[Congressional Record Volume 143, Number 20 (Monday, February 24, 1997)]
[Senate]
[Pages S1448-S1468]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  The PRESIDING OFFICER. Under the previous order, the hour of 3:30 
p.m. having arrived, the Senate will now resume consideration of Senate 
Joint Resolution 1, which the clerk will report.
  The assistant legislative clerk read as follows:

       A joint resolution (S.J. Res. 1) proposing an amendment to 
     the Constitution of the United States to require a balanced 
     budget.

  The Senate resumed consideration of the joint resolution.

       Pending:
       Byrd amendment No. 6, to strike the reliance on estimates 
     and receipts.
  The PRESIDING OFFICER. The pending question is amendment No. 6, 
offered by the Senator from West Virginia [Mr. Byrd].
  The debate on the amendment is limited to 2 hours, equally divided 
and controlled in the usual form.
  Mr. BYRD addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia [Mr. Byrd] is 
recognized.


                      AMENDMENT NO. 6, AS MODIFIED

  Mr. BYRD. Madam President, I ask unanimous consent to modify my 
amendment and send the modification to the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is so modified.
  The amendment (No. 6), as modified, is as follows:

       On page 3, strike lines 12 through 14 and insert the 
     following:
       ``Section 6. The Congress shall implement this article by 
     law.

  Mr. BYRD. I thank the Chair and I thank the manager of the 
resolution, Mr. Hatch, and I thank all Senators.
  Madam President, the proponents of the proposed constitutional 
amendment now before the Senate would have the American people believe 
that if their proposal is adopted by Congress and ratified by three-
fourths of the States, the Federal budget will then be constitutionally 
required to be balanced every year, unless supermajorities of both 
Houses pass waivers. But let us all remember that ``the devil himself 
can quote Scriptures for his purpose.'' My purpose here is to strip 
away the hype and the rhetoric and examine the manner in which this 
constitutional amendment will actually work.
  Section 1 of the article states, ``Total outlays for any fiscal year 
shall not exceed total receipts for that fiscal year * * *.'' That is 
pretty plain. That seems quite straightforward and very clear. There 
appears to be no room for any misplay or misunderstanding. The entire 
Federal budget must be balanced each and every year, right down to the 
bottom dollar. Unlike State and local governments or businesses, where 
borrowing is frequently used for the purchase of capital investments--
or, in the case of family budgets, where debt is incurred for the 
purchase of homes and automobiles and to pay for college tuition 
costs--the Federal unified budget will not be allowed to incur debt for 
any reason under this amendment. Instead, the Federal Government's 
investments in military weaponry, highways, bridges, waterways, and all 
other capital items will have to be paid for, in full--cash on the 
barrel head--as they are purchased. Total spending for any year for any 
purpose will have to be no greater than the income to the Treasury for 
that same year if this amendment is adopted.
  But, the question arises, just how are we mere mortals to ensure that 
total outlays do not indeed exceed receipts, and how will that 
constitutional requirement be enforced?
  How, indeed, given that the Federal budget deficit, its total 
receipts and its total outlays, unlike the family budget, is based 
entirely on estimates? Granted, these estimates of total outlays and 
total receipts are prepared by some of the finest statistical wizards 
in this country--the men and women who work for the nonpartisan 
Congressional Budget Office.
  Once the amount of the deficit is set in the annual Congressional 
Budget Resolution, then the Congressional Budget Office, CBO, monitors 
the performance of the economy throughout

[[Page S1449]]

the year and keeps Congress informed as to whether the outlay estimate 
and the revenue estimate and the deficit estimate are going to be 
correct. But remember, these are all estimates--educated guesses, if 
you will. I can produce one. You can produce one. It is an educated 
guess. But we live up to the educated guesses, or at least we are 
guided by the educated guesses of the Congressional Budget Office. 
These are estimates of many factors in the public and private sectors 
which are totally outside of the control of any mortal human--totally 
outside the control of any human being.
  We are told, just don't worry about that section 1. Don't lose any 
sleep over that section. The authors of the amendment have solved the 
problem. We need only to look at section 6 of their proposal to find 
the answer to the dilemma of how to ensure that the budget is balanced 
in every fiscal year, despite our having to rely on nothing more than 
estimates. Well, I want Senators, and I want the American people who 
are watching what is being said and what is being done here, to 
understand what they would be buying into here. What are you getting 
here now? Is it just what you see? Is that what you get? We all need to 
thoroughly understand that crucially important section--section 6--of 
the resolution.

  Section 6 of the resolution reads as follows:

       The Congress shall enforce and implement this article by 
     appropriate legislation, which may rely on estimates of 
     outlays and receipts.

  `` * * * which may rely on estimates of outlays and receipts.''
  So there you have it.
  Congress may enforce balanced budgets by relying on ``estimates of 
outlays and receipts.'' We don't need to really balance the budget. We 
don't need to comply with section 1, which requires the balancing of 
the outlays, or the spending with the receipts, or the income right 
down to the bottom dollar, as I said earlier. We don't need to do that. 
All we have to do is balance the estimates.
  So the American people need to understand this. They are being told 
that if this constitutional amendment to balance the budget is adopted 
by the Congress and ratified by the States, that the budget will be 
balanced. That is what article I says, no if's, and's, and but's about 
it.
  The American people need to understand this. Unlike their family 
budget, which is relatively stable as far as income and expenses are 
concerned--most families know how much income they will have with which 
to purchase their needs from month to month and from week to week as 
those individuals who receive salaries know from week to week and month 
to month how much those salaries will amount to. So they know how much 
income they can count upon. But the Federal budget is far from being 
that stable. The Federal budget is based on myriad estimates that are 
compiled in advance of each fiscal year by the CBO, the Congressional 
Budget Office. These estimates have to include such factors as 
corporate profits and how much revenues the Treasury will receive from 
corporate and individual income taxes; what the unemployment rate will 
be; what the rate of inflation will be; what interest rates will be 6 
months from now or 9 months from now; and a whole host of other factors 
which we do not have to consider as we attempt to keep our own family 
finances in order.

  The fact is that when it comes to the Federal budget, we never know 
whether the budget for any fiscal year is balanced until well after 
that fiscal year is over--the clock has run its course and the calendar 
has been exhausted--and the Treasury Department has had time to 
finalize its tally of receipts and expenditures. And this usually 
occurs 3 or 4 weeks after the end of the fiscal year. So we really do 
not know whether or not the budget is in balance; and if not, how high 
the deficit is. We really don't know what the final figures are until 3 
or 4 weeks after the end of the fiscal year. So, in truth, therein lies 
the Achilles' heel of this amendment: In no year can we know for sure 
that the budget is balanced until sometime after that year is over.
  The proponents point to section 6 and say we can balance the budget 
by relying on estimates of outlays and receipts. Madam President, it is 
disingenuous at best, and, at worst, it is a deliberate hornswoggle to 
lead the American people to believe that we can even come close to 
balancing the actual budget by relying on estimates.
  In fact, as I will now demonstrate in a series of charts, these 
estimates vary by billions of dollars--that is billions, not millions, 
``b,'' not ``m,'' billions, not millions--from the actual results in 
nearly every year.
  Before turning to the specifics of these charts, let me emphasize 
that the data presented in them come from the independent, nonpartisan 
CBO, the Congressional Budget Office. It is independent. It is neither 
Democrat nor Republican. It is nonpartisan. These data are hot off the 
presses of the Congressional Budget Office and are taken from CBO's 
most recent publication, entitled ``The Economic and Budget Outlook: 
Fiscal Years 1998-2007.''

  And here it is. This is the document that I am talking about.
  I highly recommend that Senators, our colleagues here, read this 
publication. I highly recommend the publication to the American public. 
It contains an entire chapter, namely chapter 3, which explains the 
uncertainties in budget projections and how these uncertainties in the 
economy and in technical factors can greatly affect deficit 
projections.
  In that chapter, when referring to its latest deficit estimates, the 
Congressional Budget Office makes these statements, and I quote:

       . . . considerable uncertainty surrounds those estimates 
     because the U.S. economy and the Federal budget are highly 
     complex and are affected by many factors, none of which can 
     be projected with full confidence.

  That is the Congressional Budget Office talking, the nonpartisan 
Congressional Budget Office.
  Another quotation from that book:

       Growth in potential gross domestic product (GDP) that was 
     half a percentage point higher or lower would decrease or 
     raise the deficit by $50 billion in fiscal year 2002.

  Continuing to quote from that document:

       Similarly, a fairly typical swing in the business cycle 
     would increase or decrease the deficit by more than $100 
     billion in a given year.

  Madam President, those are just two examples of changes in economic 
factors which the Congressional Budget Office says could cause huge 
changes in deficits for any fiscal year.

  The Congressional Budget Office also says, and I quote:

       An increase of 2 percentage points in the annual rate of 
     growth of Medicare and Medicaid alone could boost spending 
     for those two programs by about $50 billion in fiscal year 
     2002. If such technical errors (those not attributed to the 
     performance of the economy or legislation) pushed the deficit 
     in the same direction as economic errors in a particular 
     fiscal year, the deficit could swing by very large amounts.

  That is the Congressional Budget Office talking. There you have it, 
Madam President. The very office which has the responsibility for 
providing Congress with these annual deficit estimates tells us that 
their own calculations can be off by very large amounts.
  In fact, as this chart shows, the difference between revenues, as 
estimated in the congressional budget resolution for each of fiscal 
years 1980 through 1996, versus what revenues actually turned out to be 
for each of those years, varied greatly.
  Let me first point out that the green horizontal line on the chart 
represents a zero difference between estimated and actual revenues--no 
difference whatsoever. That is what the green line is for any 
particular year. There is no bar above or below the green line. That 
means that the Congressional Budget Office hit it right on the 
head. The green line means that the CBO got it right on the nose. The 
black numbers above the green line depict years in which actual 
revenues exceeded the estimates--that occurred in six of these 17 
years: 1980, 1987, 1989, 1994, 1995, and 1996--when revenues were $36 
billion greater than CBO estimated they would be.

  For 11 of those 17 years, actual revenues were less than CBO 
estimated they would be, and in a number of those years the revenue 
shortfalls were large. In 1983, for example, the shortfall was $65 
billion; and for 1992, Federal revenues were actually $78 billion less 
than they were estimated to be by the Congressional Budget Office for 
that year.
  In all, over these 17 years, revenues never matched the estimate for 
any year--not one. On average, actual revenues collected by the Federal 
Treasury

[[Page S1450]]

were off, in one direction or the other, by $29 billion. That is a 
pretty big disparity.
  The next chart shows for the same 17 year period, 1980 through 1996, 
the differences between the estimated outlays and what actual outlays 
turned out to be. For those in our viewing audience, the term 
``outlays'' is a very fancy word for spending. Total outlays means 
total spending by the Federal Government for a given year.
  Starting again on the left of the chart, the green horizontal line 
represents a bull's-eye for the CBO. They hit it right in the eye. But 
you notice there is always a variation from the green line.
  That green line represents a zero difference between CBO's estimates 
of what outlays were expected to be and what actual outlays turned out 
to be for each year. Again, as was the case with revenues, in no year--
not one--did actual Federal outlays, or spending, exactly equal the 
estimate. For 11 of the 17 years, actual spending was greater than the 
CBO estimate. In 1990, for example, outlays actually exceeded CBO's 
estimate by $85 billion. They were off $85 billion. Outlays, in 1993, 
were $92 billion less than they were estimated to be.

  So the point I am making is that the estimates are always wrong--
always.
  On average, over this 17-year period, CBO missed hitting the bull's-
eye by $36 billion per year--per year. A pretty big ``goof,'' by most 
folks' standards, I would say.
  These first two charts have shown that at no time--no time --over the 
last 17 years have either revenues, or income, or outlays, or spending, 
equaled the estimate for any year. About the only thing that we can 
ever be sure of when we talk about these estimates is that they will 
always--always--be wrong. In fact, the whole point of these charts is 
to graphically demonstrate that these best guesses by the best experts 
are consistently, always wrong. And yet, despite knowing that the 
estimates we must work with have always been wrong and will inevitably 
continue to be wrong, they are exactly what this section, section 6 of 
this resolution says Congress may rely on.
  It is ludicrous to think that just because we adopt this 
constitutional amendment--hear me out there--ludicrous to think that 
just because we adopt this constitutional amendment to balance the 
budget, somehow we will magically have accurate estimates every year in 
the future. It just will not happen, unless, of course, someone comes 
up with a crystal ball that can accurately tell us at the beginning 
now, at the beginning--that is what it says. That is what the amendment 
says, at the beginning--at the beginning of each fiscal year what the 
gross domestic product will be for that year, or what the unemployment 
rate will be for that year, or what the inflation rate will be for that 
year, or what interest rates will be for that year, or any of a number 
of other economic and technical factors. It just cannot be done.

  In fact, during the debate on Senate Joint Resolution 1 on Wednesday, 
February 12, the distinguished manager of the measure, Senator Hatch, 
and I debated this problem of the inaccuracy of estimates at some 
length and during our debate the able manager made the following 
statement. We took it down, and I quote:

       Let us be honest. There is no way anybody can absolutely, 
     accurately tell what the outlays and receipts are going to be 
     in advance.

  There it is, statement by the manager.

       When we say ``total outlays of any fiscal year shall not 
     exceed,'' it has to be written that way because that is the 
     force that says, Congress, your estimates better be good, a 
     lot better than these statutory estimates we have had in the 
     past, because then we will be under a constraint to balance 
     the budget, or vote by a supermajority vote not to balance 
     it. That is the difference.

  That is the end of my quotation of my esteemed colleague, Mr. Hatch.
  The point is there is no difference. There is nothing in the pending 
measure that will make these estimates any more accurate in the future 
than they are right now. I have already laid in the Record the 
statements by CBO that their estimates of deficits can be off by tens 
of billions of dollars for reasons totally beyond any human being's 
control. We will not do any better because we cannot do any better. The 
only ``difference,'' if we put this hoptoad into the Constitution, will 
be that we are out of sync with the Constitution of the United States 
if the real budget does not balance at the end of the year.

  What are we in Congress to do then? How do we address an unbalanced 
Federal budget that we are unaware of until the very last minute, or 2 
or 3 or 4 weeks after the very last minute? The very last minute the 
old fiscal year has come and gone, and then 3 weeks later we find out, 
or possibly even 4, from the Treasury Department what the actual 
figures were, how much the estimates were off, how much the deficits 
are. So how do we address an unbalanced Federal budget at that point? 
How do we square ourselves with the new constitutional dictate for 
balance?
  What happens when it becomes known that, in fact, there has been a 
deficit for a year that has ended, even though Congress did not vote to 
waive the balanced budget requirement of section 1? Will the President 
decide that he is obligated to impound sufficient funds to make up the 
difference, make up the deficit? Or failing any action by the 
President, will the courts step in to ensure compliance with the 
Constitution, albeit after the year in question has ended? Pretty 
farfetched. But the President's impoundment of funds, that is not so 
farfetched. It seems possible that one or both of these actions could 
occur. Remember, the President and the courts will have their own 
responsibilities to ensure that the constitutional requirements for a 
balanced budget are met. We are not going to be tinkering around with a 
simple statute, you know. This is not just a simple statute that can be 
repealed the next day or the next month or the next year. We will be in 
violation of the basic, fundamental, organic law of this great Nation.

  One thing is certain. Under this resolution, even if deficits are 
unintended, if they are allowed to stand, they will cause an increase 
in debt and therefore will ultimately force a vote under section 2 to 
increase the debt limit. And what does section 2 say? That section 
requires a supermajority vote of three-fifths of the whole number of 
each House of Congress and the President's signature in order to 
increase the limit on U.S. debt held by the public.

  What happens if this three-fifths vote cannot be achieved? A 
financial crisis could be upon us because, at the point when the debt 
limit is reached and not raised, no more bills can be paid until that 
debt limit is raised. Virtually all Federal payments would be subject 
to being withheld--I am not saying they would all be withheld, but they 
would all be subject to being withheld--Social Security checks, 
veterans' pensions, payments on Medicare and Medicaid, payments to 
contractors.
  Pretty dire stuff to comprehend, may I say to my colleagues. But, lo 
and behold--lo and behold--ah, now we have it, section 6. There it is. 
Section 6 provides an escape hatch. It is not going to be so hard to do 
after all. Section 6 provides a way out. Whoopee. I am thankful for the 
proponents having foreseen that we would need a way out of this dilemma 
so that we won't be caught hoisted by our own petard.
  It is almost as if someone who had something to do with writing this 
amendment realized that we could never actually balance the real budget 
in the real world, so they dreamed up the Houdini section. This is the 
Houdini section, section 6. Take a good look at it. The Houdini 
section. Take a good look. The Houdini section lets us go ahead and use 
estimates, even though they are invariably going to be inaccurate; 
therefore, it should be obvious to everyone that the Congress will not 
be chained, bound or gagged by this constitutional amendment. We will 
just bring back some of our old friends like Rosy, Rosy Scenario, or 
resort to some of our well-known magic tricks with smoke and mirrors 
and, lo and behold, just like Houdini, escape--gone. How sweet it is.

  I am perplexed as to how section 6 is intended to work. Will someone 
help me here? The distinguished manager is on the floor; perhaps he 
will help me. I ask the manager of the pending resolution how and when 
do you intend to put section 6 into effect? Let us see what it says. 
Section 6, ``The Congress shall enforce and implement this article by 
appropriate legislation, which

[[Page S1451]]

may rely on estimates of outlays and receipts.'' Will we have to carry 
out this section 6 annually? Will we have a kind of floating definition 
of what the deficit will be every year? Or will we just declare that a 
discrepancy of, say, 1.4 percent of GDP is ``negligible'' for one year, 
and 1.5 percent is ``negligible'' for the next year?
  Also, sections 1, 2, 4 and 5 use the terms--this is an interesting 
observation. I hope the audience and especially my colleagues will pay 
close attention. Sections 1, 2, 4 and 5 use the terms ``provided by 
law,'' ``provided by law,'' ``shall become law,'' ``which becomes 
law.'' Yet, section 6 uses a different term. It says, ``by appropriate 
legislation.'' Why the difference? Section 1, which requires the budget 
to be balanced, which says, ``Total outlays for any fiscal year shall 
not exceed total receipts for that fiscal year. . .'' it goes on to 
say, ``. . . 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.'' So, there is the ironclad language 
referring to law in section 1, in section 2, in section 4 and section 
5, but lo and behold, the Houdini section, section 6, does not say 
anything about law. So what does it mean by the term ``appropriate 
legislation?'' Does this mean that we in Congress can ``enforce and 
implement'' the article in each year's budget resolution? If so, would 
it not be possible for Congress to simply estimate that the budget will 
be in balance, in the budget resolution each year, or, to describe a 
deficit as ``negligible'' in the budget resolution and then pretend 
that we have met the balanced budget requirement of section 1? What 
would stop the President from stepping in and finishing the job in 
years where Congress allowed ``negligible'' deficits? The President of 
the United States may not want to go along with satisfying the 
requirements of this amendment by calling a particular amount of 
deficit a negligible amount.

  I think it is obvious that section 6 shows this amendment to be 
unworkable. It is contradictory to the absolute requirement in section 
1 that the budget be balanced each year unless waived, and it invites 
continued deficits, which, if allowed, will likely create an automatic 
crisis by forcing supermajority votes to raise the debt in order to pay 
for those continuing deficits.
  My amendment to section 6 is quite simple. It would modify section 6 
to read: ``The Congress shall implement this article by law.'' Not by 
``appropriate legislation'' but ``by law.''
  This language will disallow the use of estimates, which I have shown 
are always inaccurate. It will require Congress simply to comply with 
section 1. It will eliminate all the gimmicks that section 6 currently 
allows. My amendment is to keep them honest. My amendment is the ``keep 
us honest'' amendment. Keep us honest. It requires ``truth in budget 
balancing.'' Do it by law.
  Without my amendment, the American people can expect to see all of 
the budgeting tricks that are presently allowed by this committee 
report to be, by implication--not literally, but by implication--
inserted into the Constitution. Rather than rely on my own imagination, 
Mr. President, let me read to you a few ideas for ingenious obfuscation 
which come from the Judiciary Committee's own report that accompanies 
this resolution.

  What does section 6 mean? On page 23 of that report, Senate Report 
105-3, it is stated that ``This provision,'' meaning section 6, ``gives 
Congress an appropriate degree of flexibility * * * .'' That is what 
the committee report says, ``flexibility.'' Right there it is. There is 
the word--``flexibility.''

       It gives Congress--

  I am quoting from the report--

       It gives Congress an appropriate degree of flexibility in 
     fashioning necessary implementing legislation.

  What is meant by ``flexibility''? Does anybody still use a dictionary 
around here? The Random House Dictionary defines flexibility as 
``capable of being bent,'' like a flexible piece of rubber hose. I 
think that is probably a pretty accurate definition when it comes to 
this amendment. It is going to be flexible, capable of being bent.
  The report of the committee continues:

       For example, Congress could use estimates of receipts or 
     outlays at the beginning of the fiscal year to determine 
     whether the balanced budget requirement of section 1 would be 
     satisfied, so long as the estimates were reasonable and made 
     in good faith.

  Who is to be the judge? Does this mean that if we pass a budget that 
is balanced only on paper we need not worry, if the budget becomes 
unbalanced during the course of the year, as long as we were reasonable 
and exercised good faith? Who knows whether we are acting in good 
faith? We could say so. In arriving at the estimates, does that make 
anything we pass hunky-dory? Is that the ideal we are supposed to 
include in our implementing legislation? If that is what the sponsors 
of this amendment have in mind, I suspect that it is very different 
from what the American people are expecting from a constitutional 
amendment to balance the budget.
  The next sentence states:

       In addition, Congress could decide that a deficit caused by 
     a temporary, self-correcting drop in receipts or increase in 
     outlays during the fiscal year would not violate the 
     article.

  Now, will someone explain to me how one can know in advance that a 
deficit will be self-correcting? And what about the word ``temporary''? 
Well, there is a word one could really get his teeth into.
  Mr. President, what that sentence says to me is that at the same time 
the proponents of the amendment are telling the American people that a 
constitutional amendment will bring about balanced budgets, they are 
telling the Congress we don't have to practice what we preach.
  Reading again from the report, the next sentence states:

       Similarly, Congress could state that very small or 
     negligible deviations from a balanced budget would not 
     represent a violation of section 1.

  Here we have the suggestion that the Congress could just stand up and 
declare that certain amounts of deficit, as long as we determined it 
will be ``negligible,'' were not in violation of the amendment. We are 
told, for example, that the deficit for 1996 of $107 billion equaled 
only 1.4 percent of the Nation's $7.5 trillion gross domestic product. 
Could we declare that future deficits of not to exceed 1.4 percent of 
the GDP would be ``negligible''? Just $107 billion, that's not much, 
just 1.4 percent. I suppose that is the kind of thing the proponents of 
this resolution have in mind. But if we were to constitutionalize the 
mandate in section 1, that outlays shall not exceed receipts, any 
congressional attempt to deviate from that requirement would bring the 
moral authority of the entire Constitution into question. If we could 
violate this amendment with impunity, then what other amendments of the 
Constitution could be put at risk?

  And finally, the last sentence in this paragraph of the committee 
report states:

       If an excess of outlays over receipts were to occur, 
     Congress can require that any shortfall must be made up 
     during the following fiscal year.

  Now, that is a loophole that, if adopted by the Congress as part of 
its implementing legislation, would be big enough for Hannibal to take 
his 46,000 men and his 37 elephants, with which he crossed the Rhone 
River in 218 B.C., through. Of course, he had 80 elephants at the 
Battle of Zama in the year 202 B.C. But you could just take all those 
elephants, all 80 of them, through the loopholes created by those 
words.
  What the sponsors of the amendment are telling us is that if we 
cannot figure out what to do, if we run into options too difficult to 
swallow, we can just require that the shortfall be made up the next 
year, just roll it over, just put it off until next year. The American 
people, are they listening to what the committee report is telling us 
about this constitutional amendment and how the strictures may be 
avoided? They are right there in the print of the committee report. 
What kind of fiscal shenanigan is this? Just put it off till next year?
  The American people think that budget is going to be balanced every 
year, but that is not what the committee report says. That is not what 
section 6, the Houdini section of the constitutional amendment, will 
allow. It won't be balanced, need not be balanced. So much for holding 
our feet to the fire. One can tell from these clever little suggestions 
in the committee report that Congress has no intention of

[[Page S1452]]

having its feet held to the fire and getting burned by this amendment.
  Let me emphasize again, these little gems about how to deal with the 
deficit under a balanced budget amendment come from the committee's 
report on Senate Joint Resolution 1. As such, they would not become 
part of the underlying resolution if it were to pass. They would not 
have the force of law in any respect, but, nevertheless, they ought to 
give the American people some idea of the kinds of gimmicks and 
evasions that the American people can expect to see if this amendment 
is passed by the Congress of the United States and ratified by the 
States.
  The American people are being sold a bag of tricks. They are not 
being told about the realities of actually balancing the Federal budget 
each and every year. As I listen to those who speak in favor of a 
balanced budget amendment, I do not hear them telling the people that 
to comply with this mandate, we really intend just to roll the deficit 
for a given year over into the following year. Won't that just compound 
the problem the next year? We will end up with ``rolling deficits,'' 
another term. I do not hear the proponents of this amendment telling 
the public that the Congress could just state, ``Oh, well, the deficit 
is negligible and so nothing will need to be done this year about it.'' 
I do not hear the proponents telling the public that if this 
constitutional amendment is passed and ratified, the implementing 
legislation will only require that the budget be balanced on paper at 
the beginning of the year. That is not what the American people are 
being told.
  Mr. President, how much confidence have even the authors of this 
amendment, if, as is evident right in the committee report, they have 
already started figuring out ways to weasel around, slip around, get 
around the amendment? No, Mr. President, this proposal is not worthy of 
being enshrined in the Constitution of the United States. It is little 
more than political pandering thrown up to screen the real difficulty 
of getting to budget balance each and every year. And I do not think 
that we should perpetrate this charade upon the American people. If it 
were simply a joke, which it is, if it were simply a political dodge, 
which it is, it would be regrettable and unwise to adopt. But it is 
much, much worse than those things.

  This proposal is potentially dangerous. Within its murky appeal and 
unsound formula for budget balance lie the seeds for the further, 
rampant diminishment of the trust of the American people in their 
Government and in their rulers whom they elect. The legislative branch 
can ill-afford any more cynicism and loss of trust. And I worry as much 
about the trust deficit as I do about the fiscal deficit. The American 
people do not trust their politicians now.
  Often Members believe that doing what seems to be the safe, popular 
thing will prove also to be the right thing. Political correctness is 
the supposed order of the day for many people. Not for me. I believe 
that endorsing this balanced budget amendment has taken on the aura of 
a politically sacred act. It has become a litmus test of sorts--the 
right choice to make the political meter register 100 percent in one's 
favor.
  But whether or not we amend the Constitution in this damaging way--
and I am not against amending the Constitution per se, because the 
Constitution itself provides for its own amendment--but I am 
unalterably opposed to amending the Constitution in this way. The 
American people must be made to understand that once one takes a closer 
look at this idea it is far from what it seems. I hope that each 
Senator will carefully study this amendment before voting on it. Of 
course, most of them have already made up their minds. Many are 
committed and probably feel that they cannot break out of the chains of 
their commitments. I believe that close and open minded scrutiny of 
this proposal shreds it, reveals its many shortcomings and unmasks its 
benign countenance to reveal the sinister seeds of a constitutional 
crisis in the making or a Constitution in the ruining.
  Mr. President, we are told in the Bible that Ezekiel felt the hand of 
the Lord upon him and he was carried down into the midst of a valley 
which was full of dry bones. He was told by the Lord to prophesy upon 
the bones and to say that the Lord God would cause breath to enter into 
the bones and they would be covered with sinews and flesh and skin and 
that they would be filled with breath and that the bones would come 
together, bone to bone, and that they would live and stand upon their 
feet and become an exceeding great army.
  Do not believe, however, that flesh will grow upon the dry bones of 
this constitutional amendment. The breath of life cannot be breathed 
into that carcass. It will never stand upon its feet. It is but dry 
bones and it will remain in the valley of dry bones.
  Anyone who believes that this constitutional amendment will work is 
really living in a fool's paradise--a state of illusive bliss, 
suspended in a limbo of hypocrisy, double-speak, double-shuffle, 
vanity, and nonsense. Surely we will not travel this road if we are 
fully aware of where it may lead. In the days ahead, let us be very 
sure of just what it is we propose to do to our country and to our 
Constitution before we act. Mr. President, I reserve the balance of my 
time.

  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER (Mr. Allard). The Senator from Utah.
  Mr. HATCH. Mr. President, as always, I enjoyed the distinguished 
senior Senator from West Virginia. He is always colorful. He always 
uses a great number of metaphors that are very interesting. He is 
intelligent. He is competent. And he is formidable, one of the most 
formidable Senators in history. So it is very difficult for the Senator 
from Utah to be as formidable. But I can say this. If we are going to 
talk about Ezekiel and bones, dry bones, here is 28 years of it, 28 
years of dry bones lying over everywhere with no sinews and no 
possibility of any sinews, in other words, resurrection, unless we do 
something to countermand this philosophy of taxing and spending the 
American people blind.
  My friend talks about Hannibal crossing the Alps. If my historical 
background is correct, the discussion of Hannibal in the Alps was by 
Livy, who wrote the ``History of Rome''. I think it was a little unfair 
to bring in 37 elephants. Actually, as I recall the estimate was at 
least 100 donkeys who, if Hannibal was alive today, would probably, as 
the good Democrat that he was, be trampling all over the balanced 
budget amendment with all of those donkeys--not elephants. I think the 
elephants would be nudging him forward to try to do what is right.
  What the distinguished Senator from West Virginia seems to be saying 
to me, and to the world at large, in his comments here today is that 
the estimates that we use in the budget system today are faulty. They 
have never been right. He does not take into account the fact that 
Congress has continually changed the rules in the bills and the 
spending practices throughout each year. And that is one of the reasons 
why the estimates have not been even close to being right in most 
cases.
  Therefore, he seems to be making this syllogism. We use faulty 
estimates now. It appears to him that we will not be able to prevent 
the use of faulty estimates if the balanced budget amendment is passed. 
Therefore, rather than do something that might put some discipline into 
the budgetary process, let us retain the current faulty system.
  His amendment does not address the problem he is raising. So the 
distinguished Senator seems to be arguing for the current 
unsatisfactory system, no change whatsoever. I have to add, these 
unbalanced budgets are higher than I am, I guess, or pretty close to 
it. The Senator argues for no change of the continuation of unbalanced 
budget after unbalanced budget, because there will not be any 
incentives to get the estimates right, will not be any incentives to 
stop Congress from continuing to spend and raise new spending programs 
every year that we are in this budget process. The balanced budget 
amendment would give us incentives to get things right.
  If there is a charade, if there is a joke, if there is a dodge, it is 
during each of these 28 years. I have been here 21 of them, and I am 
ashamed to say that every one of my 21 years in the Senate, we have had 
an unbalanced budget. The reason is because we do not have a good 
system, we do not have a constitutional mandate to force us to do what 
is right. That is what this amendment will do.

[[Page S1453]]

  Now, my friend says Americans do not trust their politicians. I think 
that is right. I think his points are well taken. The fact of the 
matter is, the reason they do not trust us is because they have seen 28 
straight years of this, and for 58 of the last 66 years, we have had 
these kinds of unbalanced budgets.
  Now, is that a good argument for keeping the status quo, for 
continuing what we are doing and mortgaging the future of our children? 
I do not think so. I do not know anybody who looks at it carefully who 
would think so.
  There are hoptoads all over the current system, whatever a hoptoad 
is, but they are all over the current system. The system is not 
working. The reason it is not working is because there is no incentive 
to make it work other than to tax and to spend more. You get more 
credit for spending around here than you do for standing up and saying, 
``Hey, where will the money come from?'' Some of my colleagues of the 
more liberal persuasion have been here longer than I have, and I have 
yet to hear some of them say, ``Where do we get the money for that 
program?'' No, they go ahead and spend away our children's future, 
spend away our grandchildren's future. Do not worry, have a good time 
now and let them pay for it.
  We have reached a point where every living man, woman, and child in 
this country owes about $20,000 as their share of the national debt 
right now, as we stand here. Yet, some are arguing for the status quo, 
a system that is not working, a system that will go on as a broken 
system, a system where there is no discipline. We have tried five 
different statutory plans since 1978 and none of them have worked.
  Now, I have to say if it was up to my friend from West Virginia and 
myself, I think we could get together.
  Mr. BYRD. Will the Senator yield?
  Mr. HATCH. On your time, I am happy to yield to the Senator, and if 
you need extra time, I am happy to yield.
  Mr. BYRD. I thank the Senator.
  The Senator continues to refer to the present system; he says that 
the Senator from West Virginia apparently prefers the present system.
  Mr. HATCH. Did I say that? I am implying that.
  Mr. BYRD. You did not say that exactly.
  Mr. HATCH. I am strongly suspicious that the Senate may prevail over 
the balanced budget amendment.
  Mr. BYRD. Tell me, Mr. President, may I ask the Senator, and I am one 
who believes we ought to do what we can to balance the budget----
  Mr. HATCH. I acknowledge that.
  Mr. BYRD. And to reduce the deficits, but I do not think we ought to 
go about it by way of a constitutional amendment. But the Senator from 
Utah continues to talk about the present system, the weaknesses of the 
present system.
  Section 6 is in the constitutional amendment. That is the present 
system. That continues the present system of working with estimates of 
outlays and receipts.
  So there is nothing different, except the Constitution of the United 
States will be trivialized. There will be nothing different in what we 
are talking about balancing the budget for real after the Constitution 
has been amended than from what the situation at present is.

  Reading section 6:

       The Congress shall enforce and implement this article by 
     appropriate legislation, which may rely on estimates of 
     outlays and receipts.

  Now, I have been talking all afternoon, or for almost 1 hour, about 
estimates of outlays and receipts and the fact that they are never, 
never accurate.
  I hope the Senator from Utah, when he refers to the present system, 
he scores, he excoriates, and I do not blame him for that, the 
``present system''--the ``present system.'' He wants to get away from 
the present system. Well, he is not doing it in section 6, because 
under section 6 we are told, this is the Houdini section, the section 
that tells Congress it can do it, it can balance the budget, it can 
carry out the mandate under the constitutional amendment by relying on 
estimates of outlays and receipts. So the Senator from Utah is not 
getting away from the present system when he falls back on section 6.
  May I ask the Senator this question: What is meant in this section 6 
by ``appropriate legislation''? What does that mean?
  Mr. HATCH. The same thing that is meant in every constitutional 
amendment since the Civil War.
  Mr. BYRD. Will the Senator yield?
  Mr. HATCH. Let me answer the question.
  In addition, and I will take back my time, in addition to the fact 
that we have no strong incentives under the current system to stay 
within either the estimates or the budget that is under the current 
system, Congress often compounds the problems inherent in using 
estimates by making changes in policy that the estimates did not 
foresee. There is no disincentive under the current system for doing 
this without great concern about the effect on compliance with the 
budget plan.
  Mr. BYRD. Will the Senator yield?
  Mr. HATCH. If I could finish. I want to answer your question, and it 
will take me a second because it is an interesting question, and then I 
will be happy to yield.
  Under Senate Joint Resolution 1, Congress will, by necessity, need to 
be more careful about its decisions through the year in order to comply 
with the constitutional directive of the other sections. For instance, 
section 6 simply recognizes that to be reasonable and workable, we will 
need to rely on estimates throughout the fiscal year in complying with 
the balanced budget amendment rule.
  Mr. BYRD. That is the present system.
  Mr. HATCH. Let me finish. If there is a minor or negligible drop 
below balance at the end of the year, and we find out that has occurred 
after the fiscal year has ended, we can avoid constitutional problems 
for minor deviations. However, we still have an incentive to get the 
budget back in line because section 2's debt ceiling provision does not 
rely on estimates.
  That is where the distinguished Senator is missing the point of this 
amendment. Section 2 does not rely on estimates. It requires that we 
not increase the debt without a three-fifths vote, and to avoid hitting 
the debt ceiling we have every incentive to stay at or above balance 
and to ensure that small deviations are actually made up.

  All of this is substantially better than the current system, which is 
not working. The current system is where we make our estimates and then 
we immediately forget about them and pass whatever legislation we want 
to, and that is why they are always out of balance. It has given us 28 
straight years of unbalanced budgets, and deficits for 58 of the last 
66 years--enough to drive anybody who is fiscally responsible wild.
  To argue that this current way of doing things is better than having 
fiscal discipline written into the Constitution, I think completely 
misses the point. Senate Joint Resolution 1 is a necessary step to give 
us the incentives to do something about this mess of unbalanced budgets 
that are going to continue unless we have something like this.
  Mr. BYRD. Will the Senator yield?
  Mr. HATCH. I am happy to yield to the Senator.
  Mr. BYRD. The Senator has not answered my question. What is meant by 
the words ``appropriate legislation'' in section 6? I want to point out 
the big hole that section 6 provides for the Congress, so that Congress 
can avoid section 1 of the amendment, which requires a dollar-for-
dollar match between spending and income. What is meant by 
``appropriate legislation''?
  May I say as a predicate to asking the question, as I pointed out 
earlier, in section 1 reference is made to the word ``law.'' Section 1 
is really a binding section if you just stood it out there alone: 
``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.''
  Section 1 says Congress must ``provide by law.'' Section 2 says: 
``The limit on the debt shall not be increased * * * unless three-
fifths of the whole number of each House shall provide by law.'' 
Section 4 refers to increases in revenue which shall become law. 
Section 5 refers, and uses the words, ``which becomes law.''
  Why is it, Mr. Manager of the bill, my dear colleague, Senator Hatch, 
why is it that section 6 uses the words ``appropriate legislation''? It 
does not say

[[Page S1454]]

that Congress shall enforce and implement this article by law, which 
may rely on estimates of outlays and receipts. It says by ``appropriate 
legislation.'' What is meant? Does that mean a simple resolution? Does 
that mean a concurrent resolution? Does that mean a joint resolution? 
Does that mean a bill? What is meant by ``appropriate legislation''? 
Why is the change made there? It is perfectly obvious that there must 
be some reason lurking behind this change in the word ``law'' in other 
areas of the constitutional amendment, but in section 6 it uses the 
words ``appropriate legislation.'' ``The Congress shall enforce and 
implement this article by appropriate legislation.'' What does that 
mean?

  Mr. HATCH. I will answer the Senator. First, how much time remains on 
both sides?
  The PRESIDING OFFICER. The Senator from Utah has 49 minutes. The 
Senator from West Virginia has 3\1/2\ minutes.
  Mr. HATCH. All right. I thank the Chair. The term ``by law,'' used in 
the Senate Joint Resolution 1, sections 1 and 2 is used there in order 
to make clear that Congress cannot imbalance the budget or raise the 
debt limit by an internal rule. Why? The President must sign a bill for 
it to become a ``law.'' The President is not involved in the adoption 
of rules in the Senate or House.
  The term ``by appropriate legislation'' is used in Senate Joint 
Resolution 1, section 6, because that is the standard term used in all 
other enforcement clauses in the Constitution since the Civil War. So 
we have followed that which has been used. And I believe it will be 
interpreted similarly to the word ``law.'' But be that as it may, it 
has not been a problem since the Civil War, and I don't believe it will 
be a problem now.
  Specifically, ``appropriate legislation'' means that it satisfies 
article 1, passed by both Houses and is signed by the President. But 
the language actually mirrors all enforcement clauses in the 
Constitution since the Civil War. So I don't quite see the problem that 
the distinguished Senator from West Virginia does, and I don't think 
anybody else will.
  Mr. BYRD. Will the Senator yield?
  Mr. HATCH. I will be happy to.
  Mr. BYRD. There is a massive problem here. For some reason --and I 
think the distinguished manager has put his finger on it --the 
constitutional amendment refers to actions by the Congress that 
constitute laws--until we get down to section 6. Section 6 is an 
alternative to section 1. Section 1 is a rather binding section, which 
says, ``Total outlays for any fiscal year shall not exceed total 
receipts * * *''--``shall'' not, not ``may'' not, not ``ought'' not, 
but ``shall'' not exceed--``* * * for that fiscal year, unless three-
fifths of the whole number of each House of Congress shall provide by 
law. * * *''
  That is pretty binding. If that section stood by itself, it would be 
pretty hard to get around it. But, lo and behold, the authors of the 
amendment have come along with the Houdini section --section 6--which 
as much as says you don't have to do it by law, and you can do it by 
relying on estimates of outlays and receipts.
  Now, if you had to do it by law, under section 7 of Article I of the 
Constitution, which is the presentment clause, whatever we do in 
section 6 would have to be presented to the President of the United 
States. He could veto it. But we have a way out here. Section 6 allows 
us, by ``appropriate legislation,'' to avoid section 1. And appropriate 
legislation can be a concurrent resolution between the two Houses. It 
is kind of an agreement or an understanding, or a ``shake hands'' deal 
between the two Houses. It doesn't go to the President. It isn't 
presented to the President under section 7, the presentment clause. He 
has no voice in the matter--none. He can't veto. And so section 6 
allows Congress, in the concurrent resolution on the budget, to put in 
whatever standards it wants. It can write into the resolution that so 
long as the deficits do not exceed, say, 1.5 percent of the gross--it 
used to be gross national product, but now it is gross domestic 
product--as long as it doesn't exceed 1.5 percent or 1.4 percent. To 
some, that would be considered negligible. But, as we have seen, with a 
$7.5 trillion GDP, 1.4 or 1.5 percent can amount to over $100 billion. 
But the President won't have any voice in that. It won't have to go 
across his desk. He can't veto this little Houdini section. What we do 
there is all that we will do, but we don't have to do----

  The PRESIDING OFFICER. The time of the Senator from West Virginia has 
expired.
  Mr. HATCH. Does the Senator need more time?
  Mr. BYRD. I will finish my sentence. I thank the Senator from Utah 
for his usual courtesy. We will not be bound by section 1. We can do it 
by way of section 6, which does not require a three-fifths vote for a 
waiver. And we will be complying with section 6 if we do it in a simple 
resolution, which is only an action by the Senate concerning the 
Senate, or on a concurrent resolution, which is an action between the 
Houses and which doesn't have to go to the President for signature.
  I thank the distinguished Senator from Utah. It seems to me that the 
words in section 6 should give Senators pause. I am sure they would 
give the American people pause if they understood what Congress can do 
under that section.
  Mr. HATCH. Mr. President, I don't want to spend a lot of time on this 
because I don't think that is a good point. Ever since the Civil War, 
the 13th, 14th, 15th, 19th, 24th, and 26th amendments have used the 
language ``appropriate legislation,'' which, under the Chadha decision 
of the Supreme Court, is interpreted as a law as signed by the 
President. It has to be submitted to the President.
  Mr. BYRD. Will the Senator yield briefly?
  Mr. HATCH. Sure.
  Mr. BYRD. Has Congress ever passed any civil rights statutes by 
concurrent resolution, or by a simple resolution?
  Mr. HATCH. Not that I know of.
  Mr. BYRD. No, indeed, but by a joint resolution or a bill, which have 
the force of law and go to the President for signature.
  Mr. HATCH. Under the Supreme Court decision in Chadha, appropriate 
legislation has to go to the President and become a law. I think it is 
a moot point, to be honest with you. Frankly, we are using the language 
of the Constitution itself, and appropriately so, in my opinion.
  I notice the distinguished Senator from Wyoming is here. He would 
like to speak for 8 minutes. I yield to him, and then I would like to 
have the time back so I can finish my statement. I want to respond to 
my dear colleague's thoughtful comments. They are intelligent comments, 
and I always enjoy listening to him as one of the true experts in this 
body. I mean every word I am saying, as well. I don't agree with him on 
much of what he is saying here today, but so what. The fact is, I 
respect him.

  I yield 8 minutes to the Senator from Wyoming.


                         Privilege of the Floor

  Mr. HATCH. Mr. President, I ask unanimous consent that the new 
counsel on my committee staff, Brian Jones, be granted floor privileges 
for the remainder of the day on the balanced budget constitutional 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Wyoming is recognized.
  Mr. ENZI. Mr. President, I thank the Senator from Utah for granting 
me this time.
  Mr. President, I rise in opposition to the amendment that is 
sponsored by my distinguished colleague from West Virginia, Senator 
Byrd. The amendment would strike the language from section 6 of the 
balanced budget constitutional amendment that permits Congress to rely 
on budget estimates when drafting the implementing language pursuant to 
the ratification of the amendment.
  As the only accountant in the U.S. Senate, I know that no budget can 
be predicted to the penny more than a year in advance. I would like to 
see that extended out to 2 years in advance. If we demand better 
estimates, we will get better estimates. If more is riding on the 
estimates, the estimates will be better. The estimators' performance 
and ours will be judged. The very heart of budgeting means making 
estimates before the money is spent. There is no way to do it after the 
money is spent. You have to do it in

[[Page S1455]]

advance. Advance means estimates. Without the use of the estimates of 
future outlays and receipts, we will be unable to draft implementing 
legislation that keeps us within the boundaries of the balanced budget 
amendment.
  As an accountant, I am fascinated with the budget discussion because 
we are talking about numbers. We are talking about balancing budgets. 
We are talking about formats that will provide us with the most 
information possible. And we are doing it in the context of a real 
budget, dealing with real people. We are doing it in the context of a 
history where we have only had one balanced budget in 40 years. We have 
not balanced the budget in 28 years.
  Some very valid accounting concerns have been raised here in the 
debate by opponents of the balanced budget constitutional amendment. I 
have heard reference to the need for capital budgets. I have heard 
reference to a need for Social Security to be off budget. I have heard 
reference to the need to take care of accounting problems that happen 
during recessions. As an accountant, I applaud this insight into the 
need for new accounting methods. We need to have cash flow budgets so 
that as cash arrives the purchases can be made without extensive 
deficits. It is just good business. A balanced budget amendment will 
force us to have a better accounting system and to even have better 
estimates.
  I have heard debate about the concern with the Judiciary Committee's 
definitions for estimates. The committee stated that estimates, for 
example, ``means good faith, responsible and reasonable estimates made 
with an honest intent to implement section 1.'' I would add that 
generally accepted principles would also ask that they be conservative 
estimates. We all know that there is no way to be absolutely accurate 
about estimates. We have to do the best we can to estimate outlays and 
receipts and do it routinely at the same day each year.
  If we really want to talk about problems with definitions, ``off 
budget'' is a fascinating accounting term. In fact, in my accounting 
references I couldn't even find that term. I have to say from listening 
to discussions that there doesn't seem to be a lot of consensus on what 
that really means.
  It looks like we found another catchword that scares senior citizens 
and scares people and gives us a hook not to vote on this. As one who 
daily approaches being a senior I want to see us get that rhetoric out 
of that term. We give the impression that Social Security has enough 
money at the moment. We talk about the surpluses going into Social 
Security and being used in the budget. Without estimates of outlays and 
receipts, it would be impossible to gauge the problems that currently 
affect the very existence of the Social Security system.
  Let's talk a little bit more about definitions. I think that 
accountants frown on the Federal term ``surplus'' revenue. Surplus 
implies more than what is needed. That is definitely not the case with 
Social Security. Social Security is a trust fund. But we give the 
impression that that money is being set aside in a special account for 
seniors so that when they retire there will be money to be drawn out in 
their name. That is not even close to what actually happens.
  We don't have a crystal ball, only reasonable estimates from which to 
work. The President and Congress currently use estimates and budget 
planning. The Congressional Budget Office and the Office of Management 
and Budget already give budget estimates each year. It has been pointed 
out how accurate they are. One is more conservative than the other. 
They correct the estimate twice during the year to ensure their 
accuracy. Congress ultimately decides how to balance the difference 
between the estimates.
  We need to have a system where we can see how far in debt we are. And 
we need to do that not just for Social Security but for every single 
trust fund that we have, and the budget. We either have to change the 
accounting system, account for funds honestly and show how much deficit 
there is, or rename them so that they are not called trust funds. 
Perhaps we should do both.
  We are not snake oil salesmen here. Meeting the requirements of the 
balanced budget constitutional amendment will require Congress to go 
about their business with a great level of accountability. Spending and 
borrowing decisions must be deliberate because every decision will 
impact the requirement of this balanced budget constitutional 
amendment.
  I think those people who are opposing the balanced budget 
constitutional amendment know in their hearts that this one will pass 
and will also have more swift ratification by the States than most of 
the other amendments to the Constitution.
  Why will that happen? First, most of the States already have a 
balanced budget constitutional amendment. They work under them, and 
they know that they work. And, incidentally, those work with estimates. 
They know their limitation and the type of problems that develop from 
it. The States understand that problems are not a detriment to the 
United States having a balanced budget constitutional amendment.
  The concern of the inaccuracy of the estimates is overblown. The data 
that are often used are generated months to over a year in advance to 
the end of the fiscal year. In fact, the Federal Reserve uses its own 
estimates to help set its own policy. It also makes mistakes. For 
example, in the July 1996 Humphrey-Hawkins banking deregulation 
hearing, Chairman Alan Greenspan predicted the GDP would grow at about 
2.5 to 2.75 percent. Instead, it grew by about 3.4 percent. Quite a 
difference; billions in difference. Is that to say that the Fed should 
not use estimates because they do no more than identify the economic 
trends and provide decisionmakers with useful information? Yes, an 
estimate is an educated guess. Where else would we start? Where else 
would the Fed start in determining its policy?

  I think that most people in this body realize that a constitutional 
amendment will pass and get ratified by the States. If we didn't 
believe that it would be ratified by the States, this would be a real 
easy debate. But we know that the people of the States want it and the 
States will respond. If just those States with one or more Senators 
opposing the balanced budget constitutional amendment did not ratify 
the constitutional amendment, it would never become a constitutional 
amendment. So if those Senators' States did not ratify it where one or 
more Senators were opposing it, we wouldn't have the constitutional 
amendment. If we did not have appropriate legislation, those people in 
those States would not have to raise the confusion that we are having 
raised right here today; that is, to get a hook so that they can 
explain a vote that is very difficult to explain back home.
  The people understand from their own experience that you can't spend 
more than you take in. Almost every school kid above third grade is 
able to explain that to me--that, if you spend more money than you take 
in, you go broke. By third grade they have already had enough 
experience to realize this fact of life. It has been said that we can 
learn much from children. Children focus on problems in more simple 
terms. There is a difference between being simplistic and being simple.
  If you went to your banker and said, ``I want to borrow money to buy 
a house, and I don't want to have to pay anything but the interest for 
the rest of my life,'' do you think you would get that loan? No, you 
wouldn't. But that is what we are doing right now with the national 
debt. By not balancing the budget, the Federal Government has not been 
good about limiting or disciplining itself in any way.
  How does this relate to the constitutional amendment? I am suggesting 
that, if we limit ourselves by a balanced budget constitutional 
amendment, we will concentrate more on what we really do well. We will 
have more people participating and less people expecting Government to 
do things for them, more caring concern for our elders, and more 
concentration on our children's and grandchildren's welfare, if we have 
a balanced budget amendment.
  Thank you.
  Mr. HATCH. Mr. President, I am going to try to reserve some time out 
of my time for the Senator from West Virginia to make closing remarks 
here today. If that is all right, I will reserve some time for the 
distinguished Senator from West Virginia to make closing remarks out of 
my time.

[[Page S1456]]

  Mr. BYRD. Mr. President, the Senator is very kind and generous. It is 
most characteristic of him.
  Mr. HATCH. How much time would the distinguished Senator like to have 
to close out at the end?
  Mr. BYRD. Two or three minutes.
  Mr. HATCH. Let me reserve 5 minutes for the distinguished Senator.
  Mr. BYRD. Mr. President, I thank the Senator.
  Mr. HATCH. I thank my colleague. I have great respect for him, as I 
have said. I have been around here a long time, and I have seen 
Senators come and go. This Senator is one of the greatest of all time, 
and I have respect for him. I do not agree with him here today, but I 
do have respect for him. And I want his amendment to be given every 
consideration.
  Mr. President, today we begin our third week of debate on the 
balanced budget amendment. Our national budget as of right now is going 
to $5.4 trillion. That is about $20,000 for every man, woman, and child 
in America.
  Believe me, when we are talking about the debt we are placing on the 
backs of our children and grandchildren, we are truly playing with 
fire, and we have been getting burned for 28 years, the 28 years 
represented by these unbalanced budgets--these stacks are obscene, and 
yet that is what we face ad infinitum if we do not have this balanced 
budget amendment. These stacks will reach all the way to the ceiling of 
this Chamber. And it is time to do something. We have been getting 
burned for 28 years now--actually, 58 of the last 66 years. That is 
what those two towers of debt mean. There is only one way to scale this 
tower of debt and only one way we will ever reach and remain at a 
balanced budget. There is only one cure that I can think of for this 
addiction that we have for debt. That is this balanced budget 
constitutional amendment.
  Everybody knows it is a bipartisan amendment. Everybody knows it has 
been worked out with Democrats and Republicans. Everybody knows it is 
the only one that has a chance of passage. Everybody knows we have to 
keep amendments off or we lose Senators here or Senators there. 
Everybody knows it is the best possible language we can arrive at and 
still have it be bipartisan.
  There are Senators over here who want to have a three-fifths vote to 
increase taxes. We cannot do that and have it bipartisan, even though 
the Senator from Utah may have some sympathy for that attitude. We have 
Senators on the other side who wish that we did not have a 
constitutional majority to raise taxes, and that certainly they would 
like us not to have a three-fifths majority to increase the debt. But 
in order to have a bipartisan amendment and satisfy people on this side 
of the aisle--and, by the way, people on the other side--we have come 
to this conclusion. So anybody who says that they have to have their 
one little amendment or they cannot vote for this, they are for 
balanced budgets and they are for a balanced budget amendment but they 
cannot vote for this, they may be sincere, but, in most cases, they are 
obfuscating. The fact is, they knew at the beginning of this debate if 
we cannot pass this amendment as it is, there will never be a balanced 
budget amendment and there will never be, at least I do not think 
there will ever be, a fiscal mechanism put into the Constitution that 
will require us to at least do what is right here.

  This afternoon we are resuming the consideration of the Byrd 
amendment, which would remove the ability of the Congress to rely on 
estimates in implementing the balanced budget amendment.
  Let me just say a few things about this proposal, keeping in mind I 
want to reserve some time for my colleague on the other side. If there 
are any Republicans who want to speak, I hope they will get over here 
soon, because I am going to reserve the last 5 minutes for my colleague 
from West Virginia.
  Estimates are a necessary tool to be used by a more vigilant Federal 
Government living under current law or under the balanced budget 
amendment. The very first step in the perennial budgeting process is 
the presentation of the budget estimates of OMB and the CBO, the Office 
of Management and Budget and the Congressional Budget Office.
  We have just seen this process in action this last month as the 
President proposed his budget and the Congressional Budget Office came 
out with its latest deficit predictions, predicting that even though 
the President is trying to balance the budget--of course, 75 percent of 
the cuts are in the last 2 years after he has left office--even at 
that, it is $49 billion in debt come the year 2002.
  This process has not been the subject of intense scrutiny or 
recriminations. I do not understand why, if it is satisfactory now, 
some have argued it is insufficient under the balanced budget 
amendment.
  Now, we all know that no budget can be predicted to the penny more 
than a year and a half in advance, particularly not the $1.6 or $1.7 
trillion Federal budget. Even I am amazed at how high it is now. The 
bottom line is that we have no crystal ball, only reasonable estimates 
upon which to work. The President and the Congress use estimates now in 
budget planning. They are a necessary part of the process. They will 
continue whether this passes or not. But there will be some incentives 
to be more careful if the balanced budget amendment passes. The 
balanced budget amendment accepts the plain truth that the President 
and Congress use estimates in the budget process and that they are a 
necessary part of the process and that they will have to have continued 
use.
  The difference is that the balanced budget amendment provides new 
incentives for Congress to be more vigilant in actually getting to 
balance or being more deliberate and accountable in our spending and 
borrowing decisions. In the past, estimates have been off target at 
least in part because there was no incentive to get them right in the 
first place and no real sanction for getting them wrong or failing to 
live within them. It is ultimately up to Congress to determine the 
estimates that we use, and, more importantly, it is up to Congress 
whether they will work to stay within Congress' projected budget or the 
estimates' projected budget.
  Under current practice, once the Congress passes a budget resolution, 
it never looks back at these predictions with an eye to adjusting its 
behavior to accommodate new information. Whether the estimates were in 
fact right or wrong, high or low, Congress is never held accountable 
under the current system for the accuracy of its estimates or its 
failure to stay within the stated budget based on those estimates. 
Under the balanced budget amendment, we would have to be much more 
vigilant. If the estimates are incorrect, then we, the Congress, will 
have to set things right to get back on track. Failure to do so would 
force the Congress to muster a three-fifths vote to approve the deficit 
and announce to the American people that we have failed to do our job. 
That is what it will mean. In other words, Congress will be held 
accountable for its own predictions. This incentive can only help us 
make more realistic projections and to work to abide by our stated 
budget goals.

  Further, we have only heard part of the story on the accuracy of 
estimates. The statistics most often cited to show that the CBO is 
frequently off target when trying to predict the budget are the 
earliest estimates that the CBO compiles, often a full 20 months before 
the end of the fiscal year they are predicting. But there are many 
other sources of updated information throughout the year. Both OMB, the 
President's Office of Management and Budget, and the CBO, the 
Congressional Budget Office, update their budget statistics for the 
current year and their estimates for the next year every February and 
every August. Further, the Treasury Department issues monthly 
statements showing detailed information on receipts, outlays, and 
borrowing. These multiple reports and any additional ones we might 
require under the balanced budget amendment give the Congress 
increasingly accurate information, providing the ability to anticipate 
a trend towards a deficit and to make appropriate adjustments to the 
budget.
  Let us also recognize that the early estimates are often distorted by 
the subsequent volitional acts of the Government. Life under a balanced 
budget amendment can use estimates more effectively than they are now. 
The first thing the Congress and the President will do is pass a budget 
resolution laying out the general scenario for outlays

[[Page S1457]]

and receipts in the fiscal year. This resolution will be based on 
estimates, as is now the case.
  At this stage, the wisest policy is to shoot for a budget which is in 
surplus, which would be a very wonderful thing compared to what it has 
been over the last 66 years, shoot for a budget that is in surplus to 
provide a margin for error in case outlays are in fact greater or 
revenues less than expected during the year. That would become the norm 
rather than to not do anything, which is the norm today.
  Over the course of the fiscal year, the Congress will need to monitor 
outlays and receipts. While it is not required that the budget remain 
in balance during every moment of the year, Congress must work to get 
its budget back in balance by the end of the year unless it votes, by a 
three-fifths vote, to authorize a specific deficit. If a trend towards 
an unintended deficit is observed, Congress should adjust its budget in 
order to rectify the problem. Indeed, the reconciliation process was 
originally created for the purpose of adjusting outlays and receipts, 
if necessary, before the end of each fiscal year.
  Should it be determined that circumstances are serious enough to 
warrant deficit spending, the Congress could approve an appropriate 
deficit and raise the debt ceiling, if necessary, as provided for in 
the balanced budget amendment.
  As the fiscal year comes to a close, Congress will have a very good 
idea of whether the budget is likely to be out of balance or out of 
line. This is where Congress will be held accountable for the accuracy 
of the estimates it adopted earlier. Sloppy estimates will require more 
work to keep the budget in balance. Realizing this potential difficulty 
will keep Congress honest in its budget estimates.
  If the budget is balanced or is in surplus, the country will have 
prospered from disciplined fiscal policy. On the other hand, if it 
appears that there may be an unintended deficit due to unexpected 
economic conditions or events, a deficit could be approved but it would 
take a three-fifths vote to do it. Even if the precise size of the 
deficit is unknown at the close of the fiscal year, budget forecasts 
will certainly provide a range in which the deficit will fall. In order 
to anticipate all contingencies, the Congress would simply approve a 
deficit at the high end of the projections. That way, the Government 
would continue proper operations even in the worst case scenario.
  So you see, the Federal budget process can work smoothly and 
efficiently under the terms of the balanced budget amendment. Further, 
it will provide the strong incentives towards fiscal responsibility, 
reasonable budget forecasts, and, most important, a balanced budget. 
The reality is that under a balanced budget amendment, the Government 
will have increased accountability for its decisions and increased 
incentives to act responsibly throughout the year to get to a balanced 
budget at the end of the year. This is a real change from the system we 
now have that has given us an unbroken chain of unbalanced budgets for 
each of the past 28 years.
  Each of the past 28 years--I don't care who you are, you have to be 
shocked by that. I am so afraid of knocking these over for fear I will 
crush somebody, but literally, these stacks really tell it all. There 
is just no real argument against this, other than the argument that you 
want to spend more, you want to tax more, and that old argument, let us 
just have the will to do what's right. Come on, give me a break. We 
haven't had the will for 28 years, we are not going to have it for 28 
more if we don't put some fiscal discipline into the Constitution. It 
is about time to end this game and do what's right.
  And, yes, I have to admit I am very loathe to amend the Constitution. 
It is, to me, an inspired document. Those Founding Fathers never 
thought for a minute, they never thought for a minute that we would 
have 28 straight unbalanced budgets and 58 out of 66 years of 
unbalanced budgets. They never thought that for one minute. They 
thought the only way you would ever have an unbalanced budget is during 
time of war or serious, real serious economic distress, and they could 
understand that. But you would immediately get in balance once the 
economy picked up or you got out of war. The Founding Fathers knew 
that, and nobody ever thought in their wildest imaginations that we 
would be brought to the pitiful, or should I say pitiable, position 
that we are in today.

  Nonetheless, some proponents of the Byrd amendment contend that the 
reliance on estimates somehow turns the balanced budget amendment into 
a gimmick. That claim is simply untrue. And, to paraphrase the 
distinguished senior Senator from Maine, basically she said, ``I'll 
tell you this, if a balanced budget amendment were a gimmick, Congress 
would have passed it long ago.''
  I think that says it all. ``If the balanced budget were a gimmick, we 
would have passed it a long time ago,'' because we love gimmicks around 
here, the biggest of which, and the biggest hoax of which, is saying 
that you have to take the largest item in the Federal budget, Social 
Security, out of the purview of the balanced budget and then let it sit 
out there all naked so it can be attacked, manipulated, poked at, taken 
apart.
  Mr. LEAHY. Mr. President, will the Senator yield for a question?
  Mr. HATCH. I will be happy to.
  Mr. LEAHY. Will the Senator acknowledge that the deficit has come 
down, now, 4 years in a row and the projected budget will for a 5 year?
  Mr. HATCH. Of course I will. And I will also acknowledge it is still 
$107 billion in debt. If I can just finish, it is amazing to me--I give 
credit for that. We had what some think is the largest tax increase in 
history and the deficit has come down. But the fact of the matter is, 
only in Washington would people say that a $107 billion deficit is 
making real headway.
  Mr. LEAHY. Mr. President, as I recall, the tax bill actually lowered 
taxes for the vast majority of Americans. I can understand some concern 
for some who may have had it higher, those who serve in this Chamber, 
because they are in the highest income bracket anyway. They may have 
felt their taxes go up slightly. But the vast majority of people we 
represent saw their taxes go down.
  I raise this, however, the fact that without all the rhetoric that we 
have been hearing for years, rhetoric about balancing the budget at a 
time when the national debt was tripled in the two previous 
administrations, we have had a President who has brought down, with 
very tough votes and very tough action, brought the deficit down 4 
years in a row. I would only suggest to my good friend and colleague 
from Utah, the President laid it out very well in the State of the 
Union message. He said all that's needed for a balanced budget: We vote 
it, he signs it.
  The Republicans are in the majority in the Senate. The Republicans 
are in the majority in the House. All they have to do is bring up the 
various spending bills, entitlement bills or anything else. They should 
have the votes.

  Mr. HATCH. Let me just respond. I guess I will do it again. I will 
stand behind these two stacks of unbalanced budgets for the last 28 
years and I will just repeat what the Senator said, the distinguished 
Senator from Vermont. All you have to do is sign the bill and send it 
to the President, but we have not been able to do it for 28 years, or 
58 out of the last 66. And, by the way, I will give the President 
credit for bringing down the deficit from around $170 billion to $107 
billion, but in each of the next 4 years, according to his budget, the 
deficit goes up until we are almost back to where we were until you 
reach 2001 and 2002, after he leaves office, when 75 percent of the 
cuts are going to take place. And everybody knows that is impossible. I 
should also mention that there were a lot of factors that helped lower 
the deficit that had nothing to do with the President. So he deserves 
some credit, but certainly not all of it.
  So, the same game is still going on, saying all you have to do is 
present the budget to him and he will sign it. If you believe that, you 
don't believe that these are real. Anybody who makes that argument just 
does not know what has gone on for 28 years and they just don't believe 
these books are real. I am telling you they are real. This is America, 
this is where we are going. We are in a fiscal deficit like you cannot 
believe and only in Washington, DC do people believe that a $107 
billion deficit for a fiscal year is wonderful.

[[Page S1458]]

  And, by the way, even the poor are paying more under the so-called 
tax cuts that the distinguished Senator is talking about. When you look 
at the Social Security tax they are paying, they pay more in Social 
Security taxes than they do income taxes; user fees, various user fees; 
they are paying more for pharmaceutical products because of user fees. 
I was not very happy with it at the time. They are paying higher gas 
taxes, at least 4 cents or 5 cents a gallon more. That hits the poor 
harder than anything else. You can go right on down the line. There are 
an awful lot of extra taxes that people are paying that we hide around 
here every year because we don't have to be responsible under the 
current system.
  We have shared responsibility for our debt. I am not just blaming 
colleagues on the other side. There are colleagues on our side--all of 
us are responsible for it. And we have shared responsibility for our 
recent gains because some of the cutbacks in programs and restraint of 
growth occurred from this side of the aisle.
  The tax increase did occur from that side of the aisle. We did not 
support that.
  I think we should stop the partisan bickering and do what we need to 
do. I think what we need to do is adopt Senate Joint Resolution 1, the 
balanced budget amendment, and if we do that, I really believe we will 
be able to make real headway in a joint effort and in a bipartisan way 
to solve the problems of this country, especially the fiscal problems.
  As I have pointed out, common-sense reliance on estimates is the best 
way to apply the balanced budget rule. Further, the opponents' claim 
focuses only on the deficit vote in section 1 of the balanced budget 
amendment, but ignores the debt ceiling vote that is required in 
section 2.
  Under the balanced budget amendment, if we want to raise the limit on 
the debt, we need a three-fifths vote of both Houses of Congress. The 
debt is not an estimate. It is the real, cold, hard fact. The bottom 
line is, regardless of what the estimates say, under the balanced 
budget amendment, our children cannot be saddled with more debt unless 
there is a vote under the appropriate provision, and, in this case, it 
is section 2.
  There are no loopholes here. Reliance on estimates is both reasonable 
and sound. If we did not permit a reliance on estimates, someone on the 
other side would be arguing that the balanced budget amendment would be 
unworkable because it does not let us rely on estimates. You can just 
bank on it. Indeed, on the one hand, some opponents argue that the 
balanced budget amendment would be a straitjacket, while this proposal 
by my friend from West Virginia argues that it is not stringent enough. 
If this pending amendment of the distinguished Senator from West 
Virginia were adopted, this balanced budget amendment would be much 
harder to work with, and you could bet that we would hear from the 
critics then.
  Mr. President, this balanced budget amendment that we are debating is 
the real thing, and that is why so much noise is being made about it. 
If it wasn't important, there would not be this colossal fight every 
time we bring it up. It would shake things up in Washington, and there 
are some who are afraid of that. Personally, I think this town could 
use a good shaking by its neck. I am not one of those who is afraid of 
what the balanced budget amendment would do. I am not willing to add 
many more books to this pile. Even if we pass the balanced budget 
amendment and it is ratified by 38 States, or three-quarters of the 
States, we will still have another 5 years leading up to a balanced 
budget, but at least we know the game is over; we will have to get 
there.
  I am not willing to ruin this country's economy, and I am most 
certainly not willing to increase that $20,000 in debt that every man, 
woman, and child in America currently owes as their share of the 
national debt. I hope our colleagues will defeat the pending amendment 
and move on to passing Senate Joint Resolution 1, the balanced budget 
amendment.
  Mr. President, how much time do I have?
  The PRESIDING OFFICER. The Senator from Utah has about 6\1/2\ 
minutes.
  Mr. HATCH. I yield 5 minutes to the distinguished Senator from West 
Virginia. I will reserve 1 minute.

  Mr. BYRD. Mr. President, I thank my friend.
  Mr. President, section 1 of the constitutional amendment to balance 
the budget lays it out in a very straightforward way. It says in plain 
English that outgo shall not exceed income. ``Spending shall not exceed 
income in any fiscal year unless three-fifths of the whole number of 
each House of Congress shall provide by law for such an excess of 
outlays over income.''
  Now, that is a pretty tough section to comply with, and Congress, I 
think, would be in great difficulty if it sought to follow that 
mandate. But Congress, by this constitutional amendment, has provided a 
way around section 1, so that we really don't have to comply with 
section 1.
  Section 6 says that ``The Congress shall enforce and implement this 
article by appropriate legislation, which may rely on estimates of 
outlays and receipts.'' So, Congress, as anyone will know, because it 
is plain as the nose on one's face, Congress is just going to forget 
section 1, that will be too hard to comply with. Congress will choose 
section 6 as a way out, because then it does not have to balance dollar 
for dollar, it does not have to have a three-fifths vote, as section 1 
would require, for a specific excess of outlays over receipts. It can 
forget about that. No real balancing of the budget. No three-fifths 
vote. Just doing it by appropriate legislation, which could be a simple 
resolution or concurrent resolution. So this is the way out, this is 
the dishonest way out--section 6. That is the Houdini section.
  What would I do? My amendment strikes the last words in section 6. My 
amendment says: ``The Congress shall implement this article by law.'' 
Period. You can't get around that.
  What does it mean when we say the Congress shall implement this 
article by law? It means that Congress will do by law what it says it 
will do in section 1; namely, it will have to balance the budget dollar 
for dollar, and the only way it can get out of doing that then will be 
to have the three-fifths vote to waive the requirement.
  So in order to keep us honest, in order to keep the proponents 
honest, and I include myself--I am not a proponent--in order to keep 
all of us honest in Congress, we strike out this Houdini language, 
which allows Congress to weasel around and avoid the impact of the 
amendment, and we say ``the Congress shall implement this article,'' 
which means section 1, balance the budget, and it has to do it by law.
  So this is the ``to keep them honest'' amendment, Mr. President, and 
I hope Members of the Senate will support my amendment.
  The American people have a pretty low estimate of politicians. They 
don't believe us. They don't believe that we mean what we say. They 
don't have much faith in Congress. It isn't just Congress, but we are 
talking about Congress now because Congress has to enforce this 
article. They don't have faith in Congress, and we are going to confirm 
their lack of faith in Congress by enacting this article in the 
Constitution and, more specifically, by including in it section 6, 
which provides the loopholes by which we can avoid the strictures and 
the commandment of the language of section 1. We are merely going to 
compound and add to and solidify and fortify the American people's low 
estimate of Congress and of politicians in general.
  So that is why I am offering this amendment. Let's clean up section 6 
to say, ``No, no, we are not going to have this sleight of hand.'' 
Congress will enforce this article, and Congress will have to do it by 
law.
  Unless we approve my amendment, this section 6 will allow Congress to 
avoid the three-fifths vote, which is required if outlays are going to 
exceed income in any fiscal year, and will allow Congress to use 
estimates, sleight-of-hand estimates, in order to fool the American 
people.
  The PRESIDING OFFICER. The time of the Senator from West Virginia has 
expired.
  Mr. BYRD. I thank the Chair, and I thank Senator Hatch.
  Mr. HATCH. Mr. President, I say in relation to section 6, the term 
``appropriate legislation'' has appeared in every enforcement clause 
that has been adopted since the Civil War. But in

[[Page S1459]]

order for appropriate legislation to become a law, it must be passed by 
both Houses of Congress, presented to the President, and signed by him 
into law. I do not think there is any question about it. I yield back 
the balance of my time. I move to table and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
lay on the table the Byrd amendment No. 6, as modified. The yeas and 
nays have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Utah [Mr. Bennett], the 
Senator from North Carolina [Mr. Faircloth], the Senator from Oklahoma 
[Mr. Inhofe], and the Senator from Pennsylvania [Mr. Specter] are 
necessarily absent.
  Mr. FORD. I announce that the Senator from Hawaii [Mr. Inouye] is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 61, nays 34, as follows:

                      [Rollcall Vote No. 12 Leg.]

                                YEAS--61

     Abraham
     Allard
     Ashcroft
     Baucus
     Biden
     Bond
     Brownback
     Bryan
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Enzi
     Feinstein
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hutchinson
     Hutchison
     Jeffords
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Moseley-Braun
     Murkowski
     Nickles
     Reid
     Robb
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith, Bob
     Smith, Gordon H.
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner
     Wyden

                                NAYS--34

     Akaka
     Bingaman
     Boxer
     Breaux
     Bumpers
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Feingold
     Ford
     Glenn
     Hollings
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moynihan
     Murray
     Reed
     Rockefeller
     Sarbanes
     Torricelli
     Wellstone

                             NOT VOTING--5

     Bennett
     Faircloth
     Inhofe
     Inouye
     Specter
  The motion to lay on the table the amendment (No. 6), as modified, 
was agreed to.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Nevada is recognized to offer an amendment.
  Mr. REID. Will the Chair bring order to the Chamber, please.
  The PRESIDING OFFICER. The Senate will be in order.


                            Amendment No. 8

(Purpose: To require that the outlay and receipt totals of the Federal 
 Old-Age and Survivors Insurance and the Federal Disability Insurance 
      Trust Funds not be included as a part of the budget totals)

  Mr. REID. Mr. President, I send an amendment on behalf of myself and 
Senators Dorgan, Daschle, Kennedy, Feinstein, Conrad, Ford, Hollings, 
and Wyden and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Nevada [Mr. Reid] proposes an amendment 
     numbered 8.

  Mr. REID. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 3, line 19, after the period inset ``The receipts 
     (including attributable interest) and outlays of the Federal 
     Old-Age and Survivors Insurance and the Federal Disability 
     Insurance Trust Funds (as and if modified to preserve the 
     solvency of the Funds) used to provide old age, survivors, 
     and disabilities benefits shall not be counted as receipts or 
     outlays for purposes of this article.''.


                      Unanimous-Consent Agreement

  Mr. LOTT. Mr. President, I ask unanimous consent that on Wednesday, 
February 26, immediately following the vote on Senator Feinstein's 
amendment, Senator Torricelli be recognized to offer an amendment 
relating to capital budgeting. I further ask consent that there be 3 
hours for debate, equally divided in the usual form, with no amendments 
in order to the amendment. I finally ask that following the expiration 
or yielding back of the time, the Senate proceed to a vote on or in 
relation to the Torricelli amendment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. REID. Mr. President, in the early 1930's, this country faced what 
was called the Great Depression. That was a time that in the history 
books is even hard to understand. But banks had their doors locked and 
depositors could not get into the bank to get their money. Banks were 
formally closed and informally closed. Factories were either slowed 
down or stopped completely. Homes were foreclosed upon. Families moved 
in with each other. You had brothers living with brothers and everyone 
living with each other. It was such that books were written about what 
was taking place. It was the ``Grapes of Wrath,'' as indicated in the 
book by John Steinbeck, where the State of California, to stop people 
from migrating to California, actually tried to close its borders, as 
people were fleeing from the economic hardship they found in the States 
east of California.
  We were a rich nation. We are a rich nation. But the rich nation we 
knew had collapsed. Mines were closed. Farms became dust bowls. Trees 
were not cut in our forests. It was the stuff of which songs were 
written. The troubadour of the Depression, Woody Guthrie, wrote many 
songs dealing with the Depression--``Dust Bowl Blues,'' ``End of the 
Line,'' ``Hey, Buddy, Have You Got a Dime.'' These are a few of the 
songs Woody Guthrie wrote.
  There was much written, Mr. President, that capitalism had failed, 
and maybe even democracy was failing. We had soup kitchens, bread 
lines, people scavenged the dumps to find the bare necessities of life. 
The rules and laws that said kids should go to school were not 
enforced. Some say that up to 25 percent of children were malnourished. 
We have terms that were originated during the Depression, such as 
``tramps,'' ``bums,'' ``hitchhikers,'' and ``railriders.'' More than 30 
percent of the people were out of jobs. Those with jobs, many times, 
wished they had no jobs because they worked endless hours, for almost 
no pay. Only about 15 percent of the people of that day had pensions. 
It was during this time of calamity, this time of depression, that 
people said we have to do something else.
  Mr. President, one of the things that was done was, we adopted during 
the Great Depression in 1935 a program we call Social Security. It was 
a noble experiment. It has come to be the finest social program in the 
history of the world. What was said during that debate 60 years ago or 
more? Among other things, President Roosevelt said, on August 14, 1935, 
when he signed the bill:

       Today, a hope of many years standing is, in large part, 
     fulfilled. The civilization of the past 100 years, with its 
     startling industrial changes, has tended more and more to 
     make life insecure. Young people have come to wonder what 
     would be their lot when they came to old age. The man with a 
     job has wondered how long that job would last. The Social 
     Security measure gives us at least some protection, and 
     protection to as many as 30 million of our citizens who will 
     reap direct benefits through unemployment compensation, old-
     age pension, and through increased services for the 
     protection of children of the prevention of ill health.
       We can never ensure 100 percent of the population 100 
     percent of the vicissitudes of life. But we have tried to 
     frame a law which will give some measure of protection to the 
     average citizen and to his family against the loss of a job 
     and against poverty-ridden old age.

  He went on to say:

       If the Senate and the House of Representatives in this 
     long, arduous session. . .

  Remember, Mr. President, this was in the throes of the Great 
Depression.

       If the Senate and House of Representatives in its long, 
     arduous session have done nothing more than pass this bill, 
     the session will be regarded as historic for all time.

  Said President Franklin Roosevelt.
  Mr. President, at that time we lived by the radio--not TV, but by 
radio. The President gave a radio address where, among other things, he 
said, on August 15, on the fifth anniversary of Social Security:

       Five years ago the term ``Social Security'' was new to 
     American ears. Today it has significance for more than 40 
     million men and

[[Page S1460]]

     women workers whose application for old age insurance 
     accounts have been received. This system is designed to 
     ensure them an income for life after old age retires them 
     from their jobs.

  He went on to say in this same address to the American public:

       The millions of today want and have a right to the same 
     security their forefathers sought--the assurance that with 
     the health and willingness to work they will find a place for 
     themselves in the social and economic system for the time. 
     Because it is becoming increasingly difficult for individuals 
     to build their own security singlehanded, Government must now 
     step in to help them lay the foundation stones. Just as 
     Government in the past has helped lay the foundation of 
     business and industry, we must face the fact that in this 
     country we have a rich man's security and a poor man's 
     security, and that the Government owes equal obligations to 
     both. National security is not half and half. It is all or 
     none. The Social Security Act offers to all our citizens a 
     workable and working method of meeting urgent present needs 
     and future needs. It utilizes the familiar machinery of a 
     Federal-State government to promote the commonwealth and the 
     economic stability of the Nation. The act does not offer 
     anyone, either individual or collectively, an easy life, nor 
     was it ever intended to do so. None of the sums of money paid 
     out to the individual in assistance or insurance will spell 
     anything approaching abundance, but they will furnish that 
     minimum necessary to keep a foothold, and that is the kind of 
     protection Americans want.

  Mr. President, these were some statements made by Franklin Roosevelt. 
These statements that he made were visionary because we have 
established in this country a program that people depend on.
  I received a letter in my office today from one Helen Collins who 
lives in Las Vegas. I wrote her a letter to talk about the balanced 
budget. She wanted to know about it. So I answered her request.
  She wrote on the bottom of my letter a handwritten note 
dated February 18, 1997.

       Dear Senator Reid: Thank you for the update and for 
     supporting a balanced budget amendment which expressly 
     exempts the Social Security trust fund. I have been a widow 
     since age 21. I never considered applying for any kind of 
     welfare assistance. I worked, and raised and educated my son. 
     He got a master's degree. Sad to say, at age 71, I am totally 
     on my own on quite a limited budget. By being very careful, I 
     get by. However, I do worry about getting more seriously ill 
     and losing Social Security. For many of us, these are not the 
     golden years. But I, for one, thank God that good people like 
     you are helping us maintain our dignity and independence. 
     Sincerely, Helen M. Collins.

  Mr. President, this is what the President of the United States said 
more than 60 years ago. He said, ``The act does not offer anyone''--not 
Helen Collins or anyone else--``either individually or collectively, an 
easy life, nor was it ever intended to do so * * * but they will 
furnish the minimum necessary to keep a foothold, and that is the kind 
of protection Americans want.''
  I repeat, the most successful social program in the history of the 
world is Social Security. This amendment is an effort to save Social 
Security.
  I have listened to the arguments for the last several years about 
this balanced budget amendment and why it is important. I agree. But I 
agree, Mr. President, that the balanced budget amendment should pass 
only if it exempts Social Security.
  I think we should have a balanced budget the hard way, the right way. 
Why should we use $80 billion this year, as an example, in surplus in 
Social Security to help disguise and offset the budget? We should not.
  When I first started this matter a number of years ago--3 years ago, 
to be exact--I was a lone voice crying in the wilderness. That is not 
the way it is anymore. We have gained support. In the last year we 
gained support from people like courageous Republican Congressmen in 
the House of Representatives who have said they will support a balanced 
budget amendment, but they want the opportunity to exclude Social 
Security because they believe also that, if we are going to balance the 
budget, it should be done honestly. It should be done the hard way.
  This Social Security Program that was set up 60-plus years ago was a 
fairly simple and principled experiment. They said what we will do is 
have the employer and the employee pay into a trust fund those moneys 
that will be saved so that people when they retire can have some money. 
Remember, Mr. President, we are talking about a Social Security trust 
fund.
  Before coming to Congress, I was a practicing lawyer. I represented 
people who had problems and needed guidance. In some of the work that I 
did, I dealt with my clients' money. I established in my office trust 
accounts for my clients. And in this trust account, I would put my 
clients' money. If I took any part of that money, $10, $100, $1,000, 
$10,000, any portion of it for personal use, to buy my wife a coat, to 
make a car payment, to make a house payment, or to go to dinner, I 
would be subject to disbarment. They could take my license to practice 
law. Not only could they do that, but if the activities that I had 
committed were egregious enough, I could be prosecuted criminally. I do 
not see why the Social Security trust fund should be any different. 
What right do we have to pilfer those trust funds?
  I have heard arguments made here on the floor of the Senate by people 
saying, ``Well, that is what we have been doing in the past.'' Well, 
isn't that great? Does that mean we should place in the Constitution or 
enshrine in the Constitution of the United States the fact that we have 
been taking money wrongly in the past from Social Security? It is an 
easy way to balance the budget. It adds billions, coming to trillions 
of dollars by the year 2029 to balance that. It is an easy way to 
balance the budget. No wonder there is a rush to balance the budget 
when you are going to violate and take money out of the Social Security 
trust fund.
  I have heard people say, ``Well, there may be a little confusion here 
with Social Security. What we will do after we pass the constitutional 
amendment is we will then come back and pass a statute that says you 
can't use Social Security.'' That is really stretching, because we all 
know you can't pass a statute to override an expressed provision in the 
Constitution. A promise like that is really meaningless. Proponents 
know the calamity of passing it. I say if we want to pass a 
constitutional amendment to balance the budget, just exclude Social 
Security. This would pass with 85 votes in the Senate and probably at 
least 350 votes in the House. Social Security is not a giveaway. It is 
not an entitlement program. It is a program, though, that requires 
sacrifice by an employer and employee, and because of that I believe we 
should do everything within our power to make sure that Social Security 
remains strong for the foreseeable future.

  There are some who say that if we have this amendment, then people 
can claim everything as Social Security. You can claim that building 
highways is Social Security. That is so fallacious and wrong. Social 
Security is enshrined in the law. We know what Social Security is. The 
underlying amendment diverts Social Security revenues for other uses. 
It could force future Social Security cuts to resolve frequent budget 
crunches, and I think more positively would force future Social 
Security cuts to resolve frequent budget crunches. It will force Social 
Security into an early funding crisis.
  Also, this is a little off the point, but I have heard arguments 
today saying, well, States balance their budgets; why don't we? I have 
been a constitutional officeholder in the State of Nevada, served three 
legislative sessions. People go around saying Nevada has a balanced 
budget, just like most States. They do not have a balanced budget. What 
they do is put capital expenditures off budget. They bond for that. 
There is no balanced budget in the State of Nevada or most other 
States. But I am willing to go for a balanced budget. I am saying we 
will keep the capital expenditures off. All I want is to exclude Social 
Security. My amendment seeks a balanced budget that protects Social 
Security. It keeps Social Security revenues in the trust fund. It 
protects Social Security from cuts. It preserves the 1983 long-term 
rescue of Social Security. It protects Social Security.
  In 1983, Tip O'Neil, Ronald Reagan, Claude Pepper, and a number of 
others got together to determine what they could do to fund Social 
Security in the foreseeable future. Social Security was in a time of 
crisis. They got together in a bipartisan fashion and funded Social 
Security, they thought at the time, to go to the year 2060. We know now 
that fund will likely go to the year 2029 or thereabouts. But they did 
excellent

[[Page S1461]]

work. In 1983, they reformed Social Security to preserve it for future 
generations. We can preserve it long after 2029 with some minor 
adjustments. I served as a member of the entitlement commission where 
we studied this and other issues for more than a year.
  So to finance Social Security benefits, low- and middle-income wage 
earners now pay a heavier payroll tax than wealthier Americans. The 
largest single tax that people pay is Social Security. It would seem to 
me that it would be logical and fair to do what we can to secure those 
benefits.
  The underlying amendment would abandon our commitment to future 
retirees. No funds could be reserved for future use. The constitutional 
amendment would supersede the statutory transfer of bonds into the 
Social Security trust fund. If we adopt the current underlying balanced 
budget amendment, we remove the obligation to eventually use the Social 
Security surpluses to pay benefits.

  The underlying amendment would force Social Security cuts. It will 
force crisis. It will encourage deadlock.
  In a letter to Tom Daschle from the President of the United States, 
January 20 of this year, the President said:

       In the event of an impasse in which the budget requirements 
     can neither be waived nor met, disbursement of Social 
     Security collections would cease or unelected judges could 
     reduce benefits to comply with this constitutional mandate. 
     No subsequent implementing legislation would protect Social 
     Security with certainty because a constitutional amendment 
     would override statutory law.

  That is pretty specific. Would there be a crisis? Of course there 
would be a crisis. We would have three alternatives: have deep cuts in 
Social Security or deep cuts in other programs we have already cut to 
the bone. Alternatively, we could have massive tax increases. I think 
any one of those is not something I look forward to. I think we should 
pass my amendment and then pass a real constitutional amendment to 
balance the budget. The Democratic alternative, the one that I am 
offering, would allow the trust fund to spend surpluses, keeping Social 
Security viable for many years.
  We have heard a lot in this past week about the need to protect 
Social Security. It is important to recognize in a little more detail 
the history of Social Security and appreciate why some of us are 
fighting so hard for this express exemption. I have said and I believe 
that Social Security is the most successful social program in the 
history of the world. It was enacted on August 14, 1935, at a time this 
country was in the throes of the greatest depression this country has 
ever felt and perhaps the greatest worldwide depression ever. It was 
enacted to provide for the general welfare by establishing a system of 
Federal old age benefits and by enabling the several States to make 
more adequate provision for its old.
  The real significance of this act is that it was this country's first 
major Federal program to deal directly with the economic security of 
its citizens.
  Before then, this matter was handled by States and private sources. 
In those days we had what were called poorhouses. Each county had a 
poorhouse where they woul put poor people They were not pleasant. Some 
were better than others. There were no standards. Whatever the counties 
could provide with State assistance is where people went.
  Social Security took away county poorhouses. Federal action became 
necessary because neither the States nor private charities had the 
financial resources to cope with the growing need during the depression 
years. The balanced budget amendment now before this body radically 
alters in one fell swoop this program. It shifts the burden for 
ensuring the economic security of our Nation's senior citizens. It puts 
us on the course of turning this responsibility back to individual 
States and private charities, and it does so, in my opinion, in a very 
deceitful way.
  Balancing the budget is very hard. It is made significantly easier by 
having these Social Security surpluses. If those surpluses were not 
available, we would really have to bite the bullet. We would have to 
make some significant changes, but we would at least have an honest 
balanced budget. This is not an honest balanced budget. And there is no 
wonder that the Helen Collinses of the world write and say, ``We are 
afraid of our little security you are going to take away from us.'' 
They have reason to be afraid.

  I have talked on this Senate floor a number of times about my 
grandmother. The first time I ever heard of Social Security was from my 
grandmother. I never knew my grandmother as a young woman. I knew my 
grandmother as short and somewhat heavy. She did not get around very 
well. She had eight children. She lived in a very rural part of Nevada, 
in a very depressed place, but my grandmother had dignity because she 
was able every month to get her old age pension check, and she was 
proud of that. It gave her dignity and independence from her eight 
children. She did not have to be a ward to her family, and she was one 
of the lucky ones because she had a family. Think of how much more 
insecure a person who had no family would feel.
  So Social Security is an important program. People like Helen Collins 
should be worried, because if this amendment passes, Social Security as 
we know it is gone. It will be destroyed.
  What is the recent history of Social Security? We have talked about 
it a little bit. We have talked about what happened in 1983 in this 
bipartisan commission. But we have also had a current commission. 
Included were former majority leader Dole and current Federal Reserve 
Chairman Greenspan, a notable opponent of the balanced budget 
amendment. But these people studied what should take place. The panel 
charted a course to long-term solvency. This contract that we have, the 
Social Security contract, is really a Contract With America, the first 
Contract With America, one that means something to people on the 
street. People on the street may not understand the importance to them 
individually of term limits, of line-item veto, of prayer in school. 
But they do understand the importance of getting a Social Security 
check. Separate and apart from the merits that I have just spoken of, 
Social Security is a Contract With America.

  So, in short, we must protect what happened in 1935 and how it was 
again protected in 1983. The only way to do that is to pass this 
amendment.
  In 1990, there was an amendment offered on this floor. It was an 
amendment offered by Senator Hollings. It became known as the section 
13301 amendment. The effect of this amendment was that it took Social 
Security off budget. It passed overwhelmingly out of committee. All but 
one person voted for it out of committee. All but two Senators voted 
for it in the Senate. It got 98 votes. The author of this amendment has 
spoken on this floor eloquently on a number of occasions. The junior 
Senator from South Carolina said he offered this amendment for the 
purpose of protecting the integrity of the trust funds of the Social 
Security system. The purpose of the Hollings amendment was to separate 
Social Security from the unified budget.
  After we established the payroll tax we wanted to ensure the money 
was excluded from the unified budget. It passed by a vote of 98 to 2. 
It was a strong statement of congressional intent to protect Social 
Security.
  The balanced budget amendment now before this body repeals something 
we passed 98 to 2. The plain language of S. J. Res. 1, the underlying 
amendment here, makes it clear that Social Security should be treated 
as part of the unified budget and should be used to bring down the 
deficit. It is ironic that some would suggest that this should occur 
after we voted just a few years ago by a vote of 98 to 2 to pass the 
Hollings amendment. The real inconsistency is that voting in 1990 to 
remove Social Security from the budget and then voting in 1997 to again 
include it.
  I do not think there are many people in this body who would say that 
the senior Senator from New Mexico does not understand budgetary 
matters. In fact, I think he has had a wide ranging experience, not 
only serving on the Budget Committee but serving on the Appropriations 
Committee, where I have had the pleasure of serving with him during my 
tenure in the Senate. The senior Senator from New Mexico, during the 
time that the debate took place on the Hollings amendment, said,

[[Page S1462]]

among other things, ``I voted for Senator Hollings' proposal because I 
support''--this is a direct quote--``I support the concept of taking 
Social Security out of the budget deficit calculation. But I cast this 
vote with reservations.''
  Now, listen to his reservation:

       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 . . . 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 20 years now.

  So what the chairman of the Budget Committee today said back in 1990 
is that we have to support the Hollings amendment. And he voted for it. 
The only reason he did not like it is it was not strong enough.
  Again:

       I voted for Senator Hollings' proposal [this is the senior 
     Senator from New Mexico talking] because I support the 
     concept of taking Social Security out of the budget deficit 
     calculations. But I cast this vote with reservations.

  And here I say, what are his reservations? It was that the provision, 
the Hollings amendment, was not strong enough. He wanted to build a 
firewall. He, Senator Domenici, went on to say:

       We need a firewall around those trust funds to make sure 
     those reserves are there to pay 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.

  Now, please, someone tell me how we can go forward now, 7 years 
later, after the chairman of the Budget Committee said this in 1990? I 
mean, is this misspeak?
  Many of us spent a great deal of time reviewing the recent report by 
the Advisory Council on Social Security, and I mean within the past few 
months. This panel of experts was charged with providing 
recommendations to Congress on the long-term solvency of the trust 
funds. There were 13 members from all walks of life, chaired by a 
professor from a university in Michigan. They were not unanimous, but 
all 13 said that Social Security trust fund moneys should be invested 
in some fashion; part of them. Six felt one way, five another way, one 
another way, but they all felt these moneys should be partially 
invested in the private sector.
  Now we are saying, if this amendment passes, that this 13-member 
commission, their work would go for naught, because you cannot invest 
moneys if there aren't any. And there would be no moneys if this 
amendment passed because the surpluses would be used to offset the 
deficit. So, should we now vote to utilize the trust funds for 
balancing the budget that will place at risk our ability to pursue 
these proposals suggested by the 13-member commission just a matter of 
few months ago? One proposal calls for investing a portion of the 
current trust fund in the equities market. You cannot invest in the 
equities market unless there is some money left over, so you could not 
do that.
  We need to understand the importance of the mission of the advisory 
panel. We paid this group of experts to find solutions that will bring 
about long-term solvency of the funds. By including Social Security in 
a balanced budget amendment, we are, in fact, admitting that we care 
not about the long-term solvency of the trust fund. What we are really 
saying is that the short-term goal of balancing the budget is all that 
matters.
  I am saying the American public wants us to stop playing games back 
here. If we are going to have a balanced budget amendment, let us do it 
the right way, let us do it the honest way: Exclude Social Security and 
not use those huge surpluses that will be going on for the next 30-plus 
years.
  We are not simply negating their findings by passing this underlying 
amendment. In fact, we are negating the whole reason we organized this 
Commission in the first place. And we are negating the need for Social 
Security.
  There are some people who do not want Social Security. I believe that 
there are people who would rather Social Security fail. I need look no 
further. I pull this out. I carry this with me all the time. This is a 
quote from the majority leader of the House of Representatives, House 
Majority Leader Dick Armey:

       Social Security is a rotten trick. I think we are going to 
     have to bite the bullet on Social Security and phase it out 
     over time.

  Does that sound like somebody who wants to save Social Security? I 
think not.
  Mr. President, there is a need for an express exemption of Social 
Security. It is Congress' obligation to ensure both parties perform 
their obligations under the terms of the contract we have with the 
people of America. This will not be possible if the underlying balanced 
budget amendment passes. It can only happen if we exempt Social 
Security.
  Social Security is a program that is working. It is a Government 
program that works. The poverty rate for today's seniors is about 10 
percent, the lowest in the history of this country. What was it prior 
to the adoption of Social Security? It is obvious that someone like 
Helen Collins would be in one of those poor houses. A widow since age 
21, who struggled and worked to put her only child through college, now 
is pleading with us: ``All I have is Social Security. I have never had 
to go to welfare. Social Security is not a welfare program. Can't you 
do something to make sure you protect Social Security?''
  That is all we are asking. Adopt this amendment and then go ahead and 
pass a balanced budget amendment. But I say to my friends, please, 
don't pass the underlying amendment unless we exclude Social Security. 
The poverty rate today for seniors is 10.5 percent, the lowest in the 
history of this country. We don't need poorhouses anymore. We don't 
need people, like my friend who wrote me this handwritten note, in a 
poorhouse.
  Why don't we have poorhouses? Why do we have a poverty rate of 
seniors at 10.5 percent? We have it because of one reason, and that is 
Social Security.
  Are we concerned about the raiding of this surplus by those intent on 
enforcing the balanced budget amendment? Maybe so. This is not a 
Democrat or Republican issue, I hope. I hope my colleagues on the other 
side of the aisle would recognize that Social Security is a program 
that is important to both Democrats and Republicans. We need Republican 
support to adopt this amendment, and I plead with my friends, adopt 
this amendment. We have some courageous Members in the House of 
Representatives, sophomore Republican Members of the House, who are 
leading the fight over there to exclude Social Security from a balanced 
budget amendment. I think we should all be proud of them. We need some 
Republican Senators to join with them.
  What we can't support is an attempt to use Social Security as a means 
of achieving this short-term goal. To do so would be a breach of our 
obligation under the terms of the Social Security contract with America 
that we have. In short, people pay into the Social Security trust fund 
through a lifetime of their employment in the labor force with the 
guarantee that they will get their money back upon retirement. It is a 
simple contract to understand. Today's workers support today's 
retirees, and tomorrow's workers support tomorrow's retirees. This 
simplicity belies the high regard and faith that the American worker 
has for this guarantee.
  So, at a time when so many are attacking this institution, 
questioning their faith in the system, it is imperative we provide 
Americans with the guarantee that while we all will sacrifice to 
balance the budget, we will all sacrifice equally, we won't do it on 
the back of Social Security, because to do so would just be another 
gimmick, another thing that was referred to as smoke and mirrors.
  This amendment should receive the support of everybody supporting the 
balanced budget amendment. While some have given assurances Social 
Security will not be touched in the enforcement of a balanced budget 
amendment, this amendment will put teeth into that assurance. If people 
on the other side of the aisle say, ``We agree with the Senator, we 
don't think Social Security should be touched either; in fact, we will 
pass a resolution, we will even tell you we will pass a statute after 
this becomes effective,'' well, it is wasteful, it will be meaningless. 
The only way that it will work is if it is included in this amendment. 
Let's exclude Social Security.

[[Page S1463]]

  Our amendment gives all an opportunity to, in effect, step up to the 
proverbial plate and take a swing at what is the right thing to do, and 
that is to exlude Social Security so that it is protected. If they 
don't wish to protect Social Security, they should not support our 
amendment. Promises not to raid the Social Security system are 
insufficient and really unenforceable. We need a binding commitment, 
and this amendment will do just that.
  Social Security affects all of us. There are proposals that include 
investing this money in the private market. This cannot be done unless 
we exempt the trust funds to ensure those funds are available for 
investment. By not exempting Social Security, we not only hurt today's 
senior citizens but are compromising the future of tomorrow's retirees 
as well. This is not an amendment that helps people with white hair 
only. This is an amendment that helps their children and their 
children's children.
  As I indicated, Mr. President, when I started this 3 years ago, I had 
very little support and help. But the message is resonating to the 
American people. Within the past 10 days, there have been two 
comprehensive nationwide polls. Hart-Teeter--now, remember, these are 
Republican pollsters. They poll for Republicans running for office. 
They also do work in the markets. They did a poll for NBC, National 
Broadcasting Co., and the Wall Street Journal. Mr. President, 71 
percent of the people polled said they will not support a balanced 
budget amendment unless Social Security is excluded. A similar poll was 
conducted a few days later by the New York Times. Like numbers. Almost 
75 percent of the American people say, ``Do not balance the budget if 
Social Security is included.'' They say, ``Balance the budget, but 
exclude Social Security.''
  We have a number of think tanks that have taken a very close look at 
this. I served on the Entitlement Commission with the Director of the 
Center on Budget and Policy Priorities, Mr. Greenstein. The Center on 
Budget and Policy Priorities told us that by the year 2020, the second 
decade of the next century, Social Security reserves will be in the 
trillions of dollars.
  They say:

       If Social Security surpluses were to be used in the next 
     two decades to increase national saving rather than to offset 
     the deficit and the rest of the budget, that will likely 
     result in stronger economic growth.

  So what the Center on Budget and Policy Priorities says is if you 
take these moneys to mask the deficit, it doesn't help. But if you take 
the Social Security reserves and make them truly reserves, it will 
result in greater savings and will cause more economic growth in our 
great country.
  Here is what the Center on Budget and Policy Priorities says about 
the underlying amendment. Among other things, they say:

       Unfortunately, the balanced budget amendment--

  The underlying amendment--

     would undercut the approach to bolstering Social Security. 
     The implications of this requirement on Social Security are 
     very significant. First, the budget would be considered 
     balanced when the deficit outside Social Security exactly 
     offset the surplus inside Social Security. But when that 
     occurred, the objective of accumulating Social Security 
     surplus, partly to build the Nation's capital stock and 
     productive capacity so we can better afford to pay for the 
     baby boomers' retirement, would be stymied. Second, the 
     benefits of the baby boomers would likely have to be financed 
     in full by the taxes of those working in the years the baby 
     boomers retire.

  Very simple. So everyone understands what the Center on Budget and 
Policy Priorities says, for example, if in the private sector you pay 
into a fund all your life so that when you reach age 65 you can retire, 
and you go to your employer and say, ``Well, I'm 65. I want to draw my 
retirement,'' they say, ``Fine. You can go ahead and draw your 
retirement, but every penny you draw out for retirement you have to put 
that much money in.'' And the person says, ``Would you repeat that?'' 
And so the boss would repeat it. The boss would say, ``Sure. You paid 
money into the fund all of your lifetime while you worked here, but 
we've used the money for something else. So if you want to draw money 
out, you have to put it back in the second time.'' That is in effect 
what is--not in effect --that is literally what is happening in here.

       If the underlying balanced budget amendment passes, Social 
     Security recipients will have to pay twice if they want their 
     benefits. This version of the balanced budget amendment would 
     thus undercut the central achievements of the 1980 Social 
     Security reforms.

  That is pretty direct. The Center on Budget and Policy Priorities 
further says:

       Under the amendment, reductions in Social Security could be 
     used to help Congress and the President balance the budget if 
     they are faced with a budget crunch. The balanced budget 
     amendment is likely to lead to periodic midyear crisis when 
     budgets, thought to be balanced at the start of a fiscal 
     year, fall out of balance at the fiscal year, such as factors 
     of slowing economic growth. When sizable deficits emerge with 
     only part of the year remaining, they will often be very 
     difficult to address.

  Among other things, they can, under this amendment, raise the debt if 
they get a three-fifths vote; raise taxes, another supervote. In such 
circumstances, the Policy Priority Institute says:

       The President or the courts may feel compelled to act to 
     uphold the constitutional requirements for a budget balance.

  In documents circulated in November 1996, explaining how the 
amendment worked, the House coauthors of the amendment--listen to 
this--wrote:

       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 appear to include Social Security 
     checks.

  Mr. President, this is not something I made up. These are direct 
words from the sponsors of the amendment in the House of 
Representatives. They put in writing--I quote--

       . . . the President would be bound at the point at which 
     the Government runs out of money to stop issuing checks.

  So, ladies and gentlemen, the underlying amendment clearly will 
destroy Social Security.
  The major difference between the two versions of the balanced budget 
amendment--mine and the underlying amendment--is that the version which 
excludes Social Security allows the Nation to draw on its Social 
Security savings during the period when the baby-boom generation is in 
its peak retirement years and requires the Nation to save more in 
advance to help cover the cost of the baby-boom generation. Pretty 
clear.
  We have here a great institution, part of the Library of Congress, 
called the Congressional Research Service. When a Member of Congress 
has a question about an issue, you can call. You may want to know about 
how much lumber our forests are producing. You may want to know how 
many miles of roads there are in Nevada, Iowa, or Colorado. Any kind of 
information they can get information for us.

  One of the things they were asked to comment on is, What about this 
underlying amendment? What about the amendment that is now before this 
body? What will it do? They said, among other things:

       The amendment 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 the 
     Social Security funds to pay out benefits.

  So what they said is the same thing Greenstein said, that when you 
have surpluses built up they would go to offset the deficit. They go on 
to say:

       Therefore, under the balanced budget amendment's language, 
     there is mandated a balance in each year for the outlays that 
     year and the receipts that year. Payments out of the balance 
     of the Social Security trust funds would not be counted as 
     Government receipts under the balanced budget amendment when 
     in the year 2019, or whenever the time occurs, the receipts 
     in those particular years and the Social Security trust funds 
     are not adequate to cover the 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 balanced budget 
     amendment requires that 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 benefits.

  That again is very clear. It is again from another source saying that 
the underlying amendment will destroy Social Security.
  Some people tried to get the Congressional Reference Service to 
change their mind, to write another report. And they wrote another 
report that said the same thing. Shorter, but says the same thing.

       Thus, the pending balanced budget amendment requires 
     outlays for any fiscal year not to exceed total receipts for 
     that year.


[[Page S1464]]


  What they are saying is you would not have to use Social Security 
surpluses. What you can do is borrow more money or cut more services or 
raise more taxes. Of course, remember, when you have surpluses running 
as highs they are, the one place you are going to go is where the 
surpluses are.
  To support what CRS has said we again come back at a later time with 
the subsequent report by the Center on Budget and Policy Priorities 
where they say:

       Under the balanced budget amendment, the Social Security 
     surplus could not be tapped and interest earnings on the 
     surplus could not be used unless it was offsetting surplus in 
     the rest of the budget.

  Again, it is very clear what CRS said, what the Center on Budget and 
Policy Priorities said.
  Mr. President, there are numerous organizations that oppose the 
balanced budget amendment for various reasons. There are also 
organizations that do not support the passage of the balanced budget 
amendment because of what it does to Social Security.

  One such organization is the esteemed National Committee to Preserve 
Social Security and Medicare with about 6 million members. Mr. 
President, they, just a few days ago, wrote a letter to me where they 
said, among other things:

       Your amendment would preserve the integrity of the Social 
     Security trust fund under a balanced budget constitutional 
     amendment.

  They did not equivocate. They did not say, ``Offer this amendment at 
the right time.'' They say, the amendment that is now before this body 
will preserve the integrity of the Social Security trust fund under a 
balanced budget constitutional amendment. They go on to say:

       The issue is clear-cut. As drafted, S.J. Res. 1 overturns 
     the 1990 law taking Social Security off budget and allows 
     Social Security to be raided to reduce the deficit. Statutory 
     measures to protect Social Security from such a result are 
     not adequate because of the supremacy of the Constitution and 
     because future Congresses are free to change such statutory 
     measures while the provision to place Social Security on 
     budget will remain in the United States Constitution. 
     Borrowing from the reserve to finance current consumption 
     will place a heavy burden on future generations because the 
     debt to the trust fund must be paid with interest.

  Mr. President, there certainly has to be consideration given to what 
will happen if the underlying balanced budget amendment passes. It will 
not only throw the Social Security trust fund out of kilter, it will be 
a cheap and very deceitful way to attempt to balance the budget. As a 
result of that, we have a letter written January 28 from President Bill 
Clinton to Leader Daschle where he says in the paragraph in the middle 
of page 1:

       I am very concerned that Senate Joint Resolution 1, the 
     Constitutional amendment to balance the budget, could pose 
     grave risks to the Social Security system. In the event of 
     passage, in which the budget requirements can neither be 
     waived nor met, disbursement of Social Security checks could 
     cease or unelected judges could reduce benefits to comply 
     with this constitutional mandate. No subsequent implementing 
     legislation could protect Social Security with certainty 
     because a constitutional amendment overrides statutory law.

  Mr. President, we have offered this amendment. The Senator from 
Nevada has offered it, along with Senators Dorgan, Daschle, Kennedy, 
Feinstein, Wyden, Conrad, Ford and Hollings.
  Mr. President, I say stop and look at what is happening. If you take 
a look at what is the state of the economy today, last year was the 4th 
year in a row we had a declining deficit, the first time since before 
the Civil War we have had 4 years in a row with a declining deficit. 
Lowest unemployment, lowest inflation for 40 years, highest economic 
growth in 40 years, 300,000 fewer Federal employees today than 4 years 
ago, excluding the cuts in the military. Our Federal Government today 
is about the same size as when President Kennedy was President. Home 
building during the last 2 years, the largest number of homes built in 
any comparable 2-year period.
  The economy is doing well. I do not think this underlying amendment 
which would throw Social Security in reverse will do anything to help 
the economy. In fact, it will hurt the economy and certainly hurt the 
Helen Collinses of the world, people who have their dignity as a result 
of the Social Security system.
  Mr. President, I talked about why Social Security was passed. I 
talked about banks shutting their doors. I talked about factories 
slowing down and stopping. I talked about homes being foreclosed upon, 
farms being foreclosed upon, people being evacuated from their 
businesses because they did not pay their bills, families living 
together, ``The Grapes of Wrath''--we do not need ``The Grapes of 
Wrath'' revisited. We are a rich nation. We have an obligation to 
provide for people in their senior years, especially when they provided 
for themselves, and that is all Social Security does. Social Security 
is not a gift. It is not welfare. It is a program, Mr. President, that 
gives people dignity like my grandmother and like Helen Collins.
  We need to understand that this underlying amendment is not fair. If 
everyone acknowledges that they want to take care of Social Security 
and protect Social Security, then why not accept my amendment? I hope 
people of good will on both sides of the aisle will think about this 
amendment, will understand where we have come in the 3 years since I 
first offered it.
  I was a lone voice crying in the wilderness 3 years ago. Now, Mr. 
President, we have support. The American public supports what we are 
attempting to do. They are supporting it because they know the 
importance of Social Security, and they know that if we do not 
expressly exclude Social Security from a balanced budget amendment, it 
will be destroyed. That is why I will only support a balanced budget 
amendment that expressly exempts Social Security.
  Mr. HATCH. Mr. President, I am hoping we can conclude debate for this 
evening. I will say a few words and hope that our leadership will be 
ready to end the session for today. I give warning that I am prepared 
to close down the Senate if the Senate is prepared to be closed down.
  Let me just say a few words about my friend's amendment. My friend, 
Senator Reid, and others seek to remove Social Security from the 
protections of the balanced budget amendment. I look forward to a 
lengthy debate tomorrow on this subject and this issue. But while I 
respect these critics, and I certainly do, the truth of the matter is 
that the Reid amendment is merely a diversion from what should be the 
real focus of this debate: whether the Constitution should be amended 
to require a balanced budget amendment except in exigent circumstances.

  When I say that, I again look at these 28 years of unbalanced 
budgets. This is the real issue. Everybody knows that if the Reid 
amendment passes, this is going to only get worse. The fact of the 
matter is, if we are going to do anything about this, we have to pass 
the underlying balanced budget amendment without the Reid amendment on 
it. Exempting Social Security from the balanced budget amendment will 
create an overwhelming incentive to do just what these critics fear.
  Let me point out this chart here. Social Security--don't leave it 
out. The budget is protected by the balanced budget amendment. If 
Social Security is left out, special interests will eat Social Security 
surpluses like cheese. There is no question about it. This exemption 
would focus budget pressures on the Social Security trust fund that 
could destroy the viability of the Social Security trust fund itself. 
It is a risky gimmick, and it has no real relationship to the goals 
sought.
  Taking Social Security off budget will subject its funds to 
Washington's special interest scavengers. When you have rats in your 
home, you need to plug up all the holes. If you do not, they will find 
a way in. If we leave Social Security off budget, new and old special 
interest spending initiatives which cannot survive or make their way in 
under a balanced budget plan will smell out the scent of Social 
Security and simply devour, just like these rats that are devouring the 
Social Security cheese. You need to leave it in because the budget will 
be protected by the balanced budget amendment. Do not take it out.
  Furthermore, exempting the trust funds is simply unjustified. There 
already exists an elaborate scheme of firewalls that protect the trust 
funds from Presidential and congressional tampering. Nothing in the 
balanced budget amendment is inconsistent with the statutory firewall 
scheme. The

[[Page S1465]]

truth is that the passage of Senate Joint Resolution 1 is the best way 
to preserve Social Security benefits.
  Mr. President, I must emphasize another reason why the Reid amendment 
is unnecessary. The proposal to remove Social Security from the 
protections of the balanced budget amendment does nothing to respond to 
the concern that Social Security benefits will be reduced. This is the 
language of the Reid amendment. Nothing in the exemption would protect 
Social Security recipients from either benefit cuts or tax increases. 
Just look at the message there. In fact, the Reid amendment could 
weaken the financial integrity of the Social Security System.
  Under current projections, Social Security will have exhausted the 
trust funds and will be running deficits by the year 2029. Many of us 
believe they will run deficits before then. By 2070, as shown on the 
chart, Social Security will face a startling $7 trillion shortfall. 
Just look at these deficits--by 2070, a $7 trillion shortfall.
  Excluding Social Security ignores this problem and places the whole 
system in dire jeopardy. Including Social Security in the budget 
calculation forces Congress to address the pending crisis in a 
responsible manner before it becomes too late. Why? Because exempting 
Social Security creates two budgets, one which must be balanced because 
receipts must equal outlays, and the other, a Social Security trust 
budget which will contain the current trust fund's surplus. This second 
budget presents the political branches of Government with a powerful 
incentive to redefine costly spending programs as Social Security and 
pay for them through what would become a giant loophole in any attempt 
to balance the budget.
  There is no telling where these games might lead. Imagine the 
christening of the SS Social Security battleship, or the creation of 
the Social Security National Park, which will probably, of course, be 
located in Utah if this administration has anything to say about it. 
Thus, this loophole would make it easy to balance the budget on paper 
without changing anything except accounting methods. And, in perhaps 
the ultimate paradox, Congress could use the loophole to seem to 
eliminate the deficit without a single spending cut.
  According to Wall Street analyst David Malpass, who recently 
testified before the Judiciary Committee, ``Financial markets would 
react negatively to a budget concept that ignores Social Security.'' By 
passing a balanced budget that excludes Social Security, Congress 
would, according to him, and I think anybody else who looks at it 
objectively, ``game'' the system, saying, in effect, that it does not 
intend to balance the consolidated unitary Federal budget. For Malpass 
and other market analysts, ``This would be a decidedly negative signal 
for financial markets leading to higher interest rates.'' That would 
hurt every citizen in this country, but most of all the poor.
  Furthermore, Wall Street's support for the balanced budget amendment 
was made evident today in a full-page advertisement that Merrill Lynch 
placed in Roll Call. The ad was entitled ``Why the Balanced Budget 
Amendment Makes Sense.''
  I ask unanimous consent that the article be printed in the Record at 
this point.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

             Why the Balanced Budget Amendment Makes Sense

       During the next month, Congress will debate whether to add 
     a balanced budget amendment to the Constitution.
       Many arguments have been raised against a balanced budget 
     amendment. Chief among them is that the amendment would 
     aggravate an economic downturn by forcing budget cuts and tax 
     increases.
       This is a legitimate concern. There is widespread agreement 
     that tax increases and spending cuts in times of economic 
     contraction would only exacerbate a downturn.
       But the balanced budget amendment would not put members of 
     Congress in straitjackets. The language of the amendment 
     clearly allows for flexibility on this score and it is 
     certainly plausible that three-fifths of the House and Senate 
     would waive the requirement during economic slowdowns.
       Concern about the impact of a balanced budget amendment 
     should be linked to where the economy is headed if fiscal 
     policy remains on its present course.
       Any budget agreement reached this year will strive to 
     balance the budget by 2002. But this year's budget agreement 
     will do little to address the long-term fiscal problems this 
     country faces.
       As the Congressional Budget Office has shown, our long-term 
     fiscal outlook is unsustainable. According to CBO.
       Entitlement and interest spending will skyrocket after 
     2010--from 12 percent of GDP today to between 22 percent and 
     30 percent by 2025.
       The spending explosion will create enormous future 
     deficits. By 2030, the deficit could range between 12 percent 
     and 37 percent of GDP--compared to 1.4 percent in 1996.
       In addition, economists project that current spending and 
     tax policies will ultimately levy a crushing 84 percent 
     lifetime net tax rate on future generations of Americans.
       Clearly, measured in terms of deficits, debt levels, or 
     future tax rates, our current fiscal path will soon become 
     unaffordable. As a nation, we have made promises that we 
     simply cannot keep without endangering our economic future 
     and that of our children.
       That's why we support a balanced budget amendment. The 
     amendment itself will not reduce the deficit by a dime. But 
     it could create a political climate that makes the hard 
     choices we face a little easier and lend political support to 
     the long-term pursuit of fiscal prudence.

  Mr. HATCH. Mr. President, I believe that this gamesmanship is exactly 
what must be avoided. The way to avoid it is to reject such exemptions. 
The best way to protect retirees of future generations is to adopt a 
clean and strong balanced budget amendment, free of loopholes. 
Significantly, critics of Senate Joint Resolution 1, who wish to exempt 
Social Security, have not demonstrated in the least how they would 
balance the budget without including the present Social Security trust 
fund surpluses, which, as I stated, is only temporary. Presumably, 
without including the present surpluses in budget calculations, other 
programs would have to suffer greater cuts.
  It is ironic that many of those who argue that a balanced budget 
constitutional amendment would cause cuts in social programs are 
themselves calling for the exemption of Social Security, advocating 
draconian cuts in their most favorite programs. Let me give you an 
example. Between the years 2002 and 2007, without including the 
surplus, the deficit will appear to be $700 billion larger than it is. 
This means either a mammoth tax hike on all American families--almost 
$1,100 per year per household--or devastating cuts in important 
programs like Medicare, cancer, and other disease research, Head Start, 
and environmental cleanup. I might add that Treasury Secretary Rubin, 
at a January 17 balanced budget constitutional amendment hearing, 
testified that the trust fund surplus will be included in the 
Presidential budget, and that this view of budget policy reflects the 
view of the President and the Congress.
  Indeed, President Clinton, in a recent press conference, while 
opposing the balanced budget constitutional amendment, admitted he 
could not balance the budget without counting the present Social 
Security surpluses. In the words of the President, ``Neither the 
Republicans nor I could produce a balanced budget tomorrow that could 
pass if Social Security funds could not be counted.'' In fact, all the 
budgets the President has submitted to Congress have contained the 
Social Security surplus. Some would think it hypocritical to not argue 
that it should not be included. I would never go that far, but it is a 
game that is being played by the White House and, frankly, it is time 
for the games to end.
  The President knows that not including the present day surpluses 
would require draconian cuts to other worthwhile Federal programs. By 
the way, contrary to what Senator Reid has alleged, CRS did not--let me 
emphasize this--conclude in any of its memoranda that the balanced 
budget amendment requirement and the Social Security program would 
prohibit the use of surpluses or other receipts to finance benefits in 
succeeding years. In fact, today, the nonpartisan Concord Coalition--a 
nonpartisan group founded by a Democrat, Paul Tsongas, and a 
Republican, Warren Rudman--revealed a study that clearly demonstrates 
that the best way to protect Social Security is to adopt this clean, 
unamended balanced budget constitutional amendment.
  I want to point out that the Concord Coalition has been cited by both 
sides as a responsible group trying to do the best to bring about good 
budgetary matters in this country. I also want to

[[Page S1466]]

point out that these amendments that are attacking this balanced budget 
amendment would, for the first time, place a statutory reference in the 
Constitution. The constitutional effect of this is unclear and likely 
to engender much confusion that could be destructive in both balanced 
budgets and Social Security. In fact, former Assistant and Acting 
Attorney General Stuart Gerson, and attorney Alan Morrison, a liberal 
attorney, as witnesses for the majority and minority, respectively, in 
a recent hearing on Senate Joint Resolution 1, the balanced budget 
constitutional amendment, agreed that exempting Social Security from 
the balanced budget amendment is a bad, bad idea.

  According to Alan Morrison, a litigator with the Public Citizen, who 
opposes the balanced budget amendment and who testified for the 
minority:

       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.

  He is a liberal and is affiliated with the Ralph Nader group. But he 
is a competent constitutional expert. Normally, he is advocating the 
most liberal constitutional principles. But even he said there should 
be no exemptions like the Reid amendment to this balanced budget 
amendment.
  Mr. President, I am eager for the debate tomorrow over the Social 
Security exemption. I am confident that when the dust settles, the Reid 
amendment will go down to defeat because it will be shown to be not 
only unnecessary, but also harmful to the very thing it sought to 
safeguard, Social Security.
  I have stated that the debate on the Reid amendment is really a 
diversion from the real underlying issue--whether this Nation has the 
will to avert a common fiscal crisis. Mr. President, the absolute 
biggest threat to Social Security is our growing debt and concomitant 
interest payments. Debt-related inflation hits hard 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 proposal to exempt Social Security 
will not only destroy the balanced budget amendment, but, in all 
probability, will also cause the Social Security trust funds to run out 
of money sooner than they would have without an exemption, risking the 
viability of the Social Security program itself.
  Finally, the Senator from Nevada has raised the specter that the 
balanced budget amendment may cause the Social Security trust funds to 
be ``raided,'' because the amounts of the present day surplus will be 
included in budget calculations. This contention is erroneous for 
several reasons.
  The argument to exempt Social Security surpluses disregards the fact 
that the United States has a unified budget, and not including the 
present trust fund surpluses will make the budget very difficult to 
balance and threatens the vitality of other Federal programs.
  The Social Security trust funds are, in actuality, nothing more than 
an accounting device. Let's consider this chart on how the system 
works. Social Security tax receipts are not kept in some sort of 
isolated bank vault. Instead, Social Security taxes are deposited into 
accounts maintained by the Federal Government with various financial 
institutions. Social Security taxes, along with other deposited 
receipts, become part of the U.S. Treasury. FICA tax receipts go to the 
Social Security Administration, and they are passed on from there to 
the Treasury, where all FICA tax proceeds are commingled with the 
general funds. In return, the Treasury invests in Treasury bonds which 
will be redeemed later. These bonds are, incidentally, the most 
important and stable securities in the world.

  All the Treasury moneys are indistinguishable from other deposited 
moneys. But the Social Security revenues are accounted for separately 
through the issuance of Federal securities to trust funds. The trust 
funds do not hold the moneys. They are simply bookkeeping accounts.
  Thus, as part of unified budget, any surplus derived from the trust 
funds, much like other revenues, is used to finance the operations of 
the Federal Government. Like all of us, the Federal Government has one 
budget. Listing categories of spending in discrete bookkeeping entries 
does not reduce the size of what we owe or spend.
  Moreover the surplus Social Security taxes being collected today will 
not cover the future cost of the system. Most of current Social 
Security taxes are currently used to cover benefit payments to present 
retirees.
  Outlays will exceed receipts of the system, and the year that it is 
suspected to do that is the year 2019. The guarantee of future 
benefits, therefore, will depend on the Federal Government's future 
ability to levy taxes, the size and the amount of the benefits, and the 
overall health of the economy, not the balances or ``surpluses'' of the 
trust funds.
  To characterize the use of the surplus as ``raiding'' the trust funds 
is, therefore, erroneous and absolutely wrong. Furthermore, the 
exclusion of the present-day surpluses in the budget will make it 
extraordinarily difficult to balance the budget by the year 2002, the 
date Senate Joint Resolution 1 mandates balancing the budget. Between 
now and the year 2002, the surplus is estimated to be over $500 billion 
in current dollars. Ten years from now, the year 2007, the value of 
trust fund surpluses is expected to be $1.067 trillion. This is an 
annual surplus average of approximately $100 billion.
  According to current budgetary figures, $100 billion per year is more 
than our current annual expenditure on education, the environment, and 
transportation and infrastructure. Mr. President, $1.067 trillion is in 
fact more than our expenditure this year on Medicare, education, 
veterans' benefits, the environment, national defense, Social Security, 
transportation and infrastructure, and natural resources combined.
  Where will we come up with the money to fund these programs if we 
exclude Social Security surpluses from the unified budget? Federal 
programs would have to be cut, or taxes raised by this amount to reach 
the balanced budget goal. Ironically, it appears that those who yell 
the loudest to exempt Social Security are the very same people who wish 
to increase the very social welfare programs that are being put at risk 
by this exemption. They are the ones that are really screaming about 
wanting to spend more on social programs, which will have to be cut if 
this amendment becomes law.
  The real issue is where are we going to get the money to redeem the 
Federal securities that make up the Social Security trust funds?
  Let's put that other chart up. Where will we come up with this $1.067 
trillion shortfall if Social Security is exempted from the balanced 
budget amendment?
  The trust funds are not being raided. We owe the money to the Social 
Security trust fund, and we will have to pay. But if Social Security is 
exempted from the balanced budget amendment it will be mortally 
wounded. Either other programs will be relabeled ``Social Security'' so 
that they take away from the luster of Social Security and the 
willingness of people to support it like it should be. Either programs 
will be relabeled ``Social Security''--as we have done in the past--and 
the present surpluses will be spent, or the surplus will be used to pay 
down our national debt. And thereafter we will keep spending until we 
have reached the debt ceiling. Either way, the surplus will be used up.
  Well, frankly, it is the Reid exemption and the Reid amendment that 
will ultimately destroy Social Security. The best way to face the 
coming problems with the Social Security System is through a unified 
budget. We all have to work together within constraints to redeem those 
securities, and not allow any other programs to be relabeled Social 
Security or affect the Social Security trust funds. But if we don't, if 
we take Social Security outside the unified budget, the rats will come 
and eat it away. Inside, Social Security competes better than any other 
issue for budgetary markets. So, it is penny-wise and pound-foolish to 
take it out and risk having to reduce all of these other good social 
welfare

[[Page S1467]]

programs. Head Start, education, environment, highways and 
infrastructure--all of these programs that are so important would have 
to be cut to reach a balanced budget by the year 2002 if Social 
Security is exempted.

  We show that by the year 2019--on this chart, the green part is the 
surpluses--surpluses drop, and huge deficits will be as high as $7 
trillion a year by the year 2007. Without the balanced budget 
amendment, that is where we are headed.
  We would not get this balanced budget if the Reid amendment happened 
to pass. And, if it did past, it would put us at tremendous risk as we 
try to reach a balanced budget by the year 2002. We would have to cut 
almost every social program that we have more than we should. Naturally 
we are going to have to find restraint in growth, and we are going to 
have to find ways of cutting without cutting to the bone.
  Taking Social Security out. I have to tell you, it will still be the 
same system. The only difference is we will still be investing in the 
bonds which I was showing--these Federal Government securities. The 
only difference is our colleagues who want to spend more will be 
spending those surpluses for more social welfare programs without 
reaching a balanced budget.
  The fact is that this country will be doomed. We have to pass this 
amendment. Frankly, it is the only thing I know to stop the rats from 
raiding all of our budgetary assets. And this will start us on the the 
pathway of getting things in order.
  Look. We know that we cannot keep up the same system. We cannot keep 
doing this. We just can't keep doing this. And the only chance to put 
an end to these types of unbalanced budgets year after year is to pass 
this balanced budget amendment, and to pass it intact without these 
amendments, as sincere as they may be.
  Mr. President, I am prepared to move on this side of the Senate, if 
we can.
  Mr. REID. Mr. President, I have just a few more comments which I 
would like to make in response to my friend, my western friend from the 
State of Utah, for whom I have the greatest respect. But I would say to 
him and those listening that we are all beginning to see where some of 
the special interest scavengers are and who the rats are that will be 
looking for the cheese. And I think if you look at the Wall Street 
Journal today you will look at a full-page ad. You would find that 
those are the people who are the rats and those are the people looking 
for cheese. The Helen Collins of the world who are trying to survive on 
Social Security can't run a full-page ad in the Wall Street Journal. 
The cheese is the surplus from Social Security. That is what the rats 
are eating. They have been doing it all along.
  For my friend from Utah to say that President Clinton has said he has 
been using it in his calculations, that doesn't make it right. That is 
my whole point. Let's do it the right way. Why would we enshrine in the 
Constitution something we have been doing wrong for 15 years now? The 
surpluses of Social Security should not go toward balancing the budget. 
Everybody says it will be hard to do. You have that right. It will be 
hard to do. But when we do it it will be honest. It will be done the 
right way. When we say we have a balanced budget we will really have 
done it. We don't have one now.
  My friend, prior to coming to this body, was a trial lawyer, and a 
good lawyer. I say to him and to anyone within the sound of my voice 
that you can't have Social Security. It is statutorily defined. You 
can't include a national park in that, and other programs. It is 
statutorily defined.

  Now, people may say that you look in the Wall Street Journal; Merrill 
Lynch and others, which I have not seen--I am sure it is a full-page 
ad--they run this full-page ad. I repeat, the Helen Collinses of the 
world and almost 75 percent of the American public do not support a 
constitutional amendment to balance the budget unless Social Security 
is excluded. They cannot run a full-page ad in the Wall Street Journal. 
But those that are running full-page ads know where the cheese is, and 
the cheese is the surpluses for Social Security that they will use to 
balance the budget.
  And people say, why? The same answer I guess is the answer that 
Willie Sutton gave when they asked him, after he was put in prison, 
``Willie, why did you rob all those banks?'' He said, ``That's where 
the money was.'' Well, the reason they are going after the Social 
Security surpluses is that is the only place we have surplus money now.
  I repeat, why enshrine in the Constitution something that we have 
been doing that is wrong?
  Now, my friend from Utah has said, well, the CRS really did not mean 
what they said, and if they said what they mean they really did not say 
it that way. I read from the Center on Budget Policy Priorities just a 
few paragraphs. In fact, I know the time is late. I will read one 
paragraph. They say there are three memos, two from CRS and one from 
them.

       All three memos explain that under the Hatch and Schaefer-
     Stenholm versions--

  This underlying amendment--

     outlays in any year--including outlays for benefits paid from 
     the Social Security trust fund--may not exceed receipts in 
     that year. All three memos note that any funds drawn down 
     from the accumulated Social Security surpluses to help pay 
     for the Social Security benefits of retired baby boomers 
     would not count as receipts in those years.

  Very clear. That is what they have said.
  Now, they have said there is no exception as to war. Of course, there 
is exception in the Constitution as to war. So this amendment is not as 
pure as some would like us to believe.
  I also say for emphasis that my friend said it would be difficult to 
balance the budget. Democrats and Republicans say it would be difficult 
to balance the budget unless you use Social Security trust fund moneys, 
but it is not a fair balance.
  Mr. President, I will close tonight--I know everyone is anxious to 
go. We will take this debate up tomorrow. We have a series of speakers 
lined up, as does my friend from Utah.
  Congressman David McIntosh, a sophomore Republican Congressman from 
Indiana, says, and I quote:

       Republicans cannot allow ourselves to be defined as cutting 
     Social Security even as we move forward with the balanced 
     budget amendment.

  Now, this man, Mr. McIntosh, is no left-wing socialist. He is noted 
as being one of the most conservative Members in the entire House of 
Representatives. He was part of the Republican revolution, but he, 
sophomore Republican, has said, I want to be able to vote on the Reid 
amendment; I want to be able to vote to exclude Social Security. Why? 
Because it is the right thing to do. It is the honest way to balance 
the budget.

  Mr. HATCH. Mr. President, I do not want to prolong the debate 
tonight, but I have to say no matter what you do, those funds are going 
to be invested in bonds, U.S. securities. That is what is statutorily 
required.
  The fact is, if you set Social Security outside of the budget, if 
Social Security is defined by statute, it can be redefined by statute. 
So we have accounting surpluses in Social Security. I am just using 
bizarre examples, but what about Medicare? People around here are not 
willing to reform Medicare. They are not willing to pay the price to 
get it done. They just want to find some other revenue source to pay 
for it. It would be easy to shove it into Social Security and make the 
surplus pay for it rather than facing the music which the balanced 
budget amendment would make us do.
  And it is not just that. It is all social spending they want to do. 
They will use that surplus for that rather than using it for what it 
needs to be used for, and that is to balance the budget. And the only 
way you are going to get the payment for that Social Security surplus 
in the future is if the United States can redeem its bonds. And the 
only way the United States can redeem its bonds in the year 2020 is if 
we do what is right today and we pass a balanced budget amendment.
  That is the only way, because every dime of it, if there is a surplus 
up to the year 2020, every dime will be invested in Federal Government 
bonds, every dime, just like it is today.
  The question is, will we be using those dollars, every dime in those 
dollars, to balance the budget or will it just be another big spending 
spree by those who want to spend us blind and who have done so for 28 
straight years?
  I do not mean to sound rabid about this, but this is important stuff. 
And when we start talking about putting

[[Page S1468]]

Social Security outside the balanced budget amendment, we're really 
talking about milking that program to death. You cannot get away with 
it if it is all on budget. If it is a unified budget, you cannot get 
away with it. And these people say it is currently raided. Everyone 
knows that every single nickel of that money is going to go into 
Federal Government bonds. The question is whether that money is going 
to be used to reduce the deficit and get us to a balanced budget by the 
year 2002 or whether we are going to have people raiding it and using 
it to pay for other additional social spending programs because it is 
not subject to balanced budget requisites.
  This is a pretty serious issue. I have here a wonderful article by 
Stephen Chapman in Sunday's Washington Times entitled ``Balanced Budget 
Shell Game.''
  He says:

       Opponents of a simple balanced budget amendment, which 
     include President Clinton, say it would harm retirees by 
     allowing Social Security surpluses to be used to offset 
     deficits elsewhere in the budget.
       North Dakota's Democratic Sen. Byron Dorgan says such a 
     ``misuse'' would violate ``a solemn promise:''

  How is that, since all that money is going to be invested in Federal 
Government bonds? The question is, what is it going to be used for, 
once the Government gets the money? Is it going to be used to balance 
the budget or used for more spending, which is going to happen if the 
Reid amendment passes?

       This tax taken from your paycheck goes into a trust fund to 
     be used for only one purpose, and that is to fund the Social 
     Security system. The critics say the amendment would 
     encourage Congress to cut retirement benefits to pay for tax 
     cuts and other programs at the expense of the elderly.
       They propose an alternative version that excludes Social 
     Security from deficit calculations. For many Members of 
     Congress, this option has an extra attraction: It has no 
     chance of enactment, since it would force Congress to come up 
     with another $465 billion in spending cuts or tax increases 
     between now and the year 2002. So there will be no need to 
     make the unpleasant choices that our lawmakers have been 
     dodging for an entire generation.

  As they have passed these 28 unbalanced budgets and 58 of the last 
66.

       The opponents have found a clever way to gull voters into 
     accepting a continued tide of red ink.
       But the public shouldn't be fooled. The opponents are 
     playing a shell game, hoping voters won't be able to detect 
     their sleight of hand. The fears they have for Social 
     Security are unfounded and their solution would protect only 
     fiscal indiscipline.

  Indiscipline, not discipline.

       First of all, excluding Social Security would create a 
     loophole big enough to drive a $300 billion deficit through. 
     If Social Security is exempt from the balanced-budget 
     requirement, everything will be Social Security. Any program 
     with any remote benefit to the elderly can easily be renamed. 
     ``Housing, national health care, highways will be treated as 
     Social Security,'' says Heritage Foundation budget expert 
     Daniel Mitchell. We would end up with a ``balanced'' budget 
     that drives us ever deeper into debt.
       The exclusion is billed as a way to prevent looting of the 
     trust fund, but its actual effect would be zero. Right now, 
     the retirement fund is running a surplus every year. The 
     surplus is ``invested'' in government bonds--in other words, 
     it is lent to the Treasury, which uses the borrowed money to 
     pay for other government programs. Once it is excluded from 
     the budget, the surplus will still be lent to the Treasury. 
     Mr. Dorgan says Social Security taxes should never be used 
     except to pay Social Security benefits. But his proposal does 
     nothing to prevent that.
       The ostensible reason we are running a surplus is to build 
     up a reserve that can be used to pay benefits when the Baby-
     Boom generation retires. Dorgan and Co. say the original 
     balanced-budget amendment would deplete that reserve, 
     seriously endangering future benefits. Nonsense. The 
     ``reserve'' consists of government bonds. These are nothing 
     more than IOUs, which cannot be repaid unless future 
     taxpayers are willing. When the Baby Boomers retire, taxes 
     will have to rise to pay their benefits. That's true whether 
     Social Security runs a surplus today or not.
       The opponents insist that excluding Social Security from 
     the amendment would shield it from politicians eager to 
     starve Grandma so they can hand out goodies to special 
     interests. Since Congress wouldn't be able to reduce the 
     deficit by cutting Social Security benefits, those benefits 
     would be as safe as the gold in Fort Knox.
       This argument is neat, simple and hopelessly naive. What it 
     overlooks is that if Congress can't use the surplus to 
     balance the budget, it can always get rid of the surplus by 
     cutting payroll taxes--then raise taxes an equivalent amount 
     elsewhere to pay for the programs it wants. It could also cut 
     benefits to allow even deeper cuts in the payroll tax, which 
     would permit additional tax increases to finance spending 
     that doesn't help the elderly. The protection for Social 
     Security would soon turn out to be no protection at all.
       The opponents of the original amendment take the 
     politically easy position of saying that the Constitution 
     shouldn't require the budget to be balanced at the expense of 
     the elderly. What they mean is that the Constitution 
     shouldn't require the budget to be balanced at the expense of 
     anyone.

  The fact is, the same funds will be invested in the same bonds, and 
the credit of the United States will have to take care of those bonds 
in the future or people on Social Security will not have the money. You 
saw the deficits expected in Social Security during the next century.
  The fact is, unless we balance this budget, unless we get fiscal 
discipline into the Constitution, I guarantee we are not going to do 
what is necessary to solve our fiscal problems. We are certainly not 
going to have the funds to take care of Social Security in the future.
  So, passing the balanced budget amendment in its current form, in the 
form that we have here, the only one that has a chance of passage, is 
our only hope to get spending under control.
  Mr. President, I am prepared to turn the floor over to the majority 
leader.
  Mr. REID. Mr. President, I see the leader here. I have just a couple 
of more comments. I have about 5 more minutes, Mr. Leader?
  Mr. LOTT. That will be fine.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, I would first of all say I don't know who 
this man is from the Washington Times, but having read that before 
coming here I know why he writes for that newspaper. I think he would 
have trouble getting a job anyplace else with the logic he uses in 
that.
  As far as I am concerned, he is perpetuating the myth that Social 
Security proceeds will and should be used to balance the budget. I 
think that is wrong. Remember, the commission that just reported to us 
in the last few months said that some of those trust fund moneys should 
be invested in private securities. We cannot do that if all the money 
goes to balancing the budget, as will happen with the underlying 
amendment.
  My friend from Utah said all through this debate that Social Security 
is the only way, using the excesses, the surplus from Social Security, 
that you can balance the budget. That does not make it right. That is 
wrong. If you told a future Social Security recipient the money you are 
paying in and your employer is paying in is going to be used to balance 
the budget, it is going to pay for foreign aid and other type things, I 
don't think they would be too happy.
  Senator Domenici said it about as well as we could in 1990 when he 
said,

       I voted for the Hollings proposal because I support the 
     concept of taking Social Security out of the budget deficit 
     calculations. We need a firewall around those funds to make 
     sure the reserves are there to pay Social Security benefits 
     in the next century.

  The Reid amendment is the firewall that the chairman of the Budget 
Committee called for 6 years ago. We should pass it. It can be done 
with my amendment.
  I further say that the President of the United States, in his radio 
address this past Saturday said:

       It would prevent us from responding to foreign challenges 
     abroad or economic trouble at home, if to do so resulted in 
     even a minor budget deficit. And because it would write a 
     specific economic policy into our Constitution, it could 
     force the Secretary of the Treasury to cut Social 
     Security, or drive the budget into courts of law when a 
     deficit occurred when Congress was not working on the 
     budget. In a court of law, judges could be forced to halt 
     Social Security checks or to raise taxes just to meet the 
     demands of the constitutional amendment.

  It is wrong to balance the budget using Social Security surpluses. 
That is what Congressman David McIntosh, Republican from the State of 
Indiana, said when he stated, ``Republicans cannot allow ourselves to 
be defined as cutting Social Security.'' They will. Anyone voting for 
the underlying amendment and not for the Reid amendment will be deemed 
as cutting Social Security because that, in fact, is what would occur.
  The PRESIDING OFFICER. The Senator from Mississippi.
  
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