[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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