[Congressional Record Volume 143, Number 22 (Wednesday, February 26, 1997)]
[Extensions of Remarks]
[Pages E318-E319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            THE 1998 BUDGET

                                 ______
                                 

                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Wednesday, February 26, 1997

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
report for Wednesday, February 19, 1997, into the Congressional Record.

                      The President's 1998 Budget

       The most important document in the government is the 
     budget. It is a plan of how the government spends your money, 
     how it pays for its activities, and how it borrows money to 
     pay the bills. It affects the nation's economy, and it is 
     affected by that economy. This month President Clinton sent 
     his 1998 budget to Congress.
       The President submitted a $1.687 trillion budget. With 
     revenues projected at $1.567 trillion, that leaves a $120 
     billion deficit, down slightly from $126 billion in 1997. The 
     President lays out a plan to eliminate the deficit by 2002, 
     while protecting Medicare and Social Security without raising 
     costs to beneficiaries. Unlike previous years, congressional 
     leaders in both parties say the President's plan is not 
     ``dead on arrival,'' and they will use his proposal as a 
     starting point for budget negotiations.
       The biggest spending in the President's budget goes for 
     Social Security ($381 billion), Medicare and Medicaid ($310 
     billion), defense ($260 billion), and interest on the 
     national debt ($250 billion). Non-defense discretionary 
     programs, including education, training, research, housing, 
     infrastructure, and law enforcement, receive a total of $287 
     billion. The downsizing of the federal workforce continues, 
     with a 14% reduction on track for 1999. More than 250,000 
     positions have already been eliminated.
       Over the next five years, the President would cut back 
     discretionary spending by $137 billion and Medicare and 
     Medicaid by $122 billion. The plan would raise $88 billion by 
     closing tax loopholes, imposing new user fees, and auctioning 
     new television broadcast spectrum rights. The President would 
     restore $18 billion for nutrition programs cut in last year's 
     welfare reform law, and cut taxes for middle-income 
     individuals and certain small business by $98 billion.
       The President projects a continuation of a good economic 
     growth and no acceleration of inflation. He believes interest 
     rates will fall markedly as a result of balancing the budget. 
     The President's budget further reduces the deficit and 
     provides middle class tax relief, but it does not do enough 
     to boost investment in the future.
       New Priorities: Within his plan, the President has proposed 
     a significant realignment in government priorities. First, 
     the President would increase our emphasis on education by 
     expanding everything from the Head Start program for pre-
     schoolers to tax credits for college tuition and adult job 
     training. Second, the President would extend health care 
     coverage to children and unemployed families who currently 
     lack health care coverage.
       It is appropriate to reassess our proprieties, even as we 
     cut back on the scope of government programs. The President's 
     emphasis on education reflects growing public sentiment that 
     we should pay more attention to the problems of our education 
     system. Health care, especially for children, remains a 
     critical issue for many families. I agree with these 
     priorities, but have concerns about the specifics. Some of 
     the President's education plans might create as many risks as 
     rewards. For example, the tax credit for college students 
     with a B average could push colleges to raise tuition, 
     pressure professors to boost student grades, or require 
     the IRS to monitor college transcripts. In broadening 
     health care coverage, we must be careful not to create new 
     runaway entitlements. In prioritizing budget cuts, we 
     should also remember that the major cuts in spending in 
     the last Congress were on assistance to the poor. The rest 
     of us got a bye.
       Other Investment: The President misses the mark by adding 
     new investment only in education. Spending on roads, bridges, 
     harbors, airports, and water systems, along with research in 
     science and technology, is essential for new economic growth 
     and for an increase in our living standards. I am concerned 
     that the President would not increase this spending to keep 
     up with inflation--or our global competitors. My view is that 
     the nation's major economic problem is slow growth. We must 
     accelerate economic growth by increasing investment in 
     infrastructure and research.
       Long-term changes: A key question is whether or not the 
     budget will remain balanced beyond 2002. My concern is that 
     unless the President and Congress make sweeping changes in 
     the budget now, the deficit will bounce back after 2002. The 
     President postpones the tough budget choices by shifting too 
     many cuts to the last 2 years of his

[[Page E319]]

     plan, after he leaves office. He also uses a number of one-
     time savings (such as selling government assets) to achieve 
     balance in 2002. These one-time fixes do not really address 
     the fundamental problem of overspending.
       We have not yet begun to make the necessary decisions to 
     get our fiscal house in long-term order. The underlying 
     budget problem facing our country is the aging population. In 
     fifteen years, baby boomers will begin retiring, placing 
     great strains on programs for older Americans--Social 
     Security, Medicare, and Medicaid. Each of these programs is 
     reasonably secure for the short-term, but long-term reforms 
     must begin now. It will be less painful and less costly to 
     act early. Choices must be made soon on proposed changes to 
     cost-of-living adjustments, subsidies for wealthier 
     recipients, the retirement age, payroll taxes, and the role 
     of private markets in strengthening Social Security and 
     Medicare.
       Prospects: The outlook is good for a balanced budget 
     agreement. The mood of key players in Congress and the White 
     House is positive, economic growth is creating higher 
     revenues than expected, and health care costs are 
     constrained. The President and leaders of both parties have 
     had productive meetings to discuss their common ground on the 
     budget. The most contentious issue will likely be the size 
     and shape of tax cuts. The President wants targeted cuts for 
     education, children, and capital gains on the sale of a home. 
     The congressional leadership plans much larger, broad-based 
     reductions. In our efforts to enact politically popular tax 
     cuts, we must not rely on rosy assumptions about future 
     growth or the likelihood that future Congresses will cut 
     popular programs.
       Conclusion: At its heart, the President's budget is a 
     political document, designed to gain political advantage in 
     negotiations. I do not view this budget proposal as a 
     powerful document that addresses long-term challenges. 
     Rather, it is an opening bid in the long process to balance 
     the budget. In a few places, it modestly pushes the country 
     in the right direction. It deals with long-term structural 
     problems only on the margins.

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