
prudent course, keeping inflation in check and economic growth 
positive.
  Exactly what did the Clinton administration do to help lessen the 
deficit as reflected in this Mid-Session Review? What did the Clinton 
administration do? In short, it raised taxes. Now, for those who think 
raising taxes is the primary way to reduce the deficit, they can put 
this up on the credit side. They get credit for that, because the only 
significant policy change--that is, a President says, ``Change this,'' 
Congress changes it, and something good happens to the deficit--the 
only one that they can claim credit for, all of those assembled working 
for the President, is that one that I have just described, the $121 
billion of tax increases during those three budgets. That $121 billion 
is an $8 billion tax increase, coupled with a few billion in defense 
cuts. That is all the deficit reduction the Clinton administration has 
gotten approved.

  Now, frankly, Republicans, meanwhile, have been working the other 
side of the Federal ledger, attempting to control the incessant growth 
in Washington of spending programs. Republicans passed significant 
reforms in Federal programs and hundreds of spending cuts. We worked to 
eliminate needed bureaucracy, cut staff, slow the growth of Federal 
programs, and send more power back to the people at home in their 
States and communities. It has been Republican leadership that has been 
attempting to pressure the Clinton White House to cut spending.
  Unfortunately, our attempts to reduce Federal spending have been 
consistently opposed and eventually vetoed by President Clinton. But we 
overcame their opposition and were still able to save $26 billion in 
appropriated accounts. Remember, a little more than a year ago, the 
Clinton White House was promoting a budget plan that called for $200 
billion deficits as far as the eye can see. As this election year 
approaches, the President has turned 180 degrees now and supports a 
balanced budget. But imagine what the deficit would have looked like if 
the President's huge spending proposals had not been blocked by 
congressional Republicans and had become law. Remember that President 
Clinton planned the 1993 fiscal stimulus package that would have spent 
money, not saved money. The ill-fated, expensive health care plan would 
have spent huge amounts of money, not saved money. Had we followed the 
lead of the President and passed these plans, the deficit would be 
soaring, not coming down. There would not have been any reduction in 
the deficit that policies would have reflected.
  Let me close by saying my greatest frustration with the budget debate 
has been our inability to make fundamental changes to the major Federal 
entitlement programs and, because the deficit has declined these last 4 
years, some politicians may try to hoodwink the American public into 
believing the problem has been solved, but it has not because the 
automatic Federal spending programs have been left essentially 
unchanged. Despite the clamor of the last year, despite the clamor 
today of the Mid-Session Review, the American public early into the 
next century will find just how elusive any real, significant deficit 
reduction has been in these last 4 years.
  The White House has focused solely on tax increases to reduce the 
deficit and taking credit for reestimates that would have happened 
whoever was President and whether or not a budget was even produced. 
This is not a real, long-term solution. Despite the White House deficit 
whitewash, the fact is that even with our current modest economic 
growth, the Federal deficit will again be growing next year and 
skyrocketing out of sight, burdening our

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children with absolutely impossible obligations in the next century.
  Before we get too excited about the progress we have made on the 
deficit, keep in mind the real heavy lifting which has not yet been 
done and that the real test of leadership on the budget lies ahead. As 
the White House exalts the improved deficit estimates, I say to the 
American people in a straight-forward way, we have proposed how we 
would head off the real train wreck, and we anxiously wait for action.
  I yield the floor.

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