[Congressional Record Volume 143, Number 19 (Thursday, February 13, 1997)]
[Senate]
[Pages S1358-S1366]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  Mr. HOLLINGS. The distinguished Senator from Arkansas is right on 
target, it is the king of corporate welfare. The Senator from Arkansas 
has been at this for years trying to save the conscience of this 
particular body. I have been most interested in his factual, indepth 
study and report to the Congress, and particularly here to us in the 
Senate. It is just astounding to me that it continues.
  As he said, the public can hardly believe what he says. I want to 
turn to a subject that the public cannot believe, and that is what we 
say, because we have a funny way of talking about deficits. 
Specifically, if you look, Mr. President, at the budget message of the

[[Page S1359]]

President in the budget green book, fiscal year 1998, on page 2, and 
you want to see what the deficit is after the fifth year out, it says 
on page 2 at the bottom, ``Surplus deficit.'' Why doublespeak? You 
would not get that from your accountant.
  Do not, by gosh, make your income tax statement in April on the basis 
of surplus deficit, on budget/off budget, unified budget, unified 
deficit. But you will see here that they show a $17 billion surplus on 
page 2. However, Mr. President, if you turn to page 331, buried in the 
back, you will find table S-16, ``Federal Government Financing and 
Debt.'' All one needs do to ever determine a deficit is to just look at 
the increase, if you please, of the debt each year. If the debt stays 
the same, you have a balanced budget. If the debt goes down, then you 
have a surplus. But, if the debt goes up, as it says on page 331, 
clearly you have a deficit. You can see that the debt in 2002 is 
$6.6525 trillion on the line which says ``Total gross Federal debt.'' 
Then, if you subtract the previous year's debt of $6.4852 in 2001 from 
the 2002 figure of $6.6525 trillion, you will get, of course, a $167.3-
billion deficit. This is not a surplus as you find on page 2, but a 
deficit, as it states on page 331. That is the real world, and it 
should be our real world. It should be our real world, Mr. President, 
because, otherwise, the discipline has broken here in this body. 
Specifically, if you are going to use some offset borrowing, it is like 
going to the bank and the teller says, ``Well, Hollings, you don't have 
any money left,'' and I say, ``Well, let me borrow from the next 
fellow's account over there and put it in mine.''

  So what we do for the unified budget is borrow from Social Security 
and highway trust funds. Let me give you the list, Mr. President. This 
chart lists each President since Harry Truman in 1945, the U.S. budget, 
the trust funds that are used, the real deficit, the gross Federal 
debt, and then the gross interest costs.
  I ask unanimous consent to have this printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

----------------------------------------------------------------------------------------------------------------
                                                  U.S.
                                                 budget                           Annual      Gross
                President/Year                 (outlays)    Trust       Real     deficit     Federal     Gross
                                                  (in       funds     deficit     change      debt      interest
                                               billions)                                   (billions)
----------------------------------------------------------------------------------------------------------------
Truman:
    1945.....................................       92.7        5.4  .........  .........       260.1  .........
    1946.....................................       55.2        3.9      -10.9  .........       271.0  .........
    1947.....................................       34.5        3.4      +13.9  .........       257.1  .........
    1948.....................................       29.8        3.0       +5.1  .........       252.0  .........
    1949.....................................       38.8        2.4       -0.6  .........       252.6  .........
    1950.....................................       42.6       -0.1       -4.3  .........       256.9  .........
    1951.....................................       45.5        3.7       +1.6  .........       255.3  .........
    1952.....................................       67.7        3.5       -3.8  .........       259.1  .........
    1953.....................................       76.1        3.4       -6.9  .........       266.0  .........
Eisenhower:
    1954.....................................       70.9        2.0       -4.8  .........       270.8  .........
    1955.....................................       68.4        1.2       -3.6  .........       274.4  .........
    1956.....................................       70.6        2.6       +1.7  .........       272.7  .........
    1957.....................................       76.6        1.8       +0.4  .........       272.3  .........
    1958.....................................       82.4        0.2       -7.4  .........       279.7  .........
    1959.....................................       92.1       -1.6       -7.8  .........       287.5  .........
    1960.....................................       92.2       -0.5       -3.0  .........       290.5  .........
    1961.....................................       97.7        0.9       -2.1  .........       292.6  .........
Kennedy:
    1962.....................................      106.8       -0.3      -10.3  .........       302.9        9.1
    1963.....................................      111.3        1.9       -7.4  .........       310.3        9.9
Johnson:
    1964.....................................      118.5        2.7       -5.8  .........       316.1       10.7
    1965.....................................      118.2        2.5       -6.2  .........       322.3       11.3
    1966.....................................      134.5        1.5       -6.2  .........       328.5       12.0
    1967.....................................      157.5        7.1      -11.9  .........       340.4       13.4
    1968.....................................      178.1        3.1      -28.3  .........       368.7       14.6
    1969.....................................      183.6       -0.3       +2.9  .........       365.8       16.6
Nixon:
    1970.....................................      195.6       12.3      -15.1  .........       380.9       19.3
    1971.....................................      210.2        4.3      -27.3  .........       408.2       21.0
    1972.....................................      230.7        4.3      -27.7  .........       435.9       21.8
    1973.....................................      245.7       15.5      -30.4  .........       466.3       24.2
    1974.....................................      269.4       11.5      -17.6  .........       483.9       29.3
Ford:
    1975.....................................      332.3        4.8      -58.0  .........       541.9       32.7
    1976.....................................      371.8       13.4      -87.1  .........       629.0       37.1
Carter:
    1977.....................................      409.2       23.7      -77.4  .........       706.4       41.9
    1978.....................................      458.7       11.0      -70.2  .........       776.6       48.7
    1979.....................................      503.5       12.2      -52.9  .........       829.5       59.9
    1980.....................................      590.9        5.8      -79.6  .........       909.1       74.8
Reagan:
    1981.....................................      678.2        6.7      -85.7     [-6.1]       994.8       95.5
    1982.....................................      745.8       14.5     -142.5    [-56.8]     1,137.3      117.2
    1983.....................................      808.4       26.6     -234.4    [-91.9]     1,371.7      128.7
    1984.....................................      851.8        7.6     -193.0    [+41.4]     1,564.7      153.9
    1985.....................................      946.4       40.6     -252.9    [-59.9]     1,817.6      178.9
    1986.....................................      990.3       81.8     -303.0    [-50.1]     2,120.6      190.3
    1987.....................................    1,003.9       75.7     -225.5    [+77.5]     2,346.1      195.3
    1988.....................................    1,064.1      100.0     -255.2    [-29.7]     2,601.3      214.1
Bush:
    1989.....................................    1,143.2      114.2     -266.7    [-11.5]     2,868.0      240.9
    1990.....................................    1,252.7      117.2     -338.6    [-71.9]     3,206.6      264.7
    1991.....................................    1,323.8      122.7     -391.9    [-53.3]     3,598.5      285.5
    1992.....................................    1,380.9      113.2     -403.6    [-11.7]     4,002.1      292.3
Clinton:
    1993.....................................    1,408.2       94.2     -349.3    [+54.3]     4,351.4      292.5
    1994.....................................    1,460.6       89.1     -292.3    [+57.0]     4,643.7      296.3
    1995.....................................    1,514.4      113.4     -277.3    [+15.0]     4,921.0      332.4
    1996.....................................    1,560.0      154.0     -261.0    [+16.3]     5,182.0      344.0
    1997.....................................    1,632.0      130.0     -254.0     [+7.0]     5,436.0      360.0
----------------------------------------------------------------------------------------------------------------
Source: Historical Tables, ``Budget of the U.S. Government FY 1996'': Beginning in 1962 CBO's ``1995 Economic
  and Budget Outlook.''

  Mr. HOLLINGS. Mr. President, you go down each year and--incidentally, 
when I got here, in 1966, there wasn't any unified budget, or unified 
deficit, or unified surplus. There wasn't anything unified. There 
wasn't any in 1967, 1968, and 1969. When they started that under 
President Johnson, they said President Johnson started it as a gimmick. 
If you look at these figures, you will find out that President Johnson 
did have a surplus and a balanced budget--I voted for it; I was here 
then--and it did not use Social Security or any of the other trust 
funds.
  Then, Mr. President, as I was saying, there is a table here of the 
different amounts used in this so-called unified budget, or deficit. In 
the year 1997, there was $78 billion in Social Security moneys to 
reduce the size of that deficit; in 1998, $81 billion; in 1999, $88 
billion; in 2000, $94 billion; in the year

[[Page S1360]]

2001, $98 billion; and in 2002, $104 billion. That is a total of $543 
billion.
  Now, I am a budgeteer. I am on the Budget Committee. I go in the room 
and I say: Well, now, are we going to really look at the debt and see 
if we've got this Government on a pay-as-you-go program, or are we 
going to play the gamesmanship? Oh, they have reporters running all 
around the world, to China, to find out whether or not they made a 
contribution in the Presidential election. But they don't have the 
integrity to report the facts, truth in budgeting. The discipline is 
broken. I go in as a budgeteer and you say: Wait a minute, you have 
$543 billion, a half trillion bucks, over the next 6 years, and if I 
don't spend it for what I want, that fellow over there is going to 
spend it on defense; this one over here is going to spend it on foreign 
aid; the next one is going to spend it on the national parks. I might 
as well get my money to take back home. There is no discipline. There 
is no trust.
  Obviously, the public has heard us talk ad nauseam about deficits and 
balancing budgets. And like old Tennessee Ernie sang, ``Another day 
older and deeper in debt.'' We have these polls taken to see whether or 
not they trust us. I hope they don't because we are not giving them the 
truth in budgeting. I am trying my dead-level best here to list these 
amounts.
  I ask unanimous consent that this particular table be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 
 
------------------------------------------------------------------------
Gross debt 1996....................   5182  Gross debt 1997......   5436
Gross debt 1995....................   4921  Gross debt 1996......   5182
                                    -------                       ------
      Difference...................    261        Difference.....    254
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                           1996    1997
------------------------------------------------------------------------
Deficit.................................................    107      124
Trust funds:
    Social Security.....................................     66       78
    Medicare HI \1\.....................................     -4      -10
    Medicare SMI........................................     13       -5
    Military Retirement.................................      5        9
    Civilian Retirement.................................     28       28
    Unemployment........................................      6        7
    Highways............................................      3        3
    Airports............................................     -3       -4
    Other...............................................      1        3
Additional borrowing:
    Banking.............................................     16       10
    Treasury loans......................................     23       11
                                                         ---------------
      Total trust funds and additional borrowing........    154      130
                                                         ===============
Real deficit............................................    261      254
Gross interest..........................................    344      360
------------------------------------------------------------------------
\1\ The HI part of Medicare is projected to go broke by 2001. Based on
  numbers reported by the Treasury Department.

  Mr. HOLLINGS. You will find that in the 1997 budget we use $78 
billion from Social Security; military retirement, $9 billion; civilian 
retirement, $28 billion; unemployment compensation fund, $7 billion; 
highways, $3 billion; additional borrowings from banking, $10 billion; 
Treasury loans, another $11 billion.
  So you can see the tremendous amounts that we do to obscure the size 
of that deficit. And this has been quite a problem for this particular 
Senator, because I have been trying to get one vocabulary, if you 
please, so when we go into the Budget Committee we all talk the same 
language. Then, we can have ``slush'' funds instead of ``trust'' funds. 
We, very lightly, make a motion and say the money is there and we will 
use it there, and we will use the CPI and pick up a trillion dollars 
over 10 years. Oh, there are all kinds of gimmicks to use. I got an 
initiative in the formal statutory law, which was called a gimmick less 
than 24 hours ago by the distinguished chairman of the Budget 
Committee. I don't think the law is a gimmick.
  I want to talk seriously about that, Mr. President, because we can go 
back to the National Commission on Social Security Reform in January 
1983. You will find, under section 21, a majority of the national 
commission recommends that the operations of OASI, DI, HI, and SMI--the 
trust funds, Social Security trust funds--should be removed from the 
unified budget. In the operations, the Social Security trust funds have 
been included in the unified budget. However, by including Social 
Security trust funds in the annual budget process, it gives a false 
impression to the American public. The national commission believed 
that changes in the Social Security program should be made only for 
programmatic reasons and not for balancing the budget.
  Then, they projected as the reason for removing it from the unified 
budget was to take Social Security from a pay-as-you-go program to 
building up surpluses--tremendous reserves--to take care of the baby 
boomers in the next century. They use the year 2056 in one instance and 
talk about protecting the fund for 75 years in another. Now, in all the 
litany from these reports and emergency committees that go around 
studying this, they are coming back in and saying it will be broke in 
the year 2029, not 2056 or 75 years out as the Greenspan Commission 
reported.
  What should we do? We should reduce benefits and increase taxes. But 
do you know what happens? The trust fund surpluses created by the tax 
increases are spent on other programs. The Social Security taxes that 
we passed in 1983 were formally declared as revenues for Social 
Security surpluses, a trust fund for the baby boomers in the next 
century. They were certainly not to be used for defense, or foreign 
aid, or housing, or any of these other endeavors. But we are spending 
it for any and all purposes except Social Security. It is a dirty shame 
what is going on. You cannot get it reported. And the effect is on us 
immediately, not in the next century. The effect is this particular 
minute. We are running up these horrendous deficits and debt to the 
tune now--as you can see from the table that I put in--of $1 billion a 
day in interest costs. It was only about $1 billion a week when 
President Reagan came to town. He was going to balance the budget in 1 
year. I can show you the talk. He came to town and he says, ``Oops. 
This is the way it works. I am going to balance it in 3 years.'' He 
came in with ``Reaganomics.'' Brother, I can tell you the debt just 
went soaring through the ceiling. We had 210 years of history with the 
cost of all the wars, the Revolution, the War of 1812, the Civil War, 
the Spanish American War, the Mexican War, World War I, World War II, 
Korea, Vietnam--we had the cost of all the wars; we had 38 Presidents, 
Republican and Democrat; and we never got to a $1 trillion debt. Yet, 
without the cost of a war in 15 years, we now have $5.3 trillion in 
debt. That is the crowd around here talking about they are concerned 
about deficits and the next fellow is not.
  When the Greenspan commission made this recommendation I was on the 
Budget Committee. I cosponsored and worked in a bipartisan fashion on 
Gramm-Rudman-Hollings. Then I went to work on really stopping this debt 
from soaring that nobody knew was soaring because we were using 
billions from the Social Security trust fund. And it took me until 
1990, Mr. President, to do just exactly that. And in July of 1990, as a 
member of the Budget Committee, I made the motion that we do as the 
Greenspan commission had recommended and put it off budget; build up an 
accounting surplus. And the vote was 20 to 1.
  I ask unanimous consent to include the vote in the Record at this 
particular point.
  There being no objection, the matter was ordered to be printed in the 
Record as follows:

     Hollings Motion To Report the Social Security Preservation Act

       The Committee agreed to the Hollings motion to report the 
     Social Security Preservation Act by a vote of 20 yeas to 1 
     nay.
       Yeas: Mr. Sasser, Mr. Hollings, Mr. Johnston, Mr. Riegle, 
     Mr. Exon, Mr. Lautenberg, Mr. Simon, Mr. Sanford, Mr. Wirth, 
     Mr. Fowler, Mr. Conrad, Mr. Dodd, Mr. Robb, Mr. Domenici, Mr. 
     Boschwitz, Mr. Symms, Mr. Grassley, Mr. Kasten, Mr. Nickles, 
     and Mr. Bond.
       Nays: Mr. Gramm.
  Mr. HOLLINGS. Mr. President, thereafter we had a vote on the floor of 
the U.S. Senate.
  I ask unanimous consent to include in the Record that particular 
vote.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

          Rollcall Vote No. 283--Omnibus Budget Reconciliation

                     (Social Security Trust Funds)

       YEAS (98):
       Democrats (55 or 100%): Adams, Akaka, Baucus, Bentsen, 
     Biden, Bingaman, Boren, Bradley, Breaux, Bryan, Bumpers, 
     Burdick, Byrd, Conrad, Cranston, Daschle, DeConcini, Dixon, 
     Dodd, Exon, Ford, Fowler, Glenn, Gore, Graham, Harkin, 
     Heflin, Hollings, Inouye, Johnston, Kennedy, Kerrey, Kerry, 
     Kohl, Lautenberg, Leahy, Levin, Lieberman, Metzenbaum, 
     Mikulski, Mitchell, Moynihan, Nunn, Pell, Pryor, Reid, 
     Riegle, Robb, Rockefeller, Sanford, Sarbanes, Sasser, Shelby, 
     Simon, and Wirth.
       Republicans (43 or 96%): Bond, Boschwitz, Burns, Chafee, 
     Coats, Cochran, Cohen,

[[Page S1361]]

     D'Amato, Danforth, Dole, Domenici, Durenberger, Garn, Gorton, 
     Gramm, Grassley, Hatch, Hatfield, Heinz, Helms, Humphrey, 
     Jeffords, Kassebaum, Kasten, Lott, Lugar, Mack, McCain, 
     McClure, McConnell, Murkowski, Nickles, Packwood, Pressler, 
     Roth, Rudman, Simpson, Specter, Stevens, Symms, Thurmond, 
     Warner, and Wilson.
       NAYS (2):
       Democrats (0 or 0%).
       Republicans (2 or 4%): Armstrong and Wallop.
       NOT VOTING (0):
       Democrats (0).
       Republicans (0).
  Mr. HOLLINGS. Mr. President, 98 Senators in the U.S. Senate agreed 
with me. I will tell you, Mr. President, it was really interesting 
because I have never seen such a thing occur. We all went home in those 
campaigns and we talked about how we had finally put it into law. It 
was on November 5, 1990, that George Herbert Walker Bush signed that 
into law. That is the formal section of the Budget Act, section 13301. 
It says, ``Thou shalt not use Social Security surpluses to obscure the 
size of the deficit.'' We wanted to have truth in budgeting. When I say 
98 Senators, I counted up about 33 that are still here in the U.S. 
Senate that were there in 1990 voting for this.
  Right to the point, here is the provision in the statute. It says:

       Notwithstanding any other provision of law, the receipts 
     and disbursements of the Federal Old Age and Survivors 
     Insurance trust fund shall not be counted as new budget 
     authority, or as outlays, or as receipts, or deficits, or 
     surplus for the purpose of the budget of the U.S. Government 
     as submitted by the President, or for the purposes of the 
     congressional budget, or for the purposes of the Balanced 
     Budget and Emergency Deficit Control Act.

  When we passed that, the distinguished Senator--and there is no one I 
have greater respect for, and he is my friend, and I am his friend--
came on the floor yesterday, the chairman, the Senator from New Mexico, 
Senator Domenici, and he came on the floor yesterday late in the 
evening, and it is one of the things that prompted my appearance here 
this afternoon. Let me quote from page S. 1294 of the Congressional 
Record of February 12:

       Frankly, I want to make sure that everybody knows that the 
     best use of the word gimmick for anything going on on this 
     floor has to do with the gimmick that some on that side of 
     the aisle are using when they speak of taking Social Security 
     off budget so you will assure Social Security's solvency and 
     the checks. That is a gimmick of the highest order. For you 
     do that, and there is no assurance that Congress will not 
     spend the trust funds surpluses for anything they want. It is 
     no longer subject to any budget discipline. It is out there 
     by itself.

  Senator Domenici is totally mistaken.
  Let me quote the real Senator Domenici. Here is the report, and I 
refer to the Social Security Preservation Act of July 10, 1990, and the 
additional views of Mr. Domenici.
  I ask unanimous consent that the entirety be included in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                    Additional Views of Mr. Domenici

       It is somewhat ironic that the first legislative mark-up in 
     the 16 year history of the Senate Budget Committee produced a 
     bill that does not do what its authors suggest and, more 
     importantly, weakens the fiscal discipline inherent in the 
     Gramm-Rudmann-Hollings budget law.
       I voted for Senator Hollings' proposal because I support 
     the concept of taking Social Security out of the budget 
     deficit calculation. But I cast this vote with reservations.
       The best way to protect Social Security is to reduce the 
     Federal budget deficit. We need to balance our non-Social 
     Security budget so that the Social Security trust fund 
     surpluses can be invested (by lowering our national debt) 
     instead of used to pay for other Federal operating costs. We 
     could move toward this goal without changing the unified 
     budget, a concept which has served us well for over twenty 
     years now.
       Changes in our accounting rules without real deficit 
     reduction will not make Social Security more sound. In fact, 
     we could make matters worse by opening up the trust funds to 
     unrestrained spending. Under current law, the trust funds are 
     protected by the budget process. Congress cannot spend the 
     trust fund reserves without new spending cuts or revenue 
     increases in the rest of the budget to meet Gramm-Rudman-
     Hollings deficit reduction requirements. If we take Social 
     Security out of GRH without any new protection for the trust 
     funds, Congress could spend the reserves without facing new 
     spending cuts or revenue increases in other programs. And if 
     we spend the trust fund reserves today, we will threaten the 
     solvency of the Social Security program, putting at risk the 
     benefits we have promised to today's workers.
       Of course, I also understand that we might be able to 
     restore some public trust by taking Social Security out of 
     the deficit calculation. Trust that we in Congress are not 
     ``masking the budget deficit'' with Social Security. That is 
     why I believe we should take Social Security out of the 
     deficit, but only if we provide strong protection against 
     spending the trust fund reserves. We need a ``firewell'' 
     around those trust funds to make sure the reserves are there 
     to pay Social Security benefits in the next century. Without 
     a ``firewall'' or the discipline of budget constraints, the 
     trust funds would be unprotected and could be spent on any 
     number of costly programs.
       Unfortunately, the Hollings bill does not protect Social 
     Security, which is why Senator Nickles and I offered our 
     ``firewall'' amendment, defeated by a vote of 8 to 13. The 
     amendment, drafted over the last six months by my self and 
     Senators Heinz, Rudman, Gramm, and Deconcini, included: a 60 
     vote point of order against legislation which would reduce 
     the 75 year acturial balance of the Social Security trust 
     funds; additional Gramm-Rudman-Hollings deficit reduction 
     requirements in all years in which legislation lowered the 
     Social Security surpluses; and notification to Social 
     Security taxpayers on the Personal Earnings and Benefit 
     Estimate Statements (PEBES) each time Congress lowered the 
     reserves available to pay benefits to future retirees.
       With just one exception, the others side of the aisle voted 
     against this protection for Social Security beneficiaries.
       Furthermore, the Hollings bill says nothing about how or 
     when we will achieve balance in the non-Social Security 
     budget. The bill simply takes Social Security out of the 
     deficit calculation. If enacted, the Hollings bill would 
     require $173 billion in deficit reduction in 1991 to meet the 
     statutory GRH target (see attached table). Obviously, that is 
     not going to happen.
       I believe we need to extend Gramm-Rudman--Hollings to 
     ensure we have the discipline to achieve balance in the non-
     Social Security portion of the budget. The Budget Summit 
     negotiators are discussing a goal of $450 to $500 billion in 
     deficit reduction over the next five years. Once we reach an 
     agreement, that plan should be the framework for extending 
     the GRH law.
       I offered a Sense of the Congress amendment during the 
     mark-up expressing this view. I offered this to put the 
     Hollings bill in some context.
       But the Democratic members of the Committee refused to 
     consider even an amendment acknowledging the facts about our 
     budget situation, rejecting my proposal by another 8 to 13 
     vote. In fact, the Chairman indicated that there was some 
     concern on his side of the aisle about extending the Gramm-
     Rudman-Hollings discipline. One might infer that, for some, 
     this mark-up was really an effort to kill Gramm-Rudman-
     Hollings.
       I am not sure what we accomplished in reporting out a bill 
     with no protection for Social Security and with no suggestion 
     of what we think should happen regarding the deficit targets. 
     I, for one, do not want to do anything which could endanger 
     Social Security or Gramm-Rudman-Hollings budget discipline. 
     At a minimum, I will offer the ``firewall'' amendment to 
     protect Social Security should the reported bill be 
     considered by the full Senate.
  Mr. HOLLINGS. I quote:

       We need to balance our non Social Security budget so that 
     the Social Security trust funds surpluses can be invested by 
     lowering our national debt instead of using it to pay for 
     other Federal operating costs. If we take Social Security 
     without any new protection for the trust funds, Congress 
     could spend the reserves without facing new spending cuts or 
     revenue increases in other programs, and, if we spend the 
     trust fund reserves today, we will threaten the solvency of 
     the Social Security program putting at risk the benefits we 
     have promised to today's workers.

  Then the Senator goes on to submit firewall protection. He said this 
particular statute is not enough. Here he is adamant about this 
statute, says it is necessary, says it has to be done so you can't use 
the money for anything else. Yet he insists now using the money for 
anything else as just hunky-dory, and the law itself is a gimmick.
  Let me make sure so they don't have to look it up, subtitle C, 
section 1301.
  I ask unanimous consent to include it in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                    Excerpt From Public Law 101-508

                      Subtitle C--Social Security

     SEC. 13301. OFF-BUDGET STATUS OF OASDI TRUST FUNDS.

       (a) Exclusion of Social Security From All Budgets.--
     Notwithstanding any other provision of law, the receipts and 
     disbursements of the Federal Old-Age and Survivors Insurance 
     Trust Fund and the Federal Disability Insurance Trust Fund 
     shall not be counted as new budget authority, outlays, 
     receipts, or deficit or surplus for purposes of--
       (1) the budget of the United States Government as submitted 
     by the President,
       (2) the congressional budget, or
       (3) the Balanced Budget and Emergency Deficit Control Act 
     of 1985.
       (b) Exclusion of Social Security From Congressional 
     Budget.--Section 301(a) of

[[Page S1362]]

     the Congressional Budget Act of 1974 is amended by adding at 
     the end the following: ``The concurrent resolution shall not 
     include the outlays and revenue totals of the old age, 
     survivors, and disability insurance program established under 
     title II of the Social Security Act or the related provisions 
     of the Internal Revenue Code of 1986 in the surplus or 
     deficit totals required by this subsection or in any other 
     surplus or deficit totals required by this title.''.

  Mr. HOLLINGS. Mr. President, that is pretty serious business when the 
distinguished chairman of your own Budget Committee, who is supposed to 
lead the discipline, leads the nondiscipline.
  I have laid it on the line. When you spend these moneys to obscure 
the size of the deficit, thereupon that discipline is broken because 
you are spending it. We have already spent about $570 billion, at this 
particular point, Mr. President, and by the year 2002 we will owe over 
$1 trillion. In any of these budgets that will be debated here this 
year, we will use over $1 trillion of Social Security trust funds to 
balance the budget.
  (Mr. FRIST assumed the chair.)
  Mr. HOLLINGS. I stood here with the distinguished Senator from New 
Mexico, the chairman of our Budget Committee, 2 years ago and said if 
you can give me a balanced budget by the year 2002, without increasing 
taxes, I will jump off the Capitol dome.
  Right to the point, we have tried our best, Senator Dorgan, myself 
and others--there are five of us--and I ask unanimous consent to 
include in the Record a letter dated March 1, 1995, where five of us 
said just reiterate the law rather than repeal the law.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:


                                                  U.S. Senate,

                                    Washington, DC, March 1, 1995.
     Hon. Robert J. Dole,
     Majority Leader, U.S. Senate,
     Washington, DC.
       Dear Mr. Leader: We have received from Senator Domenici's 
     office a proposal to address our concerns about using the 
     Social Security trust funds to balance the Federal budget. We 
     have reviewed this proposal, and after consultations with 
     legal counsel, believe that this statutory approach does not 
     adequately protect Social Security. Specifically, 
     Constitutional experts from the Congressional Research 
     Service advise us that the Constitutional language of the 
     amendment will supersede any statutory constraint.
       We want you to know that all of us have voted for, and are 
     prepared to vote for again, a balanced budget amendment. In 
     that spirit, we have attached a version of the balanced 
     budget amendment that we believe can resolve the impasse over 
     the Social Security issue.
       To us, the fundamental question is whether the Federal 
     Government will be able to raid the Social Security trust 
     funds. Our proposal modifies those put forth by Senators Reid 
     and Feinstein to address objections raised by some Members of 
     the Majority. Specifically, our proposal prevents the Social 
     Security trust funds from being used for deficit reduction, 
     while still allowing Congress to make any warranted changes 
     to protect the solvency of the funds. The prior language of 
     the Reid and Feinstein amendments was not explicit that 
     adjustments could be made to ensure the soundness of the 
     trust funds.
       If the Majority Party can support this solution, then we 
     are confident that the Senate can pass the balanced budget 
     amendment with more than 70 votes. If not, then we see no 
     reason to delay further the vote on final passage of the 
     amendment.
           Sincerely,
     Byron L. Dorgan,
     Ernest F. Hollings,
     Wendell H. Ford,
     Harry M. Reid,
     Dianne Feinstein.

  Mr. HOLLINGS. That is why I ask unanimous consent also in addition to 
the letter that we include Senate Joint Resolution 1.
  There being no objection, the resolution was ordered to be printed in 
the Record, as follows:

                              S.J. Res. 1

       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled, (two-thirds 
     of each House concurring therein), That the following article 
     is proposed as an amendment to the Constitution, which shall 
     be valid to all intents and purposes as part of the 
     Constitution when ratified by the legislatures of three-
     fourths of the several States within seven years after the 
     date of its submission to the States for ratification:

                              ``Article --

       ``Section 1. Total outlays for any fiscal year shall not 
     exceed total receipts for that fiscal year, unless three-
     fifths of the whole number of each House of Congress shall 
     provide by law for a specific excess of outlays over receipts 
     by a rollcall vote.
       ``Section 2. The limit on the debt of the United States 
     held by the public shall not be increased, unless three-
     fifths of the whole number of each House shall provide by law 
     for such an increase by a rollcall vote.
       ``Section 3. Prior to each fiscal year, the President shall 
     transmit to the Congress a proposed budget for the United 
     States Government for that fiscal year, in which total 
     outlays do not exceed total receipts.
       ``Section 4. No bill to increase revenue shall become law 
     unless approved by a majority of the whole number of each 
     House by a rollcall vote.
       ``Section 5. The Congress may waive the provisions of this 
     article for any fiscal year in which a declaration of war is 
     in effect. The provisions of this article may be waived for 
     any fiscal year in which the United States is engaged in 
     military conflict which causes an imminent and serious 
     military threat to national security and is so declared by a 
     joint resolution, adopted by a majority of the whole number 
     of each House, which becomes law.
       ``Section 6. The Congress shall enforce and implement this 
     article by appropriate legislation, which may rely on 
     estimates of outlays and receipts.
       ``Section 7. Total receipts shall include all receipts of 
     the United States Government except those derived from 
     borrowing. Total outlays shall include all outlays of the 
     United States Government except for those for repayment of 
     debt principal.
       ``Section 8. This article shall take effect beginning with 
     fiscal year 2002 or with the second fiscal year beginning 
     after its ratification, whichever is later.''.

  Mr. President, it is impossible for they on the other side of the 
aisle, or anybody else, to provide a budget that would be balanced in 
the year 2002 without increasing taxes. That is not a daring statement 
to make because all you have to look at is the chart that I included, 
and you see the gross interest cost for the fiscal year in 1997, the 
year we are in, is estimated to be at $360 billion. That is $1 billion 
a day. No one has in mind over that 5-year period of cutting $360 
billion. Nor do I recommend, necessarily, that you cut that amount, but 
it is going to have to be a combination of cuts, freezes, and increased 
taxes if we are to reach the balanced budget--and perhaps foregoing 
some new programs.
  When they all talk about these tax cuts that they have in mind for 
families here and families there and students here and everything else, 
there are no taxes to cut. We are operating and have been operating in 
deficit mode in such a disastrous fashion, as in a downward spiral. The 
spending is on automatic pilot that must occur for interest costs on 
the national debt faster than we can possibly raise any revenues or cut 
any spending. That ought to be clearly understood.
  The best way to raise taxes is to continue on this course because you 
continue to raise interest costs. When you raise the debt, you raise 
the interest costs, which is added, of course, to the debt, which 
increases the debt, which increases the interest costs that must be 
paid just like taxes.
  So the surreptitious way in order to raise taxes is to continue on 
this particular path. That is why I have called for truth in budgeting 
so that everyone would understand that it is not a gimmick when we come 
up here and talk about the 1990 law. There is no criminal penalty for 
violating it, but maybe we will have to get some court injunctions or 
something of that kind to forego this reporting of a unified budget for 
the simple reason that there is no basis in law for that. There is only 
the basis in law that we must report the deficit without the use of 
Social Security trust funds in order to show the true deficit. Now, 
that is the law today, but they continue to call it a gimmick.
  Now, what happens here in Senate Joint Resolution 1, if you see 
section 7, Mr. President, it says, ``Total receipts shall include all 
receipts of the U.S. Government except those derived from 
borrowing. Total outlays shall include all outlays of the United States 
Government except those for the repayment of debt principal.''

  That particular section 7 thereby repeals section 13301, the Social 
Security protection. The trust fund is immediately made a slush fund 
constitutionally. And then, Mr. President, the way the particular 
Senate Joint Resolution 1 reads in section 1, ``Total outlays for any 
fiscal year shall not exceed total receipts for that fiscal year.''
  Now, Mr. President, that being the case, you have to get a three-
fifths vote to succeed. If total outlays shall not exceed total 
receipts, you cannot use the Social Security trust fund surpluses. You 
can get what you would ordinarily call a balanced budget, but

[[Page S1363]]

you have to either cut spending or increase taxes in order to pay the 
Social Security recipients. You can't use the surplus.
  Now, that is pointed out, Mr. President, in a very dramatic fashion, 
by the Center on Budget and Policy Priorities back in January, which I 
included in the Record at that particular time. Let me read this 
paragraph.
  I ask unanimous consent that the report be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           The Balanced Budget Amendment and Social Security

       In recent years, Congress has considered two versions of 
     the balanced budget amendment. The version supported by the 
     Republican Congressional leadership (herein termed the 
     ``Leadership version'') requires the ``unified budget'' to be 
     balanced each year, including Social Security. The other 
     version, which Senators Wyden, Feinstein, Dorgan and others 
     introduced in the last Congress, requires the budget 
     exclusive of Social Security to be in balance.
       The version that includes Social Security in the unified 
     budget poses serious dangers for the Social Security system. 
     It also is inequitable to younger generations, as it would 
     likely cause those who are children today to be saddled with 
     too heavy a tax load when they reach their peak earnings 
     years. The Wyden/Feinstein version does not pose those 
     problems.


                               Background

       In coming decades, Social Security faces a demographic 
     bulge. The baby boomers are so numerous that when they 
     retire, the ratio of workers of retirees will fall to a low 
     level.
       This poses a problem because Social Security has 
     traditionally operated on a ``pay-as-you-go'' basis. The 
     payroll taxes contributed by today's workers finance the 
     benefits of today's retirees. Because there will be so many 
     retirees when the baby boomers grow old, however, it will be 
     difficult for workers of that period to carry the load 
     without large increases in payroll taxes.
       The acclaimed 1983 bipartisan Social Security commission 
     headed by Alan Greenspan recognized this problem. It moved 
     Social Security from a pure ``pay-as-you-go'' system to one 
     under which the baby boomers would contribute more toward 
     their own retirement. As a result, the Social Security system 
     is now building up surpluses. By 2019, these surpluses will 
     equal $3 trillion. After that, as the bulk of the baby boom 
     generation moves into retirement, the system will draw down 
     the surpluses. This is akin to what families do in saving for 
     retirement during their working years and drawing down their 
     savings when they retire.
       This approach has important merits. It promotes 
     generational equity by keeping the burden on younger 
     generations from becoming too high. In addition, if the 
     Social Security surpluses were to be used in the next two 
     decades to increase national saving rather than to offset the 
     deficit in the rest of the budget, that would likely result 
     in stronger economic growth, which in turn would better 
     enable the country to afford to support the baby boomers when 
     they reach their twilight years.
       To pursue this approach, the tasks ahead are to reduce 
     significantly or eliminate the deficit in the non-Social 
     Security budget so that the surpluses in the Social Security 
     trust funds contribute in whole or large part to national 
     saving, and to institute further reforms in Social Security 
     to restore long-term actuarial balance to the Social Security 
     system. Restoring long-term balance will almost certainly 
     entail a combination of building the surpluses to somewhat 
     higher levels and reducing somewhat the benefits paid out 
     when the boomers retire.


                 the leadership BBA and Social Security

       Unfortunately, the balanced budget amendment pushed by the 
     Leadership would undermine this approach to protecting Social 
     Security and promoting generational equity. Under this 
     version of the BBA, total government expenditures in any 
     year--including expenditures for Social Security benefits--
     could not exceed total revenues collected in the same year. 
     The implications of this requirement for Social Security are 
     profound. It would mean that the Social Security surpluses 
     could not be used to cover the benefit costs of the baby boom 
     generation when it retires. The benefits for the baby boom 
     generation would instead have to be financed in full by the 
     taxes of those working in those years. The Leadership version 
     thus would eviscerate the central achievement of the 
     Greenspan commission.
       The reason the Leadership version would have this effect is 
     that even though the Social Security trust funds would have 
     been accumulating large balances, drawing down those balances 
     when the baby boomers retire would mean that the trust funds 
     were spending more in benefits in those years than they were 
     taking in in taxes. Under the Leadership version, that would 
     result in impermissible deficit spending.
       By precluding use of the Social Security surpluses in the 
     manner that the 1983 legislation intended, the Leadership 
     version would be virtually certain to precipitate a massive 
     crisis in Social Security about 20 years from now, even if 
     legislation had been passed in the meantime putting Social 
     Security in long-term actuarial balance. Since the $3 
     trillion surplus could not be used to help pay the benefits 
     of the baby boom generation, the nation would face an 
     excruciating choice between much deeper cuts in Social 
     Security benefits than were needed to make Social Security 
     solvent and much larger increases in payroll taxes than would 
     otherwise be required. The third and only other allowable 
     alternative would be to finance Social Security deficits in 
     those years not by drawing down the Social Security surplus 
     but instead by slashing the rest of government so severely 
     that it failed to provide adequately for basic services, 
     potentially including the national defense.
       Given the numbers of baby boomers who will be retired or on 
     the verge of retirement in those years, deep cuts in Social 
     Security benefits are not likely at that time. Thus, under 
     the leadership BBA, it is almost inevitable that younger 
     generations will face a combination of sharp payroll tax 
     increases and deep reductions in basic government services.
       For these reasons, the Leadership BBA is highly inequitable 
     to younger generations. Aggravating this problem, the 
     Leadership version would undermine efforts to pass Social 
     Security reforms in the near future. Why should Congress and 
     the President bother to make hard choices now in Social 
     Security that would build the surpluses to more ample 
     levels if these surpluses can't be used when the boomers 
     retire? Under the leadership BBA, there is no longer any 
     reason to act now rather than to let Social Security's 
     financing problems fester.


      leadership bba also poses other problems for social security

       Under the Leadership version, reductions in Social Security 
     could be used to help Congress and the President balance the 
     budget when they faced a budget crunch. This could lead to 
     too little being done to reduce or eliminate deficits in the 
     non-Social Security part of the budget and unnecessary 
     benefit cutbacks in Social Security.
       At first blush, that may sound implausible politically. But 
     the balanced budget amendment is likely to lead to periodic 
     mid-year crises, when budgets thought to be balanced at the 
     start of a fiscal year fall out of balance during the year, 
     as a result of factors such as slower-than-expected economic 
     growth. When sizable deficits emerge with only part of the 
     year remaining, they will often be very difficult to address. 
     Congress and the President may be unable to agree on a 
     package of budget cuts of the magnitude needed to restore 
     balance in the remaining months of the year. Congress also 
     may be unable to amass three-fifths majorities in both 
     chambers to raise the debt limit and allow a deficit.
       In such circumstances, the President or possibly the courts 
     may feel compelled to act to uphold the Constitutional 
     requirement for budget balance. In documents circulated in 
     November 1996 explaining how the amendment would work, the 
     House co-authors of the amendment--Reps. Dan Schaefer and 
     Charles Stenholm--write that in such circumstances, ``The 
     President would be bound, at the point at which the 
     `Government runs out of money' to stop issuing checks.'' This 
     would place Social Security benefits at risk.


                      the wyden/feinstein approach

       The Wyden/Feinstein approach resolves the problems the 
     Leadership version creates in the Social Security area. It 
     reinforces the 1983 Social Security legislation rather than 
     undermining that legislation. It does so both by requiring 
     that the surpluses in the Social Security system contribute 
     to national saving rather than be used to finance deficits in 
     the rest of the budget and by enabling the surpluses to be 
     drawn down when the baby boomers retire.
       The Wyden/Feinstein amendment thus improves 
     intergenerational equity rather than undermining it. It 
     ensures the surpluses will be intact when they are needed, 
     rather than lent to the government for other purposes in the 
     interim.
       The amendment also ensures that Social Security benefits 
     will not be cut--and Social Security checks not placed in 
     jeopardy--if the balanced budget amendment leads to future 
     budget crises and showdowns. However those crises would be 
     resolved, Social Security would not be involved, because cuts 
     in Social Security would not count toward achieving budget 
     balance.

  Mr. HOLLINGS. Quoting on page 2:

       Under this version of the balanced budget amendment, total 
     Government expenditures in any year, including expenditures 
     for Social Security benefits, could not exceed total revenues 
     collected in the same year. The implications of this 
     requirement for Social Security are profound. It would mean 
     that Social Security surpluses could not be used to cover the 
     benefit costs of the baby-boom generation when it retires. 
     The benefits for the baby-boom generation would, instead, 
     have to be financed in full by the taxes of those working in 
     those years.

  Continuing to quote:

       The leadership version, thus, would eviscerate the central 
     achievement of the Greenspan Commission.

  Mr. President, that is followed up, finally, here, of course, with 
the Congressional Research Service, which on February 5, came out with 
a report from the American Law Division.
  I ask unanimous consent that this CRS report be printed in the 
Record.


[[Page S1364]]


  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: _______.
     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 affect 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 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.
                                  ____

                                   Congressional Research Service,


                                      The Library of Congress,

                                 Washington, DC, February 5, 1997.
     To: Honorable Thomas A. Daschle, Attention: Jonathan 
         Adelstein.
     From: American Law Division.
     Subject: Treatment of Outlays form Social Security Surpluses 
         under Balanced Budget Amendment.
       This memorandum is in response to your inquiry for an 
     evaluation of an argument made in connection with 
     interpretation of the proposed Balanced Budget Amendment 
     (BBA), now pending in the Senate as S.J. Res. 1. Briefly 
     stated, the contention is that the terms of the proposal, if 
     proposed and ratified, would preclude, at a future time when 
     Social Security outlays in a particular year begin to exceed 
     Social Security receipts in that particular year, the use of 
     surpluses built up in the Social Security trust funds to pay 
     out benefits.
       At the present time, surpluses are being accumulated in the 
     Social Security trusts funds, at least as an accounting 
     practice, as a result of changes made in 1983. It is expected 
     that when the receipts into the funds fall below the amount 
     being paid out that moneys from the surpluses will be used to 
     make up the differences.
       The BBA would have its impact on this legislated plan 
     because under Sec. 1 of the proposal ``[t]otal outlays for 
     any fiscal year shall not exceed total receipts for that 
     fiscal year, . . . .'' Under Sec. 7 of the BBA, the two terms 
     are defined thusly: ``Total receipts shall include all 
     receipts of the United States Government except those derived 
     from borrowing. Total outlays shall include all outlays of 
     the United States Government except for those for repayment 
     of debt principal.''
       Therefore, under the BBA's language, there is mandated a 
     balance in each year of the outlays that year and the 
     receipts that year. Payments out of the balances of the 
     Social Security trust funds would not be counted as 
     Government receipts under the BBA, when in the year 2019, or 
     whenever the time occurs, the receipts in those particular 
     years into the Social Security funds are not adequate to 
     cover he outlays in those years. That is, payments out of the 
     trust fund surpluses could not be counted in the calculation 
     of the balance between total federal outlays and receipts. 
     Because the BBA requires that the required balance be between 
     outlays for that year and receipts for that year, the moneys 
     that constitute the Social Security surpluses would not be 
     available as a balance for the payments of benefits.
       Now, of course, this does not mean that Social Security 
     benefits could not be paid. If the rest of the receipts into 
     the Treasury for a particular year exceed outlays, this 
     amount could be used to offset the Social Security deficit. 
     And, again of course, tax or expenditure provisions, or both, 
     could be altered to create a new balance.

                                            Johnny H. Killian,

                                                Senior Specialist,
                                      American Constitutional Law.

  Mr. HOLLINGS. I quote from this:

       Because a balanced budget amendment requires that the 
     required balance be between outlays for that year and 
     receipts for that year, the moneys that constitute the Social 
     Security surpluses would not be available as a balance for 
     the payment of the benefits.

  Now, Mr. President, we are talking about serious matters--the 
American Law Division, the priorities on budgets. You have a very 
serious matter which has been called by the chairman of the Budget 
Committee a ``gimmick.''
  I ask unanimous consent that at this particular time the letter of 
the distinguished Senator from New Mexico, dated January 13, be printed 
in the Record.

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                  U.S. Senate,

                                 Washington, DC, January 13, 1997.
       Dear Republican Colleague: We are likely to debate early in 
     the 105th Congress the Constitutional amendment to require a 
     balanced federal budget. When that debate begins, some 
     Senators will push to remove Social Security from the 
     balanced budget requirement.
       I have always believed this effort to exempt Social 
     Security from the Constitutional amendment was more of a 
     diversion than anything else. It is raised to confuse the 
     debate and provide a rationale for some to oppose the effort.
       Nonetheless, in preparation for debate in the Senate, I 
     thought it was important to review with you the consequences 
     of such a proposal so that we can all effectively debate it 
     using facts.
       One of the arguments made by those who push for excluding 
     Social Security from the balanced budget amendment is that 
     excluding Social Security will force us to ``save'' the 
     Social Security surpluses and therefore enhance fiscal 
     responsibility.
       This is only a very small part of the story.
       It is true that Social Security is currently running 
     surpluses, and these surpluses offset deficit spending in the 
     rest of the budget. If the balanced budget requirement 
     excludes Social Security, we would be required by the 
     Constitution to achieve balance in the ``on-budget'' portion 
     of the federal government--which is everything except Social 
     Security. The total or unified budget--which is the sum of 
     the ``on-budget'' programs and Social Security--would 
     therefore be in surpluses in amounts equal to the Social 
     Security surpluses. Between 2002 and 2018, these surpluses 
     would total $1.2 trillion in 1996 dollars.
       It should go without saying that, when we are amending the 
     Constitution--now into its third century--we should take the 
     long view. And in the long run, these near term Social 
     security surpluses will be overwhelmed by massive, long-term 
     Social Security deficits.
       These deficits are projected to total $9.3 trillion in 1996 
     dollars between 2019 and 2050, with a deficit of about $630 
     billion in 2050 alone, again in constant 1996 dollars.
       If it is true that excluding Social Security from the 
     balanced budget amendment would force us to ``save'' the 
     short-term surpluses, it is equally true that excluding 
     Social Security would allow us to run massive budget deficits 
     equal to the deficits that are projected to occur in the 
     Social Security trust funds beginning in 2019.
       These deficits would be real deficits--just like the 
     deficits we are experiencing today. And they would have the 
     same negative economic consequences: lower national savings, 
     higher interests rates, lower investment and productivity, 
     and sluggish growth. The only difference is that these 
     deficits would be much larger than anything we have ever 
     experienced, and therefore the consequences would be much 
     worse.
       Ironically, these massive and unprecedented deficits would 
     be specifically sanctioned by an amendment to the 
     Constitution calling for ``balanced budgets'' excluding 
     Social Security. Congress could continue to pass so-called 
     ``balanced budgets'' while running up massive new debt which 
     would tremendously burden our economy.
       The attachment chart shows graphically what I have just 
     described. ``On-budget'' would show a zero deficit throughout 
     the time period, as required by the Constitution. The total 
     budget which includes Social Security would show surpluses 
     for two decades or so followed by massive and unprecedented 
     deficits.
       It should be obvious from this analysis that, contrary to 
     assertions by some who want to exclude Social Security, such 
     a move will weaken fiscal responsibility, not strengthen it.
           Sincerely,
                                                 Pete V. Domenici.

  Mr. HOLLINGS. Mr. President, I read on the first page of that letter 
the last line:

       It is equally true that excluding Social Security would 
     allow us to run massive budget deficits equal to the deficits 
     that are projected to occur in the Social Security trust 
     funds beginning in 2019. These deficits would be real 
     deficits.


[[Page S1365]]


  That is what I am talking about, real deficits, not gimmicks. When 
you borrow from one to minimize the size of the other; namely, the 
deficit itself, then you really mislead the real deficit; you misreport 
it. Again, on yesterday, the distinguished leader for the balanced 
budget amendment to the Constitution, the distinguished Senator from 
Utah [Mr. Hatch], said on page S1336:

       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.

  That is not the case. Only one law passed in 1990. It is not a 
different section. He said:

       This is confusing:

  Well, the statement made by the distinguished Senator from Utah is 
what 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.

  How? This is in violation of the 1990 law. If we had an enterprising 
free press, a media who would go for truth in budgeting so that the 
public would be properly and accurately informed, the Members 
themselves would begin to command discipline rather than broken 
discipline when deficits are misreported. Mr. President, you can see 
what we really have here.
  Now, they come, of course, and say that what really has occurred is 
that this is a vote for the senior citizens. Not at all. I readily 
acknowledge that Social Security is the senior citizens' program and 
they are vitally interested in it. But between Medicare and Social 
Security, the present-day recipients have yet to be heard from. I 
haven't heard from them. I have asked why not. Of course, the obvious 
reason, Mr. President, is they are going to get their money. They know 
they are going to be paid right now. So they are putting all their 
efforts on saving Medicare and health costs and could care less about 
the baby-boom generation. In contrast, the baby-boom generation are 
being told they are not going to get it, so why should they show any 
kind of interest in the thing that they say is not going to be there 
for them anyway?
  And the politicians sometimes say: Why should we concern ourselves 
about the baby-boom generation? Why should we not look to the next 
election rather than the next generation? Of course, that occurs. They 
look just to the next election.
  This particular initiative--the amendment that will be presented by 
the distinguished Senator from Nevada, Senator Reid--is not a gimmick. 
It is based in law. It is one worked on by the Senator from Utah, who 
voted for it, the Senator from New Mexico, who voted for it and said it 
has serious purpose. He did not call it a gimmick in 1990. We thought 
we had it all down and understood. But that's what happens when they go 
out to Andrews Air Force Base. They went out there in 1990 and they 
repealed the targets of Gramm-Rudman-Hollings. So often, having been a 
principal cosponsor, I am asked, ``Senator, what about Gramm-Rudman-
Hollings?'' Oh, no, Gramm-Rudman-Hollings was working. We had an 
automatic cut across the board, and they eliminated it. I made the 
point of order at 1:15 in the morning on October 21, 1990, that is 
exactly what they were doing. They voted that point of order down. So 
don't come to me and say Gramm-Rudman-Hollings didn't work. It worked 
and would have continued to work had they not repealed it in 1990.
  My final statement is to the effect that the distinguished President 
of the United States, for 10 years prior to his arrival here for his 
first term in 1993, spent 10 years balancing budgets down in Arkansas. 
He is the only President since Lyndon Baines Johnson balanced this 
budget in 1968 and 1969 to reduce the deficit 4 consecutive years. 
President Clinton is the only President who has come to Washington and 
lowered the deficit. Listen to that statement.
  He has lowered it each year and every year. Yet, there is a crowd 
here on the Senate floor which keeps running around in a circle like 
the President is a tax-and-spend liberal Democrat when they are the 
ones that tripled--excuse me, quadrupled--excuse me, quintupled the 
Federal debt. Five times $1 trillion is $5 trillion. It was less than 
$1 trillion when Ronald Reagan came to town. Now it is $5.3 trillion. 
They are the ones, not President Clinton, that ran up this horrendous 
debt that is causing us to spend $1 billion a day in interest costs 
which increases taxes $1 billion a day. Because you add it to the debt, 
you have to pay for it, and it is a subtle way of increasing taxes. And 
running around fussing at the President saying, ``Where is his balanced 
budget? And he has not balanced it.'' Where is their budget? I am 
looking for one. I am on the Budget Committee. I attend meetings. I 
look around. They don't have a budget.
  It is wheeling and dealing, and all these other things going on. If 
that is what we are going to have, let us get rid of the Budget 
Committee so we can put our effort and time somewhere else. But that is 
the gamesmanship that is being played. They don't want to put up a 
budget because they know that budget will show massive tax cuts in that 
5-year period being offset by cuts in Medicare. And on up and up and 
away the deficit goes.
  So I think the gamesmanship as we go on our break here in February 
ought to conclude. Let us get their budget. Let us compare the two 
budgets like we do in the regular sense of the word, reconcile the 
differences, and go forward with the work of the American people.
  Mr. President, I thank the distinguished Senator from North Dakota.
  I yield the floor.
  I yield back the remainder of my time.
  Mr. HATCH. Mr. President, I would like to take this time to briefly 
respond to Senator Hollings concerning his remarks claiming that 
passage and ratification of the balanced budget amendment would harm 
the Social Security Program. As did Senators Dorgan, Reid, and Conrad 
at a press conference held yesterday, Senator Hollings claimed that a 
one-page memorandum, dated February 5, 1997, 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. This is alleged to be true 
because the balanced budget amendment would not allow the present day 
surplus to be used in the future when the program goes into the red to 
pay benefits. The problem is that the CRS memorandum did not conclude 
that at all.
  All the CRS memorandum concluded was that Social Security existing 
surpluses after 2019--the year the program no longer produces surpluses 
because of the retirement of the baby boomers--could not be used to 
fund the program unless benefit expenditures were offset by revenue or 
budget cuts. Of course this is technically true. That's what a balanced 
budget does. It balances outlays and receipts in a given year, and 
expenditure of any part of the budget is an outlay. Despite what 
Senator Hollings alleges today, and Senators Conrad, Dorgan, and Reid 
claimed yesterday at their press conference, under current law, assets 
of the Federal Treasury could be drawn upon to ensure payments to 
beneficiaries today and when the system starts running annual deficits.
  To clear-up the confusion that the Conrad-Dorgan-Reid press 
conference created about the February 5 CRS memorandum, which Senator 
Hollings has apparently bought into, CRS produced another memorandum at 
Senator Domenici's request. I want to thank Senator Domenici for 
requesting this new CRS memorandum--dated February 12, 1997. This 
memorandum clearly states--and I quote--``We [that is CRS] are not 
concluding that the trust fund surpluses could not be drawn down to pay 
beneficiaries. The balanced budget amendment would not require that 
result.''
  Senator Hollings and the other 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 merely ``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. 
There exists no separate Social Security trust fund separate from the 
budget. 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

[[Page S1366]]

attributed to FICA taxes are entered on the books, Federal interest 
bearing bonds are electronically entered as being purchased. This is 
the safest investment that exists.

  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 the Social Security funds in every one 
of his budgets. Did Senators Hollings, Conrad, Dorgan, and Reid oppose 
this?
  Senator Hollings also denies that we have a unitary budget. He says 
that the 1990 Budget Enforcement Act [BEA] placed Social Security off-
budget. That, in fact, we have two budgets--one for Social Security and 
one for the rest of the Nation. Let me expand on the remarks I made 
yesterday concerning the 1990 Budget Enforcement Act and explain why 
Senator Hollings position is false. Under section 13301(a) of the act, 
the receipts and outlays of the Social Security trust funds are indeed 
not counted in both the President and Congress' budgets. So it is off-
budget, but for only certain specific reasons. The primary purpose for 
this exclusion was to exempt Social Security from sequestration by the 
President under the Gramm-Rudman-Hollings procedures and from the act's 
pay-as-you-go requirement. In addition, as added protections, sections 
13302 and 13303 of the BEA also created firewall point-of-order 
protections for the Social Security trust funds in both the House and 
Senate. Nevertheless, this does not preclude both Congress and the 
President from formulating a unitary budget--that includes Social 
Security trust funds--for national fiscal purposes.
  Look, I recognize that Social Security is in danger. But the problem 
is not the inclusion Social Security funds in the budget. The problem 
is that with the retirement of baby boomers, there will not be enough 
FICA taxes to fund their retirement. CRS, in an other study, concluded 
that the present day surpluses would not be sufficient to resolve this 
problem. These Senators never mention that. CRS also concluded that the 
Social Security Program needs to be fixed.
  Indeed, not including Social Security in the budget would harm the 
program. Congress would rename social programs--as they have done 
before--as Social Security and use the FICA taxes to fund these 
programs. Then you'll really see the program raided.
  My colleagues problem--in reality--is not with the balanced budget 
amendment, but with the problems the Social Security Program faces. We 
need to fix that and adopting the balanced budget amendment is a good 
start.

                          ____________________