[Congressional Record Volume 142, Number 108 (Monday, July 22, 1996)]
[House]
[Pages H8084-H8091]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  GETTING OUR FINANCIAL HOUSE IN ORDER

  The SPEAKER pro tempore (Mr. Dickey). Under the Speaker's announced 
policy of May 12, 1995, the gentleman from Connecticut [Mr. Shays] is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SHAYS. Mr. Speaker, it is a privilege to be here tonight to 
address this Chamber and to have you be the acting Speaker, and I thank 
you for your willingness to take the time to do this.
  I was particularly motivated to come tonight because I listened to 
the presentation of my colleagues and I would like to give you the 
other side of the story.
  I would also like to say without any hesitation that I believe when 
you tell the American people the truth, they will have you do the right 
thing, and I feel very strongly that what this new Republican majority 
tried to do last year and what we are trying to do this year will make 
our children better off than we, this generation, find ourselves, and 
that if we fail, I think they will be worse off. I believe that with 
all my heart and soul.
  I believe that what we tried to do last year was to get our financial 
house in order and balance the Federal budget. I believe we tried to 
save our trust

[[Page H8085]]

funds from bankruptcy, particularly Medicare, and I believe we tried 
and are still trying to transform our caretaking society into a caring 
society, our caretaking social and corporate and agricultural welfare 
state into a caring opportunity society, and in the process we are 
trying to bring power, money and influence out of this city back to 
local communities, back to our local communities, back in some cases to 
our State governments, but closer to home. That is what we are trying 
to do.
  Now, I know that getting our financial house in order and balancing 
the Federal budget is not the end all and be all. There is no logic to 
saying that just balancing the budget is what we have to do and then we 
can walk away. Balancing the budget is what I view as just creating a 
strong foundation in which to build the many things that we need to 
build, but if we have a weak foundation, everything on top of it just 
crumbles away.
  I do not know how my colleagues on the other side of the aisle feel 
comfortable when we know that we are spending over $233 billion just on 
interest on the national debt. It seems to me we would not want to 
spend $233 billion interest on the national debt. It would seem to me 
we would want to spend it on meaningful programs that help make 
individuals more self-sufficient.
  But when we balance the Federal budget, we know logical things 
happen. We have a strong financial foundation in which to then do 
meaningful programs, not a lot, but meaningful programs. But we also 
know that interest rates come down. There is no question in anyone's 
mind that our interest rates have been high for many years and has 
slowed the productivity of this country and that we need to get 
interest rates down by balancing our Federal budget and getting our 
financial house in order.

                              {time}  2045

  Getting interest rates down does some significant things. It lowers 
the mortgages people pay on their houses, it lowers the amounts they 
pay on their cars, it lowers student loans. It seems kind of logical 
that we would want to do all those things simply by getting our 
financial house in order and balancing the Federal budget.
  Mr. Speaker, we did that by basically cutting some programs. We cut 
Government programs. We made Government smaller. We did not want 
Government to keep growing, we wanted it to be smaller, so we 
eliminated a plethora of individual commissions and boards that were 
created by some Member of Congress so he could go out and have a press 
release and tell people that he created this new program that had a 
wonderful sounding name.
  So what we did was we eliminated a lot of that. I do not know if many 
people know that almost 52 percent of all education programs do not 
even belong, are not even in the Department of Education. We have a 
Department of Education that has 48 percent of all education programs. 
Why?
  Because there are a whole group of individuals here who wanted to 
make sure their committee had jurisdiction over an education program, 
so they made sure it came out of their committee. They did not oversee 
the Department of Education, so they made sure it came out of HUD or 
Labor or Veterans' Affairs or the Defense Department.
  We have all these programs with great sounding names that we simply 
started to eliminate. We cut discretionary spending, and I know, Mr. 
Speaker, that you are on the Committee on Appropriations. When you came 
in this year, or last year, we were already halfway into our budget, or 
almost halfway. I guess we were about 4 months into our budget. You and 
the committee members made a decision to have a rescission package. You 
decided to cut $20 billion out of the existing budget. Now, there were 
cuts. You cut some programs. You saved $20 billion. That meant that 
taxpayers saved $20 billion.
  Then this year the President wanted, the year we are in, and we had 
Government shutdowns, and we have 13 individual appropriations bills, 
and as some bills came out he signed some of them that we wanted that 
reduced the amount of Government spending, and he vetoed others. We had 
Government shutdowns. Those various parts of the budget, if it was HUD 
or Health and Human Services and he vetoed that budget, then we had 
Government shutdown. We had no budget.
  Ultimately, though, we had an agreement. The agreement was pretty 
interesting. He wanted to spend $7 billion more than the previous year, 
and we ultimately had an agreement with him that we spent $23 billion 
less. So we spent $20 billion in the existing budget, that 1995 budget, 
and then we spent $23 billion less in the budget we are in right now. 
We have an agreement. We got the President to agree to slow growth by 
$23 billion.
  He wanted us to spend some of that money differently and we had an 
agreement. That was a compromise. That is the way the system should 
work. But ultimately, we saved $20 billion last year, $23 billion this 
year; $43 billion less in the bottom line of the deficits. Each year 
the difference between the spending and the revenue is the deficit, and 
it is added to the national debt, so we made that national debt not 
grow as high.
  So we cut what we call discretionary spending that came out of the 
Committee on Appropriations, and we made Government smaller, and it was 
what we said we would do before we were elected, and that is exactly 
what we did.

  When we came to the defense spending, we froze defense spending. We 
did not increase it, we did not cut it. We froze it. Some would 
probably say, and I am one who would like to have seen a reduction in 
defense, and others of my colleagues would have wanted to see an 
increase. But what we need to understand is that we are oversubscribed 
in defense budgets. We have so many programs, procurement programs for 
weapons systems, that funded out, they will be higher than what we even 
have in the budget.
  So we are going to have significant cuts in defense, even with a 
freeze in defense spending, because we are going to have to pare down 
some of these programs. So we cut discretionary spending out of 
appropriations, we froze defense spending.
  Then what we did is we came to entitlements. Entitlements are 50 
percent of the budget. What is alarming about entitlements is that they 
are growing at 10 percent and 11 percent and 12 percent, so you have 
half the budget that is doubling every 5 to 6 to 7 years, and they are 
programs like Medicare, a very important program; programs like 
Medicaid; programs like our Federal and military retirement; food 
stamps; veterans' benefits; AFDC, which is welfare for mothers and 
children; the earned income tax credit, which is a program that goes to 
the working poor, so instead of their paying taxes, they actually get 
money back from the Government. It also includes student loan programs.
  What did we do with entitlements? First off, I just want to say when 
I came from out of the State government where I voted for 100 percent 
of the budget, when I came here I found I only voted on a third of the 
budget, and I tried to control spending when I voted on a third of the 
budget. I only vote on the 13 budgets that came out of the Committee on 
Appropriations. I do not vote on interest on the national debt, about 
30 percent of the budget, and I do not vote on 50 percent of the 
budget, which are entitlements. I did not have that opportunity. You 
fit the title on Medicare, Medicaid, student loan, agricultural 
subsidy, you fit the title, you get the money. You get the money. I do 
not vote on it.
  What did we do with these very important programs, that are all very, 
very important programs? What did we do to these programs? We slowed 
their growth. Mr. Speaker, Medicare was going to grow at 10 percent a 
year. We decided, for instance, that we would allow it to grow at 7 
percent a year.
  I notice a colleague of mine is here. What I would like to do is just 
spend about 5 more minutes; then I would like to ask the gentleman from 
Iowa, Mr. Ganske, to respond to the whole issue of health care. What I 
heard that preceded this special order just boggled my mind. I think my 
colleague can shed some light on it.
  But this is what we did with some of these entitlements. We allowed 
the earned income tax credit, which is a payment to the poor who are 
working, to grow from $19.9 billion to $25 billion. That is an increase 
in spending. But in

[[Page H8086]]

this place here, in Washington, in Congress, in the Senate, down here, 
people call it a cut. I am hard-pressed to know how going from $19 
billion to $25 billion is a cut. In fact the only place I know that is 
called a cut is right here, and where the virus is spreading.
  The Student Loan Program. I think of the Student Loan Program and I 
remember how outraged I was when I saw the President go to a school and 
basically tell the students that they would have no Student Loan 
Program, or excuse me, School Lunch Program, because Republicans were 
going to take it away. When I got back from the weekend, I went to my 
colleagues and said, how could we have done something so stupid? And 
they said, Chris tell me something; if it goes from $5.2 billion to 
$6.8 billion, is that a cut? It is not a cut. ``But the President said 
we were cutting, we were going to spend less.''

  That is not true. It is simply not true. It is not factually correct. 
Our programs, percentagewise, instead of growing at 5.2 percent, we 
said it could grow at 4.5 percent a year, and then we said that 20 
percent of it could be allocated to the students that really needed it, 
because every student in this country is subsidized 13 cents in a 
school lunch program. My daughter is subsidized. I make a good salary. 
My wife makes a good salary. Why is my daughter's lunch subsidized?
  We, under our program, said that we could take that money, the State 
could decide to take that money and give it to an urban area that might 
want to have a breakfast program or a lunch program or a meal in the 
evening for a kid who simply may need that meal.
  Then the Student Loan Program, this is the one that really gets me, 
it grows from $24 billion to $36 billion. That was our plan last year. 
That was referred to as a cut. If it is $24 billion and we are adding 
$12 billion more in the seventh year, in the seventh year we are going 
to spend $12 billion more than we spend today, and it is $24 billion 
more than we spend today, and it is $24 billion, I am hard pressed to 
know how that is a cut. It seems to me it is a 15-percent increase in 
spending. It is simply not a cut, it is an increase in spending.
  Now we get to the health care issues. In the health care, under our 
plan last year it was to grow at $89 billion to $127 billion. Again, in 
this place, that is called a cut. Back in my home when you spend $89 
billion in the last year, and in the seventh year, in the year 2002, 
you are going to spend $127 billion on Medicaid, health care for the 
poor and nursing care for the elderly who are poor, I call it an 
increase in spending. I think most rational people do.
  Now we come to Medicare. This is where I would like to really engage 
my colleague. We learned from the trustees last year it was going to go 
bankrupt, Medicare part B, by the year 2002. Then we learned this year, 
as we suspected, because the fund actually started to go insolvent this 
last year, so we knew it was going to ultimately become insolvent 
totally and completely sooner than they said, and they said at the 
beginning of the year 2001, and the beginning of the year 2001 is 
really the end of the year 2000, it is going bankrupt.
  What did Republicans do? We said that Medicare could grow from $178 
billion to $289 billion, a 60-percent increase in the total amount we 
spend, and people said, yes, yes, but you have a lot more seniors in 
the program. True, we have more. On a per person basis it went from 
$4,800 last year to $7,100, a 50-percent increase per beneficiary. We 
slowed the growth and saved $240 billion. Yet, we are still allowing 
the program to grow from $4,800 to $7,100. That is called a cut? No, it 
is called an increase of 60 percent in terms of total dollars, 50 
percent per beneficiary in total dollars.
  Before I call on my colleague, I would just point out, we did it 
without increasing the copayment, without increasing the deductible, 
without increasing the premium. Seniors paid last year 31\1/2\ percent 
and the taxpayers paid 68.5 percent. We said freeze it. Do not increase 
it, do not subtract from it, freeze it.
  We were able to save $240 billion for the taxpayers, and in this 
program, the reason we were able to save it was we were able to bring 
in the private sector, that said if you allow Medicare to grow at 7 
percent, we can make money and we can offer a whole host of new 
services: eye care, dental care, a rebate and a copayment of the 
deductible; maybe even pay the premium, maybe even pay MediGap. We had 
some providers who said if you allow it to grow at 7 percent, which is 
very generous, we can provide a whole host of programs and we can save 
you money, because it does not have to grow at 10 percent a year.
  Then the seniors said, what happens if I do not like the program? 
Then the gentleman from Iowa [Mr. Ganske], for instance argued they 
should be allowed to go back each and every month for the next 24 
months. The gentleman from Iowa worked on this program with others, but 
he was a leader in this area, and he created a better program and saved 
money. I am just really grateful that he is here. I would love to give 
him the opportunity to just kind of express his concerns about what we 
did.
  Mr. Speaker, I yield to the gentleman from Iowa [Mr. Ganske].
  Mr. GANSKE. I appreciate the gentleman sharing some of his time with 
me, Mr. Speaker, I, too, was watching the previous colleagues who were 
having a discussion on some of the important programs, including 
Medicare. I felt stimulated to come to the floor, as the gentleman did.
  Mr. Speaker, I think that the gentleman hit upon the appropriate 
word, and that was ``better.'' The General Accounting Office, the 
Inspector General, has looked at the way the current Medicare Program 
is working and has found significant areas of fraud and waste and abuse 
in the current program, the way it is currently working.
  There was recently an editorial in the Washington Post that outlined 
some of the abuses that occur in the home health care industry, where, 
for instance, care is provided at $125 an hour or a visit. Total care 
for home health care is under no competitive bidding. There is no 
prospect of a payment system in the current plan. There is no effort to 
control abuses in that area like there is in some of the ways Medicare 
has worked on preventing abuses in hospital billing.
  So there are lots of ways that we can make the Medicare system work 
better. I think that is a crucial point, because let me just read a 
letter to the editor from the Des Moines Register: ``Congressman Ganske 
has voted for increased spending in Medicare.'' This is a letter by 
James Winger, president of the Iowa Federation of Labor AFL-CIO on 
Friday, July 19: ``Congressman Ganske has voted for increased spending 
in Medicare. However, this increase is not enough to provide Medicare 
recipients with the same coverage they have today.''
  Now, it is the second part of that statement that is incorrect. 
Because the assumption is that you cannot do it better than it is being 
done today. I think that I just do not accept that. I think we can do 
it better. We can devise a system where, in my home State of Iowa, 
quite frankly by equalizing funding formulas to make rural areas 
comparable to urban areas, we can actually improve benefits for senior 
citizens.
  Mr. SHAYS. Mr. Speaker, I remember being the chairman of the task 
force, on the Committee on the Budget, on Medicare and Medicaid, and I 
remember the fact that the gentleman was not going to vote for the plan 
unless we realized that urban areas were treated in a much more 
beneficial way than a number of your communities. I remember you having 
a dialog with me, and more particularly the Speaker, and convincing him 
to put more money into the rural areas so they would in fact get more.

  Mr. GANSKE. We have a situation, as you mentioned before, where in 
some parts of the country senior citizens can sign up for health plans 
where they get practically free prescription drugs, eyeglasses, hearing 
aids, trips to and from the doctor's office, and even memberships in 
health fitness clubs; that is, New York City, Florida, Los Angeles.
  But there is nothing like that available for senior citizens in some 
of the rural areas, or even in urban areas that have done a very good 
job with controlling their utilization. That is not fair. That is the 
way the current system is working. It is not fair, because people in 
every part of the country are paying the same into Medicare as they are 
in other parts of the country.

[[Page H8087]]

  So we equalize that. We did not decrease the amount in those areas 
that are high now. We simply said you will have to grow at a slower 
rate than the areas that are not at such a high average. We will move 
those up faster and we will equalize it. We will make it more fair 
across the country. That is one way that you can make the system work 
better.
  But you know, I want to go back to a little broader concept. I think 
all of us want to have a cleaner environment. All of us would like to 
see education emphasized. We all want to see safe streets. We all want 
to see secure borders. All of those items are in what is called the 
discretionary part of the budget.

                             {time}   2100

  The other part of the budget is the entitlement part, the 
nondiscretionary part. These are things like Medicare, Medicaid, 
welfare and interest payments on the debt.
  Mr. SHAYS. If the gentleman would just allow me to make the point 
that entitlements are 50 percent of the budget, and when we add 
interest payments, we are talking about two-thirds of the budget and 
the discretionary is only one-third of the budget.
  Mr. GANSKE. The gentleman is correct. But in 1965, the discretionary 
part of the budget was two-thirds of the budget, that is, things like 
education, safe streets, drug prevention, crime prevention, 
environmental things. In 1965 that was two-thirds of the budget. Today 
it is one-third of the budget. Because in 1965 the entitlements plus 
interest were one-third of the budget and today they are two-thirds of 
the budget.
  So all of those people who, like you and I, are concerned about those 
important things, need to be concerned about being able to control the 
rate of growth in the entitlements. It is estimated that in 10 years, 
the entitlements plus interest will consume all of the revenues from 
the Federal Government. That means that there will be nothing else left 
for the important things that we need to do.
  So what we are talking about in terms of addressing the problem that 
Medicare is going to go bankrupt in 5 years is trying to devise a 
system that works better than it does now so that we can reduce the 
rate of growth and, therefore, allow the Federal budget to function in 
the other important areas, like education, the environment, drug 
prevention, and securing our borders that we all think are important.
  I should point out, the bill that we passed had about a 7-percent 
annual rate of growth. That far exceeds the numbers of senior citizens 
that are coming in. If we look at the private sector, the amount of 
health care inflation has been close to 1 percent or less for the last 
several years. What we want to do is we want to learn for the 
Government programs how the private sector has been able to make things 
work more efficiently. The Government in effect has been growing at 
over 10 percent. We need to learn how to be able to offer benefits in a 
more efficient way. It is not just in health care, it is also in areas 
like welfare and other areas.
  Mr. SHAYS. I would love to just illustrate, if the colleague would 
allow me, a real-life example of what the gentleman is talking about 
with the growth of entitlements. Entitlements are 50 percent of the 
budget and doubling every 5 to 6 years, crowding out the discretionary 
part of the budget.
  I have had constituents who come and say, ``We need to spend more for 
this education program,'' or more for this child care program that 
comes out of the discretionary budget. I say, ``Yes, we do need to do 
that.''
  Then they say, ``And, by the way, don't cut Medicare and Medicaid.''
  I say, ``Well, I don't want to cut Medicare and Medicaid, but let me 
understand something. If we allow Medicare and Medicaid to continue to 
grow at 10 percent a year, how will we be able to do all those things 
you want?''
  It is a concept of opportunity cost. If you spend your money here, 
you give up the opportunity to spend it here.
  If we can make savings in Medicare and Medicaid, allow it to grow 
much faster than any other part of the budget, we then have some 
resources to spend on some good programs that come out of what we call 
the appropriations side of the budget.

  Mr. GANSKE. If I may jump in here, many would criticize our specific 
plans, either to balance the budget or to reform and preserve and 
protect Medicare. I am sure that there are some things in all of those 
areas that the gentleman and I might prefer to see changed in some 
respects, too. We cannot have legislation that is this big and agree 
with every single thing. But the overall thrust is responsibility.
  I would say this: I think the American public feels very strongly 
that there should be a sense of fairness. So if the opposition 
criticizes our plan to save Medicare in 5 years, and we all know, 
everyone agrees that the trust fund will be empty and there will be 
insufficient funds to pay the bills in 5 years. We all know that. This 
is a given.
  Mr. SHAYS. We have wasted a year already.
  Mr. GANSKE. If that is a given and the opposition criticizes our 
plan, then does the opposition not have a responsibility to offer their 
plans? Some of the moderate and conservation Democrats on the other 
side of the aisle did offer a plan. The fact of the matter is that we 
just passed another budget bill that basically took into consideration 
some of the proposals that they had made and the level of savings and, 
in fact, what we are currently dealing with today are savings of about 
$160 billion. That is very, very close to what the moderate and 
conservative Democrats have been for and it is not all that far from 
what President Clinton has proposed for savings in Medicare.
  Mr. SHAYS. The difference is that when he refers to it, he calls it a 
savings. When he refers to ours, he calls it a cut.
  But before we leave Medicare, I do not want to leave it without just 
summarizing the fact that we allow Medicare to grow from $178 billion 
to $289 billion, a 60-percent increase in Government spending on 
Medicare. On a per-person basis, we allowed it last year to grow from 
$4,800 to $7,100, a 50-percent increase per beneficiary.
  Mr. GANSKE. I think we ought to emphasize this: In order to achieve 
those savings, we cannot just leave the program exactly as it is, 
because in the current program there are areas of waste, fraud, and 
abuse that administration, there are a number of areas that we can 
improve the plan. If we put the structural changes in there, then we 
can effect some savings and yet we can still maintain good quality.
  Mr. SHAYS. To illustrate, we did not increase the copayment to the 
seniors or the deductible and we kept the premium the same, but what we 
allowed them is the opportunity to have what you and I have as Federal 
employees, we get choice in health care. We are going to allow seniors 
to choose different health care plans. Because of your instance and a 
wise one, we allowed seniors to go back, it they did not like that 
private plan, and just go back to the traditional fee-for-service 
Medicare system that we have had since 1960.
  So we left the existing plan in place, but we gave choices. To me, 
the choice was the most exciting part. In part of our plan we said if a 
senior discovered something that was a waste in the program, we would 
allow them to receive some of the benefit if they reported it. It is 
even in our health bill that Senator Kennedy is holding up right now by 
not allowing for a conference committee between the House and the 
Senate.
  We passed a health care bill dealing with portability in health care 
and allowing people if they have an illness to go to another health 
care plan, if they have been in a health care plan, and that is being 
held up. But in that bill is the same thing we had in our Medicare 
plan, allowing seniors to report programs that they thought were 
abused.
  I would like to talk about one abuse because I am on a committee that 
oversees HCFA, which was the agency that the gentleman from Georgia 
[Mr. Gingrich] was referring to when he talked about it withering on 
the vine, not Medicare, which our colleagues like to distort.
  Mr. GANSKE. If I may interject, am I not correct in that, I believe 
it was in 1992, President Clinton, at that time running for office, 
made a statement very, very close to Speaker Gingrich, where he 
basically said the Health Care Financing Administration, HCFA, the 
bureaucracy, not Medicare, not the

[[Page H8088]]

program but the bureaucracy, was not working as good as it should be 
and something should be done about that?
  Mr. SHAYS. The bottom line is that the bureaucracy was working 
terribly. I started to talk about some of the abuses. I sit on a 
committee where we see a number of different abuses.
  Medicare cannot buy a particular health service, let us say an oxygen 
concentrator, and reprice it at the market rate. It has to buy it at 
whatever the market cost is on the chart. If they want to reassign the 
cost, they have to go through a 2 to 3-year process. So the inspector 
general came in and looked at this process and said that Medicare was 
overpaying for a lot of goods, like an oxygen concentrator. The oxygen 
concentrator for the Veterans Department, if we paid the same price 
they paid, in 5 years we would save $4 billion. But we cannot reprice 
it without this long, laborious process.
  Mr. GANSKE. If the gentleman would yield for a minute, one of the 
mechanisms that we had in our reform bill that would help address this 
problem of abuse in the system was that we set up a mechanism whereby 
if a Medicare recipient identified areas of fraud, waste and abuse, 
reported that to the government program and then savings were utilized, 
then that recipient would get to keep part of the savings.
  This was a real carrot in order to encourage senior citizens to look 
carefully at their bills and help the program work better for the 
benefit of everybody. But without that type of incentive, then it is 
like, ``Well, somebody else is paying for it, and I guess, you know, it 
doesn't matter to me.'' So there was a real incentive system built into 
our reform bill that would help address some of those areas of abuse 
that the gentleman is talking about.
  Mr. SHAYS. Exactly. That was one. The other area was that we made 
health care fraud a Federal offense in terms of Medicare and Medicaid 
so that you would not have to find someone guilty because of wire or 
mail fraud but you could find them guilty for the actual offense. We 
all know that fraud, waste and abuse in our Medicare system is about 10 
percent, if not more. That alone is a $17 billion savings.
  Mr. GANSKE. If the gentleman would yield again, we both know that we 
can effect savings in that area. We do not want to give, I think, the 
inaccurate representation that by addressing that area alone one could 
effect enough savings to save the trust fund. But it is one of the many 
important steps that we took in the reform bill to make the system work 
better.
  Mr. SHAYS. Let me ask the gentleman, why would they call it a cut, 
our colleagues on the other side of the aisle, when we spend 60 percent 
more and 50 percent more per beneficiary? I am trying to understand, 
and I have to say I thought President Clinton would do a number of 
things. I did not think he would veto our Medicare plan. I honestly did 
not think he would do it.

  I described it this way to my daughter. I do not have the resources 
to give my daughter $20,000, but if I had $20,000 and I said to my 
daughter, ``I want you to buy a particular automobile but of course you 
can't afford to have leather seats and other nice features in the 
automobile. I can't give you more than $20,000 this is what I have. And 
so I want you to go buy that automobile.'' And she comes back to me and 
she says, ``Dad, I bought that automobile you talked about but I didn't 
spend $20,000. By the way, I got leather seats and a sun roof.'' I 
said, ``Honey, I told you you could not do that. I only had $20,000.'' 
She said, ``Dad, I bought it for $18.000'' I would not call that a cut. 
I would say she got a better car and she saved $2,000.
  Mr. GANSKE. If the gentleman would yield, one of the reforms that we 
passed at the beginning of the Congress last year was the issue of 
baseline budgeting, and this is what we are talking about.
  In Washington if your salary is $20,000 this year but next year it is 
$22,000, that could be called a cut because it is not $23,000. This is 
the only place in the country where we do budgeting like that.
  Let me just give the gentleman an example. I have a little boy who is 
almost 8 years old, his name is Carl. Sometimes Carl accompanies me on 
some of my meetings around the district. I have a chart. The chart 
shows that in the last 7 years, we spent about $925 billion on 
Medicare. We voted for a plan where in the next 7 years we would spend 
about $1,685 billion. I look at my little 7-year-old boy and I say, 
``Carl, which of these is bigger, $1,685 billion or $925 billion? I 
tell you, a third-grader knows the difference. If you factor into that 
the fact that this is more than twice the rate of inflation, it more 
than accounts for new seniors coming into the system, it still provides 
excellent benefits, there is no increase in copayments, no increase in 
deductibles, seniors would pay the same percentage of their premium as 
they have in the past, then I think that it is not accurate to 
represent our plan as a cut.
  Mr. SHAYS. And they get a choice. They get to choose a plan that 
could be better or a number of plans that could be better and in the 
end if they did not like those plans they could go back to the 
traditional system.
  Mr. GANSKE. And for large areas of our country, we would also have an 
equalization in the funding that would be very important as well.
  Mr. SHAYS. This Republican majority is trying to get our financial 
house in order and balance the Federal budget. My colleague knows that 
just balancing the budget is not the end all and be all. It is just the 
logical realization that we would rather spend our money on real 
programs rather than interest on the national debt. We want a strong 
foundation in which to build.
  The second thing is we are trying to save our trust funds from 
bankruptcy, particularly Medicare, and last year when we were trying to 
save it, when we did our Medicare plan we saved about $240 billion that 
could be used directly to save Medicare part A and Medicare part B. To 
save it from bankruptcy we extended the program out from the year 2001 
to basically 2010. We are going to have another problem that we are not 
going to get into right now, but it is going to be a mammoth issue of 
how do we deal with the baby boomers.

                              {time}  2115

  But we did the responsible thing of slowing the growth of programs, 
still allowing them to grow 60 percent more total dollars and 50 
percent more per beneficiary, but saving about $240 billion that could 
be used to then make sure the program was solvent for the next 15 
years. And the President vetoed that plan.
  Mr. GANSKE. If I may interject, what is the alternatives? I want to 
go back to this. If someone does not like our program, then I think 
they have a responsibility to offer their own specific plan to save the 
program, which will be insolvent in 5 years. That is only fair. It is a 
very, very important issue.
  We either effect some reductions in the rate of growth or, in order 
to keep the system solvent, what is the alternative? The alternative is 
the same alternative that we have seen from Congresses for the last 30 
years, and that is very simple: A doubling or a tripling of Medicare 
taxes.
  As both of you and I know, the effect of that would be very 
transitory. That could probably extend the life of the trust fund for 3 
years, and then what would we do? We would go back there, if we return 
to the way that it has been done before, and we would double or triple 
those Medicare taxes again. I tell you what, I cannot do that to the 
working families in my district.
  If we look at an average income working family in 1950, and adjust 
the amount of taxes they were paying to the government to 1990 dollars, 
so that we are going to compare the same dollars for 1950 in taxes to 
the dollars in 1995, an average income family, not the rich and the 
wealthy, in 1950 was spending about $7,000 to the government in 1990 
dollars. Today the average income family, 1995, is sending about 
$21,000 to the Federal Government.
  The amounts are not so important, although they are getting so high. 
What is important is to recognize the fact that in the last 30 years, 
for the average working family, taxes, government taxes have tripled. 
What that means today is that couples are no longer afforded the luxury 
of one or the other of the spouses staying home with the kids.
  It means that in 1950 one of the spouses could work, the other could 
take care of the children, if they so chose. Today what it means is 
that one is working to put food on the table, to

[[Page H8089]]

pay the expenses for the rest of their family, and the other spouse 
is working for the government.

  Now, this is not rocket science. If we are going to keep the trust 
fund solvent, we are either going to have to reduce the rate of growth 
in a responsible way to make the system work better, or else we are 
going to have to raise taxes, and raise taxes a lot and raise them 
again and again, and I just cannot do that.
  I know how hard the working families in my district are working, and 
they are pushed. They have been running harder and harder on that 
treadmill just to stay in the same spot. So I think it is our 
responsibility to address this in the way that we have addressed this, 
a responsible way, a way to make the program work better.
  But I think maybe it would be useful to turn to another topic. I was 
very interested in your comments on the earned income tax credit, 
because I think both the gentleman and I would agree that this is a 
useful program. It was designed originally and still functions to help 
people who are just above the poverty level to have benefits, slowly 
work their way out and get a helping hand away from poverty.
  The gentleman pointed out that we funded the EITC at $19 billion and 
increased it to $25 billion, but what he neglected to mention, and I am 
sure that he just did not get to it, was the fact that the General 
Accounting Office did a study and showed, or possibly it was the IRS, 
the IRS did a study and showed that there was about 30 to 35 percent 
abuse, in some cases outright fraud in people taking the earned income 
tax credit when they should not.
  The program was designed to help families, that is, families with 
children, and it was designed to help people that were just above the 
poverty level. There were lots of cases, as much as 30 to 35 percent of 
abuse, so what did we do? We addressed some corrections in the way the 
system is supposed to work. That is what we are supposed to be doing 
here in Congress. We are supposed to be helping this Government work 
more efficiently and better, and yet when we have a good idea, we will 
keep it. I would be happy to yield back.
  Mr. SHAYS. I was thinking, as my colleague was talking, that it was 
quite difficult during the fall when we started to get this program 
through the House and the Senate, present it to the President, when he 
called the earned income tax credit a cut when we went from $19 billion 
to $25 billion; in the School Lunch Program when we went from $5.2 to 
$6.8. The Student Loan Program he is calling a cut when we went from 
$24 billion to $36 billion.

  I really believe in the earned income tax credit, because this gets 
to the third effort. We are trying to balance the budget, get our 
financial house in order. The second thing is we are trying to save our 
trust funds for future generations, so we are not the only ones that 
enjoy the trust funds but they are there for our kids and our kids' 
kids. The third thing is we are trying to transform our caretaking 
society into a caring society, to transform our caretaking social and 
corporate and welfare state--we just do not have welfare for 
individuals, we have it for corporations, and we even have it in the 
farming communities to some extent as well--and to try and move it into 
a caring opportunity society.
  We know that one of the better programs is the earned income tax 
credit for someone who is at the level of welfare but making money, 
working, not getting something from the Government, but really not 
enough to survive. They actually get a cash payment of $1,000 or 
$2,000, in some cases it could be $3,000. Instead of paying taxes, they 
get back $2,000 or $3,000.
  But what we found was that some people simply were not reporting 
their income. Well, they were reporting it, saying they were not going 
to make money when they actually made money. We found that a lot of 
single people were able to get some of the benefits when it was not 
intended for individuals, it was intended for families.
  So we are going to spend lots more, but we just want it to go for the 
people it was designed to help. It gets to this whole issue that is 
something I have had to wrestle with as what I view as a moderate 
Republican. I think I am pretty much down the center in terms of the 
political ideology.
  I believe that what we have done for too many of our young people, 
and we see the result of it, I see too many young kids who are 
pregnant, I see too many young children that are selling drugs. I see 
too many young children who are literally killing each other. We have 
18-year-olds who cannot read their diplomas.
  The thing that gets me is when I see a 20-year-old or 22-year-old who 
has never had a job, not because jobs do not exist. I would acknowledge 
if everyone who wanted a job sought one, there might not be. But we 
have too many people who are not answering the opportunity to work 
because they say it is a dead-end job.
  If I ever said to my dad, ``I do not want that job, it is dead-end,'' 
my dad would have said to me, ``Son, how many hours are you working 
there?'' I would have said 10. He would have said it just doubled to 
20. He would have known that so-called dead-end job would have taught 
me to get up in the morning, it would have taught me that for that work 
I earned something, that I was of service, instead of taking something 
from someone else.
  That is what welfare does. It is taking something that someone else 
earned, and getting it without having to earn it but it was given to 
them. There are people who have needs, and we have to make sure their 
needs are met, but we do not want the system to be perpetual so that we 
now have 30-year-old grandparents who literally, they are on welfare, 
their kids are on welfare, and their kids' kid is on welfare, three 
generations.
  Mr. GANSKE. If the gentleman would yield, we just passed last week I 
think really landmark legislation. That was a welfare reform bill that 
is a very, very good bill, that emphasizes exactly the direction 
that we think our country should move in terms of responsibility and in 
terms of opportunities, because it does have strong requirements for 
work and it does have strong requirements for responsibility for the 
fathers of children who abandon those children and leave those young 
mothers to an awfully hard row to hoe.

  There were significant corrections in the reform bill in terms of 
food stamps. Nutrition is very important. I grew up working in my dad's 
grocery store.
  Mr. SHAYS. You did not tell your dad you did not want to do it 
because it was a dead-end job?
  Mr. GANSKE. I think working in that grocery store was one of the best 
training periods of my entire life.
  Mr. SHAYS. I bet it was.
  Mr. GANSKE. You get to meet people from every walk of life, and I 
thank my dad every time I see him for that, although at the time as a 
younger kid there were times when I probably would have preferred on 
those Saturdays to be playing golf or something else.
  Mr. SHAYS. Or watching a football game.
  Mr. GANSKE. But the point that I wanted to pursue is that even back 
when I was working in the store--my dad just recently retired from 
managing a grocery store--there is a significant and a growing problem 
with abuse in the Food Stamp Program.
  It is not that food stamps should not be there for the people who 
need them. Both the gentleman and I know that they should. It is that 
there has been a growing problem with people abusing the system, and we 
know that food stamps have been used as a form of currency for drugs, 
to help fund drug abuse, that able-bodied people who should be working 
have been getting food stamps.
  So what we did in our reform bill was we addressed that. We set up 
encouragement for electronic billing to try to cut down on the 
technical problems with food stamp waste and fraud.
  I just am very optimistic. I believe that there is a role for 
government. I happen to believe that government can work a lot better 
than we have seen it work. But every time we try to change something, 
we run up against special interest groups that have a vested interest 
in seeing no change, and it is a real battle.
  Mr. SHAYS. No one said it would be easy, did they?
  Mr. GANSKE. Nobody ever said it would be easy, and in the political 
process, our Founding Fathers devised a system that requires multiple 
steps and it requires eternal vigilance. As

[[Page H8090]]

one of our Founding Fathers said, that is the price of democracy.
  Mr. SHAYS. I just wanted to emphasize that one of the things that we 
are doing with welfare is we are giving it back to the States with 
resources. We are not just saying ``It is your responsibility.'' We are 
giving significant resources for day care, for the actual payment to 
the recipient but also for day care and jobs, because we know that a 
caring bill has got to provide someone the opportunity for training and 
a place to have your child so that you can get that training and 
ultimately get that job.
  But what we do know is that a lot of the traditional job training 
programs have been basically make-work, not really teaching someone for 
a job that exists but just giving them some kind of program that in the 
end does not serve any value to them in terms of actually getting a 
job. So the day care and job training kind of programs that we are 
seeing now are quite significantly different.
  Mr. GANSKE. If I may add to that, in the welfare reform bill there 
are some significant other items that reinforce the fact that citizens 
need to be responsible. When a citizen sponsors an immigrant to come 
into the country, they basically are promising that they will help that 
new immigrant for 5 years.
  Mr. SHAYS. Yes.
  Mr. GANSKE. That is current law. However, there has never been any 
teeth in that current law, and we even have examples where in Chinese 
newspapers from the west coast, Dear Abby columns, you will have 
somebody writing in, ``My relative just came, got off the boat. How can 
I get them on to SSI?'' I would submit to you that we have hundreds of 
millions of people around the world that would love the opportunity to 
come to this country to work hard, to achieve the American dream that 
are not interested in coming to this country and immediately getting on 
welfare, and we have corrected that in this welfare reform bill.
  Mr. SHAYS. But see, some people would call that a cut in the program. 
That is what is ludicrous about the description. If we save money in 
the program, therefore, do not have to spend as much because we 
eliminate an abuse like this, it is referred to as a cut, and that is 
just simply an inaccurate way to describe what we did.
  Mr. GANSKE. But to interject, this goes back to the point that we 
have made several times before, and that is that the people who are 
always talking about cuts, cutting this, that you are cutting that, 
they are the people who, in essence, are arguing not to change 
anything. If you are interested in, in education, the environment, 
preventing crime, in order to take care of those problems, we have to 
change the programs to make them work better than they are working now.
  Mr. SHAYS. I was making reference to the fact as a moderate 
Republican I voted for a number of programs that I have had to look at 
and say in some ways what that has allowed me to do is it has allowed 
me to go back to some of my constituents and say, you know I care 
because I voted for that program. But as I have seen the program 
unfold, some of them, not all of them, I have had to go back and say 
you know, really what I have been is a caretaker and I have done 
something the exact opposite of what you would do for someone you love.

                              {time}  2130

  What I started to do about 3 years ago is I asked anyone who really 
started up in a lower echelon economically who now is a very successful 
person, far more successful than I would be, and I would say, what 
happened? Why are you so successful? When you were there in a 
development, in poverty, happened to have been a minority, so you had 
the laws against you and so on, and you had racial prejudice; and yet 
you succeeded?
  Yet in every instance, in every instance it was, I had someone who 
took an interest in me, I had someone who sometimes kicked me in the 
butt. I had someone who did not always give me what I wanted. I had 
someone who did not let me get away with the excuse I do not want that 
because it is a dead-end job. I had someone would taught me to dream.
  There were a lot of things they had, but they did not have someone 
just giving them something.
  When I was growing up, my dad would commute from Darien, CT, for an 
hour commute into New York. He would get to read three papers in the 
morning and three at night because he had an hour on the train. He 
would read, and he would come back, and he would be filled with 
information. We would have a wonderful dialog at the dining room table.
  He would invariably make some reference to something written in Ann 
Landers, and Ann Landers would write something back, and it would be 
kind of a crazy story.
  I found myself looking at these calendars. I had these calendars with 
the thought of the day. I noticed the calendar for April 3. It was a 
Wednesday. I looked at it, and it was Ann Landers. And I thought, oh, 
my gosh, there is Ann. And I read it. And in a sense I thought this 
summarizes a lot about how I think about what we have to do in 
government. She wrote, ``In the final analysis it is not what you do 
for your children, but what you have taught them to do for themselves 
that will make them successful human beings.''
  Now, we want our constituents to be successful human beings. We do 
not want them just used to handouts. We want them to be basically 
creators. We want them to be contributors to society. I was thinking 
about the true love that I think our society has shown and the true 
caring for making sure that people in our society are truly learning to 
do things for themselves, to be independent.
  It is really great. I have gone to some programs where welfare 
recipients have taken meaningful job training programs, had the day 
care they needed, and then they have a mentor who follows them for a 
year or so in the job to make sure they do get up in the morning, make 
sure when they have an excuse not to go to work, help them sort out 
that that excuse will not be very helpful in their job. And what they 
do in these graduations a year later is they hold up a check and say: 
``You know what I like about my job? I earned this.''
  We had to encourage everyone to have that same kind of feeling of 
accomplishment and contribution because it is there in the heart of 
every American citizen. Every person wants to add and to be of 
contribution.
  They also then make reference to the fact that not only did they earn 
it and how proud they are but how proud their kids are of them because 
mom is making a contribution to society and helping to support the 
family without having to turn to someone else.
  Before yielding to my colleague, if I could say this. I proactively 
went out looking for some people to work in my office who, frankly, 
were not white, who were maybe Hispanic or black; and I guess I would 
call that affirmative action. One person that we ended up hiring was 
someone who had gone through a job training program. She is a very 
valued member of my office. But I had a program that I was trying to 
help people understand how they could buy a home, and she did not want 
to come to this program as a staff person on a Saturday, but we needed 
her. She was happy to come based on that. And she came. And a month 
later I found out that she had just bought a home.

  She had gone to this program, learned how she could own a home. She 
and her brother and her sister bought this home and live in a beautiful 
home in the city of Bridgeport, now realizing all the pluses and 
minuses of home ownership. But a few years ago she was on welfare. She 
had job training. She had day care.
  She had tremendous initiative. She is a very important person in our 
office, someone who is making a wonderful contribution and someone who 
we receive a lot of compliments on because of the way she treats people 
and the way she is able to help people.
  To me, it is just a very satisfying thing, and this can be repeated 
time and time again. That should be our goal.
  I would love to yield to my colleague.
  Mr. GANSKE. I appreciate that and agree with what my colleague has 
been saying.
  I have to smile because when he was talking about his father coming 
home and discussing the three or six newspapers that he had read that 
day with you and all of the ideas, I remembered that usually my dad and 
I discussed the sports page.

[[Page H8091]]

  But to return to welfare, I think there are principles in our welfare 
reform bill that are very, very important. The first one is the able-
bodied should work. The second one is that there should be time limits. 
We do not want to see one generation after another generation, four or 
five generations, caught in welfare.
  Another idea that is very important is that for those welfare 
recipients who are under the age of 18, there should be strong 
incentives for them to continue and stay in school. You do not receive 
benefits unless you are living with an adult and unless you are in 
school because, if you do not stay in school, there is very little 
chance that you are ever going to get out of the trap of the welfare 
system.
  So I think there are a lot of good things that we have been trying to 
do. I would like to go to one thing, though, and that relates to what 
we are talking about in terms of cuts. An example is the most recent 
HHS appropriations bill, where for the Department of Education we 
increased funding this year by roughly $2.4 billion. That was somewhere 
between a 4- and a 5-percent increase.
  Now, within that we shifted some of the funds around. We took it out 
of the Washington bureaucracy and we gave it back to the States and the 
local areas. That is crucial because, when we talk about education, I 
want to see an increased teacher-student ratio, and I want to see a 
decreased bureaucrat-teacher or bureaucrat-student ratio. And that is 
what we are trying to do here. We are trying to get power back to the 
States, to the local areas.
  People can do jobs better when government is closest to them. We want 
to do it in a responsible way, and I think that I am very optimistic 
with the progress we have made.
  I will just yield back to the gentleman for a final closing 
statement.
  Mr. SHAYS. This Republican majority is working to get our financial 
house in order and balance the Federal budget. We are looking to save 
our trust funds for future generations, and we are also looking to 
transform our caretaking social, corporate and agricultural welfare 
state into a caring opportunity society. In the process we are looking 
to bring power, money and influence out of Washington and bring it back 
to local communities.

  In the process we are looking to empower people who are in our 
communities. So it is an effort that we are working hard at. Very 
candidly, we are not looking at the polls. If Abraham Lincoln had 
looked at the polls, we would not be one Nation, under God, 
indivisible. We would be two nations very much divided. For us the 
polls simply do not matter. What matters is our kids.
  Mr. Rabin, the former prime minister of Israel, said you and I, 
politicians, are elected by adults to represent the children. And 
frankly that is what this is all about, representing the children.
  Mr. GANSKE. I am happy to join the gentleman I think on some of the 
principles that we want to accomplish. We want to accomplish an 
opportunity society. We want to help make government smaller and more 
responsive to the citizens. And we basically want safer and sounder 
families. I am happy to join my colleague in his work.
  Mr. SHAYS. I appreciate my colleague for that and thank you, Mr. 
Speaker, for taking the time to listen to us. With than we yield back 
the balance of our time however short it may be.

                          ____________________