[Congressional Record Volume 143, Number 4 (Tuesday, January 21, 1997)]
[Senate]
[Page S571]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                SECOND ANNUAL PLAN TO BALANCE THE BUDGET

  Mr. MOYNIHAN. Mr. President, last January, I outlined a brief two-
step plan to balance the budget by the year 2002. I proposed that we 
correct for overindexation of Government programs resulting from using 
the Consumer Price Index [CPI], and that we postpone tax cuts. Starting 
with the President's budget proposals, and using CBO scoring, these two 
steps would have produced a balanced budget by 2002.
  I now present my second, and if we act quickly my last, annual plan 
to balance the budget. As under the first plan, balancing the budget is 
relatively easy if we correct for overindexation and forgo tax cuts.
  The Congressional Budget Office is expected to estimate the baseline 
deficit in 2002 at about $200 billion. If Congress acts now to balance 
the budget by 2002, interest rates will fall, economic growth will 
increase, and CBO will declare a fiscal dividend in 2002 of about $50 
billion. So Congress need only find $150 billion in 2002.
  Here is how to get that $150 billion:

                        [In billions of dollars]

Correct Indexation of Government Programs and Tax Laws by 1.1 
  Percentage Points (The Boskin Commission Estimate).................55
Reduce Growth in Medicare and Medicaid by at least amount in 
  President's FY 1997 budget.........................................45
Slow Annual Growth in Discretionary (both defense and non defense) by 
  about 1.0 to 1.5 percentage points.................................50
  Total Savings in 2002.............................................150
  These steps can be modified; for example, revenues from reinstating 
expired excise taxes can be used to finance high priority investments 
or avoid reductions in important domestic discretionary programs. But 
the point remains. With the correction for overindexation a balanced 
budget is within sight. Without the correction, we will have a 
protracted fiscal crisis.

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