[Congressional Record Volume 143, Number 14 (Thursday, February 6, 1997)]
[Senate]
[Pages S1079-S1099]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BALANCED BUDGET AMENDMENT TO THE CONSTITUTION
The Senate continued with the consideration of the joint resolution.
Mr. GRAHAM addressed the Chair.
The PRESIDING OFFICER (Mr. Grams). The Senator from Florida.
Mr. GRAHAM. I thank the Chair.
Mr. President, we as a Nation have come to an important crossroads in
our history. We must decide whether or not we should alter our supreme
and most respected document, the U.S. Constitution, to establish the
principle of a balanced Federal budget.
As we all know, regrettably our Nation is deeply in debt and goes
more so each year. The budget deficit has become a permanent fixture of
our Nation's fiscal policy. While there are those who say we can
without a constitutional amendment balance the budget, recent history
raises serious doubts.
Mr. President, I should like to humanize this issue by putting it in
the context of a family, my family. My father was born in Croswell, MI,
in 1885--February 10, 1885, to be exact. When he was born, the national
debt, after almost 100 years of American history, after having
purchased Louisiana from the French, having fought the Revolution, the
War of 1812, the Civil War, we had accumulated a total national debt on
the day my dad was born of $1.6 billion. If you took the population of
the United States in February of 1885 and divided it by that $1.6
billion national debt, my father came into the Earth owing $28. That
was his share of the national debt.
I was born in November 1936. On that date, the national debt was
$33.8 billion. Between my dad's birth and my birth, we had fought the
Spanish-American War, the First World War, and suffered a deep
depression, which we still were in the midst of on the date of my
birth. On that day, dividing the then national debt by the then
population, I owed $264. That was my indebtedness to the Nation at the
time of my arrival.
My first child was born in January 1963. When Gwen was born, the
national debt was $310 billion. In 1963. That was not very long ago in
the scale of life. And my daughter owed $1,640. That was her share of
the national debt as recently as January of 1963. And 27 years after
her birth, my daughter Gwen had a daughter, Sarah. Sarah was born in
1990, and upon her birth the national debt, if you can believe it, had
soared from $310 billion 27 years earlier to $3.2 trillion when my
first granddaughter, Sarah Logan, was born. Sarah came into this world
with a proportion of the national debt of $12,830.
Since Sarah's birth, I have had seven other grandchildren, the most
recent born in 1995. When those four grandchildren, triplet
granddaughters and a grandson, Mark Ernest, were born, the national
debt had soared again now to $4.9 trillion, or they came into the Earth
with a indebtedness of $18,932.
Between my father's birth, with a $28 indebtedness, to my youngest
grandchild's birth, $18,932 per person is what we have inflicted upon
our children, our grandchildren, and generations beyond.
Such history has brought me to the conclusion that if we are to
reverse this profligate policy, if we are to begin to return to the
principles of our parents and grandparents, we, unlike they, must have
the discipline of a constitutional amendment which will require that
each generation assume responsibility for its indebtedness.
I make these observations not without recognition that we have made
considerable progress in recent years in terms of gaining some control
over our deficit. America reached its all-time high, in terms of an
annual deficit, in 1992. In 1992 the national deficit soared to over
$290 billion in that one year. It took us 100 years to get to $1.6
billion. In one year we had a deficit of $290 billion.
This year, the estimate is that our deficit will be $107 billion. So
we have made substantial progress and I believe that President Clinton
and the Members of Congress during this period deserve some recognition
for the fact that we have pulled that line of deficits in a downward
position, albeit still, each year, contributing substantially to our
accumulated national debt.
But, despite this progress, current projections forecast large
deficits into
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the future. Our national debt is expected to reach not the $4.9
trillion that it was in 1995, but $5.4 trillion at the end of this
fiscal year, by the end of September of 1997.
With this history in mind, and witnessing numerous attempts--many of
which carry the names of Members of Congress--attempts and failures to
enact legislation to force ourselves to meet the standard of a balanced
budget, I believe the time has come to pass an amendment to the
Constitution to mandate a balanced budget. It is unfortunate that we
need a constitutional amendment to force us to do something that we
ought to do voluntarily. However, a constitutional amendment is
necessary to provide Congress and Presidents, today and in the future,
with the necessary constitutional backbone to maintain a policy of a
balanced budget.
I have long supported a balanced budget amendment. I am an original
cosponsor of the current amendment that is before us this afternoon. I
support an amendment as an important principle, both to maintain the
momentum of the last 4 years toward reducing and eliminating the annual
deficits, and to assure that, once we are at a point of balance, we
will stay there. It is imperative that we not let this opportunity pass
by, that we not lose the progress of the last 4 years. We must continue
on a path toward a balanced Federal budget by the year 2002.
If I could speak in the context of my State of Florida, we have a
unique interest in the outcome of this debate. Florida will continue to
grow. It will be one of the fastest growing States in the Nation. Our
population, which today is something over 14 million people, is
projected to reach over 16 million by the year 2005. The benefits of a
balanced budget amendment are national and numerous, but one of the
most important benefits, as recognized by virtually all economists, is
that a balanced Federal budget will lead to lower interest rates and
increased economic growth.
Americans deserve the benefits that a balanced budget will bring and
the people of my State, citizens in a State which each year must
finance the consequences of growth--additional homes, schools, all of
the things that a growing population requires--with money which has
largely been borrowed, will benefit especially by the lower interest
rates that a balanced Federal budget will bring.
If capital is readily available at reduce cost, virtually everything
Americans do that involves borrowing money is easier and will have a
positive financial impact on States with expanding population, such as
Florida. Most States have a constitutional requirement for a balanced
budget within their own fiscal houses. As a State legislator, and for 8
years as Governor of Florida, I operated with a balanced budget
amendment to our State Constitution and with a balanced budget. I can
say from that experience that this requirement of a balanced budget in
our State constitution, and the fidelity of generations of State
officials to that objective, has served my State well. It will serve
America well. I will support the specifics of this amendment because I
believe that this specific amendment is better than the status quo, is
better than the history of the last century. But I think we should not
let this opportunity pass without striving for additional perfection in
this amendment.
The U.S. Constitution appropriately is not amended frequently, or
without the most serious considerations. Therefore, whenever its
amendment is considered, we should give attention to the details of
that amendment and strive to assure that we are leaving to future
Americans the best possible statement of national policy. To this end,
next week or as soon thereafter as possible, I will offer an amendment
to the balanced budget amendment that will strive to accomplish four
things.
First, it will eliminate almost $2 trillion in the total debt that we
will accumulate over the next 25 years under the amendment in its
current form. Second, the amendment to the balanced budget amendment
that I will offer will protect our Social Security trust fund. Third,
it will stimulate economic growth. Finally, it will be honest with the
American people, by being consistent with their expectations of what a
balanced budget truly means.
The failure to pass a balanced budget amendment this year will be a
great mistake. For too many years we have delayed the hard discussions
until tomorrow. Mr. President, tomorrow has come. It is our
generation's duty to assure that we pay our Nation's bills rather than
asking our children and grandchildren to do so. It is our challenge to
pass a constitutional amendment to establish as a national policy that
each generation of Americans will balance its Nation's budget.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I cannot tell you how much I personally
appreciate the distinguished Senator from Florida, his courage and
boldness in standing up for the balanced budget amendment, which he has
always done. He and Senator Bryan are the two principal Democratic
cosponsors of this amendment, and they have both worked very hard with
us to try to bring this to fruition, not only on the floor but through
the whole Congress. I want to personally thank him for his kind
remarks, good remarks this day, and I look forward to the rest of the
debate.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SESSIONS. Mr. President, I am honored to rise to address this
Chamber and I am reminded of the responsibility given to me by my
fellow Alabamians. It is both an honor and privilege to represent the
people of Alabama, and I will devote all my resources toward ensuring
that their best and most honest instincts are well served in this
institution.
I am also delighted to have heard the remarks of the senior Senator
from Florida. Those remarks are most pertinent and important for us
all.
I think, also, I should note the great respect that I have for
Senator Hatch and the work he has done on building a balanced budget
amendment that is sound and that will be a good addition to our
Constitution. It is a well-written amendment and it ought to be passed
in its present form.
I think it is, indeed, appropriate that the first bill under
consideration on the floor of the U.S. Senate, is the balanced budget
amendment. The people of Alabama have made their support for this
legislation clear, and I intend to do all I can to ensure that they
have the opportunity to have this amendment placed before them for
their ratification. Americans know through experience that Washington
cannot be trusted to keep its financial house in order. This has been
demonstrated to them by Washington's failure to balance more than one
budget in the last 28 years. The 28 years of unbalanced budgets stacked
right here before us demonstrate Congresses past history of failure.
Americans know the burdens of Washington's excesses are going to fall
primarily on their children, a result which is unjust and
unconscionable. They have reached the same conclusions that I have:
Enactment of the balanced budget amendment is the only way Washington's
tax-and-spend mentality can be curbed and provides the only way for
integrity and accountability in Government spending. It will force us
to honestly confront the issues and to make choices.
Someone has suggested we really don't need to amend the Constitution,
the budget deficit is dropping. But in Judiciary hearings last week,
Senator Biden, a senior Democratic Senator from Delaware, discussed
that very point.
He noted at the time that the only reason, in his opinion budget
deficits have been dropping is because of the fear that this body and
the House, along with the President, would pass a balanced budget
amendment. Without discipline, budget deficits will increase again at
an alarming rate. That is why Senator Biden supported a balanced budget
amendment.
The arguments in favor of a balanced budget amendment are not new. In
fact, the concerns Americans raise today were advocated by our Founding
Fathers, and none more vocal than Thomas Jefferson. Where today's
families worry about the crushing debt that is being passed onto their
children, Jefferson warned, and I quote, ``Each successive generation
ought to be guaranteed against dissipations and corruptions of those
preceding.''
[[Page S1081]]
And corruption it is. It is irresponsibility. It is a corruption of
the highest duties and responsibilities of office in this Government
that we fail to make the hard choices when confronted with competing
priorities and simply adopt both priorities and pass that debt to our
children.
During the first Judiciary Committee hearing on this bill, Senator
Orrin Hatch placed a debt clock before us. It graphically illustrated
the point. Each second that passes sees another $4,500 being added to
our national debt. Think about that. The national debt is growing at
the rate of $4,500 a second, $270,000 a minute, $16,200,000 an hour,
$388,800,000 a day. This is in addition to the current national debt of
$5.2 trillion.
At this moment, our current debt is equal to a $20,000 obligation
being placed on every man, woman, and child in this country, and it is
our children who will face the brunt of this problem. Make no mistake,
the increases in today's debt will be funded directly by taxes levied
on our children and grandchildren, limiting the opportunity for them to
enjoy the same standard of living we enjoy. By continuing these
practices, we are mortgaging their right to participate in the American
dream.
Having paid no heed to Jefferson's advice, we have failed to protect
our Nation from the dissipations and corruptions of the present
generation. Indeed, we have violated the very principle of our
founding: taxation without representation. We are, in effect, taxing
future generations without their consent as a result of our own
irresponsibility.
I would like to take a moment to reflect upon the tragic waste of
resources that the interest on this debt is causing us. We lose $800
million a day simply on interest payments. In fact, over the course of
a fiscal year, we spend nearly as much money on interest payments as we
do on the Nation's defense. For example, in the year 1995, we spent
$232 billion on interest on the debt and $273 billion on defense. The
money we use to pay the interest on the debt is money that could be
diverted to other areas or simply returned to the American taxpayer.
This is an intolerable waste of our resources. A balanced budget
amendment would offer protection against a continued waste of our
revenue resources.
A balanced budget amendment would also afford protection against
another evil Jefferson foresaw: the inability of Congress to restrain
its spending with any degree of self-discipline. When Jefferson warned,
``Public debt is the greatest of dangers to be feared by a republican
government,'' he did so because he could foresee that self-interested
politicians could be expected to choose spending over restraint and
responsibility. Our $5.2 trillion national debt is a sad testament to
that fact. Our inability to live within our means on the national level
is unacceptable and adds to the increasing lack of confidence the
American public--who must live within its budgets--feels for its
Federal Government.
On this point, I am reminded of a story arising at the time I served
as U.S. attorney and attended a Federal Judiciary Conference. The
attending judges were complaining because Congress was requiring
sentencing guidelines that would restrict their ability to sentence. In
fact, the guidelines mandated certain sentences for certain types of
offenses.
At one point, a senior judge stated to the entire conference:
``Gentlemen, the plain fact is, the U.S. Congress no longer trusts you
to sentence.''
The fact today is that the American people no longer trust the
President or the Congress to bring their spending in order. They are
insisting upon a balanced budget amendment to end the deficit, because
it is a people's initiative.
A constitutional amendment is needed, I submit to you, because we
have a systemic weakness. We have observed in the last 28 years, by
these budget deficits here before us, that this Congress cannot be
trusted. Our system is weak without fiscal discipline, and it is proper
and appropriate for this body and the people of the United States to
amend that Constitution and fix that systemic weakness.
A balanced budget amendment is needed to regain the people's trust,
because the people know that there has not been a balanced budget since
1969, and they know that we are continuing to run budget deficit after
budget deficit. They are skeptical of our ability to keep our promises,
because they do not believe that we have the political will to keep
them without a law requiring it. And they are right.
When Treasury Secretary Rubin testified before the Judiciary
Committee, I asked him about the current administration's commitment to
a balanced budget. I specifically asked him how he could commit to
achieving a balanced budget in 2002 when neither he nor President
Clinton would even be in office at that time, because under the
Constitution, President Clinton will leave office in the year 2000.
They cannot give an answer to that, and that is the point.
Mr. President, I was pleased to hear the President speak of the need
for a balanced budget in his address to the Nation. But what needs to
be remembered in this debate is that while the President may offer
visions of a balanced budget, and he may offer timelines for achieving
that goal, he will not be in office when the target date for the
balance arrives and therefore cannot be held accountable.
In essence, the promises of a balanced budget are nothing more than
illusory commitments. Simply offering a vision of balance will not
guide this Nation to its goal. An efficient enforcement mechanism needs
to be in place in order to ensure that a commitment to a balanced
budget becomes a reality. This is especially true when an
administration proposes a budget in which much of the budget savings
are backloaded with the supposed balance to be occurring in the years
after they leave office.
Such ``out-of-sight, out-of-mind'' proposals are a shunning of
responsibility and reflect the same business-as-usual thinking that has
led us to the fiscal trouble we now face.
In truth, the only instrument capable of creating the kind of binding
discipline needed to bring our budgets in balance is this amendment.
While ending deficits may be tough for pork-addicted politicians and
for inefficient Government agencies and departments, it will become
much easier, once the people speak, with this amendment.
Remember, there will be economic benefits from balancing the budget,
such as increased savings and lower interest rates. The American public
would also be the recipient of another important benefit--that of
greater political independence.
On this issue, former Senator Paul Simon, a Democrat from Illinois,
and a supporter of the balanced budget amendment, has raised a
significant and often overlooked point. During testimony before the
Judiciary Committee, Senator Simon noted that limiting our ability to
increase our debt will necessarily mean that we reduce the amount of
our Nation's debt held by foreign governments.
He recounted a jarring story in which he was once approached by a
Treasury official before an important pending vote on a Saudi Arabian
arms sale. The official told him that if the vote failed to pass, the
Saudis might stop buying bonds which finance our debt. This sort of
economic extortion is intolerable. American policymaking is and should
always remain the sole province of the American people's
representatives, not foreign bondholders. As most people know, it is
not a good idea to get into a fight with your banker.
The time to restore the American people's trust is now. We simply
cannot afford to let this opportunity pass us by. As I campaigned
throughout Alabama last summer I was struck by the unanimous and
universal support this amendment enjoyed. Whether I was meeting peanut
farmers in Dothan or teachers in Mobile, small businessmen in
Huntsville or police officers in Birmingham, the support for this
amendment remained constant and strong.
The broad-based support is not confined simply to Alabama but is also
reflected nationally. Survey after survey shows that over 80 percent of
the American public supports enacting a balanced budget amendment. In
fact, support for this concept has already been powerfully demonstrated
on the State level with 48 States having enacted provisions which
restrict each State's ability to incur debt, including my home State of
Alabama. And it works well.
Support for this amendment is so wide ranging that it transcends
party
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lines. I note with some interest that my predecessor, former Senator
Howell Heflin of Alabama, and a Democrat, introduced a balanced budget
amendment as his very first piece of legislation in 1979.
Further, bipartisan support was evidenced in last year's vote on the
issue, a vote which saw Republicans and Democrats in both Houses come
together to fall just one vote short of passage. The reason for this
bipartisan support is clear: The American people demand and deserve an
opportunity to consider and vote on this amendment. I trust in the
judgment of the American people to assess this amendment's merits as
well as its defects, and I encourage my fellow Members to trust in the
American people's collective wisdom as well.
As I began this speech by quoting Thomas Jefferson, I would like to
finish it by quoting another of our Founding Fathers, George
Washington. I believe his words are applicable to our current debate.
In his words:
* * * whatsoever is unfinished of our system of public
credit can not be benefited by procrastination; and as far as
may be practicable we ought to place that credit on grounds
which can not be disturbed, and to prevent that progressive
accumulation of debt which must ultimately endanger all
governments.
Mr. President, the balanced budget amendment does place our credit on
``grounds which can not be disturbed'' and would prevent future
accumulations of debt. It has been 200 years since Washington uttered
these sentiments. We have procrastinated long enough. The time to pass
the balanced budget amendment is now. Thank you very much. Mr.
President, I yield the floor.
Mr. HATCH. Mr. President, I want to compliment the distinguished
Senator from Alabama. When Senator Heflin left the Senate, I have to
say that I personally felt very badly about it. But I think Senator
Heflin, who worked very hard for the balanced budget amendment, would
really have appreciated this wonderful set of remarks that the
distinguished Senator from Alabama gave today. I want to compliment him
for it.
Mr. President, as I understand it, there was a unanimous-consent
request. I ask unanimous consent, if I can get this, that the order be
Senator Grams, who I understand was supposed to go first, then Senator
Byrd, then finally Senator Durbin, who has an amendment that he will
bring forward. I ask unanimous consent for that.
Mr. LEAHY. Reserving the right to object.
Mr. HATCH. With the right of the minority leader to come and speak
whenever he desires.
Mr. LEAHY. Thank you.
Mr. President, I will not object, knowing the right of the
distinguished Democratic leader, Mr. Daschle, to speak has been
protected.
Mr. HATCH. Yes.
Mr. LEAHY. I know the distinguished Senator from Utah would do that
in any event. I will not object. But I would like to make one comment
after the order is entered.
The PRESIDING OFFICER (Mr. Enzi). Is there objection? Without
objection, it is so ordered.
Mr. LEAHY. Mr. President, the distinguished Senator from Utah--if I
might have his attention for one moment--the distinguished Senator from
Utah and I have tried very hard to have speakers pro and con. It is my
understanding that the distinguished majority leader wants this debate
to go on for a few days, and as well it should.
Also, I understand the distinguished Senator from Utah wanted an
opportunity for some of the new Members of the Senate to speak on this,
as well they should. It is an important issue.
I urge those who do wish to speak to cooperate with the floor
leaders, as they have. The distinguished Senator from Utah and I have
been trying to do this informally--not through an order, but
informally--to have one Member speak in favor of the amendment, one
Member speak in opposition to the amendment, and go back and forth so
the debate will bear relevance to the issue. I hope that all Senators
will understand that and will work and cooperate with the two of us to
make that possible.
Mr. HATCH. I thank the distinguished Senator. We will do that, except
if the floor is vacant we will let whoever is here speak.
Mr. LEAHY. Of course. That is right.
Mr. HATCH. Whether in opposition or a proponent of the amendment. So
we will just work this out and work together. I yield the floor.
Mr. GRAMS addressed the Chair.
The PRESIDING OFFICER. The Senator from Minnesota.
Mr. GRAMS. Thank you very much, Mr. President.
I commend the chairman, the Senator from Utah, for all the hard work
he has done on this amendment.
Mr. President, it was 2 years ago I rose as a freshman Member of this
body to express my strong support for a constitutional amendment to
balance the Federal budget. ``There is no question that Congress must
pass a balanced budget amendment and send it to the States for
ratification.'' That is what I said here on the Senate floor.
I thought that with the will of the American people behind us, at
that time we had every reason to be optimistic about its passage.
Well, here we are again, 2 years later, debating the same question we
debated in 1995. And I am here once again to call for the passage of
the balanced budget amendment.
We have already heard many of the arguments in support of Senate
Joint Resolution 1, and I will not use this opportunity to repeat them
all. But let it simply be said that there are indeed many.
However, the release of the President's budget just this morning
illustrates just how difficult it is to produce a balanced budget void
of gimmicks and accounting tricks, and illustrates the very real need
for the balanced budget amendment.
Mr. President, this morning we got a first glimpse of the President's
budget for fiscal year 1998. After a quick review of this massive
document, I must say my initial feeling has been mixed.
On the one hand, I am pleased that the President has agreed to many
of our goals, such as a balanced budget by the year 2002, tax relief
for American families, and Medicare reform, and a strong national
defense.
On the other hand, I am very concerned about what I see as serious
flaws included in the President's plan.
Let me begin my observations with the President's education
proposals, which he described in his State of the Union Address as ``My
No. 1 priority for the next four years.''
The President proposes $51 billion for education spending next year.
That is an increase of 20 percent, rising to nearly $60 billion by the
year 2002, a 40-percent increase.
This includes $36 billion in tax incentives for education and
training; $5 billion for school construction; $1.2 billion for a new
reading program; and increased funding to connect schools to the
Internet.
Mr. President, we all agree that there exists a strong correlation
between education and steady economic growth.
Investing in the skills and abilities of the future U.S. work force
will enable us to achieve and maintain high levels of knowledge and
productivity in the workplace--helping to improve our standard of
living and ability to remain globally competitive.
However, the core question is not whether the Government should
invest in education, but how those taxpayer dollars should be spent--
and, ultimately, whether more spending is the answer to our education
problems.
The United States has outspent every other G-7 country in education
and leads in the attainment of secondary and university degrees. Our
total government spending in all levels of education as a percentage of
GDP has increased from 4.8 percent in 1985 to 5.1 percent in 1993--the
highest among the G-7 countries. Eighty-four percent of our population
successfully completes secondary education--once again, that is the
highest among the G-7 countries. Twenty-four percent of our population
receive a college or university diploma, a percentage more than twice
that of Germany, the United Kingdom and France. It is significantly
greater than that of Japan.
Despite hundreds of billions of dollars in education spending and
hundreds of Federal programs, American students continue to perform
poorly compared to students in other countries, particularly in terms
of basic science and math skills. The science
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and math scores of our students are the lowest among Canada, France,
Italy, Switzerland, Taiwan, and Korea. Our Scholastic Aptitude Test
scores among college-bound students have barely increased over the last
decade, and remain below those scores attained in the 1960's and 70's.
We are spending more and achieving less. Clearly, this proves that
spending more money on education is not the solution. If it were, the
United States would have long been No. 1 in the world in attaining
academic success. Unfortunately, throwing more money at the problem
appears to be this administration's only solution. The administration
would do well to look at my State of Minnesota, where a recent study
conducted by the St. Paul Pioneer Press showed that the school
districts with the highest per-student spending produced test scores
that were among the lowest.
The President's education plan fails miserably at addressing the real
issues that face our Nation. This is unacceptable. We must dedicate
ourselves to improving our education system, but we must do it right.
First and foremost, in my view, an honest education budget should be
one that restores and revives our traditional values in American
education: It should ensure our current resources are used efficiently;
it must have incentives built into Federal programs to reward students
as well as teachers who improve their performance; it must focus on
improving basic science and math skills of our primary and secondary
school students; it must ensure a crime- and drug-free learning
environment; it must ensure that taxpayer dollars are actually helping
educate our youth.
Now let me turn to the President's tax proposals. I am pleased the
President has acknowledged the tremendous good we accomplish by
allowing working families to keep a little bit of their own money
through the child tax credit. The President has moved one step closer
to the $500 per-child tax credit my Republican colleagues and I have
long been advocating, and we welcome him on board. However, there still
exists a big gap between his proposal and ours.
First of all, the President's child tax credit has too many
limitations. For instance, the President extends his tax credit only to
preteen children, those under 13 years of age, taking away the tax
credit dollars just when families need them most. In the President's
budget, the tax credit begins at only a $300 per-child for the first 3
years and is finally increased to $500 in the year 2000. Moreover, the
President's plan begins phasing out the tax credit for families with a
combined income of $60,000, with more limited credits for families
making as much as $75,000. Finally, the President's tax credit would
not be available unless deficit reduction targets are met.
Now these limitations greatly dilute the purpose of child tax relief.
The extensive debate we have undertaken in the past 2 years over fiscal
policy has helped us understand that working families are indeed
overtaxed. In fact, families today spend more on taxes than on food,
clothing, and shelter combined. A $500 per child tax credit--without
limitation--is more appropriate and necessary to allow families to make
more of their own spending decisions.
As a long-time advocate for tax relief, I would prefer a zero capital
gains tax on all investment incomes. While I do applaud the President's
proposal to provide a capital gains tax cut for homeowners, his plan is
really just a small step forward. It is hard to justify the exemption
of this type of investment gain from other investments, such as the
individual who chooses to live in a relatively modest home and invest
in stocks and perhaps the formation of a small manufacturing company.
Why should those individuals be taxed more harshly than those who
invest in a personal residence?
In my view, a general cut in the capital gains tax must be provided
to encourage savings, and to treat all investors equally. The current
tax system discourages national savings and investment, which will
adversely affect our long-term economic growth. Fundamental reform is
needed to change the system.
The President's budget includes tax cuts totaling $98.5 billion, with
most of it going toward the family tax credit, education tax subsidies,
and expanded IRA's. However, the Clinton budget proposes new tax
increases targeted at airline passengers, small and large investors,
and the Nation's job providers totaling some $76 billion. We can do the
math ourselves: The President's budget leaves a net tax cut of just
$22.4 billion. I do not believe that is what the American people
intended when they re-elected the President to a second term.
Another serious concern lies with the President's proposed new
entitlement spending. If the President is serious about adding another
$60 billion in new entitlement spending, he must show us why we need
new spending programs when we have yet to repair the ones we already
have.
Finally, Mr. President, I remain concerned about the economic
assumptions the White House has relied upon in drafting its plan, which
are significantly more optimistic than the projections of the
Congressional Budget Office. The President's budget has not yet been
scored by the CBO. Once it is, it may very well be $70 billion short of
our deficit targets.
President Clinton came here to Capitol Hill just over one year ago
and stood in the House Chamber to declare that, ``The era of big
government is over.'' I am afraid that sentiment is not reflected
within the 2,418 pages of the President's budget. I had hoped for bold
steps from the President in addressing the very real need to control
the growth of the Federal Government. But what we received today were
more like baby steps, the first tentative wobbles of an infant. Under
the President's budget, Washington will actually spend 3.5 percent more
in the next fiscal year than we are today. While the President's budget
appears to reach balance in 2002, more than 60 percent of his deficit
reduction are slated to come after he has left office. Leaving those
tough decisions not to the Clinton White House, but the administration
of the Nation's next Chief Executive.
Mr. President, I commend the President for the blueprint he has
prepared for us, and I look forward to working with him and my
colleagues to improve on and implement these historic changes in our
Government. In the administration's budget, we have before us a good
foundation on which to build that bridge to the 21st century the White
House is so fond of speaking about. But without addressing some of the
serious concerns I have outlined today, I am afraid that bridge may
collapse before we are able to cross it.
Mr. President, I yield the floor.
Mr. HATCH. Mr. President, I thank the distinguished Senator for his
remarks in this area.
The PRESIDING OFFICER. The Chair recognizes the Senator from West
Virginia.
Mr. BYRD. Mr. President, I thank the Chair.
(The remarks of Mr. Byrd pertaining to the introduction of Senate
Joint Resolution 15 are located in today's Record under ``Statements on
Introduced Bills and Joint Resolutions.'')
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Illinois is recognized.
Amendment No. 2
(Purpose: To allow waiver of the article in the event of an economic
recession or serious economic emergency)
Mr. DURBIN. I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Illinois (Mr. Durbin) proposes an
amendment numbered 2.
On page 3, between lines 11 and 12, insert the following:
``The provisions of this article may be waived for any
fiscal year in which there is an economic recession or
serious economic emergency in the United States as declared
by a joint resolution, adopted by a majority of the whole
number of each House, which becomes law.
Mr. DURBIN. Mr. President, first let me thank the chair of the Senate
Judiciary Committee for his cooperation in this effort. Though we may
not see eye to eye on this amendment or the underlying amendment to the
Constitution, he has been gracious and gentlemanly throughout. I
appreciate that very much.
I would also like to salute the Democratic leader from that same
committee, the ranking member, the Senator from Vermont, for extending
the same courtesy, both personally and through his staff.
[[Page S1084]]
This is only the second time that I have taken the floor of the
Senate to speak. And I consider it a high honor to follow the Senator
from West Virginia. In the context of constitutional debate, I think we
are all anxious to learn the views of the Senator from West Virginia
because he reveres this Constitution, this great document, as much if
not more than any other Member of the U.S. Senate.
In the course of the last 14 years I have served in the U.S. House of
Representatives. I have cast about 7,000 votes. There were many
important votes among them. The most important vote in my estimation
was when I was called on to vote and decide whether or not the United
States would go to war. I knew with that vote and the decision made by
this Congress that lives would be lost. Husbands, fathers, sons,
daughters, loved ones would put their lives at risk because of that
vote. I do not think I cast a more important vote in my congressional
career.
But immediately behind that vote I would have to put consideration of
constitutional amendments. It is so rare that we in this body or in the
other body have an opportunity to address amending this great
Constitution that I hope we will all take it with a great deal of
seriousness. Since 1791, 205 years ago, we have chosen to amend this
great document only 27 times. Of course, the first 10, the Bill of
Rights, were in that year, 1791. And each time an amendment has been
suggested we have tried to step back and measure it against this
Constitution, this document, and to determine whether or not that
amendment or that suggestion really ranks with the importance of this
great document.
This amendment that we are considering, the balanced budget
amendment, is one that has been debated at great length. And it has
been debated by many people of both political parties for a long period
of time.
I hope that every Member of the Senate will come to this debate as I
have with a new energy and a new determination to make certain that
whatever we do in accepting or rejecting this amendment that it will
bear the test of history, that those who come after us will judge us as
having been thoughtful and reflective in determining whether or not
this amendment belongs in this great document and whether this
amendment will stand the test of time.
Mr. President, I do not believe that this balanced budget amendment
as offered stands the test of time, and that is why I am offering an
amendment today to address what I consider to be a fundamental flaw in
the balanced budget amendment.
Mr. President, the balanced budget amendment that is before us today
does not provide an adequate means for dealing with economic recessions
or other serious economic emergencies that could unexpectedly throw the
budget out of balance or require a fiscal response. It would tip the
balance against working families and make it harder to help them
recover from a recession or other economic emergency. In times of
recession or economic slowdown it would force us to do exactly the
wrong thing by making it more difficult for the Federal Government to
respond to adverse economic circumstances. In the case of a regional
economic downturn, or other economic emergency that fell short of a
national recession, it would leave us unable to respond unless a
supermajority of 60 percent or more agree to take action.
That is why I offer this amendment to allow Congress and the
President to waive the requirement of a balanced budget in those times
when our country is experiencing an economic recession or serious
economic emergency. I do not stand alone with this point of view. More
than 1,000 of the Nation's most respected economists recently joined
together to condemn the proposed balanced budget amendment as unsound
and unnecessary. And here are their words:
The proposed amendment mandates perverse actions in the
face of recessions. In economic downturns, tax revenues fall
and some outlays, such as unemployment benefits, rise. These
so-called ``built-in stabilizers'' limit declines of after-
tax income and purchasing power. To keep the budget balanced
every year would aggravate recessions.
The more than 1,000 economists who signed this statement include at
least 11 Nobel laureates and many present and former Government
officials, including the former chairman of President Nixon's Council
of Economic Advisers, current and former Federal Reserve Board
Chairmen, and former Democrat and Republican Directors of the
Congressional Budget Office. The group includes a friend of mine and a
man I respect very much, Robert Eisner, professor at Northwestern
University in my home State of Illinois who has a solid grasp of the
economic ramifications of Government budget policies.
Most Members of this Senate, Democrat or Republican, would concede
that our economy has moved forward in the last 4 years. Some credit
fiscal policy emanating from the President and Capitol Hill, and others
credit monetary policy from the Federal Reserve. I think it has taken
both efforts to put this economy on the right track.
During the course of his testimony before our Budget Committee the
Chairman of the Federal Reserve, Alan Greenspan, was asked point blank
about the balanced budget amendment. And in the Chairman's words he
said he was ``opposed to putting detailed economic policy in our
Constitution.'' This is a man who must on a day-to-day basis sit with
his staff and cohorts and determine the course of the American economy.
He is a man who is as dedicated to balancing the budget as any person
in this Nation. He is someone who has made tough and difficult
decisions time and again to put this economy on track, and he has
cautioned us that this is a mistake, a mistake for us to embody in this
Constitution detailed economic policy, that we forswear the flexibility
necessary to make certain that this Government of, by, and for the
people can respond to the needs of the people in times of recession.
What these economists and Mr. Greenspan are warning us of is that the
balanced budget amendment if not changed will exacerbate the economic
slowdowns we experience. It will put our Nation into an economic
straitjacket that will make it hard to respond to economic downturns.
Let us talk for a moment about the mechanisms that work in our
economy in times of recession. Tax receipts fall. Certain types of
Federal spending increase. Consider the obvious, the plant closes in
your hometown where workers who have spent a lifetime showing up every
day doing their job and paying their taxes end up out of work, perhaps
for the first time in their lives finding themselves drawing
unemployment compensation from this Federal Government. Perhaps if
things go badly for a family for a longer period of time, they may be
called on to apply for food stamps to make sure there is food on the
table, maybe even Medicaid to make sure there is hospitalization
protection for members of the family, and then of course trying to find
another job. They may need to call on the Government for job training
courses or education to prepare themselves for another career; another
opportunity.
What I have just described is not radical. It is a natural outgrowth
of a free market capitalist economy with business downturns and with
the vagaries of the business cycle leaving some families and some
workers needing help.
The fiscal changes I have described that take place when the
Government steps in are described as economic stabilizers because they
kick in automatically in times of unemployment and recession, and they
help the economy recover, as they help individuals get back on their
feet. That is why Robert Greenstein from the Center on Budget and
Policy Priorities described the effect of the balanced budget amendment
in this way in his testimony before the Judiciary Committee:
In years when growth is sluggish, revenues rise more slowly
while costs for programs like unemployment insurance
increase. As a result, the deficit widens. Under a balanced
budget amendment, more deficit reduction thus would be
required in periods of slow growth than in times of rapid
growth.
This is precisely the opposite--
The opposite, in his words--
of what should be done to stabilize the economy and avert
recessions. The constitutional amendment consequently risks
making recessions more frequent and deeper. In the period
from 1930 to 1933, for example, Congress repeatedly cut
Federal spending and raised taxes, trying to offset the
decline in revenues that occurred after the great crash of
1929. Yet those spending cuts and tax increases removed
purchasing power
[[Page S1085]]
from the economy and helped make the downturn deeper; they
occurred at exactly the wrong time in the business cycle.
In Dr. Greenstein's words:
This is why a balanced budget amendment requirement is
called ``pro-cyclical.'' It exacerbates the natural business
cycle of growth and recession. It also is why most economists
who favor tough deficit reduction measures strongly oppose a
constitutional balanced budget amendment.
Treasury Secretary Robert Rubin gave a similar warning when he
testified before our Judiciary Committee. He said as follows:
A balanced budget amendment would subject the Nation to
unacceptable economic risks in perpetuity . . . A balanced
budget amendment could turn slowdowns into recessions, and
recessions into more severe recessions or even depressions.
Mr. President, this would happen because the so-called automatic
stabilizers in our economy that have been developed over the past 50
years to reduce the extremes of the business cycle and help avoid
another Great Depression would remain inoperative by this proposed
constitutional amendment.
I have a chart which I would like to bring up at this point.
This chart I think demonstrates graphically what I have described:
What has happened in the business cycles of America from the year 1870
to 1990.
You will note that in our free market economy we have our ups and
downs, but note the changes that took place after World War II. It is
true that those spikes below the line still occurred, but they were not
as deep as they had been before. You look back to the Depression, the
Great Depression of 1929, you see the recession that we faced in the
mid 1940's, but look at what happened afterwards. We have had our
downturns, but they have been moderate in comparison.
These are something more than mere statistics. These reflect
Americans working and out of work. They reflect businesses being forced
to shut down. They reflect the misery that families feel when we go
into an economic downturn.
Now, what happened at this point that caused such a great change for
the 40 years reflected? We built into our economy certain ways to
moderate recessions. Those moderations or stabilizers are Government
programs involving Government expenditures. When our economy goes into
a downturn, tax receipts are diminished, the opportunity to balance the
budget is made more difficult, and we are called on at the same time to
respond and spend.
So as tax revenues are going down, calls for expenditures to
stabilize the economy go up. That is a recipe for an unbalanced budget.
But it is also a recipe for stabilizing an economy, for ending a
recession, for bringing people back to work, for giving small
businesses a chance to survive, to say to family farmers it was a bad
year but next year can be better; we are going to help you through
this.
If we accept what this balanced budget amendment offers, it will
become increasingly difficult for us to use the stabilizers that have
kept America at work, have kept families together, have kept small
businesses in business and family farmers on the farm.
That is what is at stake in this debate. The reason I have offered
this amendment is to suggest that there is a more reasonable way to
approach this. If those who support the balanced budget amendment want
to make certain that this Congress goes on the record to make certain
that we go on the record with a record vote and be held accountable
when we do not balance the budget, my amendment requires that as well,
but it does not require a supermajority.
In response to the claim by some that Congress could still easily
respond to economic recessions with the balanced budget amendment,
Secretary Rubin added the following comments:
You recognize recessions quite a bit after they have
started. Predicting economic circumstances is well nigh
impossible, in my judgment, at least with any degree of
reliability. And under those circumstances you can be well
into an economic downturn before you realize you have to deal
with it, and--
In Secretary Rubin's words--
I think that is one of the very serious problems that the
balanced budget amendment creates.
Why does it take time for us to recognize these recessions? The
general working definition of a recession is that it is at least two
consecutive quarters--a quarter being a 3-month period of time--of
decline in real gross domestic product. It obviously takes 6 months to
trigger this definition. So sometimes we have started into a recession
moving below the line here, unemployment starting to show up and we do
not see it. It is hidden to us until 3 months or 6 months later.
The more technical definition of recession also includes inherent
lags. We have found that the decline in economic activity associated
with a recession is not always widespread. Oftentimes it is confined to
a sector of the economy or region of the country. We also find that
sometimes these declines are cumulative in nature, not restricted to
just 1 month or 1 quarter. Again, it takes time to measure these
criteria.
So, as a general principle, what Secretary Rubin has said to us is we
may not know we need to help until we are in the middle of our problem.
There is a lag time, to accumulate and analyze data and recognize the
decline that may have already started.
So how often do we face these recessions? Are they rare occurrences
in the American economy? We have been blessed in recent years, but
historically recessions occur very frequently. By the National Bureau
of Economic Research's official determination, our Nation has
experienced 9 recessions since World War II, 11 since the Great
Depression of 1929 to 1933, and 21 recessions this century, which means
that roughly every 5 years we will face this recession.
The balanced budget amendment does not assume that this is going to
happen. It assumes it will not happen. And if Congress is going to
respond to this occurrence, which we know has been fairly regular, it
requires a supermajority for us to spend the money to stabilize the
economy.
In part because of the economic stabilizers that are now part of our
economy, the average length of recession since World War II has only
been 11 months compared to 18 months in the previous half century.
A recession is not just an abstract economic concept. It is lost
jobs, lost wages, personal and family financial crises.
The Federal Government has developed many mechanisms to deal with it.
I have mentioned a few: Unemployment compensation, Medicaid
applications, food stamps and so forth.
Let me tell you a story that I think illustrates this as well as any
that I could tell you on the floor of the Senate. In my hometown of
Springfield, IL, we were blessed for decades with manufacturing plants
which created good jobs, good-paying jobs for men and women who would
come to work with a strong back, a good work ethic, and usually little
more than a high school diploma. One of those plants was known as the
Fiat-Allis plant. It was a plant organized by the United Auto Workers,
producing heavy equipment and producing great jobs for a lot of
families and a great boost to the Springfield economy.
Over a decade ago that plant closed, and hundreds of workers who had
relied on this plant were thrown out on the street. You can repeat the
example and story I am about to describe in virtually every city in
America. This happens all too frequently. Let me tell you about one
friend of mine who had worked at Fiat-Allis for years. His name is Bob
Bergen.
Bob saw it coming. He had heard a lot of talk about the plant closing
down. So Bob decided that he would do something about it. He went to
the community college before the plant closed down and started taking
courses in heating and cooling, thinking about opening his own
business, furnaces and air conditioners and the like. So, when the
plant did close down, Bob had a short transition, but one that he
planned, drawing some unemployment, some trade adjustment assistance,
finishing up his course work at Lincoln Land Community College, and
ultimately opening his own business.
It worked. Our investment in Bob Bergen and his family paid off. We
cushioned the shock of unemployment. We gave Bob an avenue to follow
toward a new course of livelihood, and he took it. Now he is in
business. In fact, he put the furnace in my home just a few years ago
and does a pretty good
[[Page S1086]]
job now, and I am glad to call him a friend. His life and experience
are illustrations of what I am talking about.
Imagine a recession closing down plants across this country and
imagine this Congress, faced with the need to balance the budget to the
dollar, being unable to provide unemployment compensation that Bob
Bergen needed; being unable to provide the trade adjustment assistance
that Bob Bergen used to keep his family together while he got his
business started; being unable to provide job training, the scholarship
assistance at community college, the things which people rely on in
America to get back on track. If we are hidebound, tied to the
provisions of this balanced budget amendment, and forget the Bob
Bergens of the world and what it means to them, I think we have lost
sight of our responsibility.
How much of a difference do these economic stabilizers make to our
economy? Secretary Rubin testified, if you want to look at this in a
larger context, ``Without automatic stabilizers, the Treasury
Department has estimated that unemployment in 1992 that resulted from
the 1990 recession might have hit 9 percent instead of 7.7 percent.''
Statistics aside, Secretary Rubin tells us that would have meant 1
million more Americans out of work. We would have had 1 million more
unemployed Americans, 1 million more families pushed to the economic
precipice if our economic stabilizers had not been there.
These recessions also tend to be regional in nature. Proponents of
the underlying balanced budget amendment argue that it contains an
escape hatch that allows a waiver of its provisions by a supermajority
vote of three-fifths of both Houses of Congress. But mustering a three-
fifths vote is not always an easy matter. Millions of working families
in America might have to suffer if we cannot come up with 60 percent on
a vote to waive the balanced budget requirements in times of recession.
I recall, and I think most do as well, what happened not that long
ago, in fact, just 2 years ago, when we were called upon in Congress to
pass a debt limit, a debt limit which said we put our full faith and
credit as a government behind the debt of the United States. It took
only a majority vote to do that, and we could not bring it together. As
a consequence, we faced some of the most serious shutdowns in our
Nation's history. The Government shutdowns that occurred, two
successive shutdowns, literally sent thousands of Federal workers off
the job. The Government shut down not once but twice, a total of 27
days. The Office of Management and Budget has estimated that the
overall cost of the shutdowns was more than $1.4 billion. America knew
it. More than 750,000 Federal workers were affected, some during the
Christmas and Hanukkah season, including more than 250,000 who were
furloughed.
During that period of the Government shutdown, 170,000 veterans did
not receive their GI bill education benefits on time, 200,000 passports
were not processed, more than 2 million people could not visit the
Smithsonian museums and other facilities in the Washington area, and 7
million people could not visit their national parks. Mr. President,
1,300 workplace safety complaints went unanswered and 3,500
investigations involving pension, health, and other employee benefit
plans were suspended. Delays were created in 250,000 cases trying to
find deadbeat dads who were delinquent in their child support payments,
and cleanup of hundreds of Superfund sites was delayed. All of this
happened because we could not muster a majority, a majority vote, let
alone a supermajority.
This balanced budget amendment will enshrine in our Constitution the
requirement of a three-fifths vote in times of an economic recession to
come to the rescue of American families. For those who think this is an
easy requirement, it is rare in our Constitution to have any
supermajority requirement and it certainly should not be imposed on
people who, through no fault of their own, are victims of this economy.
My amendment brings the supermajority requirement of three-fifths
down to a majority requirement. I think that is reasonable. It is still
not going to be easy. Each and every person, whether a Member of the
House or the Senate, must stand and justify that vote in terms of a
recession, a national economic emergency, something that justifies
slipping away from the balanced budget requirement that year.
I think we have to maintain flexibility to respond to recessions,
disasters, and other economic emergencies in a timely fashion. I do not
think we have to say, ``I'm sorry, Mr. Bergen, I am sorry you have been
laid off, but because of the balanced budget amendment, we are not
going to be able to make the payments to you for your unemployment
because we just have to balance the budget. We cannot help you when it
comes to food stamps, we have run out of money. We cannot help your
family when it comes to job training or Medicaid.''
Think about that for a second. Is that fair to people we represent?
Is that fair to this economy? Will it, in fact, result in these spikes
going lower instead of moderating, as we have seen, as these
stabilizers have been put in place? That, unfortunately, might be the
verdict for Bob Bergen and others like him if this supermajority
requirement allows 41 Senators or 175 Representatives to prevent a
response that involves deficit spending.
Our Founding Fathers established only a few circumstances where
supermajorities would be necessary for Federal action. We should not
adopt a new supermajority requirement that prevents us from helping our
most vulnerable and neediest citizens in times of recession or other
serious economic emergencies.
For all these reasons, I am offering an amendment to allow Congress
to waive the requirements of the balanced budget amendment by a
majority vote for a joint resolution in times of recession or serious
economic emergency. My amendment will ensure that Congress can continue
to respond to recessions and other serious economic emergencies with
fiscal policies that will alleviate the pain of recession and shorten
its duration rather than driving us deeper into economic stagnation.
I urge my colleagues to support this amendment.
The PRESIDING OFFICER. The Senator from Arkansas is recognized.
Mr. HUTCHINSON. Mr. President, I rise in support of the balanced
budget amendment. I think it is one of the most important pieces of
legislation we will be debating in this body, in this Congress. I might
add, I appreciate the preceding Senator, Senator Durbin, acknowledging,
as he presented his amendment to the balanced budget amendment, his
overall opposition to the underlying amendment to the Constitution. We
are going to, I suspect, hear many amendments--several amendments at
least--offered in the coming weeks, with the primary goal of ultimately
defeating the balanced budget amendment to the Constitution.
As I said, I believe this is one of the most important pieces of
legislation we are going to debate. The opponents of a balanced budget
amendment argue that to compel Congress to balance the budget will
forever damage and eliminate the ability to provide our seniors with
the protection they have earned. Their plan--and we will be hearing
more of it; we have already heard quite a lot--to exempt Social
Security is nothing more than a risky gimmick. I say again it is a
risky gimmick to put such an exclusion onto the balanced budget
amendment. Their arguments are aimed at scaring the most vulnerable
segments of our population.
In the last 2 years, in my experience in the House of Representatives
and as I observe the deliberations in the U.S. Senate, we have seen a
great deal of those efforts to scare those who are most vulnerable in
our society. So I suppose it is not that unusual, as we enter a debate
on the balanced budget amendment to the Constitution, to hear those who
would frighten and those who would scare the most vulnerable in our
society. They assert Social Security checks will be withheld because
there will be no money left in the Treasury.
Mr. President, I ask unanimous consent that an editorial from the
Arkansas Democrat Gazette be printed in the Record.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:
[[Page S1087]]
[From the Arkansas Democrat Gazette, Feb. 5, 1997]
Budgetscare: How To Debase a Cause
Bill Clinton doubtless wants to defeat the Balanced Budget
amendment in the worst way which is just how he's going about
it--by scaring old folks again. Yep, once more he's saying a
proposed reform will put Social Security--Social Security!--
at ``grave risk.''
Now when have we heard that before? Only every time
somebody tries to get the federal government to put its
fiscal house in order. By now the clintonoids have made this
simple scare campaign a fine art First, scare the seniors;
then scare `em some more; then leave 'em petrified. And
never, ever let the facts get in the way.
Despite its name, the Balanced Budget amendment would not
keep Congress from passing an unbalanced budget. Instead, it
just puts a slightly larger hurdle in the way. It would
require a three-fifths vote of both houses of Congress to run
a deficit. It's not an insuperable obstacle; most
controversial business in the Senate already required a
three-fifths vote--because that's what it takes to prevent a
filibuster.
But here comes the president, warning that ``disbursement
of Social Security checks could cease or unelected judges
could reduce benefits to comply with this constitutional
amendment.''
Not very likely. Not very likely at all. The chances of
Social Security checks being sequestered fall into the same
range of probability as the Loch Ness monster posing for
photographs. Both possibilities are great for scaring folks,
but for little else.
Social Security is an entitlement written into law, it is
not dependent on annual appropriations by Congress. It's
recipients paid into the program, they're entitled to their
checks--even if Congress doesn't approve a budget. It's
automatic.
The federal government would have to go broke before one of
those unelected judges the president uses as a bogeyman would
have to decide what creditors got paid first. And recipients
of Social Security would stand at the head of the line
because their benefits are part of a separate law. Behind
them would come all of the programs that are covered by
annual appropriations--everything from education to the
federal courts, from the Smithsonian to the space shuttle,
and the multitude of grants for essentials like battery-
operated grocery carts and solar powered cars.
All told, spending for these appropriated programs amounts
to five times the size of last year's deficit, meaning that
the government's default would have to be of Depression-
sized proportions before Social Security might be
threatened. And even then such a dramatic catastrophe
isn't likely. Because this amendment has more escape
hatches than an old-time movie serial.
The president knows the process. He has to know that Social
Security isn't in the imminent danger he's conjured up. Once
again he is playing to the darkest fears of the most
vulnerable citizens in order to achieve a partisan end. Why,
with all the arguments available to him, is Bill Clinton
invariably attracted to the lowest common one? Some days it's
as if he'll do anything but raise the level of public
discourse.
A mere citizen can still yearn for a leader who, acting on
principle, takes an unpopular stand without resorting to
demagoguery. To make his case, such a leader would not paint
a doomsday scenario of little old ladies starving in the
cold, but would rely on reason supported by fact and informed
by sober judgment.
About that misnamed Balanced Budget Amendment, he would say
it would unnecessarily clutter the Constitution we all
revere. He would explain that such an amendment would create
an even more unwieldy process in a Congress already prone to
procedural knots. Perhaps he would contend that the proposal
for a super-majority is undemocratic. Or he could argue that
while America is not a strict democracy, its citizens are
loathe to depart from majority rule without a pretty darned
good reason.
But these are all arguments that, unlike the usual scare
tactics, would have to be patiently explained in order to
carry the day. They would compliment the intelligence of the
American people, not insult it. It's so much easier to
proclaim that Social Security and the sky are falling. So,
once again, William Jefferson Clinton has chosen to frighten
any older citizens he can.
The result: Our president and head of state, an official
who should be most responsible of all, introduces still more
mistrust into a political system already overburdened with
it. He encourages suspicion and cynicism--always corrosive
agents in a system that relies on consent and understanding.
In doing so, he tears at the fabric of the very constitution
he claims to be defending.
Mr. HUTCHINSON. Mr. President, a part of that editorial says this:
The chances of Social Security checks being sequestered
fall into the same range of probability as the Loch Ness
monster posing for photographs. Both possibilities are great
for scaring folks, but for little else.
I believe that is very, very true. Again, nothing could be a more
risky gimmick to be put onto the balanced budget amendment than to
exclude Social Security from the provisions of the amendment. It is
attempting to replace the truth with fear.
The plain truth is that the President does not have the power to
withhold appropriations, such as Social Security. Only Congress can
give him that power. It is our responsibility to appropriate the funds
necessary to carry out the domestic and the foreign policy programs of
this Nation. In reality, the balanced budget amendment will ensure that
money is there to spend.
Today, annual deficits and the national debt are the greatest threat
to Social Security's existence. If we talk about the threat to the
future of Social Security, let us not forget that the greatest threat
is continued chronic deficits and an unwillingness or a lack of
discipline and a lack of will on the part of the politicians of this
country to bring our books into balance.
I believe this very vivid depiction of having 28 budget books stacked
on top of each other is very clear evidence that the notion--as the
President put it in the State of the Union Address--that we can just do
it, we pass it and he will sign it, we will balance the books, will not
happen, as we see with 28 budgets before us. It has to stretch the
credibility of not only the executive branch but a Congress that is
more inclined to continue spending on ever-expanding entitlement
programs.
Since the 1930's, literally dozens of proposals have been made to
require a balanced budget to limit the size or the growth of the
Federal budget or public debt, or some combination of these ideas,
including several very notable recent efforts in 1990 and, again, in
1993. These have come in the form of bills, statutory efforts, and
proposed constitutional amendments. An average, Mr. President, of more
than 30 measures per Congress have been introduced in recent years.
I believe one reason that we have seen such statutory efforts and so
many offers of various constitutional amendments is because many of
those who occupy the Halls of Congress today, both at the other end of
the Capitol in the House of Representatives and in the U.S. Senate,
once served in State legislatures where they have the yearly annual
experience of seeing their State budgets balanced. They came from State
legislatures where there were constitutional provisions that required
them to balance their budget, and they saw year after year after year
that it could be done.
So when they came to Washington, they came with a determination, they
came with a deliberation that we would have, in fact, that same
provision embodied in the U.S. Constitution. But it has been
frustrating. Year after year and time after time, we have seen those
efforts defeated.
The opponents of a balanced budget amendment, I believe, are pursuing
a campaign of deliberate disinformation. There has been and will
continue to be an effort to distract and to divert the attention of the
American people from the real issues that are at stake in the debate
over a balanced budget and over a balanced budget amendment. The
opponents would distract and divert the American people from the real
threat to Social Security, which is chronic deficits and enormous
accumulated debt. They would like the debate over the coming weeks to
be about Social Security, but the debate is not about Social Security.
The debate is about the chronic deficits that threaten the future
economic stability of this Government and our economy in years to come.
That's what it is about.
If you care about Social Security, you should care about a balanced
budget amendment to the Constitution, because that is the best way of
ensuring fiscal sanity being restored to our budget process. Without a
credible, sustainable balanced budget, we will never have the money to
pay out future benefits. It is just that simple. A balanced budget
amendment needs economic prosperity that will produce revenues
necessary to fund the program. With a balanced budget, the big spenders
in Washington will not be able to target and, therefore, raid Social
Security to pay for other programs.
Opponents of the balanced budget amendment will throw out, I think,
any diversion to confuse the issue. They will use scare tactics. The
truth is that excluding Social Security does nothing to secure benefits
into the future. The President's own budget counts these surpluses to
achieve his balance.
What if Social Security is excluded? Social Security will not be
protected,
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but between the years of 2002 and 2007, the deficit will appear $700
billion larger. That means either a mammoth tax hike on American
families, almost $1,100 per year per household, or devastating cuts in
important programs like Medicare, cancer research, Head Start, and
environmental cleanup.
In the years since 1960, the budget has been balanced only once.
Deficit spending during that period has increased the official national
debt from less than $284 billion to over $5 trillion, and the 28 budget
books that are stacked right over here give vivid evidence of that
failure of Congress to discipline its spending habits.
Interest payments on the debt now consume about $240 billion
annually; $240 billion annually just on interest to service the
national debt. The $240 billion that we are spending in interest
payments is larger than the combined budgets of the Departments of
Commerce, Agriculture, Education, Energy, Justice, Interior, Housing
and Urban Development, Labor, State, and Transportation.
I suggest that if we have a commitment to education, then we ought to
have a commitment to a balanced budget amendment to the Constitution to
ensure that these exploding interest payments will finally be reined
in. In the future, the debt problem will only get worse. The
Government's current debt calculation fails to include the 10 to 20
trillion dollars worth of unfunded liabilities. These are promises to
pay future benefits like Social Security, Medicare, Government employee
retirement and other programs. In short, we will soon long for the days
of $200 billion deficits unless something is done, and that something
should be the balanced budget amendment.
When you exclude Social Security, you derail the very purpose of the
amendment. I was interested, as I listened to the deliberations of the
House Judiciary Committee earlier this week on the balanced budget
amendment, in the testimony of a former Congressman, my former
colleague, Tim Penny. He referred to this gimmick of taking Social
Security off budget and out of the unified budget as being the greatest
money-laundering scheme in history, because future creative Congresses
will find it not too difficult to begin to shift programs into the
Social Security trust fund so as to circumvent the purpose and the goal
and the intent of a balanced budget amendment to the Constitution. It
is a loophole so large, not only can a truck drive through it, but tons
and tons of red ink can flow through it.
Finally, the goal of such an amendment is to defeat the balanced
budget amendment to the Constitution.
As I said, I am glad that Senator Durbin acknowledged his underlying
opposition to an amendment to the Constitution requiring a balanced
budget altogether. So while he offers this amendment to the BBA, he
still opposes the concept of an amendment requiring a balanced budget.
Secretary Rubin--who was quoted earlier this afternoon--Secretary
Rubin, when he testified before the House Judiciary Committee, was
asked by my brother, Congressman Hutchinson, whether there was any
balanced budget amendment that he could envision that he would be able
to support? In other words, if you went ahead and excluded Social
Security, or if you put in a recession provision, or if there were some
other addition to a balanced budget amendment, was there any such
amendment that Secretary Rubin or the administration could support? And
when finally pressed, Secretary Rubin said no. He said he could not
envision any amendment to the Constitution requiring a balanced budget
in any form that the administration would support.
I think that really tells the story, that while there will be efforts
to divert attention, while there will be efforts to distract the
attention of the American people, all of the amendments that are
offered are in the end ultimately being offered with the goal of
defeating this very, very important amendment to the Constitution.
I want to put a human face on the balanced budget amendment. We can
often become too consumed with who has political advantage in policy
debates that we forget who sent us here and how it often affects them.
Let me tell you about one of my constituents. Bob Boyd, a small
business owner in Little Rock, is the kind of person who can speak to
the importance, I think, of a balanced budget amendment to the
Constitution.
Mr. Boyd was a delegate to the White House Conference on Small
Business. During that time, he and the conference made several
recommendations to President Clinton. The one proposal which received
the most votes, more than any other policy recommendation by the White
House Conference on Small Business, was for the adoption of a balanced
budget amendment to the Constitution. Unfortunately, that proposal has
only collected dust at the White House. But this was from the White
House Conference on Small Business, the recommendation that received
the most support.
When asked why so many of the conference voted on this proposal and
voted for this proposal, Bob simply says:
. . . as a small business owner, we know the importance of
the bottom line and [the] government doesn't, they have lost
the principle of being responsible for their debts.
Bob said that the President told them ``that small business is the
engine that drives our economy.'' Unfortunately for Bob, and for all
the small businesses in Arkansas and America, the national debt, and
the taxes it needs to pay for it, are taking up all the fuel.
I strongly believe that ratification of a constitutional amendment is
the only way to turn around this unending sea of financial debt. It is
time to put the harness of the U.S. Constitution on Congress and the
President. It is time to require these institutions to be more fiscally
responsible than our predecessors have been.
I would just say again, as I conclude, Mr. President, that there is a
fundamental immorality that goes along with chronic deficit spending.
For decades and for generations of our history as a Nation, a
constitutional amendment requiring a balanced budget was not necessary
because there was an inherent fundamental belief on the part not only
of our policymakers and our politicians but the people of the United
States as a whole that spending more than you take in, whether it is
your family budget or whether it is the Federal budget, is simply
wrong. To transfer our spending in the form of debt to our children and
to our grandchildren, for them to assume through higher taxes and
through a lower standard of living, is simply wrong.
The intrinsic value, though, of the balanced budget amendment rests
on a simple point--it affects every American. It will affect how and
where we spend taxpayers' dollars. It will affect the process by which
those decisions are made. Moreover, it will affect the real value we
place on the taxpayers' money, when we are restricted in the ways we
spend it.
The time has come for Government to learn how to work with less, how
to see the citizen's money as being precious, and to permanently reduce
its size so that its people's wealth can expand. I yield the floor, Mr.
President.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER (Mr. Abraham). The Senator from Utah.
Mr. HATCH. Mr. President, I just want to take a second here and thank
the distinguished Senator from Arkansas for his remarks that he has
made. I do not know when I have been more impressed with a group of new
Senators than I have now, unless it was the last time when we brought
the balanced budget amendment up and lost by one vote, when all of the
new Senators spoke together on the last one. I was just really
impressed with that. And these Senators this year have been doing very
well. I appreciate the Senator coming to the floor and making these
cogent remarks. I thank my colleague.
Mr. LEAHY addressed the Chair.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. Mr. President, while the Senator from Arkansas is still on
the floor--and while I indicate a different view than his on the
amendment, I, too, join the chairman in complimenting him and the other
new Senators who have spoken. When you think back to what your first
speech was, it is nice to know it was on a major issue. So I compliment
him for that.
Mr. President, I would note though that it is an important issue.
That is why we should take it as serious as possible. We talked about
amendments.
Senator Durbin, the distinguished Senator from Illinois, has also
spoken,
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in one of his first speeches on the floor of the Senate, as eloquently
and as completely and as logically and cogently as he used to speak in
the other body. The Senator from Illinois has spoken of an amendment
that he has offered. While we will not vote on it today, we will
eventually vote on it to the balanced budget amendment. He also
expressed his concern about the underlying amendment.
There is nothing inconsistent with saying that one does not want to
amend the Constitution of the United States on this issue but will
propose an amendment to the constitutional amendment as presented by
the distinguished Senator from Utah and others. I think there is
nothing inconsistent with this because all of us have a responsibility,
however we vote, to try to make what is the final product as good as
possible.
All Senators know that there are issues that come to this floor where
we may have made up our mind how we would vote on the underlying piece
of legislation, either for or against it, but yet we will be involved
in numerous amendments before we get there.
I have voted against amendments on a bill when I finally voted for
the final bill and vice versa. I have had legislation of my own that I
have sponsored and have then supported amendments to my own
legislation, amendments offered either by myself or other Senators. I
have supported amendments to my own legislation offered by Senators
from the other side of the aisle on major pieces of legislation on
numerous occasions because while I thought I had brought a good piece
of legislation to the floor of the Senate, other Senators brought up
amendments that I realized, in listening to the debate, made that
legislation even better.
I can think of various times during the years when I was chairman of
the Senate Agriculture Committee, when I would have a farm bill, a
major piece of nutrition legislation, and others on the floor--
legislation that I had been the principal author of--and Senators on
both sides of the aisle, both Republicans and Democrats, had come up
with amendments which, after listening to them, I felt that they made
the underlying piece of legislation better and voted for them.
I can think of a couple instances when I have had legislation on the
floor where Senators have been very candid and told me they would not
vote for my piece of legislation, but on the possibility it might pass
they had an amendment which at least in their thought would make it
better. It is a very legitimate thing to do. We debated those
amendments. Some were accepted, some were not.
The underlying amendment, the underlying proposed constitutional
amendment, is unsound economic policy and should be rejected for that
reason. But you also go on the assumption that any piece of legislation
may pass. It is the responsibility of each of us to offer suggestions,
if we have them, of how it may be improved. Senator Durbin's amendment
to waive this article in the event of an economic recession or serious
economic emergency is right on point, and it does improve the
legislation.
One should listen in that regard to the economic experts. More than
1,000 of the Nation's most respected economists, including at least 11
Nobel laureates, as well as a former chair of President Nixon's Council
of Economic Advisers, the current and former Federal Reserve Board
Chairman, former Democrat and Republican Directors of the Congressional
Budget Office, all agree this amendment is unsound economic policy.
The distinguished senior Senator from the State of West Virginia [Mr.
Byrd] held a news conference in which he released the signatures of
more than 1,000 economists and had a number of economists, Professor
Tobin and others, who pointed out why they felt this proposed
constitutional amendment was bad economic policy. These economists,
incidentally, were across the political spectrum. They all agreed that
the proposed amendment would hamper the Government's ability to cope
with economic downturns.
Economists and financial experts agree that this proposed balanced
budget constitutional amendment will straitjacket the economy in hard
times. It will hamstring the adjustment mechanisms that have been
developed since the Great Depression to preserve jobs and restore the
economy after a downturn.
Being opposed to the constitutional amendment is an entirely
different thing than being opposed to a balanced budget. This Congress,
under very strong leadership from President Clinton, has brought the
deficit down 4 years in a row and is now going to go for the fifth year
in a row. Certainly since I have been old enough to vote, no President,
Republican or Democrat, has done that before. The deficit is coming
down.
Were it not for the fact that we were now paying almost half billion
dollars a day in interest on the deficits run up in President Reagan
and Bush's budgets, we would not even have a deficit today. We would
have a surplus, and we could start applying that surplus to the
national debt.
I urge Senators to understand that people like the Senator from
Vermont and others who have cast very, very difficult votes,
politically unpopular votes to cut programs, to cut spending, to bring
down the deficit, do not need to be shown a constitutional amendment
that some day in the next century, the next millennium, it might have
some effect. We can vote right now. As President Clinton said in his
State of the Union Message, all it takes is our vote and his signature
to bring down any deficit. We can do it now rather than saying, well,
sometime in the next millennium, the year 2000-something, maybe there
will be this untried amendment to the Constitution, only the 18th
amendment to the Constitution since the Bill of Rights. Instead, we
should have the courage to vote to bring the deficit down now.
Some of us in this Congress and the House and Senate have had the
courage for 4 years in a row to cast those votes to bring down the
deficit. I wish we were not paying that half billion dollars a day in
interest from the doubling and tripling of the national debt during the
1980's. But to President Clinton's credit and the credit of those men
and women who have voted with him to bring down the deficit, it is
coming down.
Let us think about the flexibility you do need in difficult times.
President Herbert Hoover, who was a great engineer and had many
wonderful characteristics, but not a sense of the economy, felt during
an early recession in his term that the most important thing he could
do to bring about some confidence in this country was to take whatever
steps necessary to have a balanced budget--basically taking the steps
that would be required by this constitutional amendment. By doing that,
it plunged this country into the worst depression it has known in its
200-year history.
If the economy today takes a downturn and Americans are losing their
jobs as happened in the early 1990's, then this proposed constitutional
amendment makes it more difficult for our Government to respond to the
needs of working families.
As Treasury Secretary Rubin, a man who has proven by his own life
that he understands the economy and economics, testified before the
Judiciary Committee--and, incidentally, without any expert refuting
what he said--Secretary Rubin said he thought ``a balanced budget
amendment would subject the Nation to unacceptable economic risk in
perpetuity. * * * A balanced budget amendment could turn slowdowns into
recessions and recessions into more severe recessions or even
depressions.''
To date, no competent, recognized expert has come forward and refuted
what Secretary Rubin said. Thus, the 1,060 economists and 11 Nobel
laureates who are opposing the proposed constitutional amendment
condemn it because the amendment ``mandates perverse actions in the
face of recessions.''
I am deeply concerned about the impact the balanced budget amendment
will have on jobs for working families in Vermont and across the
country during times of recession. If I put a human face on it, I put a
human face of 560,000 Vermonters. We are a fiscally conservative State.
We find when we sell bonds from Vermont, they sell out virtually
immediately because people know how we feel about keeping our books. We
do not have a constitutional amendment to balance the budget in the
Vermont State Constitution. What
[[Page S1090]]
we have are 180 Vermont legislators who treat every tax dollar as
though it were their own. Governors, Republicans and Democrats, felt
the same, who realized, however, at such time as Vermont, a small
State, has gone into a recession, there are times it has had to spend
some money to help us out of it as a responsibility to the people of
Vermont.
I hate to think what might happen if we go into a deep recession and
people are being laid off from jobs and are told, ``Well, we cannot
help out.'' There are none of the programs we normally see to ease
recessions and get our economy going again. I realize it is 25 below
zero in Vermont. I realize you have just been laid off from a job you
have had for 15 years, but the various Federal programs that we started
after the Great Depression cannot be funded.
As Secretary Rubin explained, the so-called automatic stabilizers in
our economy would be ineffective under this proposed constitutional
amendment. These are mechanisms that have been developed over the last
50 years to reduce the extremes of the boom-and-bust cycles. They are
intended to prevent another Great Depression. They have proven
effective over time.
Secretary Rubin testified:
``[W]ithout automatic stabilizers, the Treasury Department
has estimated unemployment in 1992 that resulted from the
1990 recession might have hit 9 percent instead of 7.7
percent, which would have been in excess of 1 million jobs
lost.''
Some of these things that helped, when I think about 1988 and 1992,
we were adding around 40,000 people a week to the food stamp rolls to
help bring us back. In the last 4 years, we have been taking millions
back off the food stamp rolls. It shows it can work.
The preamble to the Constitution and its stated purpose to ``promote
the general welfare, and secure the blessings of liberty to ourselves
and our posterity,'' ought not be overridden by a constitutional
amendment that denies jobs to hundreds of thousands of working families
in hard times.
People talk about the Federal Reserve Board. Federal Reserve Chairman
Alan Greenspan reiterated his opposition to the proposed constitutional
amendment during questioning by Senator Lautenberg during his testimony
before the Senate Budget Committee. Federal Reserve Chairman Greenspan
urged the Senate Budget Committee to continue to eliminate the deficit.
He did join Secretary Rubin and our Nation's leading economists in the
conclusion that this proposed constitutional amendment places too many
constraints on our economy.
This so-called escape hatch allowing a waiver of its provisions by a
supermajority vote of three-fifths of both Houses of Congress is small
comfort to America's working families, because many national recessions
start out in different regions of the country. For example, the most
recent recession hit New England first.
What if citizens of New England, who have fewer Members of the House
of Representatives than other regions of the country, needed help? Or,
conversely, what if a very populous region of the country suddenly had
a recession? Do they become the only ones who can get help? Could New
England get Senators and Representatives from other States, which are
still experiencing good times, to waive the constitutional balanced
budget requirement to help protect their livelihoods?
Prof. Robert Eisner of Northwestern University, a past president of
the American Economic Association, understood the economic problems
under this proposed constitutional amendment when he wrote:
One need only recall the near collapses, in recent years,
of the economies in New England, California, and Texas. Who
would bail them out if their own tax revenues again decline
and there were surges of claims for unemployment benefits,
food stamps, and general assistance?
One of the reasons for having this great Nation of 50 States is so
that we can work together to help each other, knowing that if a tornado
hits one part of the country and not others, or a recession hits one
region and not others, relief would be available. Relief for economic
recessions and emergencies has to be flexible. None of us can predict,
and certainly cannot write into a constitutional amendment, when the
next natural disaster will hit or the next recession will take place,
because usually a swift response from the Federal Government is needed
to aid State and local relief efforts. Economic emergency relief by
constitutional supermajority mandate is a prescription for gridlock,
not swift action.
It would make no sense--if there is a terrible earthquake in
California, or awful flooding in the Midwest, or a drought in the
Southeast, or a recession in New England--to say we can't do anything
to help because we need a supermajority vote.
When your State or region is hit by a major recession or emergency,
do you want critical Federal assistance to hang on the whims of 41
Senators or 175 Representatives? That is all it would take. We have 535
Members of Congress. All 535 Members of those bodies--save a critical
41--could vote and you may not be helped.
Our Founders rejected this requirement of supermajorities. We should
look to their sound reasons for rejecting supermajority requirements
before we impose on our most vulnerable citizens a three-fifths
supermajority requirement to provide Federal relief from recessions and
serious economic emergencies.
In fact, I urge some to go back and read ``The Federalist Papers,''
read what our Founders wrote. I hope that all Senators have read them.
But if they haven't, now is as good a time as any to add to your
education, improve your mind, and acquire a sense of history. It is why
Senators, for 200 years, have resisted the temptation to amend the
Constitution unnecessarily--17 times since the Bill of Rights, that's
all. Surely, we have had more than 17 times in this country when we
have had the urge to do it, when it has been politically popular to do
it, when we could point to political polls of the moment that said 70
percent of the country wanted us to amend the Constitution. We have
taken polling where people have taken our Bill of Rights--those things
that protect us from unlawful search and seizure, protect us in our
right of free speech and religion--there have been polls and studies
done that would just break down the words and ask the people, and the
majority would say, oh, no, we could not vote for that. Then they are
surprised to find that it is in the Bill of Rights.
The Constitution should not be a prisoner of that moment's public
opinion polls. The Constitution should be protected by the best
instincts and the greatest sense of responsibility of every man and
woman in the Senate and in the House. If we start voting by popular
public opinion poll and not by a sense of history and not by what is
best for the next generation, then we fail in our own responsibilities
here.
Mr. President, I grew up in a family that revered the Constitution. I
grew up in a family that understood the first amendment. I grew up in a
family that knew that so much of what makes us Americans is in the Bill
of Rights. In my public life as a prosecutor, as a lawyer and, more
important, as a husband and a father, I have realized the advantages I
have that no one in any other country has because of the protections in
the Constitution. I also realize that those protections came because my
predecessors, and all our predecessors in these bodies, resisted the
temptation to amend the Constitution every time that it was popular. I
hope we will not do it now.
The sponsors of this measure repeatedly outline the dangers of a
budget deficit. We are all in favor of bringing down the deficit, as we
have done for the last 4 years. But these sponsors have failed to
address how the proposed constitutional amendment will provide for the
flexibility needed in economic downturns, without holding working
families and hard-hit regions hostage to a supermajority vote.
Senator Durbin's amendment restores that flexibility by requiring a
simple majority vote to respond to economic recessions and emergencies.
Whether you are for or against this constitutional amendment, we
should take the effort to make it a better constitutional amendment.
Certainly, Senator Durbin's amendment does that, and it deserves our
support.
Mr. President, I see my friend from Utah on the floor. Maybe he can
give us some idea of what he plans to do with our lives for the rest of
the day.
Mr. HATCH. I think we have a few more remarks. The distinguished
Senator from Wyoming would like to
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speak, and the distinguished Senator from Maine wants to speak. I could
then wrap up, and that should end it for the day. Do you have anybody
over there desiring to speak?
Mr. LEAHY. I will check. It would be your turn to go now. I will
yield the floor so your speakers may proceed. And we will find out if
there is anybody else on this side.
Mr. HATCH. I yield to the Senator from Wyoming [Mr. Enzi].
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Mr. President, I rise in support of the passage of the
balanced budget constitutional amendment. Without that amendment, our
children and grandchildren will be saddled with a mountain of debt.
They will be left with no hope of fulfilling their hopes and dreams.
I feel that it is time to correct the misleading reports that have
been put forth by many of the opponents of Senate Joint Resolution 1
over the past few weeks. Their arguments are not new. They have been
the same arguments for the past 20 years--actually, for almost three
decades Congress has failed to balance the budget. I am standing almost
in the shadow of the mountain of budgets that don't balance. That
failure has led to the current fiscal mess that holds us hostage.
But what has really kept us from a balanced budget amendment? The
same old excuses and fear-mongering still prevail, scaring everyone
from the children to the senior citizens of this country. The excuses
take a little different form each year, but the same basic fears are
still being played upon. The easy position to take is to continue
spending the taxpayers money on feel-good programs instead of grappling
with the tough issues.
The debt we are incurring for our kids amounts to taxation without
representation. We are forcing people who haven't even been born yet to
cosign on a note. A balanced budget constitutional amendment would tie
the hands of the spenders in DC. It doesn't throw the baby out with the
bath water. In fact, it is the life cord that connects the budget to
the baby. It would protect generations yet to come.
A balanced budget will do away with the hidden taxes Americans pay in
the form of higher interest rates. If we pass the balanced budget
constitutional amendment now, a middle-class family could easily save
$1,500 a year. That is a nice raise. This is assuming a drop in
mortgage rates from 7.7 to 5.7 percent, a drop in interest rates on a
car loan from 9.2 to 7.2 percent, and decline in student loan rates
from 8.5 to 6.5 percent. Interest rates should be 2 percent lower with
a balanced budget.
How would the financial markets view the balanced budget amendment?
According to many financial market experts, such as David Malpass, the
more restraint on Government spending, the better the markets will
respond. Part of the reason for the bullish market is merely the
suggestion of a balanced budget. Laws enforcing a balanced budget would
perpetuate a bullish financial market. Currently, interest rates are
low and the economy is healthy, due again in part by Congress and the
President getting serious about balancing the budget. All of these
positive trends are occurring as a result of just the possibility of
balancing the budget.
What about the claim that a balanced budget amendment would hobble
our economy in a recession? First of all, there is a clause in the
amendment that would allow Congress, by a three-fifths vote, to spend
more than it takes. In an emergency situation of three-fifths vote
would not be difficult to attain. Financial experts agree that
recessions have occurred at times due to Federal mismanagement of
monetary, tax, or regulatory policies. Mistakes are usually made when
the Government intervenes too much in the private sector. The amendment
has a built in method that allows the Federal Government to quickly
react to these types of glitches.
The economist John Keynes knew that Government should attempt to
create a surplus in the good times and that Government must borrow
during bad times. The problem with our situation is that Congress is
borrowing during the bad and good, wartime and peacetime, national
emergency or no emergency. Look at where we are now. We are supposed to
be having the best economy in years--with a focus on reinventing and
downsizing government, a huge reduction in military expenses, and a
Congress and President that want to balance the budget. We lack the
will and discipline, however, to ultimately balance the budget before
the end of the 20th century.
We have had commission after commission study this issue to sheer
boredom. We all know that revenue is up right now for Social Security.
We are also well aware that the program will start running a deficit in
2013. Let's not make political hay out of Social Security. Let's start
dealing with reality.
Opponents of the amendment want Social Security exempted or taken off
budget. It is catchy wording that some senior citizens have bought
hook, line and sinker. It has absolutely no consistent meaning to
anyone and it provides a false sense of security. There is a vague
feeling that ``off budget'' means that we don't want to cheat on Social
Security and damage the ability to support our seniors.
I say right now that nobody wants to damage Social Security. Nobody
wants that to happen. Everyone, including me, wants to protect senior
citizens. It is absurd to say otherwise.
Right now Social Security is a partial pay-as-you-go system. The
people paying Social Security taxes are paying for the people who are
retired today. It is not a fully funded system. It doesn't build up a
trust fund. It's a bunch of IOU's. There is no secret vault stacked
full of Social Security funds. The revenue from Social Security is
invested into Government-backed securities like Treasury bills. To
disregard Social Security plays games with the budget. It would require
an additional $80 billion match up front. Later, when baby boomers
reach retirement, the fund will go broke without an enormous infusion
of funds from our children and grandchildren. An amendment is not just
for the next 8 years.
It is for that time when there is an extra burden on Social Security.
As the only accountant in the U.S. Senate, I believe that in order to
ensure stability and longevity of Social Security, we need to go to a
modified accrual system of accounting for each of the trust funds.
We need to talk also about Medicare and the other trust funds, not
just Social Security. It happens to be the only one that fits with the
argument of the opponents.
This accrued system would assure that the moneys coming in match up--
at some point in the critical near future--to the time that the money
has to go out. A modified accrual method would show that any surplus
revenue for this year's budget is already committed further down the
line.
I believe we should pass a balanced budget amendment even though the
growth rate of the deficit is falling without the amendment. The budget
deficit is expected to rise from $107 billion in fiscal year 1996, to
$124 billion in fiscal year 1997. This is not a reduction in the size
of the deficit. Some are praising the progress in reducing the deficit.
We aren't reducing the deficit or the national debt. I don't know where
their numbers are coming from. They sure aren't coming from the
Congressional Budget Office. But if we move toward a balanced budget by
fiscal year 2002, a fiscal dividend of about $34 billion is in sight.
The Clinton administration and a number of Members of this body have
already begun a reign of terror on the American people regarding the
balanced budget amendment. Members of the administration have
criticized the amendment by claiming it is unenforceable. These attacks
are not only unfounded, they represent a sad critique on the
administration's view of fulfilling its constitutional obligations.
On January 7, I swore a solemn oath to preserve, protect, and defend
the Constitution of the United States. All of my colleagues in the
Senate and the House have taken this same pledge. President Clinton
took the same oath on January 20. This is one of the most serious
pledges a person can take in his or her lifetime. It binds all Members
of the Congress and the President to follow all the provisions in the
Constitution. If the balanced budget amendment was added to the
Constitution, we would be bound by our most solemn oath to pass a
balanced budget in each and every fiscal year.
For the administration to criticize this amendment as unenforceable
is a
[[Page S1092]]
very serious charge indeed. Does the President intend not to fulfill
his constitutional duty to preserve, protect, and defend the
Constitution by delivering a balanced budget proposal to Congress
before each fiscal year? Is the administration insinuating that Members
of the Senate and the House of Representatives are willing to blatantly
violate the clear language of our Constitution which they took an oath
to uphold and defend?
I do not share the Clinton administration's cynical view that our
constitutional officers will openly and flagrantly flout their solemn
duties. If we pass the balanced budget constitutional amendment, I have
every confidence that Members of this noble Chamber as well as our
friends in the House will take their oath to defend the Constitution
very seriously. We will balance the budget because we have sworn to
uphold the Constitution. We will balance the budget because we desire
to leave our children and grandchildren a legacy of hope and prosperity
instead of the horror of a $5.3 trillion debt.
I want to stress that the enforcement of the balanced budget
amendment will rest first and foremost with this Congress. Under
section 6 of the balanced budget constitutional amendment, Congress
must pass implementing legislation to enforce this amendment. This
provision indicates that it will be primarily Congress--neither the
President nor the Federal courts--which will provide the means of
enforcement. Claims that this amendment will result in new powers of
Presidential impoundment or judicial involvement in the budgetary
process are unfounded. These are nothing more than further attempts by
the amendment's detractors to sidestep the serious obligation we all
have of safeguarding the financial future of our Nation, and our kids
and grandkids.
I urge my fellow Senators to join me in voting for Senate Joint
Resolution 1, the balanced budget constitutional amendment. This will
be a giant step in restoring responsibility to our Government, and it
will demonstrate to future generations that we were willing to act
responsibly in the most serious of our tasks. And if we do not balance
the budget, we become the longest running game show with the lowest
ratings in history.
Mr. President, I yield the floor.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I thank the distinguished Senator from
Wyoming for the excellent remarks he has made here on the floor today.
I have really been appreciative of the new Senators coming and talking
about this because each and every one of them is a prime cosponsor of
this amendment. What a change that is from two Congresses ago when we
lost this by three votes, one Congress ago by one vote.
I am very grateful to have had the good people we have listened to
all day today. It makes a lot of difference to me.
I am happy to yield the floor.
Ms. COLLINS addressed the Chair.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Ms. COLLINS. Mr. President, I rise to add my voice to those of my
distinguished colleagues who have spoken in favor of a balanced budget
amendment to the U.S. Constitution.
It is not surprising that with a national debt which is $5.3 trillion
and still growing this debate is awash in statistics, each more
staggering than the last. As someone who ran for office to fight for
more opportunities and better jobs, I find the costs in those areas of
our chronic failure to balance the budget to be particularly troubling.
In light of the President's call for a crusade for education, one of
the more telling statistics is that last year the Federal Government
spent about $240 billion to service our national debt, an amount that
is almost eight times greater than the amount we spent on education.
Think about that. If we had been operating the Government without debt,
we could have spent nine times more on educating our children. Now,
that is what I call a crusade.
Whatever the long-term benefits to the public sector from balancing
the budget, they pale in comparison to the benefits to our families.
The Concord Coalition has estimated that had we not run deficits for
the past two decades, the average family's annual income would be
$15,500 higher. Looked at prospectively, the General Accounting Office
has said that we will increase per capita income by 26 percent over the
next two decades if we balance our budget.
These are not partisan statistics, just as this is not a partisan
issue. The numbers I have cited to demonstrate the enormous costs of
our past fiscal failures can be found in a recent letter to the editor
from former Democratic Senator Paul Simon, a leader in the battle for a
constitutional amendment, whose 22 years of congressional service ended
before the goal to which he was so deeply committed could become a
reality.
The economic evidence that favors a balanced budget is overwhelming.
But one legitimately may ask how I make the jump from the need for a
balanced budget to the need for a constitutional amendment mandating a
balanced budget. That is a political not an economic issue but the
evidence is equally as overwhelming.
The simple fact is that the road to our huge national debt has been
paved with good intentions. We have had the Deficit Reduction Act, the
Gramm-Rudman Act, the Budget Enforcement Act, and yet we still have
deficits. The old saying that ``We have met the enemy and it is us''
has never been more applicable.
As a freshman Senator, I do not sit in judgment on my predecessors
and say that I would have done it differently. I know the pressures on
Washington to spend money, even borrowed money. By and large, each
Congress sets out to be fiscally responsible, but our national debt
still grows. The truth is experience has taught us that even in good
times we need the discipline of a constitutional amendment.
To those who say that this issue does not rise to the level of
constitutional protection, I respectfully disagree. It is the unique
genius of the U.S. Constitution that serves to protect our people and
their property from the excesses of their Government. It is difficult
to imagine a greater excess, at least in the realm of property, than a
debt burden of more than $5 trillion. The legacy we are leaving our
children and our grandchildren, many of them not yet born, is taxation
without representation in its most egregious form.
As I said earlier, this is a debate in which there has been no
shortage of statistics and no shortage of speeches, but buried
somewhere beneath that pile of numbers and mounds of rhetoric is a very
simple principle. That is that all of us, including the Congress of the
United States, must be personally responsible for our actions. In the
context of the budget, personal responsibility means not spending what
is not ours to spend.
The 104th Congress struck a strong blow for personal responsibility
in its welfare legislation. It told able-bodied welfare recipients that
they could not live off the efforts of others; that they would have to
earn their own way. For those who grew up in a culture of dependency,
this was a harsh message. But it was the right message because
responsibility for one's own actions is the core of the American
effort.
I think it important that the Congress and the President not hold
themselves to any less of a standard of personal responsibility. During
the past quarter century, a culture of dependency has developed right
here in the U.S. Congress, and it is reflected in our dependency on the
money of future generations. In each of the past 27 years, we have
borrowed from our children and our grandchildren to buy things for
ourselves, building up an immense debt with no end in sight.
The legacy we are leaving, however, is not just financial. It is a
legacy of excess, of taking advantage of those who cannot protect their
own interests, of practicing not deferred gratification but, rather,
deferred responsibility.
I recognize that deficits are sometimes unavoidable and that, indeed,
they are sometimes critical to finance wars or to get the economy
moving out of a recession. The balanced budget amendment would still
permit deficit spending in the event of war, recession, or other
emergency, but deficit spending today is no longer a tool carefully
used by Congress and the President to respond to emergencies. Rather,
it has become a permanent feature of our fiscal landscape.
[[Page S1093]]
Just how permanent deficit spending has become is reflected in the
staggering fact that if every man, woman, and child in this Nation
brought all of their currency to Washington, DC, it would not be enough
to pay off our national debt. Those who argue that we do not need a
constitutional amendment to solve this problem are simply ignoring our
fiscal history.
I yield the floor.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I believe I will be the last to comment
today, and I deliberately waited to the end to allow some other
speakers to have a turn, but we do have an amendment which has been
filed by the distinguished Senator from Illinois [Mr. Durbin], and I do
believe I need to make a few remarks about that. But I do not intend to
take too much time here.
Senator Durbin has offered an amendment to the balanced budget
amendment that would allow for suspension of the balanced budget rule
in times of ``economic recession or serious economic emergency.'' I
wonder what those words mean. Some words, when placed into the
Constitution, can have almost any meaning.
The very purpose of this provision of the distinguished Senator from
Illinois is to make the balanced budget amendment easier to waive.
Instead of trying to find ways to avoid fiscal responsibility, we ought
to be working toward passing a strong balanced budget amendment that
will help us to keep out of recessions in the first place.
As an initial matter, any definition of ``downturn'' is malleable and
could be abused by any future Congress bent on deficit spending. This
amendment is no different. Trying to deal with a concept as loose as an
economic downturn without even an attempt at defining terms can make
this a loophole you could drive a truck through. It will not be long
until a convoy starts rolling through. Furthermore, there is a loophole
within the loophole, because the amendment does not limit the waiver in
any way, such as to amounts related to the emergency.
Under this provision, even during times of significant national
growth, certain regions may experience an economic downturn which might
give Congress a reason to trigger this waiver, whether we actually need
to borrow to respond or not. Or there could be a general feeling of
``economic anxiety,'' or a perceived sense of anxiety felt in
Washington about the economy. We can create anxieties about anything
around here. For instance, I am very anxious about these 28 years of
unbalanced budgets that are represented by this stack of budget
submissions right here. We have had people worrying all day that these
volumes might fall off and crush somebody. I just hope it is not us.
But the debt burden they represent are crushing the American people.
Year after year of unbalanced budgets and all we get from the other
side is, ``All we need is the will to do it, to balance the budget.''
This President says we are going to do it by the year 2002, but he's
going to do 75 percent of the balancing in the last 2 years according
to the budget filed today. Give me a break. It is just more of the
same. That is why we are here.
I don't think it takes any brains to figure this one out. It is a no-
brainer to know that these people who file these amendments do not want
any balanced budget amendment, they do not want any constraints; they
want to keep spending just like they always have. We have plenty of
unbalanced budgets around here. We have done it for 28 years straight,
and actually for the most of the last 60 years. We just put 28 budget
submission volumes up here because we thought to stack up our budgetary
failures any higher would be truly dangerous. In fact, I am not sure
this little table will hold this throughout the whole debate.
Let me say this. Even during times of significant national growth,
under this proposal of the distinguished Senator from Illinois, we
could have a waiver of the balanced budget amendment during times of
economic boom, just when we should be balancing the budget or running a
surplus.
I believe the general three-fifths waiver already provided for in the
balanced budget amendment strikes the right balance. It will allow
Congress to waive the balanced budget rule during times of real need,
but it will prevent those who are simply trying to find an easy way out
of a budget crunch from strapping even more debt onto the backs of our
children and future generations. The general three-fifths waiver
provision will give Congress an incentive to plan ahead, rather than to
borrow and spend in good times and bad, just like we have up to now,
and then when things get tough, just go borrow some more. That is what
we do. This is a recipe for instability.
You will find the people who bring these amendments by and large are
people who were never, never going to vote for a balanced budget
amendment. But they will do anything to stop it, anything to stop us
from having to live within budgetary constraints.
Mr. President, this amendment is based in part on the largely
rejected notion that increased borrowing will help us out of a
recession. Fred Bergsten, a noted economist who had testified in
support of the balanced budget amendment in past years, suggested the
better way to go is to shoot for a yearly surplus, and let that take
care of any truly automatic fluctuations and any truly pressing needs
at that time, if there are any.
Further, financial market experts have stated that increased
borrowing and spending is not a cure for recessions. The better way is
to get Federal spending and borrowing under control, which will make
for a stronger, more stable economy, which will help us avoid economic
problems in the first place.
We should learn from other countries in the world that are trying to
``spend their way out of recession.'' Several European countries and
Japan have been trying to do this lately. The result has been continued
recession and even larger debt. On the other hand, a number of the
world's up and coming countries are enjoying booming economies while
keeping their national budgets in balance or even surplus. Perhaps we
should be more concerned that we do not spend ourselves out of
prosperity. I think we ought to think about that. Are we spending
ourselves out of prosperity?
One commentator has wryly stated that the theory of borrowing and
spending out of a recession ``is the game plan that propelled Argentina
and Bolivia into economic superpower status in the 1970s.'' That is
pretty sarcastic, but I think a pretty good comment.
The balanced budget amendment in no way prevents us from running a
reasonable surplus which could be used to offset the effects of an
economic downtown. This surplus would allow us to use fiscal policy
within the balanced budget rule better than we can now without it.
Even if we were to drop below balance using the intended rainy day
surplus, the balanced budget amendment has anticipated this sort of
need. A three-fifths vote in Congress will allow the balanced budget
amendment rule to be suspended for a year. That way we have the
flexibility to run reasonable deficits if we need to. The three-fifths
requirement makes sure we do not waive the amendment unless it is a
true need and not just an attempt for us to avoid making tough choices,
which is something that goes on here all the time.
So, we do not need any exceptions or loopholes. What we need is a
strong balanced budget amendment as a mechanism in the Constitution to
help us to get to a balanced budget. We should be less concerned about
when we can spend more and more concerned about when we must spend
less.
Some say we are spending less. We have been hearing a lot in just the
last 2 days about what a wonderful job we have done in reducing the
deficit. Of course, we do not hear much about the fact that so long as
we still have a deficit, our debt is increasing. In fact, we are not
spending less. You would think a $107 billion deficit was a wonderful
nirvana-like state. Only in Washington do we celebrate a reduction in
the increase in the debt as an achievement, only here in this
surrealistic place where we have these surrealistic budgets, all of
which were unbalanced for 28 straight years, some of which were
proposed to be balanced budgets but were not. None of these since 1969
have been balanced.
Another fact we do not hear much about is even though the economy is
[[Page S1094]]
doing fairly well, we are still in a deficit. Opponents of the balanced
budget amendment keep talking about how the deficits are related to the
economy. It seems to me, that given the current health of the economy,
the budget should be balanced right now. But of course it is not. And
of course the blame must be Mr. Reagan's or Mr. Bush's.
Give me a break. The Reagan tax cuts actually produced 40 percent
greater increase in revenues. What really cost us were two things, part
of which was President Reagan's fault. One was the increase of strength
to our military. But, on the other hand, I think most commentators now
will give President Reagan credit for having brought down the iron
curtain and having ended the cold war. But the other side of that
equation was, during all of Reagan's 8 years, and all of Bush's 4
years, the House of Representatives where all money bills originate was
controlled by liberals. In particular, during the Reagan years it was
Tip O'Neill who led the liberal onslaught against the budget. Even
though Reagan cut taxes and reduced marginal tax rates, and revenues
actually went up--not as high as we would have liked, but they went up
some 40 percent--even though that happened, the liberals in Congress
were spending us into bankruptcy. That, coupled with the increase in
the military, of course, did get us to the point where we are.
(Ms. COLLINS assumed the chair.)
Mr. HATCH. It is an old expression that the time to save money is
when you have it. If this economy is so good, as some of our colleagues
are saying, Madam President, why do we not have a balanced budget.
Why? Because it is easy to spend other people's money in good times and
bad. That is why we need to correct Congress' spending bias with a
constitutional amendment.
This country has enjoyed some remarkable economic progress in the
latter half of this century, and yet the United States has borrowed
ever more money, despite the fact that most of those years were both
peaceful and prosperous. So when people hear the opponents of the
balanced budget amendment talk about needing to spend more in
recessions, they should consider whether we have spent less in
prosperous times. Of course, we have not. The debt has simply gone up
higher and higher. It now stands at over $5.3 trillion.
Let me just take a moment to illustrate just how big that is. This
chart shows, if you were to lay the debt of $5.3 trillion in $1 bills
end to end on a road, they would stretch 514,283,460 miles. Were you to
drive to the end of that road traveling an average of 500 miles per day
at 65 miles per hour, it would take you 2,818 years. You would have to
drive along the road paved with dollar bills for 500 miles a day at 65
miles an hour for 2,818 years.
That gives us a little understanding of how big the debt is. Two
thousand eight hundred and eighteen years is somewhat difficult to
comprehend, so let me put it in more descriptive terms.
Had the legendary founder of Rome, Romulus, gotten on his horse in
753 B.C. and started down that road of dollar bills at a rate of 500
miles per day, he would still be some six decades away from reaching
the end of that road. In the course of his travels, he would have
circled the globe more than 20,000 times.
That is our debt. It is no longer cyclical. It has become a permanent
structure in Washington. It even has its own Government office, the
Bureau of Public Debt. I am not kidding; that office really does exist.
Our deficits have not been countercyclical, they have been
counterproductive.
What we need is to change the way Congress thinks. Only a requirement
with the strength and staying power of a constitutional amendment can
make that change. Only the balanced budget amendment can get our fiscal
house in order and keep it there.
Before we are done with this debate, we will likely see amendments to
exempt certain programs, exempt certain groups, and waive the balanced
budget amendment whenever the times get tough. But this is precisely
the type of thinking that has brought us 30 straight years of deficits
and a $5.3 trillion national debt.
The way to avoid the hardships of recession is to pass a strong
balanced budget amendment and get our runaway deficit spending under
control. That will take some guts. Because it is tough, you will see
all of these amendments to try and protect one constituency after
another. The fact is, we have to keep all the budget together and
approach it in an intelligent and thoughtful way. And those programs,
like Social Security, that are so justifiable are better than capable
of competing, and they will compete well. Some of the programs that are
not quite as good--all of them have some merit--but some that are not
quite as good may have to have some changes. All of our budget has to
have some changes if we are ever going to get the budget and economy of
this country under control and save the future for our children and
grandchildren.
Madam President, I ask unanimous consent to have printed in the
Record an excellent editorial by the Investors Business Daily of
today's date entitled ``Perspective: Balanced-Budget Blather,'' as well
as an excellent editorial by Bruce Bartlett entitled ``Dangers that
Don't Hang in the Balance.''
There being no objection, the material was ordered to be printed in
the Record, as follows:
Balanced-Budget Blather
Without deficits, recessions would be longer, deeper and
harder to pull out of, the common wisdom says. Treasury
Secretary Robert Rubin echoes that in opposing a balanced-
budget amendment. But it's not true.
The idea that deficit spending could smooth out the rough
spots in a business cycle comes from John Maynard Keynes.
Recessions, he believed, started when all the buyers in the
economy suddenly stopped spending.
Sellers usually respond to such a decline in demand by
cutting output and jobs, rather than cutting prices, the
Keynesian view went. That threw more people out of work, and
further reduced aggregate demand.
Only government could turn this cycle around, by pumping
money into the economy. It did so by hiring people for public
works programs, for example.
But because the government collects less in taxes during
recessions, those public programs had to be paid for with
debt, Keynes argued.
The evidence shows that public works programs have done
nothing to solve recessions, a 1993 article by economist
Bruce Bartlett in The Public Interest magazine pointed out.
Spending packages aimed at fighting recession have never
been enacted before a recession ended on its own, as the
chart shows.
In fact, Congress often enacts these packages the very
month the recession is over. They are usually nothing more
than pork-barrel spending dressed up as compassion.
Recessions are usually defined as two straight quarters of
falling GDP. So no one actually knows a recession is
happening until six months after it starts. No one knows it's
over until three months later.
Even then, it takes Congress time to pass a law for extra
spending. And it takes still more time for that money to make
its way through the economy.
So even if Congress could tell when a recession was
starting--unlikely, given the records of most economic
forecasters--it still wouldn't have more than a small effect.
And Keynes was wrong not just in practice, but in theory as
well.
He based his whole theory on the notion that government
experts acted rationally, while the average person did not.
Central planners could know enough and act quickly enough to
save people from the consequences of their own bad
decisions--clearly not the case.
There are programs, such as unemployment insurance, that
kick in automatically when recession hits, without having to
wait for Congress to act. The amount those programs actually
increase during recession could be easily handled within a
balanced budget, however.
Between 1980 and 1984--which includes years of deep
recession--real spending on jobless benefits rose $47.4
billion above its level in 1979, an economic peak. That
increase was just 1% of government spending over those four
years.
Recession have been less severe in the postwar period, many
economists argue, largely because of the greater role
government has played in easing recessions. But it is not
certain that they are less severe, and it is even less
certain that this is due to government.
On the surface it seems true. From 1920 to 1938, recessions
averaged 20 months, with a 14.2% decline in real GNP. Since
1948; they averaged 11 months, with 2.4% drop in real GNP.
Unfortunately, it's hard to compare the two periods, because
the prewar data are quite crude.
National Bureau of Economic Research economist Christina
Romer, in an key 1986 American Economic Review article, tried
to compare apples with apples. She adjusted the more recent
data so that it was calculated much like those of the prewar
period.
And she found the evidence of a change in the length,
frequency and severity of business cycles was weak.
Even if recessions are less severe, it may have little to
do with government. The growing importance of the service
sector, where
[[Page S1095]]
employment tends to be stable, could be one reason. And
technology has helped ease the sharp boom-bust cycle of the
farm and factory sectors.
Legitimate gripes about a balanced-budget amendment are
easy to come by. But Rubin's is not one of them.
TOO LATE
------------------------------------------------------------------------
Date of anti-recession
End of recessions legislation
------------------------------------------------------------------------
Apr. '58.................................. Apr.--July '58.
Feb. '61.................................. May '61--Sept. '62.
Nov. '70.................................. Aug. '71.
Mar. '75.................................. Mar. '75.--July '76, May
'77.
Nov. '82.................................. Jan.--Mar. '83.
Nov. '91.................................. Nov. '91.--Apr. '93.
------------------------------------------------------------------------
Source: The Public Interest.
Dangers That Don't Hang in the Balance
(By Bruce Bartlett)
Treasury Secretary Robert Rubin strongly opposes the
Balanced Budget Amendment to the Constitution. His main
concern is that it will hamper the government's ability to
respond to an economic downturn. While this is a valid
concern, it is overstated. Congress can always abandon the
balanced budget requirement by a super-majority vote, which
it certainly would do in the event of an economic crisis.
More importantly, however, there is no evidence that deficit
spending has been necessary to recover from past rescissions.
It is undeniably true that Congress always passes some sort
of anti-recession legislation every time there is an economic
slowdown. But the history of such legislation is that it
always comes too late to do any good. In fact, the date that
anti-recession legislation becomes law often corresponds to
the very date that the recession ends. More frequently, the
legislation comes well after the recession's trough. And
since the actual spending does not come into effect
immediately, it has always been the case that anti-recession
spending did not impact on the economy until long after the
recession's end--sometimes many years afterward.
The table illustrates this point, looking at every major
postwar recession as defined by the National Bureau of
Economic Research. As one can see, there is not a single case
in which anti-recession legislation was enacted in a timely
fashion, so as to mitigate the economic downturn. In fact,
one can argue that such legislation may have made matters
worse. By overstimulating the economy during upturns, it may
have sown the seeds of future recessions.
The problem is that for anti-recession spending to work,
forecasters would have to see a recession coming. Legislation
would have to be enacted into law well in advance, and
programs implemented so as to coincide with the beginning of
the downturn. These are virtually impossible requirements to
meet. Forecasters seldom, if ever, accurately predict turning
points in the economy. And if they could, it is doubtful that
they would be persuasive enough to convince Congress and the
administration to act in time. And even if they did, it
usually takes a year or more to get programs implemented and
money flowing.
Thus it is absurd to argue that the Balanced Budget
Amendment should be defeated because it will hamstring the
government's ability to respond to economic downturns. All
recessions really do is give politicians an excuse to enact
pork-barrel public works programs in the name of mitigating
the recession. If the amendment prevents such wasteful
spending it will serve a useful purpose.
DATES OF RECESSIONS AND ANTI-RECESSION LEGISLATION
------------------------------------------------------------------------
Beginning End Legislation
------------------------------------------------------------------------
Nov. 48......................... Oct. 49........... Oct. 49.
Aug. 57......................... April 58.......... April-July 58.
April 60........................ Feb. 61........... May 61, Sept. 62.
Dec. 69......................... Nov. 70........... Aug. 71.
Nov. 73......................... Mar. 75........... Mar. 75, July 76,
May 77.
July 81......................... Nov. 82........... Jan.-Mar. 83.
July 90......................... Nov. 91........... Nov. 91, April 93.
------------------------------------------------------------------------
Source: The Public Interest (summer 1993).
Mr. HATCH. Madam President, there will never be a time when we have a
true economic need and a true economic emergency that we will not get a
three-fifths vote. As a general matter, whenever we needed it for
unemployment compensation, whenever we needed it for emergencies, there
has always been more than three-fifths. That requirement of consensus
to borrow, which allows for flexibility but not complete laxity, is the
value of this amendment and the strength of this amendment.
So we can't just do what our friend from Illinois would like to do,
and that is to just have a nebulous set of terms that would allow this
Congress to do whatever it wants to about spending in the future. What
we are trying to do is establish some restraints and get this place
under control.
This constitutional amendment's approach is a bipartisan approach. It
is not a Republican approach; it is not a Democrat approach. It has
taken a lot of us working together year after year--in my case, over 20
years now--to get this bipartisan amendment, the only one having a
chance of going through, and everybody knows that. So hoping for a
version more to one's liking is no excuse not to vote for this.
Everybody knows this is the amendment. We are hopeful this amendment
will pass intact and be sent to the House, and if it receives the
required votes in the House, it will be a great day for America.
I yield the floor.
Ms. MOSELEY-BRAUN addressed the Chair.
The PRESIDING OFFICER. The Senator from Illinois.
Ms. MOSELEY-BRAUN. Thank you, Madam President. I rise to speak on the
balanced budget amendment to the Constitution.
Madam President, I am a liberal. I also support a balanced budget
amendment to the U.S. Constitution. To some, this might appear a
contradiction in terms. To others, including my predecessor in office,
Senator Paul Simon, it is as logically consistent as the classical
definition of ``liberalism,'' and I quote: ``Belonging to the people;
giving freely; generous; tolerant of views differing from one's own;
broad-minded; favoring reform or progress as in education; favoring
political reforms tending toward democracy and personal freedom for the
individual; progressive.''
Those are all definitions to be found in Webster's New World
Dictionary of a ``liberal.''
It is precisely because I believe in this definition of liberalism
that I believe the balanced budget amendment is necessary. Chronic
budget deficits and cumulative national debt currently threaten to
undermine our ability to act in the public interest.
Budget deficits make it much harder for our country to focus on what
is really important: the objectives we want to achieve. Only by
balancing the budget will we be able to reclaim our country's ability
to decide to make important investments in our communities, such as
fixing crumbling schools, investing in mass transit, providing pension
security, ensuring that our airways are safe, or caring for the poor.
Unless we take a long-term view of budgetary problems and require
permanent fiscal prudence, the Federal Government will be forced to
spend its resources on paying interest to bondholders, rather than on
addressing the priorities of the American people.
In the name of intergenerational fairness--fairness to these young
people who are here as pages and their generation--in the interest of
intergenerational fairness, we need to keep in mind the needs of the
next generation, not just current short-term issues.
While we want to be able to respond to the next emergency and to the
next one, not telling the truth about the budget and not making the
tough choices required forces us to continue to try to finance our
future with debt. That accumulation of debt, however, will make America
less competitive and less able to respond effectively to future
emergencies and future priorities.
Because of persistent deficits and a huge national debt, the value of
what Government is doing is being lost. Social Security, Medicare and
Medicaid, for example, have reduced poverty among the elderly to the
lowest levels since statistics first started being kept. Social
Security has administrative costs of less than 1 percent of benefits
paid, and Medicare has administrative costs of less than 3 percent of
benefits paid, both far better in terms of administrative costs than
their private counterparts.
These programs account for almost 50 percent of all noninterest
Federal spending, and they have made it possible for literally tens of
millions of Americans to enjoy a secure, healthy retirement, and they
have helped increase longevity.
The Federal Government has also built the Interstate Highway System,
set aside national parks and created a space program that put men on
the Moon, and will soon begin a space station.
We financed an American military that won the cold war, and we went
to the Persian Gulf and achieved victory at the lowest possible cost in
American lives.
In short, Madam President, Government can work. But Government
successes are being swallowed up in interest costs that were only 40
years ago
[[Page S1096]]
about a penny out of every dollar and now today are 15 cents out of
every dollar, and growing. Is there any wonder that Americans felt more
prosperous in the 1950's and in the 1960's than they do today?
The balanced budget amendment will not undermine the value of what
the Federal Government does. The balanced budget amendment will help
clear out that undergrowth of debt, making room for more investment in
the values that we hold dear.
According to the Congressional Budget Office, the Federal Government
is right now spending $684 million every day for interest payments on
the national debt. That is $684 million that could otherwise be used
for Head Start, for housing programs, for our battle against crimes or
drugs or to repair our crumbling school infrastructure. And $684
million a day is a resource hemorrhage that we, as a nation, can ill
afford.
In fiscal year 1996, we spent $241 billion to service our national
debt. The national debt, as you no doubt have heard, is now $5.2
trillion, and it is growing. We cannot allow these trends to continue
unchecked. If we do not act now, if we wait until the country is on the
brink of financial ruin, we will have totally failed our obligation to
the American people and to our country and our children, and the next
generation will pay the price for that failure.
Madam President, I served on the Bipartisan Commission on Entitlement
and Tax Reform. One of the conclusions that was made clear there was
that unless we get the deficit under control, by the year 2003
mandatory spending, which is entitlements plus interest on the national
debt, by that year they will account for fully 73 percent of the total
Federal budget. These few programs already consume almost two-thirds of
Federal resources. So domestic discretionary spending, that is to say,
the kinds of things we appropriate here, will be frozen out altogether
if we do not get a handle on the continuing deficits.
Even though, Madam President, the current economic news is generally
good and the economy continues to expand, we know that markets go up
but then markets also go down again. So the trend, given the changes in
our country and the demographic changes, is not likely to continue.
A recently released Congressional Budget Office report entitled,
``The Economic and Budget Outlook: Fiscal Years 1998-2007,'' points
out:
Despite the improved outlook through 2007. . .the budget
situation will start to deteriorate rapidly only a few years
later with the retirement of the first baby boomers and the
continued growth of per-person health care costs.
Madam President, the demographics of our time are something that we
have to come to grips with. I like to tell people that this year alone
a baby boomer will turn 50 every 9 seconds. So we are aging as a
population. That is impacting on our budget situation and the decisions
that we here in the Congress have to make.
By the year 2012 the Social Security trust fund will begin spending
more money than it takes in. By the year 2029 the trust fund will have
exhausted all its resources. After 2012, when there are no more
surpluses, Federal deficits will really begin to explode, an explosion
that will be fueled by the looming retirement of the baby-boom
generation.
It is true that for the next 15 years Social Security will be running
a surplus. It will be taking in more than it spends. I agree that the
existence of these annual surpluses does make the consolidated budget
deficit look smaller in the relative short run. But that surplus is a
temporary phenomenon. After 2012 Social Security will begin consuming
that accumulated surplus.
Madam President, the temporary or the permanent nature of the
surpluses perhaps would not be important if it were actually possible
to decouple Social Security completely from the rest of the Federal
Government. Social Security, however, is intimately related to the rest
of the Government as long as the Social Security system invests in
Treasury bonds.
Right now the Treasury Department is selling U.S. Government bonds to
the public, both here and abroad, and to the Social Security system.
What that means is that whether Social Security is part of the budget
or not, the Treasury Department will be selling exactly the same amount
of bonds to the public, including those sold to the trust fund. And it
is the amount of bond sales to the public that is the real measure of
the Federal deficits in any given year.
The unbreakable connection of an even theoretically off-budget Social
Security system to the rest of the Federal budget will become even more
clear by the year 2012 when the Social Security trust fund ceases to
take in more money than it pays outs. After that year, Social Security
will begin cashing in its Treasury bonds. So whether Social Security is
on budget our not is irrelevant, frankly, to the fact that the Treasury
Department will have to find the cash to pay off those Treasury bonds.
There are only three basic ways that that can be done: issuing new
bonds to the public, thereby increasing the Federal deficits in those
years; raising taxes by the amount necessary, which is another option;
or cutting spending on other programs by the amounts needed. I hope we
never have to get to making those Draconian cuts. I believe that
passing the balanced budget amendment will keep us from having to make
those choices under that gun.
Madam President, taking Social Security out of the budget, therefore,
does nothing to make our long-term budget problems either better or
worse. It does nothing to protect Social Security from the rest of the
budget because, again, Treasury bond purchases and sales continue to
bind Social Security tightly to the rest of the budget. Perhaps most
important, it does nothing to protect the long-term future of Social
Security. The only way to protect the long-term future of Social
Security and to keep the important Social Security contract with the
American people is through reform of that system.
Madam President, the balanced budget constitutional amendment will
not solve these problems overnight. What it will do, however, is force
the Congress, the President, and the American people, to face the truth
about the budget, all of it, both on the revenue and on the expenditure
side of the equation.
Unless we get the deficit under control, we will be leaving to our
children and to our children's children a legacy of debt that will make
it impossible for them to achieve the American dream. We owe it to our
children and their children to get our fiscal house in order now. If we
fail to do so, our legacy to future generations will be one of greater
problems and diminished opportunities.
Madam President, I come from a working-class family. The availability
of public education made it possible for me to get advanced degrees. I
have no doubt that without the commitment of my parents' generation to
create a national community which would nurture my talents, I would not
be here today speaking to you as a U.S. Senator. It saddens me that it
is harder for a child to get a quality education or for a teenager to
pay for college or for a young couple to have a single wage earner
outside the home today than it was a generation ago.
The recent dismantling of our national commitment to support poor
children is just the beginning of the chilling effect that these
chronic budget deficits will have. We are faced with making hard
choices by which this generation will define our national community.
That is again why I support this amendment.
But, Madam President, whether we look to the future or look to the
past, the arguments in favor of passage of the balanced budget
amendment are compelling.
As one of our Founding Fathers, Thomas Jefferson, stated:
We should consider ourselves unauthorized to saddle
posterity with our debts, and morally bound to pay them
ourselves.
This proposition is as true today as it was when he stated it
centuries ago.
Madam President, our country's debt did not emerge from a national
emergency nor from some massive Federal initiative to build roads or
educate children or to create jobs for poor people. It came in
peacetime and, frankly, largely while no one noticed. When a national
consensus against chronic deficits did emerge, it came after the debt
had reached historic proportions.
[[Page S1097]]
Madam President, we should have known better. George Washington, in
his farewell address warned the Nation:
As a very important source of strength and security,
cherish public credit. One method of preserving it is to use
it as sparingly as possible, avoiding occasions of expense by
cultivating peace, but remembering, also, that timely
disbursements, to prepare for danger, frequently prevent much
greater disbursements to repel it; avoiding likewise the
accumulation of debt, not only by shunning occasion of
expense, but by exertions in times of peace, to discharge the
debts which unavoidable wars may have occasioned, not
ungenerously throwing upon posterity the burdens which we
ourselves ought to bear.
Again, Madam President, sage advice from the Founding Fathers did
not, could not, overcome the pressures of the political and demographic
realities of our times. Legislators are often judged by constituents on
their ability to--you may not have this expression in your State. But
we do in Illinois-- ``bring home the bacon'' whether in terms of actual
pork barrel project specific spending or in terms of across the board
program funding. Each and every constituency wants its share. Each has
legitimate rationale for its demands.
However, these constituency demands must be seen in the long term and
overarching context of our responsibility to the public interest. The
demographic changes the future holds will mean more demand, not less,
for health care and retirement security, at precisely the time that
changes in technology and the global economy requires more, not less,
investment in education, transportation, and infrastructure. The
confluences of these trends which government does not control make more
important than ever that we make decisions about those things we do
control. Passage of the balanced budget amendment will force a
discipline in our decisionmaking which may well be the only force great
enough to counter the institutional force in favor of secret spending.
I am not keen about tinkering with the Constitution. Happily, the
Founding Fathers envisaged the periodic popularity of constitutional
amendments, and required absolute consensus in the process. I hope the
balanced budget amendment is one of the few to make it through the
Congress and ratification by the States.
There have been amendments to the Constitution proposed for just
about everything in recent years. I hope, however, that this one which
had been suggested at the time of the Constitutional Convention, that
this one finally makes it through.
Now, Madam President, critics of the amendment have argued or warned
us that a balanced budget amendment could worsen economic recessions or
downturns. The amendment, however, contains a safety valve for just
this sort of situation. The safety valve would allow Congress to
provide for a specific deficit by passing a law with a three-fifths
vote in each House; the same vote, I point out, that is required to
waive the Budget Act. I believe in the event of an emergency or a
recession, Congress would be able, would be anxious to obtain a three-
fifths majority to enact a countercyclical package of tax cuts or
investment spending to counter the economic downturn. The requirement
of the three-fifths majority, however, will ensure that the creation of
a specific deficit is done with deliberation and care, and is not a
casual occurrence.
This safety valve also applies to fears about risks of default.
Should outlays exceed receipts and if our country were faced with a
situation where we were in danger of not being able to pay interest on
our debt, Congress could respond with a three-fifths vote to increase
the debt. However, this dilemma could be avoided if Congress and the
President followed the tenets of the amendment and actually balance the
budget, or, better yet, establish a rainy day emergency fund.
Madam President, an economist friend of mine who I had dinner with
argued passionately that we should not be concerned about the debt
because after all it is money that we owe ourselves. After all, the
interest is paid on Treasury bonds, so reduced to its essentials, it is
money that is recirculated in other ways. I do not dispute that point.
However, it seems to me that recycling large and growing amounts of
taxpayer money to bondholders represents a real problem that we ought
to face up to, as well. We are putting off the books and out of
Congress' control, scarce resources which are then no longer available
for our national priorities.
My friend also argues, further, that the balanced budget amendment
does not allow for capital investment. Again, while most States that
have a balanced budget amendment do provide for a separate capital
budget, the balanced budget amendment that we are considering here
today does not preclude Congress from enacting capital budgeting at the
Federal level.
Another criticism is that should a three-fifths vote be necessary, it
would be difficult for Congress to obtain the votes to address
emergencies. Again, the need to achieve a three-fifths vote majority is
not a foreign concept to this Congress. In the Senate, 60 votes are
required to invoke cloture on a bill. Sixty votes are also necessary to
waive the enforcement provisions of the Budget Act. In each case, the
60-vote mark is achieved or negotiations and compromise to develop an
alternative way of proceeding.
One might point out now the way we obtain the majority necessary to
raise the debt is for both parties to get the votes from their Members.
Taking out partisanship is no less necessary under a 60-vote margin. On
the important issue of approving more debt, three-fifths is large
enough to assure the decision is made with due deliberation but not so
large that a minority in either House can deadlock the Government.
Critics also claim that a balanced budget amendment poses enforcement
problems, and I will for a moment address that. For instance, there are
fears that disputes would go to the courts. I believe that elevating
the balanced budget amendment requirement to constitutional status
will, in and of itself, be enough to guarantee that it will be upheld.
Every Member of this Congress has taken an oath to uphold the
Constitution of the United States. The American people expect, as they
have every right to, that the officials to whom they entrust the
Constitution will not betray that public trust.
Nor, however, do I believe that the amendment will unduly involve the
Federal judiciary in matters of fiscal policy. Senate Joint Resolution
1 provides ``the Congress shall enforce and implement this article by
appropriate legislation * * *'' In other words, Congress is directed to
enact legislation to make the amendment work. That can include, if
necessary, actions to limit the remedies a court could grant in a case
brought under the balanced budget amendment.
In addition, the courts have already developed a number of doctrines
which will limit the type and the number of lawsuits which may be
brought under the act. First and foremost, all litigants must have
standing in order to bring a claim. This generally requires the
potential plaintiffs to show they have suffered an injury, in fact,
that was caused by the alleged unlawful conduct and which is
redressable by the courts. Courts have been extremely reluctant to
confer standing to litigants based on their status as taxpayers.
Furthermore, courts have a longstanding practice of avoiding
controversies that involve a political question. So, I believe, again,
that there are adequate safeguards to make certain that the courts do
not take over the constitutional function of this legislature under a
balanced budget amendment.
Madam President, the opponents of Senate Joint Resolution 1 have a
great many arguments to support their view that a balanced budget
amendment is unnecessary and unwise. I do not doubt the sincerity of
their opposition, for their ranks include a number of Senators with
whom I usually find myself in agreement. On balance, however, I believe
that the only way we will be able to turn the current budget trends
around is to face reality with the help of the balanced budget
amendment. We must honestly address the budgetary, fiscal, and social
issues of our time without resorting to the pocketbook resources of
future generations.
As I stated at the outset, I am a liberal. My support of the balanced
budget amendment is logically consistent with that definition of
liberalism that I previously outlined, for several reasons. The
balanced budget amendment
[[Page S1098]]
will save our ability to invest in people. It will protect our capacity
for humane government. And the balanced budget will help expand
people's opportunities. It is good policy and it is an idea whose time
has come.
Madam President, every generation of Americans has been able to
address and resolve challenges unique to their time. That is what makes
this country great. Our current fiscal challenges are daunting, but I
am convinced that passage of this amendment will preserve our
Government's ability to act to face our underlying budget problems--
honestly and directly--and save our ability to invest in people.
Passing a balanced budget amendment will not prevent the Government
from acting to help address problems, and working to create expanded
opportunities for Americans. It will mean that we will not abandon our
responsibility to help educate our children, to assist the poor in
moving into the economic mainstream, to protect our environment, or to
exercise leadership in any number of areas of important public policy.
Balancing the budget may be the critical element in our efforts to
preserve the American dream of a better tomorrow.
I have no doubt but that this generation of Americans is as
compassionate and creative and patriotic as previous generations were.
We will be forced to make artificially draconian choices if we continue
to spend what we do not have, and delude ourselves that debt passed on
to future generations is not debt. The balanced budget amendment will
force a fiscal discipline which will be the first step toward ensuring
our generation will adequately and honestly address its needs so that
future generations will at least have the same opportunity.
Madam President, I yield to the Senator from Utah.
Mr. HATCH. Madam President, I thank my distinguished colleague from
Illinois. She may call herself a liberal, and that is fine with me. But
she has stood up on this amendment as one of our principal cosponsors
on the Democratic side of the floor, and that is one of the reasons
this amendment is as good as it is and why it is a bipartisan
amendment. I'm personally grateful to her for her courage in standing
up for this. I think the generations will, as we pass this amendment,
thank the distinguished Senator from Illinois for standing up and being
willing to articulate why this is so important. So, again, I want to
personally express my fondness for her and my feelings of what a great
job she does on this issue and how I personally appreciate it. I have
enjoyed her remarks. They have been right on point. I think she covered
the issues very well and, frankly, I hope everybody in this country is
listening to it.
As we close, I wanted to offer just a few final remarks on today's
debate.
First, I would once again like to thank all those who have
participated so far in the debate. I especially wish to congratulate
those new Members who have made their first addresses on this important
issue. I appreciate their participation.
Second, I would like to add just a few additional thoughts on the
notion of the so-called automatic stabilizers and the moderation of the
business cycle.
Madam President, I believe the importance of automatic stabilizers
has been overstated.
In her testimony before the Senate Budget Committee just last month,
CBO Director June O'Neill responded to a question about the
effectiveness of automatic stabilizers by citing better monetary policy
and the Nation's move away from an agricultural based economy, with the
inherent ups and downs that go along with agriculture, as factors at
least as important as automatic stabilizers in minimizing recessions.
Additionally, the move to a service economy and better inventory
management practices has reduced the fluctuations associated with
inventory overstocks and the factory economy.
The global economy and greater business information and efficiency
have also contributed to a more stable economy.
Finally, there has been much discussion of who can take credit for
the recent reductions in the deficit.
I believe that, like the increases in the deficit, the credit is to
be shared. A recent article by Jim Miller, a former OMB Director shows
various ways credit might be shared, and I ask unanimous consent that
that article be printed in the Record following my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. HATCH. Madam President, the fight to adopt a balanced budget
amendment is a bipartisan one.
I congratulate my Democrat colleagues who have argued for the
balanced budget amendment. Their support shows that this constitutional
amendment is a nonpartisan solution to a nonpartisan problem.
Exhibit 1
[From the Washington Times, January 15, 1997]
(By James Miller)
Giving Credit Where Due for Lower Deficit
A week before the election, President Clinton announced the
scorecard for fiscal 1996 (which ended Sept. 31): the deficit
was $107 billion--lower than any time since 1981. As someone
who would easily take credit for a brilliant sunrise or a
starry night, Mr. Clinton wasted no time in claiming the
deficit record was the product of his ``economic plan.''
Credits aside, the deficit record is very good news indeed.
More U.S. saving is available for private investment, and the
Federal Reserve is less likely to act in such a way as to
restrain the economy. Tragically, had Congress adopted the
budget discipline President Reagan recommended in his 1988
budget, the deficit would have been $108 billion and ``going
South'' eight years ago. Think of what spending restraint to
balance the budget (by 1991) would have meant for economic
growth in the meantime!
But who should get the credit for the latest deficit
figure? Bill Clinton likes to say his tax increase did the
trick, although in a moment of weakness he admits he raised
taxes too much. He also emphasizes his ``cuts'' in spending,
although in the package ultimately enacted most of the
claimed slowdown in spending growth takes place after 1996.
Is the Clinton economic plan of 1993 responsible for the
decline in the deficit?
It's especially helpful to focus on the outcomes in two
fiscal years, two years apart, reflecting two Congresses:
1994 and 1996, the first being the product of a Democratic
Congress, and the latter of a Republican Congress.
In April 1993, soon after taking office, Mr. Clinton
proposed a budget for 1994 that forecast a 9.2 percent
increase in receipts--from an estimated $1,146 billion for
1993 to $1,251 billion. The latter figure included $36
billion in additional taxes from his economic plan (``A
Vision of Change for America'') announced two months earlier.
Actual receipts in 1994 were $1,258 billion--$7 billion more
than the initial forecast, and an increment due to the
economic boost attributable to further spending restraint
(see below). In the budget, Mr. Clinton proposed a 3.2
percent increase in outlays--from an estimated $1,468 billion
to $1,515 billion, the latter figure reflecting his plan's $5
billion net reduction from the spending baseline. Actual
outlays in 1994 were $1,461 billion--$54 billion less than
Mr. Clinton asked for. Clearly, the deficit reduction in
1994--from $255 billion (actual) to $203 billion (actual) was
due more to spending restraint by Congress ($54 billion) than
to Mr. Clinton's economic plan ($41 billion).
In 1995, receipts were $13 billion higher than forecast,
such forecast reflecting $47 billion in new taxes from
President Clinton's economic plan. Outlays were within $1
billion of Mr. Clinton's request, which reflected an $18
billion reduction from the baseline due to his economic plan.
The actual deficit fell from $203 billion to $164 billion,
and in this instance one can argue that Mr. Clinton's
economic plan is the major factor.
In February 1995, President Clinton submitted his budget
for 1996. In it, he forecast a 5.2 percent increase in
receipts--from $1,346 billion to $1,416 billion, the latter
figure reflecting a $54 billion increase due to his economic
plan. Actual receipts, announced a week before the election,
were $1,453 billion--$37 billion more than forecast, arguably
attributable to Congress' additional budget restraint (see
below). In that same budget, Mr. Clinton proposed a 4.7
percent increase in outlays--from $1,539 billion to $1,612
billion, the latter figure reflecting a $34 billion reduction
from the spending baseline due to passage of his economic
plan. Actual outlays were $1,560 billion--$52 billion less
than Mr. Clinton asked for. Thus, the sizable reduction in
the actual deficit in 1996--from $614 billion to $107
billion--was due to additional spending restraint by Congress
($52 billion) as well as the combined effects of the spending
restraint and the new taxes in President Clinton's original
economic plan ($88 billion).
Thus, if you give President Clinton all the credit for the
forecast changes due to his economic plan, he accounts for
$194 billion of reduction from the baseline deficit over the
three fiscal years, whereas Congress deserves credit for at
least $107 billion because of further spending restraint. If
you give Congress credit for the $57 billion revenue boost in
1996 (see below), Congress can claim credit for $164 billion
in deficit reduction. If you give Mr. Clinton credit only for
the tax portion of the plan (his negotiations with Congress
focused on its demand for spending restraints vs. his demand
for tax increase), Mr.
[[Page S1099]]
Clinton's contribution is only $137 billion; Congress
accounts for the rest--$221 billion.
Of further interest here is that, contrary to the rhetoric
over alleged excesses of the (104th) Republican Congress in
paring programs indiscriminately, its record on spending in
its first year was almost precisely the same as that of the
first year of the last (103rd) Democratic Congress--both gave
the president some $50 billion less than he asked.
Receipts in 1994 (and 1993) were close to forecast. But
what explains the substantially larger-than-forecast receipts
in 1996? If the stock and bond markets are any guide, the
determination expressed by the new Republican majorities in
the House and Senate to balance the budget by restraining
spending improved the economic outlook and was responsible
for the better-than-expected economic performance during the
last fiscal year (3 percent real growth vs. 2.5 percent
forecast) which in turn led to higher federal receipts.
EFFECTS ON DEFICIT: CLINTON VS. CONGRESS
[In billions of dollars]
------------------------------------------------------------------------
Fiscal years--
------------------------ Cumulative
1994 1995 1996
------------------------------------------------------------------------
Clinton tax increase................ -36 -47 -54 -137
Clinton spending restraint.......... -5 -18 -34 -57
Congressional revenue increase...... -7 -13 -37 -57
Congressional spending restraint.... -54 -1 -52 -107
------------------------------------------------------------------------
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