[Congressional Record Volume 143, Number 15 (Friday, February 7, 1997)]
[Senate]
[Pages S1119-S1124]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BALANCED BUDGET AMENDMENT TO THE CONSTITUTION
The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will now resume consideration
[[Page S1120]]
of Senate Joint Resolution 1 which the clerk will report.
The assistant legislative clerk read as follows:
A joint resolution (S.J. Res. 1) proposing an amendment to
the Constitution of the United States to require a balanced
budget.
The Senate resumed consideration of the joint resolution.
Pending:
Durbin amendment No. 2, to allow for the waiver of the
article in the event of an economic recession or serious
economic emergency with a majority in both Houses of
Congress.
Mr. HATCH. Mr. President, yesterday the President of the United
States submitted his budget. I have to say that the President has come
a long way. He now says that he agrees that the budget needs to be
balanced by the year 2002. This budget is a legitimate departure point
from which to move in developing a final budget package.
I was disappointed, however, to see that the President's 5-year cost
of Government is almost identical to what he proposed a year ago. This
does not look like the era of ``big government is over.'' It is not
even shrinking according to this budget. Even more disturbing, the
budget deficit over the next 5 years is nearly $200 billion higher than
what was proposed just a year ago. And the deficit does not even
decline until the year 1999. The bulk of the spending cuts contained in
his budget occur after the President leaves office.
So he has left all of the hard decisions to the years 2002 and 2001.
Seventy-five percent of any fiscal responsibility has to occur in the 2
years after he leaves office.
That is not what I call political courage. That is not what I call
attending to the structural problems and the economic problems of this
country. It is more of the same that we have had for the last 28 years.
These huge stacks here on the table to my right represent 28 years of
unbalanced budgets. These are the actual 28 budgets. Keep in mind that
only involves the last 28 years, since 1969, the last time we balanced
the Federal budget. For most of the last 60 years we have not balanced
the Federal budget. So this is just a small smattering. If we put them
all up here for the last 60 years, they would reach almost to the
ceiling.
Then we have this budget which came up here yesterday that has all
the tough decisions made after he leaves office. The reason we elect
Presidents is so they can make the tough decisions and help us to work
in a bipartisan way so that nobody can scream at the other side.
In this particular case this budget is filled with smoke and mirrors.
What this means is that many of the tax cuts and spending increases
contained in this budget are not even likely to occur or will not be
offered until the last 2 years of the budget's projections, well after
this President is gone.
Just as important as reaching a balanced budget in 2002 is reforming
the entitlement programs. This is what we are going to have to face. We
are going to have to face the growing financing and deficit problems we
see looming in the next century. This may sound far away, but it is
only a few short years before we see the next century begin. We cannot
be lulled into a false sense of security because we have not reached
the crisis yet.
I had hoped that the President would take a leadership position and
tackle these difficult programs. Unfortunately, the budget contains
only short-term fixes. We see no sign of the structural reforms that
are absolutely needed. We see more signs of business as usual.
By the way, while the President says that his budget balances the
budget, the Congressional Budget Office--which he has touted himself as
being accurate through the years and which certainly has not been what
I consider a conservative Congressional Budget Office for all the time
I have been here--the Congressional Budget Office says that his budget
will not be balanced in the year 2002; and that the Administration is
using economic assumptions that just are not realistic.
I want to applaud the President for providing some tax relief in the
budget. It is a solid first step in giving some tax relief to the
American people. But it is only a baby step, and really a tentative one
at that, because all of the tax increases--and there are plenty of them
in this budget that he submitted yesterday--are permanent. The spending
programs are permanent. But, the tax cuts are temporary and are likely
never to occur because they go away if he does not meet his standards.
So it is a big shell game again.
I get so doggone tired of it. It is almost unbelievable. It is just
more of the same of what we have had over the last 28 years, and it is
really another reason why we simply have to pass this balanced budget
amendment.
The Presidents just do not seem to have the courage to stand up and
do what really has to be done. I am really concerned about it. Well, I
could go on and on on the President's budget, but I want to leave time
for others.
As we open the debate today on the balanced budget amendment to the
Constitution, I have to refer again to this stack of unbalanced
budgets. These are the actual 28, the last 28 years' budget packages.
I keep these budgets here, Mr. President, as a reminder of the
generation of bipartisan budgetary failure. Here it is, 28 straight
years of unbalanced budgets. There has not been one single balanced
budget since 1969, not one in 28 years, and yet we have people on the
other side come and say, ``Oh, let's just have the will to do it. Let's
just do it and the President will sign it.''
Give me a break. That is not going to happen any more than it
happened over the last 28 years. Paul Simon said, ``Your hair will turn
green before that happens, unless we have this balanced budget
amendment.''
I might say, Mr. President, there has only been one balanced budget
in the last 36 years. If we had 36 up here, it would be much higher,
the 36 individual budgets that have not been balanced. And there have
been only eight balanced budgets in the past 66 years. Just think about
it--58 years of unbalanced budgets. Only eight balanced budgets since
1930.
This sad history of budgetary failure is not a Democratic problem or
a Republican problem. It is an American problem. Those of us who are
proposing a constitutional amendment to require balanced budgets do not
do so as Republicans or Democrats; we do so as Americans, Americans
concerned about America and the future of our children and our
grandchildren.
Let me just give you a few illustrations of how bad our debt problem
has become. The national debt, as we all know, is now over $5.3
trillion--$5.3 trillion. That is a debt for each and every American of
more than $20,000. CBO, the Congressional Budget Office, projects that
in the year 2002, total Federal debt will exceed $6.8 trillion. That
means roughly $24,000 of debt for every person, every man, woman and
child in America, with annual interest costs projected to be over
$3,100 per taxpayer. That is just what we have to pay on the interest
against the Federal debt, $3,100 for each taxpayer a year by the year
2002.
The national debt has increased more than $4 trillion since the
Senate last passed a balanced budget amendment in 1982. We passed it in
the Senate. Tip O'Neill and the liberals in the House defeated it at
that time.
The debt, which started this year at a baseline of $5.3 trillion, has
increased over $550 million each and every day since then. Since we
began debate this year on the balanced budget amendment in the
Judiciary Committee, the debt has increased by more than $10 billion--
just since we began debate this year.
In 1996, gross interest exceeded $344 billion. That is more than the
total Federal outlays in 1975--all outlays--and is nearly $50 billion
more than the total revenues in 1975.
In 1996, gross interest consumed nearly 25 percent of the Federal
budget and more than one-half of all personal income taxes.
In 1997, for the first time, we will pay more than $1 billion a day
in gross interest on the debt. That is more than $41 million each hour
and $685,000 each minute that we are losing in just interest costs.
Net interest payments on the debt are currently the third largest
budget category, amounting to 15 percent of the Federal budget, and it
is the fastest growing item in the Federal budget.
Our annual net interest payment on the debt is more than the combined
budgets of the Departments of Commerce, Agriculture, Education, Energy,
Justice, Interior, Housing and Urban Development, Labor, State, and
Transportation.
[[Page S1121]]
I think these basic facts should make it plain why the balanced
budget amendment is an idea with appeal for Republicans and Democrats,
for liberals and conservatives.
There are liberal Democrats who see the money we waste on interest
payments that could be used in better ways to help the disadvantaged.
There are conservative Republicans who see the wreckage we are doing to
the opportunities for our citizens and our people by strapping debt,
interest, and future economic and tax burdens on them.
We are all concerned that our resources are being misallocated
because the Federal Government is spending willy-nilly, with
thoughtless borrowing, rather than making deliberate choices.
As we close this week of debate, I thank my colleagues who have
participated in the debate who have expressed why we, Republicans and
Democrats, are concerned about the debt the Government piles up just
like the stack of these unbalanced budgets here, and why we,
Republicans and Democrats, believe the only answer is the
constitutional requirement that the Government act more deliberately in
its spending decisions without always taking the easy recourse to
borrow.
This is a proposal that can unite us as Americans across party lines.
Let me mention again that every Republican Senator is a cosponsor of
this amendment. That is a great signal. But equally important is that
seven courageous and bold Democrats have also signed on as original
cosponsors. I wish to pay special tribute to those Democrats who
support this and who have spoken in support of a constitutional
amendment either in the Chamber or by signing on as cosponsors.
Senators Bryan, Graham of Florida, Kohl, Baucus, Breaux, Moseley-Braun,
and Robb have stood up for America and its future, and I applaud them
for standing for principle and our children.
Mr. President, I am also pleased to say that six other Democrats have
voted for this in the recent past and have promised to support it in
their most recent campaigns. I welcome their support for this most
important insurance policy that this stack of budgetary failures will
not grow too much higher and, more importantly, that our American
future will be brighter. If all of these folks honor their commitments
to their constituents, all 55 Republicans and all 13 Democrats who have
said to their constituents they will vote for it, we will pass the
balanced budget amendment this year and it will be a great day for all
Americans.
I thank the Chair.
The ACTING PRESIDENT pro tempore. The Senator from Kansas is
recognized.
Mr. ROBERTS. Mr. President, I truly appreciate this opportunity to
speak in behalf of the balanced budget amendment to the Constitution,
and in this regard I especially thank several of my colleagues: Mr.
Hatch, the distinguished chairman of the Judiciary Committee--and I
associate myself with all of his remarks--Mr. Domenici, the
distinguished chairman of the Budget Committee, and Mr. Craig, the
Republican policy chairman, for their longstanding leadership and
efforts in behalf of this legislation that I feel, in effect, would
simply protect the financial and economic future of our children and
their children.
For those who have had the perseverance and the tenacity to pursue
this goal, it has at times been a very lonely trail. Whatever success
we might achieve, and that I hope we will achieve, it has been in large
part due to the efforts of these Senators and their leadership role,
and the American people should certainly be aware of that.
I have read some interesting commentary in regard to this effort. Our
opponents predict dark budget clouds for Social Security and any other
programs deemed essential by Senators regarding their particular and
parochial interests; but contrary to that dire prediction, if we total
the sum of the balanced budget parts, I see and predict a very bright
future. I see a nation with 6.1 million more jobs in 10 years. I see
lower interest rates that will directly affect the daily lives and
pocketbooks of every citizen in terms of the amount of the hard-earned
income they pay now for living essentials--health care, housing,
education, loans, food and transportation.
If you ask the American people, with a 2 percent drop in interest
rates, how would you like 6 months of groceries free as compared to
what you are paying now, or corresponding savings in your health care
premium costs, mortgage payment or student loans, and if you compare
those savings in their pocketbooks with the marginal reductions in the
amount of growth in Federal programs in this city, why, put that way,
the American people support a balanced budget. They are six jumps ahead
of Washington.
So the question is how, how do we achieve a balanced budget? In his
State of the Union Address, President Clinton said, ``Don't give me a
balanced budget amendment. Give me a balanced budget.''
I agree with that. I must say I do agree. But with all due respect to
the President, many of my colleagues and I have done just that but to
no avail. During the last session of Congress, we sent two balanced
budgets to 1600 Pennsylvania Avenue, and despite exhaustive effort and
despite a lot of rhetoric to the contrary, in reality I think they were
dead on arrival. However, I must say that passing the balanced budget
amendment in the House last year and two budgets that were in fact in
balance, despite the Presidential vetoes, this action did provide the
kind of fiscal backbone and tenacity not seen in the Congress for
decades. In my own case, I was very proud of our efforts within the
House Agriculture Committee, as chairman, in enacting farm program and
food stamp reform that also produced an estimated $350 billion in
savings over the life of the budget agreement.
It can be done. They said it could not be done, but it can be done.
And with our reform of farm program policy passing by overwhelming
margins--318 in the House, 74 in the Senate--we also proved there is
bipartisan support for true reform and budget savings.
We also achieved very considerable budget savings in discretionary
spending at the conclusion of the appropriations process, all 13 major
spending bills--something unique to the last Congress. So we made some
progress. But that was last year. And last year, despite our successes
and a reduced deficit, we fell short of the final goal, a budget that
is truly, truly in balance. However, the real problem is that while
there is considerable talk about accepting responsibility and standing
foursquare for a balanced budget, there are serious differences of
opinion as to how to bring the budget into balance.
I don't know how many times I have heard my Kansas constituents say,
``Pat, why can't you and Senator Kassebaum and Senator Dole--Bob and
Nancy--work together and bring this budget into balance?'' Well, which
programs would be cut? In most cases, I know, our constituents
certainly come to Washington and say, ``Yes, I want to balance the
budget; yes, I know we have to quit this business of mortgaging the
future of our young people, our children and their children; but, you
know, my program is a little different. My program really represents an
investment.'' And, in many cases, that is true. But, do we have the
political wherewithal to address the real entitlement question, and
that is our individual freedom and the future of our kids and their
kids? In that, if you total up all the spending, you reach a certain
level, as evidenced by all of the budget reports on the floor of the
Senate, where that is the key question, not each individual program.
So, do we have the political wherewithal to save and restore Medicare
and other entitlements? In this regard, the President and many of our
friends across the aisle stated over and over again they are for a
balanced budget, but not that budget, that budget meaning any cuts in
their favorite and priority programs. And I must say, despite the fact
that a Republican Congress and the President were within $10 a month
difference last year in regard to preventing Medicare bankruptcy, $10 a
month, some even say $7, because of the fact we were not able to reach
agreement and the fact that the Democratic Party made a conscious
decision to make Medicare a top issue in last year's campaign, I am not
overly confident any budget agreement can be worked out without a great
deal of difficulty--unless we have to--unless there is some outside
discipline that
[[Page S1122]]
will force Congress to get the job done. The lure of political
opportunism may be just too great. The coming debate in regard to
Social Security is a classic example.
I have here the report in regard to the balanced budget amendment
legislation we are considering. On page 33, the minority views begin.
And I note, as I thumb through some of the commentary, that it is
merely a repeat of what many of us on this side of the aisle
experienced in 30-second spots.
So the real question is, does the Congress have the fortitude and the
perseverance and the tenacity to truly balance the budget? As has been
said by many of my colleagues, despite very good men and women of both
parties with the best of intentions, it is now the 28th year in which a
majority in Congress has failed in efforts for the Federal Government
to live within its means and to prevent the mortgaging of our children
and their children--28 years. There is the evidence right down there,
right next to Senator Craig. As a matter of fact, I think it stacks so
high that we are in violation of the Occupational Safety and Health
Administration code, and maybe the fire code.
So we all agree that we must make progress toward a balanced budget.
Then during the course of our political deliberations, we most
generally agree to disagree on how to achieve this goal. I think it is
clear that, if there is anything to be learned during the time we have
regretfully experienced ever-increasing deficits and political discord,
it is that we need a balanced budget amendment to the Constitution to
simply get the job done.
Now, the minority says in the beginning of their views:
The real question this year is not whether to reduce the
deficit but by how much and what cuts to make in order to
bring the budget into balance. That is the real work that
lies before us.
And amen to that. And I credit the minority for starting off with
that paragraph.
But, as has been said before, we now have the President's budget, and
in that regard I am going to quote from today's issue of the Washington
Post. This is an independent observation, not known for conservative
views--some conservative views. When they shine the light of truth into
darkness, it is usually to the left-field bleachers as opposed to the
right-field bleachers. But the Post says this morning:
``For the first time in 30 years, we'll be able to tell the American
people that we have brought fiscal sanity back to their Government,''
declared Clinton's Budget Director, Franklin D. Raines, at a news
conference.
And the Post goes on to say this, and this a wake-up call to the
American people:
But, in many respects, [the President's] fiscal 1998 budget
falls well short of the administration's soaring rhetoric. On
issues such as deficit reduction, Medicare, tax cuts and
welfare, congressional Republicans and many independent
budget analysts charge [the President's] plan is crafted less
to impose fiscal discipline than to gain political advantage
in the budget battle to come.
That is the Washington Post. That is not some Republican on Senate
floor.
In assembling its blueprint for wiping out the deficit by
2002 and beyond, the administration offers dozens of new
spending initiatives, including almost $60 billion of
additional entitlement programs [I thought we were going to
scale those back], while providing sketchy information about
spending cuts.
Clinton is relying heavily on new fees and deferred spending
reductions to reach balance. About 75 percent of all the proposed
spending cuts would take effect after 2000, a strategy that would put
off most of the pain--most of the discipline, if you will--until after
President Clinton leaves office.
A respected columnist, second to none, the dean of the political
writers in Washington, David Broder, added this in today's issue of the
Post:
The numbers in the latter document [I am talking about the
budget] are immensely revealing. After pages of pat-myself-
on-the-back rhetoric, the gauzy camouflage is pulled aside.
And you can learn that there's really not that much wrong
with this budget except that it adds another $1.2 trillion to
the statutory national debt in the next 5 years, fails to
start addressing the baby-boomer retirement problem, further
squeezes the share of money available for needed domestic
programs, shifts burdens to the States, shortchanges the
cities and stagnates investments in nonmilitary research and
development, the real seed corn for the future. Other than
that, it's a fine, forward-looking budget plan.
That is by David Broder and I think it deserves significant attention
for those involved in this debate as well as all of the American
people.
Mr. President, with the fall of the Greek Republic as an example,
there is an often-quoted and pessimistic theory that a democracy cannot
exist as a permanent form of government. The argument and prediction is
a democracy can only exist until the voters discover they can vote
themselves largesse from the Public Treasury. From that moment on, the
majority always votes for the candidates promising the most benefits,
with the result that a democracy always collapses over a loose fiscal
policy.
That was predicted about the Greek Republic. It happened. If that
prediction is true, it is a terrible prospect for our future.
Mr. President, I don't buy it. I think the American people are
willing to sacrifice and invest in the future if we but set the example
and get the job done.
I must say, when we look at our most recent history, and the fact our
best efforts fell short during the last session of Congress--and,
goodness knows, we worked hard--I believe this debate, this legislation
and this time represents our very best opportunity to set our Nation's
fiscal house in order.
In his State of the Union Address, President Clinton said, ``we need
action.'' And I agree. It is, indeed, time for action.
And for action that gets the job done, we need a constitutional
amendment.
I yield the floor.
Mr. CRAIG addressed the Chair.
The ACTING PRESIDENT pro tempore. The Senator from Idaho is
recognized.
Mr. CRAIG. Mr. President, let me make note of the comments of the
Senator from Kansas. They are so appropriate and so well directed at
what we can do here as it relates to controlling our spending and
modifying programs that do just that and produce long-term benefits.
The Senator from Kansas last year, of course, was a major player and
author of the Freedom to Farm Act while he was chairman of the House
Agriculture Committee. That very act changed the whole dynamics of
Government policy as it related to farm programs and Government's
relationship to production agriculture.
He spoke of the net savings in the tens of billions of dollars that
will result over an extended period of time. I would guess that less
than a few years ago, many Senators and many Members of the U.S. House
would have said, ``That can't be done; you cannot sever that
relationship.'' And yet, we have severed it.
Agriculture continues to prosper every bit as well as it did tied
directly to the Government and Government programs and, we believe, in
the long term will prosper more, simply because it is not relying on
farming-to-Government programs but, in fact, is now looking at the
market and producing to the market, as we had hoped it would.
That was one major benefit in change that occurred in the 104th
Congress.
Another one that occurred that is, in the long term, going to
substantially get us to the point by 2002 of a balanced budget, of
course, was the welfare reform.
So when the kind of pandering that occurs here on the floor, often
from the other side, that there is no way to balance the budget, or, if
you balance it, you must begin to exempt major portions of the budget
because they are too sensitive, too important and no constraints must
be put upon them of the kind that a constitutional amendment would
place upon them, so, therefore, they must be exempt, I would argue just
the opposite, that all it forces us to do is make tough choices,
priorities, where should the dollars be spent.
Of course, we all know we are going to build and maintain a strong
human safety net in Government policy for the citizens of this country
who are poor or disadvantaged or need an opportunity. That is exactly
what has been and will remain a concern of this Congress always.
All we are asking, and what I think we are causing to happen, is what
the American people have been asking now for well over a decade. Out of
fear--now fright--that this Congress cannot control a Federal debt,
they are saying, ``Balance your budget.''
[[Page S1123]]
Of course, the Senator from Kansas and I, the day before yesterday,
referenced this large stack of 28 consecutive budgets that are piled
here beside me, to recognize that 14 of them have deficit spending,
with all the intent to deficit spend and no intent to balance. And 14
of them have the intent to balance, where the Congress collectively, in
producing the budgets, said it is our intent that these budgets lead to
a balanced budget.
Yet, of course, we now have evidence, by the President's budget
coming to us yesterday, that in all the rhetoric and all the time that
he expended and all the good intentions that he expended in the State
of the Union Message this week, referencing a balanced budget many,
many times, that his budget isn't balanced, won't even balance unless
you do major cuts and major tax increases, largely because he is
habitually the kind of public leader that we have had for so many
years, who wants to constantly add new programs without making the
tough choices of deleting programs so that you can add.
I am not suggesting the programs the President spoke of are not
contemporary and necessary. When he spoke to education the other night,
I applauded a fair amount of what he said. But I am willing to stand
here and make the tough votes to suggest spending ought to decrease
somewhere else if we as a country are going to shift our priorities in
spending to education.
We now have an amendment before us that would impact the whole intent
of a balanced budget amendment to our Constitution, and those are tough
choices, prioritizing and doing exactly what the American people expect
us to do, and that is balance the budget. If 51 of us can say, ``Oh, we
can't balance the budget, the environment is too extreme at the moment,
economically at this point in the country or the priorities of spending
are we just have to bypass this national mandate, this constitutional
mandate and do it only by 51 votes here in the Senate,'' then I suggest
to you this amendment wipes away the full intent of a balanced budget
amendment and causes us, if that were to become part of the balanced
budget amendment, to gimmick up the Constitution by simply doing
exactly what we do now.
So we are telling the American people that the amendment that is
before us is one where, ``Oh, we have given you a balanced budget
amendment to the Constitution. Rest assured we have given you what you
wanted, but more importantly, we have now simply represcribed business
as usual.''
It is with those frustrations that I think we are now suggesting that
this is an amendment--the amendment to the constitutional amendment,
the one before us--is one that does not deserve to be in the
Constitution, because it would be false pretense to argue it any other
way.
Yesterday, there was a fascinating article from Investors Business
Daily that I thought was very reminiscent of the very arguments we are
placing here on the floor. The President had expressed concern about
the ability to react promptly in a recession and, of course, the
amendment we have before us would argue that that is what it allows.
When the President said that, I said, ``Mr. President, we have provided
for that. We have a three-fifths vote in the amendment now.'' It is a
tough vote. It is not always easy to come by, but it is a necessary
vote to force us to the reality.
Let me suggest that Congress, in 1962, passed 12 economic stimulus
bills because of a recession. All 12 bills received 60 votes or more in
the U.S. Senate. In 1993, in a stimulus package, there were similar
kind of votes.
What I am suggesting is that the record is replete with a voting
pattern that says if we are truly in a major economic emergency and
there is need for economic stimulus, that the very marker we have put
in the proposed constitutional amendment that we are debating on the
floor is the proper mark and not 51 votes.
So what Investors Business Daily said yesterday was:
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. . .
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.
In other words, they always came after all of the indicators were in
place that the recession was over.
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.
That is the reality of how we define ``recession.'' Yet, the
amendment that we have before us to amend the resolution would argue
that we know better.
Mr. President, I ask unanimous consent that the full text of the
editorial called ``Prospective Balanced-Budget Blather'' be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Perspective Balanced-Budget Blather, February 6, 1997
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.
Recessions 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 a 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 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.
Mr. CRAIG. It is important to recognize that while the politics of
the argument are interesting, the record would
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suggest that it does not fit, that Congress has always responded to
recessions after they were over. And, in fact, what ended up usually
was pork-barrel spending that became a part of the total budget program
that went on.
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.
Recessions have been less severe in the postwar period,
many economists argue.
That is exactly the point of those figures, the argument that somehow
we straitjacket our Government by a balanced budget not able to respond
to times of recession, and the facts simply do not bear it out, the
economic facts, not mine, but those of the economists who study this.
So when Secretary Rubin fears straitjacketing, what Secretary Rubin
fears is that the American people will once again have control of their
budget and the spending of the Federal Government and that we take it
out of the hands of politicians and force them to stay within
parameters and make the tough choices and to stop mounting the huge
Federal debt that we are currently having.
That is the essence of a balanced budget amendment. That is why we
are here on the floor, because the American people have asked us to do
this. I am one of those who believes so strongly that the record is
replete with the facts that we as politicians cannot do it.
Some of us can make those tough votes; others cannot for various
reasons. It is true that, as never before, special interest groups come
to Washington for a piece of the pie. So it is easy to give it away and
make the pie bigger. The only problem is we borrow hundreds of billions
of dollars annually to make the pie, expecting future generations to
pay for the ingredients. Therein lies the great discrepancy, why we are
here.
It is an important issue. We must fight to make sure that we retain
it and that we pass the balanced budget constitutional amendment
resolution and disallow the kind of amendments that would weaken it or
make it hollow at best. We cannot put that kind of language in our
Constitution.
I yield the floor.
Mr. DODD addressed the Chair.
The ACTING PRESIDENT pro tempore. The Senator from Connecticut is
recognized.
Mr. DODD. Mr. President, I ask unanimous consent that I may be able
to proceed as in morning business and the time I use not be deducted
from the debate on the pending business.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. DODD. I thank the President.
Mr. President, I have a couple of items that I would like to address,
if I may, here of a different nature than the debate on the
constitutional amendment for a balanced budget. Myself, I will have
some remarks later in the day on that subject matter, but I would like
to take a little bit of time, if I could, to raise several issues.
(The remarks of Mr. DODD pertaining to the submission of Senate
Congressonal Resolution 6 are located in today's Record under
``Submission of Concurrent and Senate Resolutions.)
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