[Congressional Record Volume 143, Number 18 (Wednesday, February 12, 1997)]
[Senate]
[Pages S1331-S1336]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  BALANCED BUDGET CONSTITUTIONAL AMENDMENT AND SOCIAL SECURITY TRUST 
                                 FUNDS

  Mr. REID. Mr. President, hopefully the week we get back, we will be 
able to start a serious debate on the most important issue relating to 
the balanced budget amendment, namely whether or not Social Security 
trust fund moneys should be counted in the constitutional amendment to 
balance the budget.
  There will be an amendment offered, of course, that the Social 
Security trust fund moneys should be excluded from that. It seems each 
day that goes by we get added support for our amendment. We have 
received support over the months from various individuals, and just 
yesterday we received an opinion from the Congressional Research 
Service of the Library of Congress that was very important.
  There has been some talk in the Chamber today that they have changed 
their opinion. Nothing could be further from the truth. And that 
certainly can come from reading the transmission from the American Law 
Division of the Congressional Research Service today. My friend, the 
Senator from North Dakota, will discuss this when I complete my 
remarks. But, Mr. President, all you need to do is read this new 
document that they put out where it says:

       Only if no other receipts in any particular year could be 
     found would the possibility of a limitation on drawing down 
     the Trust Funds arise. Even in this eventuality, however, 
     Congress would retain the authority, under the [balanced 
     budget amendment] to raise revenues--

  Of course, if you can get a supermajority.

     or to reduce expenditures--

  That's very true, you could continue to cut.

     to obtain the necessary moneys to make good on the 
     liquidation of securities from the Social Security Trust 
     Funds.

  Mr. President, this is certainly the same opinion that they rendered 
yesterday. The Social Security Trust Fund is the largest money out 
there, this year, $80 billion. This is being applied toward the deficit 
to make it look smaller. And that is all they are saying, that is, in 
effect, when it comes time to balance the budget, they will look to 
Social Security. The way the balanced budget amendment is written, if 
there are not surpluses over and above the Social Security Trust Fund 
moneys, people simply would not be able to draw their checks.
  I will yield the floor----
  Mr. DORGAN. I wonder if the Senator will yield?
  Mr. REID. I will be happy to.
  Mr. DORGAN. Mr. President, I wanted to make an observation and make a 
point. The Congressional Research Service has sent a second letter. I 
wanted to make the point the Senator from Nevada made. The second 
letter says the same as the first letter on the question of whether 
surpluses in the Social Security Trust Fund can be used in the outyears 
to be spent for Social Security needs. The answer is, in the first 
letter from CRS and in the second, the answer is no, unless there is a 
corresponding tax increase in the same fiscal year, or corresponding 
spending cuts, equal to those surpluses. And that is the very point we 
were making.
  The second letter from the Congressional Research Service simply says 
the same thing that they said earlier with slightly different wording. 
We

[[Page S1332]]

want to make that point, that this is not a change in position for them 
at all.
  In the outyears, the way the constitutional amendment to balance the 
budget is worded, the Government would be prevented from using the 
surpluses accrued in the Social Security Trust Fund that were saved for 
the specific purpose of being used later when they were needed. It 
would be prevented from using those unless in those years it also 
increased taxes sufficient to cover them or cut spending sufficient to 
cover them. This, despite the fact that they were accrued as surpluses, 
above other needs in the Social Security system now, in order to meet 
the needs in the future.
  I know this is confusing. We just wanted to leave the message that 
the Congressional Research Service is saying the same thing. This is 
not a change in message from them at all, and this is about a $3 
trillion issue. It is of great significance, and I hope Members will 
take account of it as we consider these issues.
  Mr. REID. I say to my friend from North Dakota, also, we will discuss 
this at great length right after the break. But it is interesting that 
we are talking about trust fund moneys like it is some fungible 
commodity that can be used for any purpose. The fact of the matter is, 
Social Security Trust Fund moneys are put, supposedly, into a trust 
fund to be used for people's retirement, not to make the deficit look 
smaller.
  Mr. DORGAN. If the Senator will yield for 1 additional minute, that 
is exactly the point of this debate. It is not an attempt in any way to 
create more diversion, or any diversion, on the issue of a 
constitutional amendment to balance the budget.
  The question is, Shall the Constitution be altered? But we are 
raising the question of, if an alteration of the Constitution is made, 
how will that affect, in the outyears, the opportunity to spend the 
surpluses that we are accruing each year now because we need it when 
the baby boomers retire?
  And the answer is, according to the Congressional Research Service, 
it will have a profound and enormous effect on the Government's ability 
to do that. That is what we want our colleagues to understand.
  The PRESIDING OFFICER. The Chair will inform the Senators, under the 
previous order we were in morning business for up to 5 minutes each, 
and I must notify the Senators that time has elapsed.
  The Senator from Utah.
  Mr. HATCH. Mr. President, I would like to take this time to briefly 
respond to my friend from North Dakota and others. In their press 
conference that was held this morning, as I understand it--I was not 
there, but Senators Conrad, Dorgan and Reid were--at that event a one-
page memorandum from the Congressional Research Service, which was 
inaccurately termed a ``study,'' was characterized as proof that 
passage and ratification of the balanced budget amendment will harm 
Social Security.
  The problem is that the CRS memorandum did not conclude that at all. 
All the CRS memorandum concluded was that the Social Security existing 
surpluses after 2019--the year the program no longer produces surpluses 
because of the retirement of the baby boomers--cannot be used to fund 
the program unless such expenditures were offset by revenue or budget 
cuts.
  Of course, this is technically true. That is what a balanced budget 
does. It balances outlays and receipts, and expenditure of any part of 
the budget is an outlay.
  But these critics of the balanced budget fail to mention a few 
things. They fail to mention that CRS, in the memorandum, also 
concluded that the present day surpluses are ``an accounting 
practice.'' Past CRS studies clearly demonstrate that the Social 
Security trust funds are, indeed, an accounting measure. There is no 
separate Federal vault where Social Security receipts are stored. 
Social Security taxes--called FICA taxes--are simply deposited with all 
other Federal revenues. The moneys attributed to Social Security are 
tracked as bookkeeping entries so that we can determine how well the 
program operates. As soon as the amounts attributed to FICA taxes are 
entered on the books, Federal interest-bearing bonds are electronically 
entered as being purchased. That is the safest investment that exists 
in the world today.
  This country has a unified budget. This means that the proceeds from 
Social Security taxes are part of the Treasury--of general revenue. CRS 
has recognized this.
  Moreover, I might add, without including the present day surpluses, 
the budget cannot be balanced. That is why President Clinton has 
included Social Security funds in every one of his budgets.
  Do Senators Dorgan, Conrad, and Reid oppose that? If they do, they 
have a right to, but the President includes them because he has to.
  I recognize that Social Security is in danger. But the problem is not 
the inclusion of Social Security funds in the budget. The problem is 
that, with the retirement of the baby boomers and that generation, 
there will not be enough FICA taxes to fund their retirement. CRS, in a 
study, concluded that the present day surpluses would not be sufficient 
to resolve this problem. CRS concluded that the Social Security program 
needs to be fixed.
  Finally, not including Social Security in the budget would harm the 
program. Congress could rename social programs--as they have done 
before--as Social Security and use the FICA taxes to fund those 
programs to the detriment of senior citizens; that is, if we do not 
handle this matter the way the balanced budget amendment requires us to 
do.
  My colleagues' problem, in reality, is not with the balanced budget 
amendment but with the problems the Social Security program faces and 
will face in the future. We need to fix that. Adopting the balanced 
budget amendment is a good start. If we do not do that and if they take 
these matters so they are not part of the unified budget, then I submit 
every senior in this country is going to be hurt some time in the 
future because there will not be the will to get matters under control 
and spending under control.
  We saw the charts of the distinguished Senator from West Virginia all 
afternoon, which I think make my case, and so do these 28 years of 
unbalanced budgets. The only way we are going to face up to the needs 
of Social Security and the needs of our seniors is if it is part of the 
unified budget.
  Frankly, the CRS is right, this is an accounting process. The way to 
do it right is to have a balanced budget amendment passed that works.
  Mr. President, I ask unanimous consent that the Congressional 
Research Service, Library of Congress, February 12, 1997, letter to the 
Honorable Pete V. Domenici, attention Jim Capretta, from the American 
Law Division, on the subject of ``Treatment of Outlays from Social 
Security Surpluses under BBA,'' signed by Johnny H. Killian, Senior 
Specialist, American Constitutional Law, be printed in the Record at 
this point.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                   Congressional Research Service,


                                      The Library of Congress,

                                Washington, DC, February 12, 1997.
     To: Honorable Pete V. Domenici, Attention: Jim Capretta.
     From: American Law Division.
     Subject: Treatment of Outlays from Social Security Surpluses 
         under BBA.

       This memorandum is in response to your inquiry with respect 
     to the effect on the Social Security Trust Funds of the 
     pending Balanced Budget Amendment (BBA). Under S.J. Res. 1 as 
     it is now before the Senate, Sec. 1 would mandate that 
     ``[t]otal outlays for any fiscal year shall not exceed total 
     receipts for that fiscal year. . . .'' Outlays and receipts 
     are defined in Sec. 7 as practically all inclusive, with two 
     exceptions that are irrelevant here.
       At some point, the receipts into the Social Security Trust 
     Funds will not balance the outlays from those Funds. Under 
     present law, then, the surpluses being built up in the Funds, 
     at least as an accounting practice, will be utilized to pay 
     benefits to the extent receipts for each year do not equal 
     the outlays in that year. Simply stated, the federal 
     securities held by the Trust Funds will be drawn down to 
     cover the Social Security deficit in that year, and the 
     Treasury will have to make good on those securities with 
     whatever moneys it has available.
       However, Sec. 1 of the pending BBA requires that total 
     outlays for any fiscal year not exceed total receipts for 
     that fiscal year. Thus, the amount drawn from the Social 
     Security Trust Funds could not be counted in the calculation 
     of the balance between total federal outlays and receipts. We 
     are not concluding that the Trust Funds surpluses could not 
     be drawn down to pay beneficiaries. The BBA would not require 
     that result. What it would

[[Page S1333]]

     mandate is that, inasmuch as the United States has a unified 
     budget, other receipts into the Treasury would have to be 
     counted to balance the outlays from the Trust Funds and those 
     receipts would not be otherwise available to the Government 
     for that year. Only if no other receipts in any particular 
     year could be found would the possibility of a limitation on 
     drawing down the Trust Funds arise. Even in this eventuality, 
     however, Congress would retain authority under the BBA to 
     raise revenues or to reduce expenditures to obtain the 
     necessary moneys to make good on the liquidation of 
     securities from the Social Security Trust Funds.

                                            Johnny H. Killian,

                                                Senior Specialist,
                                      American Constitutional Law.

  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, we will likely have a longer debate about 
this, and I shall not lengthen it today, but the Senator from Utah 
always makes a strong case for his position.
  In the circumstances this evening, he, once again, has made a strong 
case, but on a couple of points, in my judgment, he is factually in 
error, and I want to point that out.
  In one respect he is not in error, he is absolutely correct. 
President Reagan, President Bush, and President Clinton have all sent 
budgets since 1983 to this Congress--1983 is the period in which we 
began to decide we were going to accumulate substantial surpluses in 
Social Security to save for a later time when they are needed--all 
Presidents have sent budgets to this Congress that use the Social 
Security trust funds as part of the unified budget. I think 2 days ago 
on the floor of this Senate, I pointed out the President did that in 
his budget, and his budget that he says is in balance is not in 
balance. I pointed that out about this President. I made the same point 
about President Bush and President Reagan when they did it as well.
  But, having said that, the Senator from Utah says the Social Security 
trust funds that are derived from Social Security taxes taken from 
paychecks of workers all across this country and from the employers, is 
a technical issue, and they simply go into all other funds and they are 
commingled. This technical resolution of all these moneys means that 
there really is not a dedicated Social Security fund, and so on and so 
forth.
  I would be happy to go for a drive with the Senator from Utah to 
Parkersburg, WV, where the Social Security trust fund securities are 
held under armed guard. I might even be able to bring him a copy of one 
of those securities so we could show him that those securities exist. 
They are held under armed guard. I can tell him where they are held, 
and it is not merely technical. It is much, much more important than 
that.
  If it is purely technical, then I say to the tens of millions of 
workers out there, ``The next time you get your paycheck stub and you 
see that little portion where they take some tax away from you and they 
say, `We're doing this to put it in the Social Security account and 
it's a dedicated tax to go into a dedicated trust fund to be used for 
only one purpose,' you deserve a tax break; you ought not be paying 
that if it is not going to where it is indicated it is going, to a 
trust fund to save for the future.'' If this is just like other money, 
commingled with other funds, let's stop calling it a trust fund, let's 
stop calling it a dedicated tax and call it an income tax, and a 
regressive one because everybody pays the same amount.
  In fact, it is the case that most Americans pay more in this payroll 
tax than they do in taxes, regrettably, but they do so because they 
believe it goes into a trust fund. I reject the notion somehow that 
there is no difference between all this money. I think the trust funds 
are dedicated funds that we promised workers would be saved for their 
future.
  The Congressional Research Service says nothing in the second letter 
they did not say in the first. They say--and you can say it two ways--
the Government with this constitutional amendment to balance the 
budget, the way it is worded, would be prevented from using the Social 
Security trust funds in the outyears, when we are going to use that 
surplus because it is needed, unless a corresponding tax increase or 
corresponding spending cut equal to those trust funds is enacted by 
Congress. That is one way of saying it.
  The other way of saying it, which they now have in this paper, says 
the Congress, in the outyears, can use the Social Security trust funds, 
but only if there is a corresponding tax increase or spending cut. It 
is another way of saying exactly the same thing. Why use two pieces of 
paper when you can use one? It doesn't matter much to me. It is 
probably a waste of paper, but it says exactly the same thing.
  I want to make one final point. The reason I have taken issue with 
President Bush, President Reagan, and, yes, President Clinton on this 
issue, and taken issue with the Senator from Utah, is embodied in the 
debt clock that the Senator brought to his hearing. I hope we will have 
this discussion at some point soon. The Senator will I think agree that 
the clock showing the amount of public debt that is owed in this 
country will not stop with the passage of this balanced budget 
amendment and the passage of a budget that complies with this 
amendment.

  I ask the Senator from Utah, is it not true that if the Congress 
passes this constitutional amendment to balance the budget and then 
passes a budget in compliance with that, in the very year in which that 
budget is so-called balanced, is it not true that the Federal debt will 
increase $130 billion in that year? And if it is, and I believe the 
Senator from Utah would admit that it is, if it is true that in the 
year in which it is represented to the American people that the budget 
is balanced, then why does the Federal debt rise by another $130 
billion? Somehow that doesn't pass any standard of common sense in my 
hometown.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. REID addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Thank you, Mr. President. It is interesting to see what has 
transpired in this past year. It seems there is a new tact now to get 
the constitutional balanced budget amendment passed, and that is to 
trash Social Security--``it is going broke; its program is bad; the 
baby boomers aren't going to get any money''--to do what we can to make 
Social Security look bad.
  Mr. President, Social Security is the most successful social program 
in the history of the world. It is a good program, and people who want 
to say Social Security is in deep trouble, it is going out of business 
soon, simply are wrong. Even the 13-member bipartisan commission which 
reported back on Social Security acknowledged that until the year 2029, 
Social Security is going to pay out all the benefits as it now pays 
out. In fact, in the year 2029, if we did nothing else, benefits would 
still be paid out at about 80 percent. We have to do some adjustment to 
Social Security in the outyears. There are many ways we can do that.
  Social Security is not in trouble of going broke unless this balanced 
budget amendment passes, and then there is going to be some real 
trouble. The trouble is that the surpluses have been and will continue 
to be used to balance the budget. The fact that there has been a 
procedure used in years gone by that is wrong does not mean we should 
enshrine that in the Constitution.
  So I suggest that the argument that Social Security is going broke is 
about as valid as the argument that is used on a continual basis that 
States balance their budget. The State of Nevada balances its budget, 
but capital improvements are off budget.
  So, Mr. President, I believe we should have a constitutional 
amendment to balance the budget. I am willing to go for that. I voted 
for all the motions to table. But I believe we should exclude Social 
Security trust fund moneys from the numbers that allow the false way of 
obtaining a balanced budget.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I say to my dear friend and colleague, that 
would be one of the most tragic errors we could make. To me, that would 
be almost fiscal insanity.
  I am not saying anything is purely technical. What I am saying is 
that the money, not the securities, the money from FICA is commingled 
with all Treasury funds. Everybody knows that. That is No. 1.
  No. 2, as to the outyear issue, CRS says in various studies that the 
present surplus is not enough to fund the needs of the system when the 
baby boomers retire. That is a reality.

[[Page S1334]]

  No. 3, not including Social Security within the purview of the 
balanced budget amendment will ultimately hurt that program, because 
there will not be the same force to reform the program and make sure it 
works when the baby boomers come on that there may be now, that is 
included in the unified budget.
  I might also add, Mr. President, this is very important. This is the 
highest item in the Federal budget. How can we take it out of the 
unified Federal budget and not consider it? Yes, we have surpluses for 
a few years, but then all of a sudden, it goes into deep deficit. Both 
sides need to be in the full balanced budget if we are going to meet 
our realities and meet our necessities.
  The question of the Senator from North Dakota, Senator Dorgan, ``If 
the balanced budget amendment would truly require a balanced budget, 
then why will the debt increase,'' is, with all due respect, a bit of 
sophistry. The balanced budget amendment will require a balanced 
budget. Outlays must not exceed receipts under section 1 of Senate 
Joint Resolution 1.
  It is true that gross debt may still increase even if the budget is 
balanced. That is because the Government's exchange of interest-bearing 
securities for the present Social Security surplus is counted in the 
gross debt. It is merely an accounting or bookkeeping notation of what 
one agency of Government owes another agency. It is analogous to a 
corporation buying back its stock or debentures. Such stocks and bonds 
are considered retired obligations that, once retired, have no economic 
or fiscal significance.
  Moreover, the Defense and Energy Departments list billions of dollars 
of environmental and nuclear cleanups as liabilities. All in all, gross 
debt, which includes all debt, is simply an overall indicator of 
Federal Government obligations. This sets the floor on increasing debt 
that has a direct, current effect on the overall economy, as the 
administration agrees. This is very different from obligations owed by 
the Federal Government to the public. This type of debt termed ``net 
debt'' or debt held by the public is legally enforceable and is what is 
economically significant.
  If net debt zooms because of interest payments of debt, which last 
year amounted to $250 billion, budget deficits balloon with all the 
dire economic consequences. To assure that budgets will be balanced 
unless extraordinary situations arise, debt held by the public cannot 
be increased unless three-fifths of the whole number of each House 
concur.
  It is true that a balanced budget amendment does not by itself reduce 
the $5.3 going to $5.4 trillion national debt. But what it does do is 
straighten out our national fiscal house. Passage of Senate Joint 
Resolution 1 will increase economic growth. Almost everybody agrees to 
that on Wall Street. It will increase economic growth. It will allow us 
to run surpluses. With this, our national debt may be decreased if 
Congress desires to do so in the interest of national security, 
stability, and prosperity.
  Without Senate Joint Resolution 1, as we saw from the charts of the 
distinguished Senator from West Virginia all afternoon long today, 
without Senate Joint Resolution 1, this will be an impossibility. We 
will just continue the same darn programs producing deficits producing 
the 28 years of unbalanced budgets, unbalanced budgets that will just 
continue on ad infinitum. Ultimately our kids are going to have pay 
these debts, and it will be a doggone big debt for them. We just cannot 
do it to them.
  I just suggest to my colleagues, as sincere as they are, the worst 
thing they can do for our senior citizens is to try to exclude Social 
Security from the budget because then all these big spenders around 
Congress are going to find everything to be a Social Security 
expenditure. Ultimately, it will impinge on the Social Security program 
and ruin the program, which Senator Reid this evening has rightly 
called one of the greatest programs in the history of the world. He 
called it the greatest. I will certainly say it is one of the greatest 
in the history of the world.
  If we want it to continue, it seems to me we have to treat it, since 
it is a high item in our budget, as a budgetary item. These accounting 
approaches are going to go on no matter what happens. So I think if we 
pass the balanced budget amendment, a balanced budget will ultimately 
become a reality. We are going to have to face reform of Social 
Security in the best interests of our senior citizens.
  If we keep going where we are going, there will not be any moneys for 
Social Security and a lot of people are going to get hurt. To exclude 
Social Security from the budget is penny wise and pound foolish and it 
is a fiscal gimmick to try to take the largest item in the Federal 
budget out of the Federal budget without reforming the program to keep 
it solvent. Passage of the balanced budget amendment will pressure 
Congress to fix Social Security. Passage of the balanced budget 
amendment will help increase revenues and economic growth that will aid 
Social Security.
  I yield the floor.
  Mr. DORGAN. Mr. President, I wonder if I might--I will not belabor 
this because there will be another time when we can have a lengthier 
discussion. I hope we can have some questions back and forth.

  The Senator used the word ``sophistry.'' I was recalling when in high 
school I worked at a service station and learned how to juggle three 
balls. I remember how difficult it was when I started trying to learn 
to juggle three balls at once, but how easy it became once I learned 
how. And I marvel sometimes at how those who really know how to juggle 
do it with total ease. It seems effortless.
  The juggling that I just saw was interesting. The Senator said there 
may be an increase in gross debt even when the budget is in balance. It 
is not ``may.'' The Congressional Budget Office says there ``will'' be 
an increase in gross debt by $130 billion the very year in which people 
claim there is a balanced budget. So it is not ``may''; it is ``will.''
  The question I was asking was, does that matter? Is it not a paradox 
or contradiction that when we say we have balanced the budget, my young 
daughter will inherit a higher national debt? And the Senator from 
Utah, I think, said, yeah, but that is just technical. He said the 
gross debt is different than the net debt.
  In fact, the only reason we keep track of the gross debt, as I heard 
him say it, is because it has an impact on the economy. But if it has 
an impact on the economy, I did not understand the second position of 
why it does not count. It seems to me that the circumstances of the 
gross debt are that if you increase the indebtedness of the Federal 
Government, this cannot simply be on cellophane paper someplace. It 
represents securities that my daughter and sons and all others in the 
country will have to repay. I would be happy to yield for a question.
  Mr. HATCH. Let me just say I never did learn how to juggle things. I 
think that is one reason why I strongly believe in balanced budgeting, 
is because I am tired of all the juggling that has gone on around here. 
But under the exemption proposal of the distinguished Senator from 
North Dakota, the debt will increase much faster because there is 
nothing being done about it. His proposal does not change that one bit.
  Our proposal says we are tired of this. We are tired of 28 straight 
years of unbalanced budgets, and we want to face the music of budget 
deficits and do it within the realm of fiscal restraint. And, if we do 
not keep all items together, then there are going to be loopholes that 
literally will blow this country apart. We will have the regular budget 
and a separate Social Security budget. One will be required to be 
balanced under the constitutional amendment and the other will be an 
exempted Social Security budget that can run deficits because under the 
proposal it will be excluded from the constitutional amendment. 
Congress will transfer costly programs to the exempted budget. These 
costly programs will be funded out of Social Security revenues. This 
will ruin and hurt every senior citizen in this country. Exempting 
Social Security is just a fiscal gimmick.
  Mr. DORGAN addressed the Chair.
  Mr. HATCH. We also know it is accounting.
  Mr. DORGAN. Reclaiming my time, I was yielding for a question. I 
guess the question that often comes up for us is: Isn't our balanced 
budget amendment a

[[Page S1335]]

gimmick? Isn't yours real, the one offered by the Senator from Utah? 
The answer, I would say to the Senator from Utah, is, it is now 6:27. 
If at 6:28 we pass and all the States ratify your proposal, at 6:29 
will there have been one penny difference in the Federal debt or the 
Federal deficit? The answer is ``No.''
  Mr. HATCH. Of course not. Of course not. But passage of the balanced 
budget amendment is the first and only real step toward a balanced 
budget and fiscal sanity.
  Mr. DORGAN. I say this. My proposal is a proposal to similarly 
require a balanced budget. I think there is merit in that discipline. 
But I would say this. When we alter the Constitution to require a 
balanced budget, I want to do it in a way that really requires that 
this debt clock that you brought to your hearing that day stop, dead 
stop; not a slow creep, but a dead stop. No more debt for your kids, my 
kids, no more debts for this country, so we can start paying down the 
debt rather than continue to increase the debt.

  I do not want to create a shell game here where we say, let us have a 
giant feast because we have balanced the budget, and then have someone, 
some little kid point up to that debt clock and say, ``Gee, Daddy, why 
is the debt clock still increasing, because Senator Hatch or Senator so 
and so said we balanced the budget?''
  I say you and I do not have a disagreement about what we ought to be 
doing. We ought to balance the budget. Nor do we have a disagreement 
about whether there is merit to have put it in the Constitution.
  We have a very big disagreement about the $3 trillion in the next 20 
years or so in Social Security surpluses, deciding that we ought to 
take those out of reach and save them for the purpose we said we are 
going to save them for. We have great disagreement about whether or not 
that is a gimmick or whether that is important for the future of this 
country. That is where we disagree.
  Mr. HATCH. I think that is true. Let me just say, so I clarify, I did 
not say that the distinguished Senator from North Dakota is a sophist, 
though I think he would make a good one. I did say that I think his 
arguments are--
  Mr. DORGAN. I did not say the Senator from Utah could juggle, 
although I think it looks to me like he has that talent.
  Mr. HATCH. I admitted I could not.
  Mr. DORGAN. I think he has the talent, the potential.
  Mr. HATCH. Let me say this. I think there is a good argument the 
gross debt increase does not matter in this context. Why? Because it is 
just evidence of what one agency in the Government owes another agency. 
What is of economic consequence is net debt--net debt; that is debt 
held by the public which is legally enforceable.
  Now, I have to say that the Senator's proposal does not stop the debt 
from growing, and under his proposal, if this balanced budget amendment 
goes down, if his amendment was added--and it will go down and 
everybody knows that--the gross debt will grow at least as fast. So his 
solution is not a solution.
  We all know that the only balanced budget amendment we have a chance 
of passing is the underlying amendment that includes everything on the 
budget. We also all know, in all fairness, that Social Security should 
be included because it is more than capable of competing with other 
programs, and it ought to have to compete. Let me tell you this, if it 
is not on there, I think it is a risky gimmick to take it out.
  When somebody says our balanced budget amendment is a gimmick, I 
agree with the Senator from Maine, Olympia Snowe, who said today, if it 
was a gimmick, we would have passed it long ago. The fact is that it is 
why it is being fought so hard against. It will put fiscal restraints 
and discipline on all items of the budget that has been long overdue. I 
think that has to be done.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Brownback). The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I have been listening to this debate with 
a great deal of interest. I was especially interested that the Senator 
from Utah described as a fiscal gimmick separating out the Social 
Security trust fund from the rest of the Federal budget, because, if I 
am not mistaken, the Senator from Utah himself voted for that very 
proposition in 1990. In fact, we had a vote right on the floor of the 
U.S. Senate on the specific question of whether or not we were going to 
count the Social Security trust fund as part of the overall budget or 
not.
  I believe separating out the Social Security trust fund received 97 
or 98 votes. I believe the Senator from Utah was recorded in favor of 
the proposition that he now describes as a gimmick. I do not believe 
that he felt it was a gimmick then, and I do not believe that anybody 
who voted for it believed it was a gimmick then. It was a move to try 
to stop the nefarious practice of using Social Security trust fund 
surpluses to mask the true size of the operating deficit in this 
country.
  Now what they are seeking to do is put that flawed principle in the 
Constitution of the United States. I just note that back in 1990 when 
we had that vote, passed by a vote, as I recall, of 20 to 1 in the 
Senate Budget Committee.
  Mr. HATCH. Will the Senator yield?
  Mr. CONRAD. I am happy to yield to the Senator.
  Mr. HATCH. That is quite a bit different from what I am saying. We 
did not include Social Security in the budget in Gramm-Rudman-Hollings 
solely so as to not give the President the right to sequester Social 
Security funds. But this exclusion was not from the budget itself. But 
we should not lock the exemption into the Constitution. We can always 
change statutes. It is much harder to amend the Constitution. We should 
not lock into the Constitution the largest item in the Federal budget, 
which is outside the purview of the constitutional amendment. If you 
start doing that, that is risky.
  You do not know how that will affect senior citizens. It is likely to 
hurt the senior citizens, and it is better to keep things on budget. I 
suspect that there is no question in anybody's mind that Social 
Security is more than capable of fending for itself and of getting 
another 98-to-2 vote in the Senate and an equivalent vote in the House 
that you cannot tamper with it.
  Frankly, I am one of those that would make sure to vote that you do 
not tamper with Social Security, to lock the exemption in the 
Constitution forever. Such a budgetary practice, is risky. That could 
have a terribly bad effect on senior citizens. I think senior citizens 
are starting to wake up to that. They know this issue has been used 
blatantly and politically and demogogically for years now. I think they 
are getting tired of it.
  Mr. CONRAD. Mr. President, let me say I find this argument very 
interesting because the principle is identical.
  In 1990, we had a vote on the floor of the U.S. Senate to separate 
out the Social Security trust fund from the rest of the Federal budget. 
The Senator from Utah voted in favor of separating out the Social 
Security trust fund.
  Today, he says we ought to enshrine in the Constitution the reverse 
principle, that we ought to put them together, that the Social Security 
trust fund ought to be married to the rest of the Federal budget.
  What is wrong with that principle is what was wrong with it in 1990, 
and what I believe 98 Senators said, that we are not going to merge the 
two, we will not count the Social Security trust fund with the rest of 
the budget, because it is a risky financial move to put the two 
together. It masks the size of the deficits in the early years, and in 
the later years creates a whole series of other problems.
  Mr. HATCH. Will the Senator yield?
  Mr. CONRAD. If I could finish the thought, we are in a circumstance 
now where the Senator from Utah is advocating when he says locking into 
the Constitution is a risky matter, that is precisely what he is 
advocating.
  In 1990, he voted to keep Social Security separate from the rest of 
the budget. Now he is advocating a constitutional amendment that would 
force the two together.
  Mr. President, I think the Senator from Utah was right in 1990 when 
he cast that vote. I think he is simply mistaken in offering this 
constitutional amendment that puts the two together.
  What is the difference between the Social Security trust fund and 
other parts of the Federal budget? Mr. President, the primary 
difference is a dedicated revenue source. We withhold in

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the payroll of employees and employers specific amounts every month to 
go into a fund on the predicate they will then receive, when they 
retire, their Social Security benefit. Frankly, this proposal puts all 
of that at risk.
  Mr. HATCH. I will end with this. The 1990 Budget Act basically stated 
in one section to take Social Security out of budget. It said in 
another section to leave it in. This is confusing. But both Congress 
and the President have construed the Budget Act of 1990 to allow Social 
Security to be included within the unitary budget.
  Second, Social Security is not a pay-go system under the 1990 act. I 
want to add that once you make that decision to take the largest item 
out of the budget, you have provided a loophole where people can 
impinge on Social Security and hurt senior citizens. Anybody who does 
not believe in those loopholes better look at these stacks. They are 
filled with loopholes like that. We are trying to stop those loopholes.
  I might also mention this, because I think it is pretty important. 
All constitutional scholars who testified before our committee, those 
for the balanced budget amendment and those against the balanced budget 
amendment, Senate Joint Resolution 1, testified that exempting Social 
Security in the Constitution was constitutionally risky. It is a risky 
gimmick to do that. No one knows how that will hurt the seniors, but we 
know it will. It would subject Social Security and the Constitution to 
a gaming approach. They could game the process. They could game Social 
Security. They could game the Constitution. That would be a disaster 
for our country.
  Alan Morrison, one of the leading constitutional lawyers in this 
country, who disagreed about the wisdom of the balanced budget 
amendment, said: ``Given the size of Social Security, to allow it to 
run at a deficit would undermine the whole concept of a balanced 
budget. Moreover, there is no definition of Social Security in the 
Constitution and it would be extremely unwise and productive of 
litigation and political maneuvering to try to write one. If there is 
to be a balanced budget constitutional amendment, there should be no 
exceptions.''
  In conclusion, the biggest threat to Social Security is our growing 
debt and the concomitant interest payments. That related inflation hits 
hardest on those on fixed incomes, and the Government's use of capital 
to fund debt slows productivity and income growth and siphons off 
needed money for worthwhile programs. The way to protect Social 
Security benefits is to pass Senate Joint Resolution 1, the balanced 
budget constitutional amendment.
  The proposal to exempt Social Security would not only destroy the 
balanced budget amendment--the only one that can pass, a bipartisan 
amendment, a bicameral amendment, bipartisan in both parties--but, in 
all probability, would very badly hurt Social Security and every 
recipient of Social Security, and would definitely guarantee that the 
baby boomers would not have any Social Security in the future. They 
will come to the realization that it is going to hurt Social Security, 
too. The best thing we can do is keep everything in the budget and 
start being budget people who work, and who do what's right, and get 
rid of these 28 years of unbalanced budgets that have just about 
wrecked the country. And it could very well wreck Social Security.
  I yield the floor.

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