[Congressional Record Volume 143, Number 22 (Wednesday, February 26, 1997)]
[Senate]
[Pages S1593-S1650]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  The PRESIDING OFFICER. 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:
       Hollings-Specter-Bryan amendment No. 9, to add a provision 
     proposing an amendment to the Constitution of the United 
     States relating to contributions and expenditures intended to 
     affect elections.
       Leahy (for Kennedy) amendment No. 10, to provide that only 
     Congress shall have authority to enforce the provisions of 
     the balanced budget constitutional amendment, unless Congress 
     passes legislation specifically granting enforcement 
     authority to the President or State or Federal courts.
       Graham-Robb amendment No. 7, to strike the limitation on 
     debt held by the public.

  The PRESIDING OFFICER. Under the previous order, the Senator from 
California, [Mrs. Feinstein] is recognized to offer an amendment with 
the time between 9 a.m. and 11 a.m. to be equally divided in the usual 
form.
  Mrs. FEINSTEIN. I thank the Chair. Good morning, Mr. President.
  Mr. President, I ask unanimous consent that my legislative director, 
Susy Elfving, be permitted to be on the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. FEINSTEIN. I thank the Chair.


                            Amendment No. 11

                   (Purpose: To propose a substitute)

  Mrs. FEINSTEIN. Mr. President, I send an amendment in the nature of a 
substitute to the desk, and I ask for the yeas and nays.
  The PRESIDING OFFICER. The clerk will report the amendment first.
  The assistant legislative clerk read as follows:

       The Senator from California [Mrs. Feinstein] for herself, 
     Mr. Durbin, Mr. Torricelli, and Mr. Cleland, proposes an 
     amendment numbered 11.

  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       Strike all after the resolving clause and insert the 
     following:

     That the following article is proposed as an amendment to the 
     Constitution, which shall be valid to all intents and 
     purposes as part of the Constitution when ratified by the 
     legislatures of three-fourths of the several States within 
     seven years after the date of its submission to the States 
     for ratification:

                              ``Article --

       ``Section 1. Total outlays for any fiscal year shall not 
     exceed total receipts for that fiscal year, unless three-
     fifths of the whole number of each House of Congress shall 
     provide by law for a specific excess of outlays over receipts 
     by a rollcall vote.

[[Page S1594]]

       ``Section 2. The limit on the debt of the United States 
     held by the public shall not be increased, unless a majority 
     of the whole number of each House shall provide by law for 
     such an increase by a rollcall vote.
       ``Section 3. Prior to each fiscal year, the President shall 
     transmit to the Congress a proposed budget for the United 
     States Government for that fiscal year, in which total 
     outlays do not exceed total receipts.
       ``Section 4. No bill to increase revenue shall become law 
     unless approved by a majority of the whole number of each 
     House by a rollcall vote.
       ``Section 5. The Congress may waive the provisions of this 
     article for any fiscal year in which a declaration of war is 
     in effect.
       ``The provisions of this article may be waived for any 
     fiscal year in which the United States is engaged in military 
     conflict which causes an imminent and serious military threat 
     to national security and is so declared by a joint 
     resolution, adopted by a majority of the whole number of each 
     House, which becomes law.
       ``The provisions of this article may be waived for any 
     fiscal year in which the United States is experiencing a 
     national economic emergency or major natural disaster, which 
     is so declared by a joint resolution, adopted by a majority 
     of the whole number of each House, which becomes law.
       ``Section 6. The Congress shall enforce and implement this 
     article by appropriate legislation, which may rely on 
     estimates of outlays and receipts.
       ``Section 7. Total receipts shall include all receipts of 
     the United States Government except those derived from 
     borrowing. Total outlays shall include all outlays of the 
     United States Government except for those for repayment of 
     debt principal. Effective one year after the effective date 
     of this article, the receipts (including attributable 
     interest) and outlays of the Federal Old-Age and Survivors 
     and Disability Insurance Trust Funds (as and if modified to 
     preserve the solvency of the 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 complying with this 
     article.
       ``Section 8. Nothing in this article shall preclude the 
     authority to enact and implement a separate capital budget 
     for those major capital improvements which require multi-year 
     Federal funding, and which would be excluded from the 
     requirements of section 7 of this article.
       ``Section 9. This article shall take effect beginning with 
     fiscal year 2002 or with the second fiscal year beginning 
     after its ratification, whichever is later.''.

  Mrs. FEINSTEIN. Mr. President, the amendment I have just sent to the 
desk essentially differs from the Senate Joint Resolution 1, the 
majority balanced budget amendment, in just four ways. I would like to 
quickly summarize the distinctions and then go over each one of them 
and explain why I believe this amendment will stand the test of 
scrutiny. This substitute approach, in my view, represents how we need 
to address the balanced budget amendment.
  Mr. President, we have just had quite a bit of debate on the Reid 
amendment. The arguments have been made as to why the Social Security 
trust funds, should be removed from the unified budget. This amendment 
would allow Social Security trust funds to continue to remain as part 
of the unified budget up to the point Congress achieves balance, which 
has been estimated at 2002. The administration and Congress have both 
indicated a commitment to balancing the budget by 2002. This amendment 
respects that goal.
  The amendment would require that 1 year after enactment, whenever the 
amendment is ratified by three-quarters of the legislatures of the 
States, the amendment would go into effect and be binding. If the 
amendment becomes effective in 2002, the year in which bipartisan 
consensus exists for balancing the budget, the year in which Social 
Security would be excluded would be 2003. This provides an opportunity 
to transition away from our current reliance on the Social Security 
trust funds to offset deficit spending in other areas and reach balance 
under a balanced budget amendment.
  As Senator Hatch will recall, last year when the amendment was on the 
floor, we held some negotiations to try to reach agreement. Many of us 
feel very strongly that Social Security should not be part of balancing 
the budget. We had some negotiations to review whether we might agree 
to a balanced budget, that excluded the Social Security trust funds, by 
the year 2008. The majority did not support the approach and the 
response to the offer was that it is too difficult to balance the 
budget if you withdraw Social Security trust funds from the unified 
budget. I have given that considerable thinking and believe that if we 
use it up to the point of balance, and then separate it out, that gives 
time to adjust to this withdrawal of Social Security. My amendment 
prohibits the use of the Social Security trust funds after Congress has 
reached balance and would prohibit the use of the trust funds 
thereafter.
  My amendment's second point would retain restrictions on lifting the 
debt limit. However, it would require a majority vote, rather than a 
three-fifths vote, as the majority balanced budget amendment provides.
  The third point of the amendment would permit Congress to respond to 
serious economic emergencies or major national disasters. Without that, 
a bailout for a California earthquake would have to be paid for within 
the confines of balanced outlays and expenditures. A savings and loan 
bailout would have to be offset by cuts elsewhere in the budget, 
balancing revenue and expenditures. This balance, if the Nation faced 
an economic emergency or major natural disaster, would be much more 
difficult to achieve in the outyears.
  Fourth, this amendment would clarify that passage of the amendment 
would not prohibit Congress from developing a capital budget. It does 
not mandate a capital budget, but as has been made clear by Senator 
Torricelli and others, the majority amendment would essentially prevent 
the Federal Government of the United States of America from ever 
developing a capital budget. A capital budget has been a useful budget 
structure for many of the States, as you know from experience, Mr. 
President, and many of the cities, as I know. These cities and States 
have capital budgets separate and distinct from their operating 
budgets. They fund these capital budgets for physical assets, like 
buildings, bridges, and highways, in a multiyear funding mechanism. 
This structure could make sense for the Federal Government as well, and 
we should not close the door on this option. Unfortunately, the 
majority balanced budget amendment does precisely that.

  So these are the four points of difference. I would like to elaborate 
on these concerns.
  Let me just tell you why I feel so strongly about Social Security. To 
begin with, Social Security is already separate and discreet. Every 
worker, workers in your family and in my family, have 6.2 percent of 
their paycheck deducted every month for FICA taxes. This is matched by 
6.2 percent from every employer in the country for a total of 12.4 
percent FICA contribution. Workers are told that this money goes into a 
trust fund to be used for their retirement, invested by the Federal 
Government, so it will be there when they retire for their Social 
Security benefits. This I view as a solemn pledge. The workers are 
never told that the 12.4 percent FICA contribution is actually part of 
the unified budget. They are never told their payments, in fact, 
support the purchase of a battleship, or the payment of a lawyer's 
salary, or the payment of a clerk's salary, or the building of a 
highway or for any other activity of our Government's general 
operations.

  Now, this is also wrong because of the looming retirement of the baby 
boom generation. Analysts concluded Congress needed to increase FICA 
taxes a while back to be able to provide for the retirement of our 
large baby boom generation. Well, the taxes were increased, but, again, 
the funds are part of the unified budget and they support a battleship, 
a lawyer, a clerk, recreation programs, and so on and so forth.
  I think that is wrong. I also think the Congress recognized it was 
wrong when this House, virtually unanimously, enacted the Hollings 
resolution in 1990. As you know, the Hollings resolution said, 
henceforth, we will not include Social Security as part of the unified 
budget.
  The majority amendment essentially enshrines in the Constitution, for 
all time, the use of Social Security trust funds as part of the unified 
budget. The funds will be used to pay for every soldier, every 
battleship, every highway, every clerk, and every park employee of the 
Federal Government.
  I think this is wrong. I think it is wrong morally, I think it is 
wrong ethically, and I think if it were ever tested, it would be found 
to be wrong legally, as well. But we have been using the Social 
Security trust funds and we

[[Page S1595]]

are in a budget hole as a result. It is really a catch-22 situation. 
The only way out is to amend this majority balanced budget amendment, 
and this is what I propose to do.
  Now, let me give you some idea of the challenge Social Security 
faces. This chart represents the Social Security trust funds, between 
1996 and 2002. According to the Social Security Administration data, we 
use approximately $570 billion of these surplus trust funds to balance 
the budget. Between 2002 and 2019 we use $1.8 trillion of Social 
Security trust funds part of the unified budget. My amendment 
represents a compromise, if you will. The amendment recognizes how 
difficult it is to balance the Federal budget without the Social 
Security trust funds. We will only use the $570 billion up to 2002, and 
after 2002, these funds will be separated out from the unified budget. 
These Social Security receipts will remain in a separate and discreet 
trust fund. They will not be used to pay for a battleship or a soldier 
or a clerk's salary or a lawyer's salary or anything else. That is $1.8 
trillion that will essentially be saved to pay for retirements. This 
restriction makes the task of shoring up the long-term solvency of 
Social Security, which the majority balanced budget makes more 
difficult, a lot easier to achieve.
  As a former mayor, I know that one of the things you do to really 
assess spending at any government level is look at outlays. Outlays are 
dollars the government actually spends. If you look at outlays, you 
will see in 1995, more than 50 percent of all of the money spent by the 
Federal Government was essentially spent for entitlements, like 
Medicare, Medicaid, Social Security, and welfare, and 14 percent was 
dedicated to pay interest on the debt. Interest, which buys nothing, 
has doubled since 1969. Therefore, if you do nothing by the year 2003, 
almost 75 percent of all of the outlays of the Federal Government are 
effectively Medicare, Medicaid, Social Security, welfare, and interest 
on the debt. The spending trends are what really motivates me, and I 
hope others, to accept a constitutional balanced budget amendment.

  These spending priorities will run into each other and it becomes 
more difficult to balance the budget under any balanced budget 
amendment. One has to understand what we are going to protect. I think 
Social Security is critically important to protect for a number of 
reasons.
  If we look at the funding patterns for Social Security, Social 
Security revenue, payroll taxes and interest that has built up a 
surplus, begins to drop around 2019. As soon as these funds begin to 
drop, Social Security outlays begin to exceed our Social Security 
revenue. Under the majority balanced budget amendment, total 
expenditures and the outlays meet. When outlays exceed our revenue, 
Congress either has to increase taxes, cut Social Security payments or 
cut other programs or in some way find revenues so that those outlays 
and expenditures match. This is the significance of the Congressional 
Research Service memo that has been discussed by several Senators. So 
as it goes straight down, every year you have to either make deeper 
cuts, in Social Security or somewhere else, or you have to increase 
taxes just to pay these Social Security checks.
  Now, is this fair? Is this what we want to do? Is it fair in these 
outyears to place Social Security recipients so deeply at risk? I have 
come to the conclusion that it is not fair, that it is not the right 
thing to do. Therefore, my amendment would permit the use of the Social 
Security trust funds up to 2002 and remove it from the unified budget 
thereafter.
  Critics suggest this amendment creates a big problem in the year 
2003. However, this amendment would also provide the ability to develop 
a capital budget. Our Nation has significant capital needs, yet we are 
underinvesting in this important area. In 1965, the United States 
invested 6.3 percent of its budget in infrastructure spending. We built 
the Nation's highways, we built bridges, we built other major projects 
which benefit this Nation. This is not a nation whose population is 
going down. It is a nation whose population is increasing and a growing 
population has infrastructure needs. However, by 1992, our investment 
in capital infrastructure declined to 3 percent of the budget. When 
push comes to shove, Congress reduces capital spending, dropping those 
things that enable us to provide a decent quality of life for our 
citizens, such as the ability to get to a job without gridlock or the 
ability to travel over a bridge on a Federal highway that is not going 
to fall down. Our infrastructure has been decaying and it needs 
adequate funding.
  More than one-third of the major highways of the United States, 
representing one-quarter of a million miles, are in poor or mediocre 
condition and need to be repaired. Approximately 25 percent of our 
570,000 highway bridges are described as structurally deficient, or 
functionally obsolete. What does this say? We are becoming capital poor 
in infrastructure.
  Those of us that have been Governors and mayors know that one of the 
prime responsibilities of government is infrastructure, something that 
is not very sexy for the public. Our responsibilities are the streets, 
keeping potholes off of streets, keeping bridges and roads in good 
repair and minimizing the risk of accidents for people. I contend we 
cannot do that under the restrictions of this balanced budget, unless, 
at some point in the future, Congress has the ability to enact a 
capital budget and to fund long-term capital improvements on a 
multiyear basis rather than in cash up front as is done now.
  If you take 2 percent of GDP as your measure of investment, it would 
be about $160 billion right now. Congress could create a limit based on 
a percentage of GDP. I think we spend about $140 billion now. So if you 
wanted to ratchet it up, to permit a higher level of investment, you 
would simply set a limit at a higher percent of GDP.
  The limit would operate similar to a kind of bond limit, as we use in 
States. The Government would have a certain bonding capacity and you 
would stay within the limit of that bonding capacity, which would 
reflect our economic strength, interest payments, and payback schedule 
and similar factors.
  I think it makes tremendous sense. I think that without providing for 
a capital budget, we undermine our Nation's ability to do and carry out 
one of the most important responsibilities of a Federal Government, the 
providing of safe and adequate Federal infrastructure for the future of 
our people.
  Now, let me speak about the economic emergency. The majority 
amendment does not provide for an economic emergency. In an economic 
emergency, it is important that the automatic stabilizers be able to 
function. It is important that we be able to respond to extreme and 
serious national emergencies, whether this be a major depression or, I 
might say, a savings and loan crisis, that develops in the future, or 
another crisis. Congress was forced to spend an additional $135 billion 
to clean up the fiscal mess of the savings and loan crisis in the 
1980's and 1990's. These costs weren't anticipated and they weren't 
projected. Yet, we had to honor the United States' commitment to 
protect depositors.
  If Senate Joint Resolution 1 were in place, Congress would have been 
forced to cut the budget by $66 billion in 1991, to meet its savings 
and loan bailout obligations in that year, by cutting education, 
cutting highways, cutting crime fighting and other priorities in order 
to pay off depositors. Now, is that really the situation we want to 
place ourselves in for, not just 10 or 15 years, but in perpetuity, 
forever and ever and ever?
  If you asked me in the 1960's or 1970's, would I ever think that 
these savings and loans would default, the answer would have been no. 
But the fact of the matter is that they did. The fact of the matter is 
that the cost to the Federal Government was $135 billion, and in 1991 
this Congress ponied up $66 billion. Now, that is $66 billion that 
would be pitted against the purchase of a new battleship or soldiers' 
salaries or their cost-of-living raise, or a clerk in the Agriculture 
Department, or a lawyer in the Justice Department. That is the 
inescapable truth of budgeting.
  Therefore, the majority amendment prohibition on the development of a 
capital budget, even if this or a future Congress believes it would be 
necessary or prudent or wise to enact one, I think, is a major error. 
Consequently, my amendment would permit Congress to develop a capital 
budget in the future.
  Now, let me briefly address extending the debt limit. A three-fifths 
vote in

[[Page S1596]]

Government is something you do when you really want the minority to 
control the process. We are a representative democracy. We represent 
the people, and the bulk of votes in a representative democracy are a 
majority. The majority speaks. All of you down there, Mr. and Mrs. 
America, how many of you favor more police on your streets? The hands 
go up. A majority. How many favor more firefighters? Hands go up. A 
majority. We reflect those views when we come back to the Congress. We 
generally know what the majority believes. It is very hard to know what 
a minority really believes, and this gives inordinate power to a 
minority.

  People often argue it is easy to receive a majority vote. That is 
wrong and let me try to show you how wrong it is. Since 1990, no budget 
resolution or conference report has received a three-fifths majority. 
Since 1990, no vote to raise the debt limit has received a three-fifths 
majority.
  In 1985, the Gramm-Rudman-Hollings law was adopted in the Senate by a 
vote of 51 to 37.
  The 1990 budget reconciliation bill was passed with a budget vote of 
54 to 45.
  The 1993 Omnibus Budget Reconciliation Act was passed with a vote of 
51 to 50.
  The 1995 budget reconciliation bill was adopted on a vote of 52 to 
47.
  The 1995 temporary debt limit increase was adopted on a vote of 49 to 
47.
  If that doesn't demonstrate that majority votes even are tough to 
get, I don't know what does.
  Now, the issue here is, what happens if the debt limit isn't 
extended, and what happens if we permit 41 people to make that 
determination? Well, we just saw that. The Government shuts down. We 
default on our obligations. The full faith and credit is cast in doubt.
  I think it is a huge mistake to put forward a balanced budget 
amendment that would permit a minority in Congress to hold the 
Government hostage, shut it down, bring it to the brink of default, 
risk the loss of our full faith and credit, and the respect that goes 
with it. This gives 41 Senators and 179 House Members the power to hold 
this Nation's credit hostage during budgetary disagreements. So I think 
it is a big, big mistake.
  In closing, I am pleased to submit this amendment on behalf of 
Senators Torricelli, Durbin, and Cleland.
  Essentially, this amendment keeps Social Security as part of the 
unified budget up to the point we reach balance. As I mentioned, 
approximately $570 billion will be taken from the trust funds and used 
to balance the budget by 2002. The amendment separates Social Security 
out at the point of balance and is able to retain $1.8 trillion of 
Social Security trust funds outside of the unified budget for the 
future. This means Social Security will remain financially viable much 
longer.
  Social Security is critical for many recipients. Fourteen percent of 
people on Social Security today are totally dependent on it. Social 
Security prevents abut 57 percent of beneficiaries from falling into 
poverty. It is important to protect it. It is the one Government 
program, beyond all others, that guarantees that people in their golden 
years will have an opportunity for a decent quality of life.
  Second, this amendment provides for a national economic emergency. I 
have spoken about the savings and loan bailout, an unpredictable event, 
which cost the Treasury $135 billion, a $66 billion appropriation in 
1991, alone. Emergencies occur and will need congressional attention. 
The majority amendment will undermine our ability to address emergency 
needs.
  Third, this amendment does not mandate a capital budget, but it would 
say that the Constitution does not prohibit the development of a 
capital budget if a majority of the Congress desires to develop and 
implement one.
  Fourth, this amendment would change the restrictions on extending the 
debt limit from three-fifths to a majority vote. I am a member of the 
Judiciary Committee and attended the hearings and listened to the 
testimony. I sincerely believe, that my amendment is a balanced budget 
amendment that will stand the test of time and has an opportunity to be 
ratified by three-fourths of the State. The Senate should adopt this 
amendment.
  I thank the Chair. I yield the floor for the moment.
  Mr. ENZI. Mr. President, I have a question on some of the things the 
Senator has been talking about on capital budgeting.
  Could the Senator give me a little better definition of what she is 
talking about with capital budgeting? Is the Senator talking about all 
capital projects being off budget? Are we talking about that? What kind 
of limitations do we have on what can be a capital budget item?
  Mrs. FEINSTEIN. I am happy to answer that question. I want to read my 
amendment's specific language. The language does not talk about any 
specific capital budget plan. All the language says is ``Nothing in 
this article shall preclude the authority to enact and implement a 
separate capital budget for those major capital improvements which 
require multi-year funding and which would be excluded from the 
requirements of section 7.'' That is the requirement that outlays and 
expenditures balance.
  I will tell the Senator what I would develop a capital budget. I 
would set a basic amount of capital. Whether that amount would be 
anything above $5 million, $10 million, $15 million, or $20 million 
would be up to the Congress. But you set the basic amount for major 
capital purchases, for bridges, office buildings, or a battleship, 
whatever you want that to be. Also, because you float debt to be able 
to fund these items, you would also set a debt limit. That would most 
likely be a percentage of our Gross Domestic Product. For example, 2 
percent of GDP would provide about $160 billion, 3 percent would be 
more, and so on.
  As I mentioned, we have dramatically dropped our infrastructure 
spending. It was 6 percent of the budget in the 1960's. It is now down 
to 3 percent of the budget.
  Mr. ENZI. So the amendment really says that there won't be any 
restriction on doing capital budgeting, which is exactly where we are 
at the moment.
  Mrs. FEINSTEIN. No. I respectfully direct the Senator to the 
amendment. It simply says, ``Enact and implement a separate capital 
budget.''
  With every constitutional amendment, as the Senator well knows, the 
Congress would enact enabling legislation. The Congress would sit down 
and develop a capital budget if one was desired. My amendment does not 
mandate one, but if they felt that a capital budget was worthy and 
desirable and needed by this Nation, they would sit down and discuss 
the legal parameters and develop the legislation.
  All this does is permit it. That is all.
  Mr. ENZI. I did read it. It says, ``Nothing in this article shall 
preclude authority.'' It doesn't give authority to do it. It just 
eliminates the preclusion of doing it. It does not define what major 
capital improvements are. All of the things that the Senator from 
California has in section 8 could be done in enabling legislation under 
a balanced budget constitutional amendment.
  Mrs. FEINSTEIN. No, I disagree. Under the majority amendment it could 
not be done because, in the majority balanced budget amendment 
expenditures must equal outlays in every year. Therefore, you could not 
provide multi-year financing of major capital projects by floating 
debt. You have to meet the expenditures. Every opinion we have had says 
that the development of a capital budget would be prohibited.

  Mr. ENZI. Does this mean under this that if education is more than a 
$5 billion expenditure, that education would be a capital expenditure?
  Mrs. FEINSTEIN. No. As I understand it, for example, title I would 
not be a capital expenditure. The money that is given to poor children, 
which is I think the largest expenditure, would not be a capital 
expenditure. Capital expenditure would be reserved for infrastructure.
  Mr. ENZI. In the President's budget I notice that he listed social 
investment as a capital expenditure. That is why I was asking the 
question about education. I am concerned that the capital budget 
procedure is just an attempt to be able to move everything outside of 
the normal budgeting procedure so, in fact, we do not have to balance 
the budget. That is why I want more definition on what is meant by 
``capital budget.''
  Mrs. FEINSTEIN. Mr. President, I appreciate that very much. Perhaps

[[Page S1597]]

one way of answering this would be to place in the Record a letter sent 
to Senator Daschle by the Secretary of the Treasury on February 3. Let 
me simply read one sentence. Referring to the majority amendment, the 
Secretary writes:

       The amendment as drafted does not distinguish between 
     capital investment and current spending. Outlays are defined 
     as ``all outlays in the United States except for those for 
     repayment of debt principal.'' Even if Congress were to 
     create a separate capital budget by statute, outlays from 
     that budget would still be ``outlays of the United States.'' 
     Under the majority amendment, a capital budget would be 
     prohibited.

  Mr. President, I ask unanimous consent that this letter be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                   Department of the Treasury,

                                 Washington, DC, February 3, 1997.
     Hon. Thomas A. Daschle,
     U.S. Senate,
     Washington, DC.
       Dear Mr. Leader: You asked for our views on whether the 
     Balanced Budget Amendment (the Amendment), as currently 
     proposed, would allow Congress to establish a separate 
     capital budget unconstrained by the Amendment. We discussed 
     this with counsel and, in our view, the present language of 
     the Balanced Budget Amendment would not allow for statutorily 
     exempting capital expenditures from the Amendment's 
     requirement that ``total outlays for the year shall not 
     exceed total receipts for that fiscal year.'' Your inquiry 
     illustrates the inflexibility of the Amendment.
       The Amendment as drafted does not distinguish between 
     capital investment and current spending. Outlays are defined 
     as ``all outlays of the United States except for those for 
     repayment of debt principal.'' Even if Congress were to 
     create a separate capital budget by statute, outlays from 
     that budget would still be ``outlays of the United States.'' 
     Indeed, a provision in such a statute that capital 
     expenditures were not ``outlays of the United States'' for 
     purposes of the Balanced Budget Amendment would be 
     unconstitutional because, under fundamental principles of 
     statutory construction, it would be at odds with the express 
     language and intent of the Amendment.
       Proponents of the Balanced Budget Amendment cite the state 
     experience with balanced budget requirements as precedent for 
     a federal Constitution amendment. In relation to your 
     specific question regarding capital budgets, most state 
     requirements are not analogous because spending for capital 
     investments does not have to be offset. States with balanced 
     budget provisions generally have separate operating and 
     capital budgets. Many states require only the operating 
     budget to balance--a situation prohibited by the Amendment. 
     Although the remaining states with balanced budget provisions 
     also require the capital budget to balance, they include bond 
     financing for capital expenditures as a receipt. In other 
     words, in these states, capital funds may use borrowed funds 
     to balance--a solution expressly barred by the definition of 
     receipts in the present Balanced Budget Amendment.
       Proponents of a capital budget argue that the absence of a 
     capital budget has reduced investments in infrastructure and 
     other capital improvements that would add to future growth. I 
     do not believe we should move to a capital budget, but under 
     different circumstances in the future, others might want to 
     do so. The Balanced Budget Amendment before you now would 
     prevent us from moving to a separate capital budget, even if 
     we wanted to.
       I hope this answers your question. We would be happy to 
     respond to any further inquiries you may have.
           Sincerely,
                                                  Robert E. Rubin.

  Mr. ENZI. Mr. President, does the amendment of the Senator from 
California create kind of a loophole, though, by not defining what 
``capital expenditure'' is even in the slightest way?
  Mrs. FEINSTEIN. It does permit a separate capital budget for major 
capital improvements. I believe it would be foolish to put strictures 
in the Constitution of the United States. It seems to me that the 
Constitution of the United States should provide general concepts, and 
the specifics of those concepts should be worked out by the Congress of 
the United States.
  Mr. ENZI. So the Senator is suggesting, then, that there would have 
to be a much greater detail on the enabling legislation?
  Mrs. FEINSTEIN. Absolutely, as there is with every amendment to the 
Constitution. Implementing legislation carries with it court tests and 
standards regarding how the legislation is to be carried out.
  The PRESIDING OFFICER (Mr. Santorum). Who yields time?
  Mrs. FEINSTEIN. Mr. President, may I ask the distinguished Senator 
from Illinois how much time he would require? Ten minutes?
  Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator from California has 31 minutes.
  Mrs. FEINSTEIN. I am happy to have the Senator use as much time as he 
wishes.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I thank the Senator from California for 
yielding time.
  I rise in support of the Feinstein substitute. I think that we ought 
to reflect for a moment what we are about. This is not the passage of a 
congratulatory resolution, nor is it enactment of a law which can be 
reconsidered at a later date. We are talking about amending the 
Constitution of the United States. In the last 205 years of our history 
we have done that 17 times. We should pause and reflect, and I think 
reflect on what the Senator from California has noted as the obvious 
flaws and weaknesses in the balanced budget amendment that is being 
brought to us today.
  Last night, many Members of the Senate were given the opportunity to 
visit the National Archives. I have to tell you quite honestly that in 
all the years I have lived in Washington I have not done that. I did 
last night, and saw the original of our Constitution. Just stopping for 
a moment, pausing, and looking at this great document in its original 
form humbles anyone who would call himself a modern day legislator. If 
we are to change the words of that great document, let us take care to 
do it rationally, calmly, and in a way that can be defended for decades 
to come.
  I am concerned that this whole debate over the balanced budget 
amendment has taken on a different style, a different life of its own, 
a different velocity than most political issues.
  We have over the last 10 or 15 years in Washington come to believe 
that this balanced budget amendment is the answer to America's prayers. 
Those who support it would suggest if we could just pass the balanced 
budget amendment, then things will be better--our debt lessened; 
interest rates will come down; the economy will forge forward helping 
everyone: businesses, working families alike.
  I do not doubt that some of those suggestions are true, but I think 
we should pause for a moment and really reflect on whether or not we 
are exaggerating the impact of this amendment, whether we are 
overstating the case. We in America have done that many times in our 
history. We have found what we considered to be those silver bullets, 
those big fixes that this Congress, many of its supporters, came 
forward with and said this is what we will do to change America and its 
future.
  For a moment, as we reflect about the historical impact of this 
debate, let us consider some of the big fixes in American history. 
Consider, for example, the battle for free silver. The free silver 
movement in the late 19th century called for unlimited free coinage of 
silver at a time when unstable economic factors were causing 
devastating economic depressions. Proponents of free silver, including 
the People's or Populist Party, agrarian interests, and silver miners, 
thought that free coinage of silver would increase the money supply, 
drive up the prices of agricultural products and help struggling 
farmers and working families.
  In the famous speech of William Jennings Bryan, of Illinois, ``Thou 
shalt not crucify mankind on a cross of gold'' was his basic plea for 
free silver. He believed, as did many in his time, if we just had free 
silver, that would be what America's economy needed to prosper.
  We hear echoes of William Jennings Bryan in the Chamber in this 
debate: if we just have a balanced budget amendment, then our Nation's 
problems will be solved. But some of us reflect on the fact that 
without a balanced budget constitutional amendment we are making real 
progress. We are, in fact, moving toward a balanced budget. We have 
seen more deficit reduction in the last 4 years than any time in this 
century. Our economy is moving forward, creating millions of jobs and 
opportunities for family farmers, for small businesses, for working 
families. And so as to the big fix of the balanced budget

[[Page S1598]]

amendment, one has to question whether or not it is truly necessary to 
put this in our Constitution.
  Of course, after the free silver movement came another solution, the 
gold standard. This was an idea that had been kicking around for a long 
time. Unfortunately, it was too simplistic. Changes in the supply of 
gold were tied to mining discoveries rather than economic progress and 
caused shifts in commodity prices unrelated to the economy. The Gold 
Standard Act of 1900 reaffirmed the gold standard of the time, but by 
limiting the amount of base money in the economy the gold standard 
failed to allow the contraction and expansion of America's money 
supply. As the efforts to maintain the gold standard helped deepen the 
Depression, our Nation was forced to shift away from that gold 
standard. By 1971, dollars could no longer be exchanged for gold at an 
official rate. In 1976, the statutory link between the dollar and gold 
was officially severed.
  I can tell you, after 14 years of service in the House, there were 
many of my colleagues during that period of time who still believed 
passionately in the gold standard. They felt that if we returned to a 
gold standard, America's economy would spring forward--echoes again of 
debate we hear on the balanced budget amendment: if we can just pass 
this amendment, this will certainly solve America's economic problems.
  We went through an era of protective tariffs in America's history, 
too. This was another big fix. There were people who pushed for these 
tariffs, saying they would generate revenue for the Federal Government 
at the same time as protecting American manufacture and American 
agricultural production. The worst of these, the Smoot-Hawley tariff of 
1930, which occurred right after the Depression started, is credited, 
if you can use the term, with driving the American economy even deeper 
into a depression.

  In the early part of our Nation's history, the second half of the 
19th century, the national banking issue was always on the forefront. 
It was one that was debated long and hard in this Chamber and by many 
others in terms of whether or not it would be the answer to America's 
problems. It was unable to fully address the problems of our Nation. 
Cooler heads prevailed. The idea of a national bank was amended.
  The point of these stories is to show you that in a quick survey of 
our Nation's history the silver bullets do not always hit their 
intended targets. Big fixes, like this balanced budget amendment, do 
not always have the intended effects.
  There is a critical difference between the suggestions of those in 
the past and what we are dealing with today. These were legislative 
proposals. If there was a mistake made on free silver or a national 
bank or the gold standard or a protective tariff, the next Congress 
could address it, change the law. But in this case, we are enshrining 
in our Constitution words that we believe will be the big fix. But what 
if we are wrong?
  And the Senator from California raises questions about the inherent 
wisdom of the balanced budget amendment before us: Do we really want to 
put in our Constitution for all times language that threatens the 
future of the Social Security trust fund?
  I think it has been clearly demonstrated with reports from the 
Congressional Research Service, with the statement of the Senator from 
California this morning, that we put our Social Security trust fund at 
risk with the balanced budget amendment that is before us.
  We also know that this balanced budget amendment does not give 
Congress or the Federal Government the flexibility to respond to a 
national economic emergency or a natural disaster.
  Over 1,000 economists have come forward in a rare show of unanimity 
and said this balanced budget amendment is bad economic policy for 
America. And yet when I offered an amendment to give more flexibility 
to respond to an emergency, it was rejected. I hope the Senator from 
California has better luck today. But her substitute will take care of 
that problem.
  There is also a concern about gridlock. What the Senator from 
California is proposing is that an extension of the debt limit be 
approved by a majority vote and not three-fifths. Those of us who have 
even a short memory can recall that within the last 24 months we had 
the two longest shutdowns in Federal Government history because of the 
failure of Congress to rally a majority to extend the debt limit. This 
constitutional amendment will up the ante, will increase the 
responsibility, raise the bar--a three-fifths vote. I think the Senator 
from California is right in saying that when it comes to extending the 
debt limit, it should be done by majority vote.
  I also applaud her comments on a capital budget. I would ask my 
colleagues to reflect on the fact that every business and virtually 
every State government has a capital and operating budget. At my town 
meetings people would come in and say: ``Congressman, you just don't 
get it. I balance my checkbook every month. Why can't you balance the 
books out in Washington?'' A good point.
  But I always ask them a question: ``Do you have a mortgage on your 
home?''
  ``Oh, sure.''
  ``Do you pay it off at the end of every month?''
  ``Oh, no. It's a 25- or 30-year mortgage.''
  ``What's the difference?''
  ``Well, this is a home that we are going to have for a long time. 
This is an investment, Congressman. This isn't the annual operating 
costs of our family. This is the annual investment of our family.''
  Families understand that. Americans understand that. The question is 
whether Members of the Senate understand it because this balanced 
budget amendment makes no distinction between capital investments for 
the future of our Nation and the operating expenses.
  And if we should decide, as part of the telecommunications revolution 
or for some other reason, to make a massive American investment in our 
future, in economic progress, this balanced budget amendment will tie 
our hands. It treats the interstate highway system the same way it 
treats the purchase of paper clips. That is wrong.
  The Senator from California addresses that and gives to Congress, 
even with the balanced budget amendment, the authority to establish a 
capital budget.
  Congress can and should balance the budget. I do not believe we need 
a constitutional amendment to do it. But if we are going to pass a 
balanced budget amendment, we must do it right. That is why I support 
the Feinstein substitute.
  I cannot support a balanced budget amendment that jeopardizes Social 
Security, prohibits prudent capital planning, risks even deeper 
recessions and unemployment, and invites gridlock and danger of default 
on Capitol Hill. The Feinstein substitute protects Social Security; it 
allows a capital budget; it allows a way to provide for economic 
recessions and avoid the threat of gridlock and default.
  The choice is clear. The Feinstein substitute is clearly the better 
choice, and I urge my colleagues to support it.
  Let me say in closing, those who are resisting any amendment to this 
underlying resolution, to the balanced budget amendment, I think are 
unfortunately taking the wrong approach. There are possibilities that 
those who support this amendment are just wrong. And if they are wrong, 
there is a lot at stake.
  Would it not be better if we could come together with a bipartisan 
consensus to address the serious flaws in this bill? Would it not be 
better if there were a little humility on the floor of the Senate and 
the House, and an understanding that perhaps these words, although 
politically right, may not be right for America's future? Would it not 
be better if the Members of the House and Senate could take a little 
walk down through the National Archives, take a look at that 
Constitution, and realize the gravity of the decision we are about to 
make?
  The PRESIDING OFFICER (Mr. Burns). The Senator from Wyoming.
  Mr. ENZI. Mr. President, I appreciate all the words that have been 
said here this morning, particularly those that call for us to do a 
bipartisan consensus.
  I am a big believer in the U.S. Constitution. I carry my own copy of 
the U.S. Constitution. In article V it tells us how to amend this 
Constitution, and it says that it is going to have to be a bipartisan 
effort if it is going to take two-thirds when the majority party

[[Page S1599]]

has 55. This is going to be a bipartisan effort, but it has to be an 
effort that winds up with a constitutional amendment that will do what 
the American public is demanding. They are demanding that we come up 
with a balanced budget.
  I get to stand next to these unbalanced budgets, the last 28 years of 
work in this body, and I know that, individually, the people in this 
body have said we have to balance the budget. And I am willing to do 
it. It is collectively that we have had a little trouble getting it 
done. It is in that bipartisan manner that we have had trouble getting 
it done. It is in that situation when we are having to tell the people 
back home ``no'' for any particular issue. Somebody told me it takes 
political will to balance a budget. I really contend it takes political 
``won't'' to balance a budget.
  We are talking today about an amendment that will deal with capital 
budgeting. As the only accountant in the Senate, I am fascinated by 
some of the definitions of capital budgeting that I am hearing here and 
reading about in the paper, that the President has said. It looks to me 
like the Federal idea of capital budgeting is not only a risky gimmick, 
it is also a loophole so big that you could drive an interstate through 
it, or an aircraft carrier, or planes and buses, or buildings. Anything 
can be driven through the loophole that will be created by this nice 
term ``capital budgeting.''
  I, too, have run into the people at home who say, ``Wait a minute, I 
have a mortgage on my house. How is that different from the United 
States?'' And I say, ``Are you paying off the mortgage, or are you just 
paying the interest? And can you buy two or three or five houses and 
only pay the interest?'' That is what we are trying to do with capital 
budgeting with the Federal Government. We are saying we don't have to 
pay the principal back; interest is the only thing that is important.
  You and I know if you borrow enough, pretty quick the interest equals 
all of your revenue. We are a little ways away from that yet in the 
United States, but it is a distinct possibility. We are talking about a 
possibility of telling our kids or our grandkids, ``You have to pay 84 
percent of your wages in taxes and you will get nothing for it because 
you are going to be paying the interest on the houses that we bought 
and used up.''
  At that point, we are going to have a revolution in this country. It 
is not going to be the same kind of gentle change we are used to. It is 
not going to be subject to the same slow processes. We are going to 
have a generation that is going to say, ``I am paying Social Security 
to people I don't even know, and I am never going to get any.'' And 
they are going to take Social Security away. If we do not begin 
balancing budgets, there will not be Social Security.
  I don't think there is a single person in this entire body who does 
not want to protect Social Security. But how long are we going to wait 
before we protect Social Security?
  We keep talking about capital budgeting. I have said any kind of 
budgeting would be really great. What we are really talking about is 
cash-flow budgeting, I think, rather than capital budgeting, unless we 
are talking about that tremendous loophole, the one that says we can 
designate anything we want as capital and we can shift it off budget--I 
hate those words; it is not a good accounting term--but we no longer 
have to be responsible for anything that we can call capital budgeting, 
which is a very good accounting term.
  The President's commission on setting up a capital budget will not be 
nearly as restrictive as was the question that I asked earlier. That 
commission will report on including physical capital and intangible or 
human capital. That is the social capital I was talking about, the 
social investment I was talking about before. This loophole would 
virtually allow anything to be deemed as a capital investment.
  I would like to go into a little bit of what happens in some of the 
other entities that we do allow the right to do capital budgeting, and 
really what we are talking about is loans for capital. The Federal 
Government has such an extensive budget that we have not been forced to 
do any capital budgeting, nor in the foreseeable future would we have 
to do capital budgeting. We should do cash-flow budgeting so we can 
build all these capital items we are talking about in a logical 
progression and within budget, and pay back some of the debt that we 
already owe so there is less interest, so we have more money to spend.
  Probably one of the toughest levels of capital budgeting or loans 
that we allow to be made is at the local level. I used to be the mayor 
of a boom town out West that more than doubled in size. We had to have 
sewer treatment. Yes, there was a Federal program for sewer treatment, 
but our community had already applied for one of those grants and 
gotten one and built a sewer treatment plant. Then we had all of these 
people move in and we exceeded the capacity and were fined for 
exceeding the capacity of this lifetime plant. So we had to build 
another sewer treatment plant, and we were last on the list for getting 
another grant in that area.
  We had to build streets. You cannot have houses without streets that 
let you get to the houses. We had to increase our garbage collection. 
We also had our own electrical service. The first day I was in office, 
I got a call from one of the electrical suppliers who wanted to know 
what I was going to do when my substation blew up. I had to ask him 
what a substation was. That is a great big transformer for a town. He 
told me it was operating at 1.2 capacity, and any warm day it would 
just be eliminated and my town would be out electricity for maybe 2 
weeks while we got a portable substation. I pictured myself for quite 
awhile being tarred and feathered and ridden out of town, as people's 
deep freezes thawed or they couldn't read at night or iron or any of 
the things that we really rely on electricity for but never think about 
it.
  And water, that was really the biggest problem. That has to be one of 
the most basic things any of us is involved in, is water. We did not 
have enough water before the boom. We went on water rationing in May 
and we got off in October, and our water was color-coded. The cold 
water came out kind of red because there was iron in the water and it 
took on that color when it mixed with oxygen, and the hot water came 
out black because we have a lot of coal in the area I am from and the 
coal would settle out in the hot water tank and then come out when we 
used hot water. You have to have water. You can do, maybe, without 
electricity. You cannot do without water.
  It was not an option to do without either of them, so we had to issue 
bonds. We had to borrow on a long-term basis. Our water project alone 
was 43 miles and $23 million away. Out here, that is not a microdot in 
the budget. It does not mean anything out here. But that was $3,000 in 
debt for every man, woman, and child living in that town at the time.
  They don't just let municipalities print their own money. There is a 
process that you have to go through that has a lot of review, because 
you have to prove to the people who might buy the bonds that those 
bonds will be paid off.
  I want to make a distinction again on that ``paid off,'' something we 
don't even consider around here. In all of the discussion that I have 
heard on the balanced budget constitutional amendment, in all of the 
discussion that I have heard on balancing the budget, I have not heard 
anybody say, ``Where's the number here that pays down the national 
debt?''
  That is what we do with bonding. That is what we do with States when 
they bond. We have an elaborate process to do everything we can to make 
sure that those bonds will be valid, which means they will be paid off 
in a reasonable amount of time.
  So what did I have to go through to get that $23 million? One of the 
things I had to do was go before Standard & Poor's and Moody's in New 
York and explain how a town of 8,000 people was going to pay off $24 
million in debt. I know that is real small stuff compared to cities in 
California, but for a guy from rural Wyoming, that was a lot of money.
  It also happened to be at the very same time that New York City was 
going broke, and Standard & Poor's was having daily meetings with the 
city to see how they were going to pay off the debt that they already 
had. I didn't mention forgiving the debt. I know there was some talk 
about that.

[[Page S1600]]

 But what Standard & Poor's and Moody's was interested in was how it 
was going to be paid off. They didn't care whether it was Federal 
grants or how.
  So they had a lot of extra special questions for us on how to do 
that, and as a result of the discussions, there were also criteria that 
were placed on the bond issues. This is normal stuff that happens with 
bond issues. There are covenants. That means that you have to dedicate 
sources of revenue. I have not heard us talk about any really special 
dedication of revenues to paying off any of this capital budgeting. I 
will tell you, they come in and they take that revenue before you get 
to do anything else with it if you default on the bonds. If you even 
miss a payment, they come in and demand the money, much the same as if 
you own a home.
  Then they also put a restriction on, they call it coverage, and 
coverage is an additional amount beyond the normal payment that goes 
into a special fund to make sure that you will not default on the 
bonds. In the case of our bonds, it was 1.25 percent. That means we had 
to pay into another fund 25 percent more than our payment to assure 
that we would make future payments. Again, that is something we don't 
talk about with capital budgeting for the United States. We just talk 
about spending the money and how we can build loopholes to do more 
spending outside of the normal budgeting process.
  We also had a requirement of a front-end sinking fund. That means 
before we could even start the project, we had to put money in a fund 
to show that we could make the first part of the payments.
  And then, and here is a real divergence from what we do back here, we 
had to have a vote of the people to go into debt--a vote of the people. 
What would happen with our budgets, these 28 years of no balanced 
budgets? Would the people let us do that if they had to vote on what we 
were spending? I know from the State-level discussions on this that 
that would be an incredible burden and extreme expense, and we can't go 
to that extent. No, we can't go to that extent, and we were elected to 
make those kinds of decisions. But we were elected to make them within 
certain constraints. The people back home tell me that they expect that 
constraint to be paying things off. They expect us not only to balance 
the budget, but to get to a situation, to plan for a situation where we 
pay down the national debt. That is good budgeting; that is good 
accounting.
  There was a happy side to this story. We did do capital budgeting. We 
did cash flow budgeting. We built the things that I talked about, and I 
want to tell you that today, not because of my efforts, but because of 
the people who followed me, who followed the cash flow budgeting, that 
those projects are not only in place, but they are paid for. Gillette, 
WY, is one of the few places in the United States that is debt free. 
That is how you run a city. That is how you should run a State, and 
most States do. Most States are required to, because they have a 
balanced budget constitutional amendment that forces them to live 
within their means. And that is how the United States ought to work.
  Capital budgeting could be a great idea, but not if the purpose of 
capital budgeting is to build loopholes so that we can spend whatever 
we want to by merely designating it as capital budget.
  We also ought to have performance budgets. There are a whole bunch of 
things that the private sector is doing that would be very adaptable to 
the Federal Government, and some States have already done them and some 
States have found them to be very successful.
  How do you balance a budget? You do it by strategic planning. You 
have every single person in the Government, down to the very smallest 
agency, talk about what their mission is, who their customer is, what 
they are trying to achieve, and how they will get it done. You get them 
to focus on the real problem of what they are trying to achieve and how 
they can most efficiently do it. Focus saves money.
  In Wyoming, we talked a long time about strategic planning for the 
State. We have a thing we call management audits. I am not familiar 
enough to know if we do that here, but we had a special committee that 
looked at State agencies. And the purpose of that look was to see if 
State agencies were doing what the State legislature and the Governor 
said they were supposed to be doing, if they were following the 
statutes. I am pleased to say, in most instances, they were doing 
exactly what we had told them. However, it was in pretty broad terms.
  It wasn't good enough to be a mission statement. It wasn't good 
enough to give them the finite direction they needed to have the best 
performance possible. So we instituted strategic planning. We forced 
all of the agencies to come up with a strategic plan, and most of them 
did. The ones that were most reluctant today are the biggest supporters 
of strategic planning. Once they tried it, they couldn't believe how it 
worked.
  The way that it works is the agencies for the budget process, 
actually the individuals in the agencies actually wind up saying, 
``These are the things that we shouldn't be doing in our agency.'' I 
can tell you that the general public said, ``Wow, I didn't even know 
they were doing that stuff.''
  If we had decisions to make here that were based on the employees of 
the Federal Government saying these are things we shouldn't be doing 
and the American public telling us, ``Why were you doing those 
things,'' we would cut them and nobody would complain.
  That is not how it works, though, in Government. If you allow it to 
happen, what gets cut in Government are the things that are the most 
visible. Call it the ``athletic team syndrome.'' If you want to really 
make an impact, you threaten to cut the athletic team in a small 
school, and that will get a furor bigger than anything you ever 
imagined, and it will be reinstituted. Not only will it be 
reinstituted, but I have this principle of government that if it is 
worth reacting to, it is worth overreacting to. So you not only 
reinstitute into the budget what happened, you put a little bit more 
money into that.
  We had that example in Yellowstone Park where they were $80,000 short 
on a $19 million budget, and they asked for extra money and threatened 
to close down our park early. Now, that is a major economic, as well as 
recreation, benefit to the entire United States, and particularly to 
those of us in Montana and Wyoming.
  If we had a manager who was short a few dollars who said they needed 
more money or had to close down early, we would probably fire the 
manager. We need strategic planning so that we can make the decisions 
and be sure that the things that should not be done are not being done.

  We talk about capital budgeting. We have to be sure that capital 
budgeting is not just building another loophole into the system, that 
it is good accounting. We need to have good accounting. We need to have 
good accounting to protect Social Security.
  Social Security right now is being called a trust fund. But it is not 
the fund with money stuck out there being invested on behalf of the 
person who paid it in so that when they retire there will be a 
guarantee of that money being there. It is money that is flowing 
through the system. It is money that is being paid out as it comes in 
with some small amounts being left over. Now, $80 billion this year 
sounds like a lot of money to me. And it is a lot of money. But it is a 
tittle in the budget for what needs to be put in if we are going to 
have an actuarially sound Social Security System.
  Not only should we be capital budgeting, not only should we be paying 
off the national debt, we should be making our trust funds into true 
trust funds. That is good Government. That is what I am interested in. 
If we are going to save Social Security, we are going to have to do 
adequate budgeting to build it up to some point in time where it is 
actuarially sound.
  Mr. President, the Feinstein amendment creates a loophole to the 
balanced budget constitutional amendment. As I mentioned when I started 
this speech, you can drive an interstate through it. The Feinstein 
amendment actually harms the balanced budget amendment because it 
ultimately will increase debt. It is a license to increase debt.
  Congress has been borrowing dollars to no end in order to deficit 
spend. And that is the problem. The Feinstein

[[Page S1601]]

amendment does not tell us how we will pay back the bonds for capital 
spending. It puts no limitation on the bonds for Federal spending. It 
has no oversight for the bonds for capital spending. It is more and 
more debt. I yield the floor.
  Mrs. FEINSTEIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. FEINSTEIN. May I ask, how much of my time is remaining?
  The PRESIDING OFFICER. You have 18 minutes remaining.
  Mrs. FEINSTEIN. Thank you very much, Mr. President.
  Mr. President, let me try and sum up what I have presented here, and 
then speak specifically in answer to some of the concerns of the 
opposition.
  Essentially, the amendment that I have on the floor differs from the 
majority amendment in four ways.
  The first and most important way this amendment differs is that it 
continues to use Social Security trust funds as part of the unified 
budget up to the point where we reach balance. According to Social 
Security Administration data, that represents about $570 billion, 
cumulatively, of Social Security trust funds that would be used to 
offset other spending by 2002. For 1996, we used about $77 billion of 
the surplus.
  Once Congress balances the budget, we would remove Social Security 
trust funds from the unified budget. That would essentially save for 
Social Security recipients a cumulative total of about $1.8 trillion 
and, therefore, maintain the integrity of the Social Security system.
  Additionally, unlike the majority amendment, it would not enshrine in 
the Constitution that Social Security is part of the unified budget 
forever, which, reneges on a major commitment to senior citizens in our 
country.
  As I pointed out earlier, Social Security is not funded from the 
income tax. Its revenue is not supposed to go into general operations 
of the Government. Social Security is funded from a specific FICA 
payroll tax. A worker pays 6.2 percent, matched by the employer who 
pays 6.2 percent. The 12.4 percent is supposed to go into a separate 
trust fund held for the retirement of workers. Social Security taxes 
have one purpose and one purpose only. That purpose is to provide a 
safety net for our Nation's seniors with supplemental income when they 
retire.
  Social Security deserves its unique treatment. Social Security is our 
largest single Federal program. It has more than 43 million 
beneficiaries, with 1996 spending of $350 billion. Additionally, Social 
Security plays a critical role in reducing poverty among seniors. 
Without Social Security, the poverty rate of the elderly would be 53 
percent rather than the current 14 percent. For 38 percent of all 
retirees, Social Security is the difference between poverty and no 
poverty. If those statistics do not speak eloquently for the need to 
keep Social Security intact, I do not know what does.
  So this amendment, with regard to the point of Social Security, is a 
compromise. We meet the majority's concern that if we take Social 
Security trust funds out of the unified budget right now, it is too 
difficult to balance the budget. My amendment would continue to use the 
trust funds up to the point of balance and then separate them out after 
that. The practice of using Social Security trust funds to offset other 
spending is not enshrined in the Constitution forever and ever as a way 
of doing business.
  Second, we provide in this amendment for a serious economic emergency 
and for major natural disasters. I can tell this body that the 
probability of a major earthquake in Southern California, according to 
seismic experts, has gone up. If that should happen--I should say when 
that happens--the State's disaster needs are going to be tremendous. 
Passing the majority's balanced budget amendment tells California that 
the Federal Government will have no way of meeting these disaster 
needs. This is a critical difference.
  Let me speak about other economic emergencies. Earlier, I mentioned 
the savings and loan bailout. I was not here for the savings and loan 
bailout. I do not know how many Members of this body or the other body 
actually predicted it, but I never would have thought it would have 
happened. The total costs were $135 billion of taxpayer's moneys to 
maintain the full faith and credit of the Federal Government's 
guarantee to depositors. In 1 year alone, 1991, the cost to the 
Treasury was $66 billion.
  I would really be concerned about providing for an economic 
emergency. Last month, the Congressional Budget Office issued a report, 
citing the sensitivity of the budget deficit to the economy. They 
indicated this:

       If economic growth was one-half percent lower, it would 
     increase the deficit by $50 billion in FY 2002. And these 
     effects would continue to grow over time.

  So you see, this kind of even economic change impacts the deficit 
tremendously.
  If the economy fell into recession and growth were five-tenths of a 
percent below its forecast, a budget thought to be in balance, would 
develop a $50 billion deficit or higher. Under Senate Joint Resolution 
1, the budget deficit would need to be eliminated in that fiscal year.
  As you can see, even a drop of five-tenths of a percent in the 
economy would create an additional $50 billion shortfall in the 
estimates of that fiscal year which Congress would have to eliminate. 
To close a $50 billion budget deficit, Congress would have to eliminate 
the equivalent of nearly the entire defense procurement budget in that 
year.
  Let me give you another example as to why providing for economic 
emergencies would be necessary.
  Economists estimate that a ticket shock triggered by higher oil 
prices similar to those of 1973 and 1974 and 1979 and 1980 could 
trigger a 1- to 2-percent drop in our economy. That would necessitate 
budget cuts of $100 to $150 billion that year. It would be devastating 
to an economy. I do not know if anyone here remembers what it was like 
when those prices of oil rose. Economists state it was the major reason 
for the economic downturn. No one can guarantee, that such a situation 
would not happen in the future.
  So the majority's balanced budget amendment does not address economic 
risks that face the Nation. I think that is a major weakness in the 
amendment. Our amendment would suspend the amendment in the event of a 
serious economic emergency or major natural disaster. This would have 
to be enacted by a constitutional majority of both bodies.
  We also permit a capital budget. My thinking is that when Social 
Security is withdrawn from the unified budget, we will need to be able 
to review our budget structure and proceed in a way that does not have 
a dramatic impact. One way is through the enactment of a capital 
budget.
  Now, the Constitution is not a document that should carry enabling 
legislation. The Constitution should be worded in general words subject 
to interpretation and also subject to enabling action by the Congress.
  Our amendment reads: ``Nothing in this article shall preclude,'' 
which means prevent, ``the authority to enact and implement''--that 
would have to be done by congressional enactment and implementation--
``a separate capital budget.''
  The amendment defines a capital budget: ``Those major capital 
improvements.'' Congress would have to determine what is a major 
capital improvement, which would require multiyear Federal funding. 
Those would be excluded from the provisions of this constitutional 
amendment that requires the strict expenditures must meet outlays.
  This means that for, say, Federal office buildings that would maybe 
run $40, $50, $80, $100 million or more, or a major transportation 
systems which could run $200 or $300 million, a multi-year financing 
program could be established. The interest on those programs would be 
paid out of operating capital, and the amount of interest would 
probably be limited every year.
  The amount of debt would be strictly limited. Perhaps the Congress 
would limit debt by using a percent of gross domestic product, of GDP. 
As I said, 2 percent would be about $160 billion. If you had 3 percent, 
it would be more, and still more at 4 or 5 percent. An effective limit 
would probably be somewhere between the 2 percent and, say, 6 percent, 
7 percent, or 8 percent of GDP.
  Now, is this necessary to do? Even without a balanced budget 
amendment, spending for infrastructure since the

[[Page S1602]]

1960's has dramatically dropped. It was 6 percent in the 1960's. It is 
3 percent today, 3 percent of the budget.
  We have 250,000 miles of Federal highways that are in disrepair. We 
have more than 100,000 bridges in disrepair, unable to be repaired in 
the present day situation. I think at some point the Congress may wish 
to look at a capital budget. All this amendment does is enable that 
review to take place.

  We mentioned what it means to be controlled by a minority. The fourth 
area where this amendment differs from the majority is with respect to 
the debt limit. I have tried to show this body how difficult it is to 
even raise a majority vote.
  Since 1990, no budget resolution or conference report has received a 
three-fifths vote of this body.
  Since 1990, no vote to raise the debt limit has received a three-
fifths majority.
  The 1985 Gramm-Rudman-Hollings bill, was passed by 51 to 37.
  The 1990 budget reconciliation bill was passed by 54 to 45.
  The 1993 Omnibus Budget Reconciliation Act was passed by a vote of 51 
to 50, just one vote.
  The 1995 budget reconciliation was passed by 52 to 47.
  The 1995 temporary debt limit increase was passed by 49 to 47. 
Consequently, last year, we reached our apex of minority rule when the 
Government was shut down not once, but twice while trying 
unsuccessfully to prove a point.
  Allowing a minority to block an effort to extend the debt limit 
essentially jeopardizes the full faith and credit of this country, 
something that those of us who have held executive office know is the 
true measure of the financial acumen of your city or your State. If you 
get a bad bond rating by Moody's and Standard & Poor's, the full faith 
and credit of the bonds you float is dramatically affected.
  But a minority in pique, pouting, desirous of showing their enormous 
clout, can effectively jeopardize the full faith and credit of this 
Government and put this Government into default. I must tell you, I 
think that is absolutely dreadful as a matter of public policy.
  Those are the four issues in this amendment.
  Social Security: Congress can use it up to 2002 to reach balance, but 
afterward, we must separate it out. This step will preserve $1.8 
trillion in the trust funds for retirees.
  Economic emergency: Congress should treat spending for serious 
economic emergency or major national disasters just like it treats 
military emergencies.
  Capital budget: Congress should at least enable it, rather than 
prohibit it, which the majority amendment does.
  Debt limit: Please, have some sense and address it with a majority 
vote.
  These four issues are the only way this amendment differs from the 
majority amendment.
  Perhaps the majority has their votes. Perhaps they know they have 67 
votes. If they do not, I respectfully submit to them, maybe this is 
worth looking at and reviewing.
  Maybe it solves a major problem.
  Maybe it provides some kind of constitutional flexibility to meet 
what might develop in the future. We could face another savings and 
loan crisis, or another shock from oil prices. We could face a major 
earthquake in southern California, the probability of which has been 
increased, or a major flood in the Mississippi River basin, a major 
earthquake rift zone in the center part of our country.
  We could face a range of emergencies and people will need Federal 
help. That is what we are here to do. We are here to protect the 
welfare and well-being of our citizens, and not the least among them 
are seniors. For many seniors, Social Security is the difference 
between a life of poverty and a life of being able to eat and pay the 
rent.
  I think this is a worthy amendment. I have given it a lot of thought.
  My distinguished chairman of the Judiciary Committee is present on 
the floor. I have listened to the hearings, heard the testimony of 
Secretary Rubin and really thought about whether your amendment could 
be improved. I decided that it could, but for some reason the balanced 
budget amendment is frozen in stone. I do not know who drafted the 
majority amendment. It was drafted, I assume, by the majority, but it 
has become the be-all and end-all: ``If you do not support us, you 
cannot be for a balanced budget amendment.'' I cannot accept that.
  I represent a big and deeply troubled State. I hazard a guess that 
the State of California will never ratify this balanced budget 
amendment. I cannot speak for any other State, but I think I can for 
California. And they will not do it because they know about serious 
economic emergencies. They know about a capital budget. We have 40 
million people currently on Social Security, and it's going up every 
day. The people want this protected.

  So this is a compromise with Social Security, economic emergency, 
capital budget permitted, debt limit by a majority. I would hazard a 
guess that if this became the amendment of the majority, not only would 
it pass both bodies, it would be ratified by three-quarters of the 
States.
  I thank the Chair and yield the floor.
  Mr. HATCH. Mr. President, how much time remains on both sides?
  The PRESIDING OFFICER. The Senator from Utah has 29 minutes 
remaining, and the Senator from California has 17 seconds.
  Mr. HATCH. Well, I will try to save some time for the distinguished 
Senator from California so she can make her wrap-up remarks out of our 
time.
  Mrs. FEINSTEIN. I thank the Senator. I think that was my wrap-up.
  Mr. HATCH. If you desire to say anything else, I will certainly 
extend that courtesy to you.
  Mr. President, the balanced budget amendment was written by both 
sides of the floor. This amendment has been developed over a period of 
almost 40 years. It has taken both Republicans and Democrats to do it. 
It is a bipartisan amendment. Even though some in this body might try 
to see some flaw in it, it is the only balanced budget amendment that 
has a chance of passage. It is well thought through, it makes sense, 
and it's the only one that can end having unbalanced budgets year after 
year, like this stack represents the last 28 years of our budgetary 
life in this country. I might add that for 58 of the last 66 years we 
have had similar unbalanced budgets. These stacks are obscene; we know 
that. I think it tells the story better than anything else I can do. 
These folks just want to continue the status quo.
  Now, the distinguished Senator from California is very sincere, and I 
admire her for it. She is on our committee. I care for her and I care 
for her ideas. But in all honesty, I have to rise in opposition to the 
substitute offered by my colleague from California. With the various 
escape clauses she has built into her amendment, it would be too easily 
gamed, and I believe it would be ineffective in stopping Washington's 
debt addiction. As we have debated the balanced budget amendment here 
on the Senate floor for the past several weeks, we have seen amendment 
after amendment that seeks to gut the substance of the proposed 
constitutional amendment.
  What we have here is yet another attempt to make the balanced budget 
amendment ineffectual by carving out ways to deficit spend. How does 
this amendment of the distinguished Senator from California, as sincere 
as she is, make it easier to deficit spend? ``Let me count the ways,'' 
to paraphrase Elizabeth Barrett Browning.
  No. 1, it scales back the number of votes necessary to raise the debt 
limit. We know how easy it is to raise the debt limit around here, when 
that is the only methodology you have. So it scales that back from a 
three-fifths vote to a constitutional majority.
  No. 2, it provides a waiver for undefined economic emergencies. These 
people are really clever in the Congress. They can define anything as 
an economic emergency. All they have to do is pass a statute saying it 
is an economic emergency.
  No. 3, it provides yet another waiver for undefined natural 
disasters.
  No. 4, it exempts Social Security from the balanced budget 
calculation beginning in the year 2003.
  No. 5, it carves out a separate exemption for items designated as 
capital investment.
  Can you imagine what these intelligent, ingenious, and, in some ways, 
devious people in the Congress who have done this to us over the last 
28 years could do with capital investments?
  Now, Mr. President, I wonder what is left. The reason we are here on 
the

[[Page S1603]]

floor debating a balanced budget amendment to the Constitution is not 
to make it easier to deficit spend. We are here to constrain that sort 
of runaway spending that has produced unbalanced budgets in every one 
of the last 28 years. The Feinstein amendment does not do that.
  Let me take a few minutes to address the substance of each of the 
changes proposed by the Feinstein amendment individually. The Feinstein 
amendment would alter section 5 of the bipartisan balanced budget 
amendment to allow for a waiver of the balanced budget rule by a 
constitutional majority in any year ``in which the United States is 
experiencing a national economic emergency or major natural disaster.''
  As an initial matter, the undefined terms ``economic emergency'' and 
``natural disaster'' are malleable terms and could be abused by any 
future Congress bent on deficit spending. What constitutes an economic 
emergency? We have already resoundingly rejected an amendment on this 
issue because it is a broad loophole.
  Now, what about natural disasters? Does this amendment mean to say 
that the balanced budget amendment can be waived by 51 votes in the 
Senate in any year in which there is a natural disaster in some region 
of the United States? There is hardly any year when we don't have 
something somebody claims is a natural disaster. If that is the case, 
and given the fact that natural disaster is not defined, isn't it 
plausible, or even likely, that Congress will routinely find something 
to classify as a natural disaster, thereby providing an excuse to waive 
the requirements of the balanced budget amendment. Twenty-eight years 
of unbalanced budgets would suggest that this is the case. Congress 
will find a way if you give them these kinds of generic terms that are 
not defined and really can't be defined.
  What's more, nothing in this amendment of the distinguished Senator 
from California would require the additional spending to be directed to 
the communities affected by a natural disaster or to be used to get us 
out of a recession. ``Natural disasters'' or ``economic emergencies'' 
are only the triggers that let us spend whatever we want for whatever 
purpose. Because these terms are so malleable and subject to abuse, we 
need a supermajority provision to guarantee fidelity to the balanced 
budget rule.
  The general three-fifths waiver contained in section 1 of Senate 
Joint Resolution 1 is both sufficient to answer the concerns raised by 
this amendment and strong enough to keep the balanced budget amendment 
meaningful. The Feinstein amendment would exclude Social Security 
outlays and receipts from unified budget calculations until 1 year 
after the effective date of Senate Joint Resolution 1, the balanced 
budget amendment.

  In essence, the Feinstein amendment is nothing more than the Reid 
amendment we debated yesterday to exclude Social Security from Senate 
Joint Resolution 1 and unified budgets, with one wrinkle--the exemption 
will not go into effect until 1 year after the date that the balanced 
budget amendment becomes effective. This would allow, of course, 
President Clinton to include the current Social Security surpluses in 
his budget calculations but would leave future Presidents and 
Congresses holding the bag when they are forced to unnecessarily slash 
programs like Medicare because the budget deficit appears larger 
without Social Security surpluses than it really is.
  Moreover, the explanation of the distinguished Senator from 
California of her provision, and the charts that illustrate it, 
contemplate implementing this change by a one-time massive cut in a 
single year. Opponents of the balanced budget amendment have regularly 
argued that such an abrupt change would cause serious economic 
distortions in our country. The Feinstein amendment suffers from the 
same disease as the Reid amendment. It is not a workable compromise 
because, for the most part, Social Security surpluses will be excluded 
from the protections provided by the balanced budget amendment.
  As King Solomon wisely knew, there is no practical way to split the 
baby without destroying life. If you split the baby and put Social 
Security exposed out there without any balanced budget protections and 
everything else is in the budget and protected, Social Security will 
become a political football to be used by those who want to get around 
the balanced budget. And everybody here knows that. Everybody knows 
what a phony issue that is.

  So, too, the Feinstein amendment will destroy the viability of the 
balanced budget amendment.
  First, as I discussed during the debate on the Reid amendment, it is 
necessary to include Social Security in any balanced budget plan. 
Obviously, without including Social Security, the largest single item 
in the Federal budget, other programs must be cut far more than they 
really need to be. I have the belief that the distinguished Senator 
from California would be among the first to want to oppose those cuts. 
Certainly I wouldn't feel good about cutting things beyond where they 
should be cut. But that is what inevitably would happen if the Reid 
amendment had passed yesterday, or the Feinstein amendment is passed 
today.
  The proponents of this amendment have not told us which programs they 
will cut in order to come up with approximately $100 billion per year 
that the total exclusion of Social Security surpluses will cost us. 
Astoundingly, this figure is greater than our combined annual 
expenditure on education, the environment, and transportation and 
infrastructure. In fact, between 2003 and 2019, when the Social 
Security outlays will exceed receipts, the trust fund is expected to 
earn more than $1.8 trillion. Where do the supporters of the Feinstein 
amendment propose to come up with the money necessary to cover this 
self-imposed shortfall? It is no secret around here that many on the 
other side support this amendment because they want to kill the 
balanced budget amendment. That is the whole game here. I do not 
believe that is the motive of the distinguished Senator from 
California. At least I hope it isn't. But that is the only reason why 
this amendment will be supported by our friends on the other side, if 
you really analyze it.
  Let's put it in perspective. Discretionary savings from last year's 
budget resolution, which were described as draconian, were only $291 
billion. The Feinstein amendment would require that Congress cut 
spending or raise taxes more than six times that amount.
  Similarly, the projected revenues from the 1993 Clinton tax 
increase--the largest tax increase in history, many assert--were only 
$241 billion. The Feinstein amendment would require that Congress cut 
spending or increase taxes over six times this largest tax increase in 
history. These levels of spending cuts and tax increases are clearly 
unworkable. And the adoption of the Feinstein amendment would kill any 
chance the balanced budget amendment has of being ratified. That is 
really in the eyes of many who hate this balanced budget amendment, who 
do not want fiscal restraint, and who really want to continue their 
taxing and spending ways. That is really why they support the Feinstein 
amendment.
  One person who testified against the balanced budget amendment said--
if you are going to have a balanced budget amendment you should not 
exclude anything from the budget.
  Second, exempting Social Security from the mandates of the balanced 
budget amendment for any considerable period of time will probably 
result in the demise of the Social Security program years earlier. Such 
an exemption will create a powerful incentive to redefine taxing and 
spending programs as Social Security, and to pay for them through what 
could become a giant loophole in any attempt to balance the budget.

  Opponents of the balanced budget amendment incorrectly contend that 
including present-day Social Security surpluses in a unified budget 
would raid the trust funds. Give me a break. This is a complete 
misnomer because the surpluses are nothing more than an accounting 
record. Social Security FICA taxes are deposited with other revenues. 
Interest-bearing securities are purchased equal to the amounts of 
Social Security receipts. And those are Federal Government U.S. 
interest-bearing securities. These securities provide safe investments 
as long as we are financially solvent in this country, as long as we 
don't go broke, as long as our economy is going ahead, and the

[[Page S1604]]

only thing that is going to keep us doing that for sure will be if we 
pass the balanced budget amendment.
  The fact is that these securities provide a safe investment, the 
safest in the world, I have to say, as long as this country is safe. 
This safety, however, would be wrecked if Social Security were removed 
from the protection of Senate Joint Resolution 1's balancing 
requirements. In fact, the very fears of the advocates of the Feinstein 
amendment will be realized. Their exemption of Social Security will 
really cause the trust fund to be raided. That is the ironic situation 
here. Why? Because under the Feinstein amendment trust fund receipts 
would be used to finance other costly programs that they would simply 
call Social Security.
  I heard the distinguished Senator from Nevada, Senator Reid, 2 days 
ago say that Social Security is defined by statute. If it is defined by 
statute, it can be redefined by statute. There is no argument against 
that. It is ridiculous to sit here and argue that it will not be used 
as a loophole to spend anything they want to spend by calling it Social 
Security. Trust fund receipts really could be used to finance other 
costly programs by simply relabeling them ``Social Security.''
  With the loophole proposed by this exemption in place there will be 
an irresistible impulse in future Congresses to redefine unrelated 
programs as Social Security. This in turn will create an incentive for 
Congress to include costly programs as part of Social Security. 
Congress has not been able to restrain itself.
  Look at these. There is just no answer to this by those who oppose 
the balanced budget amendment. Anything they try to say just comes out 
when you look at 28 years of unbalanced budgets, and 58 of them over 
the last 66 years. This is not rocket science. It doesn't take any 
brains to understand that Congress is incapable of living within its 
means unless we put in some sort of restraint within the Constitution 
that requires them to live within their means.
  So I am saying that if you carve out Social Security that in turn 
would create an incentive for Congress to include costly programs as 
part of Social Security. Like I say, Congress can't restrain itself 
from either wasteful spending or increasing this web of services 
provided by Social Security. What is going to prevent them from doing 
that in the future if you have all of the loopholes that the Feinstein 
amendment provides for? Are we willing to let future Congresses roll 
the dice with the financial security of America's seniors? That is what 
is going to happen if we do not have a balanced budget amendment. Mark 
my word, it certainly is going to happen if we pass the Feinstein 
amendment and put Social Security out there exposed all by itself and 
not subject to balanced budget protections. Frankly, if the Feinstein 
amendment passes the balanced budget amendment is dead. There is no use 
kidding about it. It would be killed, and for good reason because it 
wouldn't work anyway. So that is what we are talking about.

  Passing an exemption loophole would essentially create two Federal 
budgets. One would be based on sound principles of solvency, and the 
other, the Social Security budget, which would not be based on sound 
principles of solvency. One budget would be required to be in balance 
unless a supermajority voted to allow a deficit. The other the Social 
Security budget would be raided and bloated with unrelated spending 
programs and projects.
  Taking Social Security off budget will subject the funds to 
Washington's special interest scavengers. As I have said before, when 
you have rats in your house, you need to plug up the holes. If you do 
not, they are going to find a way in. If we leave Social Security off 
budget all of the 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 devour it.
  This loophole would not only blow a hole in the balanced budget 
amendment but it would also seriously harm Social Security. This in 
turn could mean--and I think would mean--the end of Social Security as 
we know it, transforming it into the least secure of all Federal 
Government programs. I do not see how anybody can argue with that.
  Third, let's not forget about the troubling future for Social 
Security. The Feinstein amendment does absolutely nothing to protect 
Social Security, and, in fact, it will make it extremely difficult, if 
not impossible, to achieve balanced budgets. The Social Security Board 
of Trustees estimates that by the year 2070, if we keep going the way 
we currently are, Social Security is expected to run an annual $7 
trillion deficit. If we include Social Security in our balanced budget 
calculations we will be able to prepare for and budget for these 
massive shortfalls. Under the Feinstein proposal we will not be 
including this deficit in our budgetary planning.
  As a result, under the Feinstein amendment, in order to raise revenue 
and increase the debt ceiling sufficient to cover the expected Social 
Security shortfalls of the next century, we will have to dramatically 
increase taxes or cut spending on other important programs or face an 
annual three-fifths-vote fiscal crisis to avoid financial default by 
raising the already staggering $5.3 trillion national debt ceiling. The 
way to protect Social Security benefits is to pass the balanced budget 
amendment, Senate Joint Resolution 1.
  The proposal to exempt Social Security will not only destroy the 
balanced budget amendment but in all probability will cause the Social 
Security trust funds to run out of money sooner than they would have 
without an exemption.
  The final change in the amendment of the distinguished Senator would 
permit the creation of capital budgets for those major capital 
improvements which require multiyear Federal funding. Most programs are 
funded for more than 1 year. Exempting capital budgets from the 
balanced budget amendment is bad policy because it creates a powerful 
incentive for Congress and the President to balance the budget by 
redefining more programs as capital expenditures. This is just another 
loophole. A gimmick capital budget exemption could actually endanger 
capital investments as fake investments crowd out real investment.
  For these reasons, budget experts, including the President's Office 
of Management and Budget, the General Accounting Office, and the 
Congressional Budget Office, have suggested that capital budgets are 
inappropriate at the Federal level and certainly do not justify 
increasing debt to finance them. The amendment of the distinguished 
Senator from California would enshrine that into the Constitution.
  The most basic problem with the separate capital budget as envisioned 
by the Feinstein amendment is that there is no clear standard 
definition of a capital budget. So no one knows what expenditures will 
fall within that definition. For example, in President Clinton's 
proposed fiscal year 1998 budget, the Office of Management and Budget 
lists four broad categories of programs that may or may not be 
considered capital expenditures, ranging from physical assets owned by 
the Federal Government to social investment, including nutrition 
programs, health care and drug rehabilitation, all under the idea of a 
capital budget.
  Mr. President, perhaps the point was best made in a Washington Post 
editorial criticizing the Reagan administration for floating the idea 
of a capital budget. In that editorial, the Post wrote that ``The 
concept of the capital budget applied to the Federal Government is pure 
fakery. It is the resort of an administration that, finding the 
realities of the budget intractable, wants to fuzz up the numbers.'' 
Pretty hard to argue with that. Pretty hard to argue with that.
  Finally, Mr. President, given all these holes in the balanced budget 
rule proposal offered by the distinguished Senator from California, it 
is no wonder the proponents of this substitute have concluded that they 
need to reduce the supermajority requirement to raise the debt ceiling 
in their substitute. Given the high likelihood of substantial borrowing 
under this substitute for undefined capital spending, undefined 
economic emergencies and natural disasters and the possible loophole 
for the abuse of Social Security, no wonder the proponents of this 
substitute do not want to have the three-fifths vote to raise the debt 
ceiling. Instead, they reduce the antidebt protections of Senate Joint 
Resolution 1 to a constitutional majority.

[[Page S1605]]

  Now, Mr. President, I hope we will reject this substitute, which is 
essentially a hit parade of loopholes repeatedly offered over the years 
by opponents of the bipartisan consensus balanced budget amendment and 
which could literally endanger Social Security.
  The Feinstein amendment is a hit parade of loopholes offered in past 
debates. How can we keep borrowing? How can we keep doing this to 
ourselves, doing this to future generations, doing this to our children 
and our grandchildren? These volumes, this picture speaks a thousand 
words, a million words, maybe I should say trillions of words, as to 
why we have to get strong about doing something about these unbalanced 
budgets.
  Let me count the ways why this amendment is wrong.
  No. 1, it exempts an undefined capital budget, allowing any level of 
borrowing for capital as defined by future Congresses. They could do 
anything they want to under this amendment. Just define them--any 
statute, any simple majority.
  No. 2, it allows for a waiver of the balanced budget rule in times of 
economic emergency or natural disaster, however interpreted by any 
future Congress. They could do anything they want to if we adopt the 
Feinstein amendment. The balanced budget amendment would be a thing of 
the past. There would be no hope to have any fiscal mechanism at all. 
In fact, it would be the biggest joke you could possibly have.
  No. 3, it exempts whatever a future Congress calls ``Social 
Security.'' They could define anything as Social Security. This 
endangers the retirement security of current and future American 
seniors.
  And No. 4, because of all these loopholes for deficit spending, it 
reduces the supermajority requirement to raise the debt ceiling from a 
three-fifths majority to a constitutional majority or 51 percent.
  The substitute offered by the Senator from California should be 
rejected. It would allow continued deficit spending and borrowing, as 
has happened in the past 28 years, or should I say in 58 of the last 66 
years. It would just continue the process, only make it easier to do it 
under the guise that we are somehow or other living within a balanced 
budget amendment constraint as defined by this amendment.
  Mr. President, look, we are talking about the future of our country. 
We are talking about our children. We are talking about our 
grandchildren. We are talking about our seniors. We are talking about a 
country that is going to be swallowed up in debt if we do not pass a 
balanced budget amendment.
  I had one of the leading liberals from the Democratic side tell me 
yesterday in no uncertain terms that--in fact, more than one--I have 
had at least three or four just flat out admit that if it had not been 
for these fights for the balanced budget--and these people, all but one 
of these people are against the balanced budget amendment--if it had 
not been for these fights over the balanced budget amendment, if we had 
not waged this battle, we would not even be talking about balanced 
budgets.

  All you have to do is look at this year's balanced budget submitted 
by President Clinton, and he is not alone. I saw budgets by several 
Presidents that also were smoke and mirrors because they have to; there 
is no restraint; there is nothing that forces them to do right. But you 
look at the budget that President Clinton called a balanced budget this 
year, that he just submitted. According to the Congressional Budget 
Office, which has been pretty accurate on some of these matters, that 
budget by the year 2002 will not be balanced; it will be at least $49 
billion in deficit, and that is assuming that all these rosy scenarios 
the President has plugged into it are coming to pass. That is assuming 
that. The fact is, it will not be balanced.
  Second, even if it was true that it would be balanced, everybody 
knows the only way we can reach balance is to attack the deficits each 
and every year up to the year 2002. President Clinton's budget goes up 
for the next 4 years, and then he calls for a 75-percent reduction in 
the 2 years after he leaves office. It does not take a rocket scientist 
to realize that is a phony budget, that they have tried to get around 
the requisite of bringing up here a balanced budget. He said he would. 
But it clearly is not a balanced budget. And it clearly could not be 
balanced. Even if you assume that it is--and the Congressional Budget 
Office says it is not--the fact is, it could not be balanced by a 75-
percent reduction in the 2 years after the President leaves office. It 
is as phony a budget as you can have from that standpoint. But we are 
going to work from it because we are going to have to.
  Let me just say this. If we pass the substitute amendment of the 
Senator from California today, those games will become even more 
pronounced. No, what we have to do is, we have to realize that over the 
last 20 years--frankly, longer than that--good Democrats and good 
Republicans have fought together to work this out. We have worked it 
out. This is the only amendment that has a chance of passage. It has to 
pass unamended.
  Frankly, I hope that our colleagues will vote down the Feinstein 
amendment and support the balanced budget amendment in the end. If this 
goes down, it is going to be because of one vote. No matter what the 
final vote is, it is going to be because of one vote. I can tell you 
that right now. I do not believe it is going to go down. I believe we 
will pass this amendment in the Senate, and I am hopeful that this will 
be an incentive to go to the House.
  Mr. President, do I have any time remaining?
  The PRESIDING OFFICER (Mr. Hutchinson). The Senator has 15 seconds.
  Mr. HATCH. Then I yield back the remainder of my time, and I move to 
table and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  The Senator from California has 17 seconds.
  Mr. HATCH. I am sorry.
  Mrs. FEINSTEIN. I would add very quickly, Mr. President, that there 
is one, deep, soft underbelly in the majority balanced budget 
amendment. You cannot use Social Security trust funds and spend the 
money on operating expenditures, whether it be for a battleship or a 
satellite, and save those moneys for someone's retirement.
  I rest my case. I thank the Chair. I yield the floor and the 
remainder of my time.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. I move to table the amendment and ask for the yeas and 
nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question occurs on the motion to table 
amendment No. 11, offered by the Senator from California [Mrs. 
Feinstein].
  The yeas and nays have been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The result was announced, yeas 67, nays 33, as follows:
  The result was announced--yeas 67, nays 33, as follows:

                      [Rollcall Vote No. 15 Leg.]

                                YEAS--67

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

                                NAYS--33

     Akaka
     Biden
     Bingaman
     Boxer
     Breaux
     Bumpers
     Cleland
     Conrad
     Daschle
     Dorgan
     Durbin
     Feingold
     Feinstein
     Ford
     Glenn
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moynihan
     Reed
     Sarbanes
     Torricelli
     Wellstone
  The motion to lay on the table the amendment (No. 11) was agreed to.
  Mr. HATCH. I move to reconsider the vote.

[[Page S1606]]

  Mr. CRAIG. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I know there are a couple of Senators who 
want to qualify their amendments.


                      Unanimous-Consent Agreement

  Mr. President, I ask unanimous consent that immediately following the 
vote on Senator Torricelli's amendment, Senator Dorgan be recognized to 
offer his substitute amendment. I further ask unanimous consent that 
there be 2 hours of debate equally divided in the usual form, and 
following the expiration or yielding back of time, the Senate proceed 
to a vote on or in relation to the Dorgan amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. I thank the Chair.
  The PRESIDING OFFICER. Under the previous order, the Senator from New 
Jersey [Mr. Torricelli] is recognized to offer an amendment on which 
there shall be 3 hours of debate equally divided in the usual form.
  Mr. BUMPERS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mr. BUMPERS. Mr. President, I would like to address a question to the 
distinguished Senator from New Jersey. Would he be willing to yield me 
30 seconds in order for me to offer an amendment?
  Mr. TORRICELLI. I am pleased to yield to the Senator from Arkansas.


                   MOTION TO REFER WITH INSTRUCTIONS

  Mr. BUMPERS. Mr. President, on behalf of Senator Feingold and myself, 
we move to refer Senate Joint Resolution 1 to the Budget Committee with 
instructions to report back forthwith with an amendment. That is 
essentially the amendment.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arkansas [Mr. Bumpers], for himself and 
     Mr. Feingold, moves to refer Senate Joint Resolution 1 to the 
     Budget Committee with instructions to report back forthwith 
     with an amendment.

  The motion with instructions follows:

       Strike all after the resolving clause and insert the 
     following:
       ``Section 1. Point of Order Against Budget Resolutions That 
     Fail To Set Forth a Glide Path to a Balanced Budget.--Section 
     301 of the Congressional Budget Act of 1974 is amended by 
     inserting at the end thereof the following new subsection:
       ``(j) It shall not be in order to consider any concurrent 
     resolution on the budget (or amendment, motion, or conference 
     report thereon) that fails to set forth appropriate levels 
     for all items described in subsection (a)(1) through (7) for 
     all fiscal years through 2002.''
       ``Section 2. Prohibition on Budget Resolutions That Fail To 
     Set Forth a Balanced Budget.--Section 301 of the 
     Congressional Budget Act of 1974 is amended by inserting at 
     the end thereof the following new subsection:
       ``(k) Congressional Enforcement of a Balanced Budget.--
       ``(1) Beginning in 2001, it shall not be in order to 
     consider any concurrent resolution on the budget (or 
     amendment, motion, or conference report thereon) that sets 
     forth a level of outlays for fiscal year 2002 or any 
     subsequent fiscal year that exceeds the level of receipts for 
     that fiscal year.
       ``(2) The receipts (including attributable interest) and 
     outlays of the Federal Old-Age and Survivors Insurance Trust 
     Fund and the Federal Disability Insurance Trust Fund used to 
     provide old age, survivors, and disabilities benefits shall 
     not be counted as receipts or outlays for purposes of this 
     subsection.''
       ``Section 3. Point of Order Against Budget Resolutions That 
     Fail To Establish A Glide Path for a Balanced Budget by 2002 
     and Set Forth a Balanced Budget in 2002 and Beyond.--
       (a) Section 904 of the Congressional Budget Act of 1974 is 
     amended by inserting ``301(j),'' after ``301(I),'' in both 
     places it appears.
       (b) Add the following new section immediately following 
     Section 904 of the Congressional Budget Act of 1974:
       ``Sec. --. Section 301(k) may be waived (A) in any fiscal 
     year by an affirmative vote of three-fifths of the whole 
     number of each House; (B) in any fiscal year in which a 
     declaration of war is in effect; or (C) in any fiscal year in 
     which the United States is engaged in military conflict which 
     causes an imminent and serious military threat to national 
     security and is so declared by a joint resolution, adopted by 
     a majority of the whole number of each House, which becomes 
     law.
       ``Section 4. Technical Changes.--Section 306 of the 
     Congressional Budget Act of 1974 is amended as follows:
       (a) Immediately following ``Sec. 306.'' insert the 
     following:
       ``(a) Except for bills, resolutions, amendments, motions or 
     conference reports, which would amend the congressional 
     budget process,''.
       (b) Add the following at the end of subparagraph (a):
       ``(b) No bill, resolution, amendment, motion, or conference 
     report, which would amend the congressional budget process 
     shall be considered by either House.''

  Mr. BUMPERS. Mr. President, I now ask unanimous consent that the 
amendment be laid aside subject to further consideration.
  The PRESIDING OFFICER. Is there objection to consider the motion at 
this time? If not, without objection, it is so ordered. Without 
objection, the motion to set aside is granted.
  Mr. FEINGOLD. Mr. President, I would also like to ask the Senator 
from New Jersey if he would yield.
  Mr. TORRICELLI. I will be happy to yield.
  Mr. FEINGOLD. I thank the Senator from New Jersey.
  Mr. President, I ask unanimous consent that the pending business be 
set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                       Amendments Nos. 13 and 14

  Mr. FEINGOLD. Mr. President, I have two amendments to Senate Joint 
Resolution 1 that I would like to offer. I ask unanimous consent that 
it be in order to send both of them to the desk at this time. I 
understand they will be set aside until a later point when they can be 
debated and voted upon, Mr. President.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered. The clerk will report the amendments.
  The assistant legislative clerk read as follows:

       The Senator from Wisconsin [Mr. Feingold] proposes 
     amendments numbered 13 and 14.

  Mr. FEINGOLD. Mr. President, I ask unanimous consent that further 
reading of the amendments be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 13 and 14) are as follows:


                            amendment no. 13

       (Purpose: To require approval of the amendment in 3 years)

       On page 2, line 7, strike ``seven'' and insert ``3''.
                                  ____



                            amendment no. 14

 (Purpose: To permit the use of an accumulated surplus to balance the 
                     budget during any fiscal year)

       On page 2, line 15, after ``vote'' insert ``or unless 
     Congress shall provide by law that an accumulated budget 
     surplus shall be available to offset outlays to the extent 
     necessary to provide that outlays for that fiscal year do not 
     exceed total receipts for that fiscal year''.
                                  ____



                            Amendment No. 15

  (Purpose: To permit limited waiver during economic emergencies and 
                        allow a capital budget)

  Mr. TORRICELLI. Mr. President, I have an amendment.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from New Jersey [Mr. Torricelli] for himself, 
     Mr. Lautenberg, Ms. Landrieu, Mr. Kohl and Mrs. Boxer, 
     proposes an amendment numbered 15.

  Mr. TORRICELLI. Mr. President, I ask unanimous consent that further 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       On page 3, strike lines 4 through 11, and insert the 
     following:
       ``Section 5. The Congress may waive the provisions of this 
     article for any fiscal year in which a declaration of war is 
     in effect.
       ``The provisions of this article may be waived for any 
     fiscal year in which the United States faces an imminent and 
     serious military threat to national security and is so 
     declared by a joint resolution, which becomes law.
       ``The provisions of this article may be waived for any 
     fiscal year in which the United States is in a period of 
     economic recession or significant economic hardship and is so 
     declared by a joint resolution, which becomes law.
       On page 3, strike lines 15 through 19, and insert the 
     following:
       ``Section 7. Total receipts shall exclude those derived 
     from net borrowing and the

[[Page S1607]]

     disposition of major public physical capital assets. Total 
     outlays shall include all outlays of the United States 
     Government except those for repayment of debt principal and 
     those dedicated to a capital budget. The capital budget shall 
     include only investments in major public physical capital 
     that provides long-term economic benefits.

  Mr. TORRICELLI. Mr. President, I offer my amendment recognizing that 
the context of this debate is fundamentally different because of over 
20 years of effort by the Senator from Utah, Mr. Hatch, and a Member in 
the House from Texas, Mr. Stenholm, who have worked diligently to bring 
before this institution of the Congress an amendment to require a 
balanced budget.
  While their efforts to date have not succeeded, the fact that we meet 
with a Federal deficit which has been reduced by over 60 percent in 
annual terms in the last 3 years is no small testament to their 
efforts.
  The national debate has been fundamentally changed. It is no longer a 
question of if there is going to be an operating balanced budget in the 
U.S. Government, but when and how it is going to be achieved.
  I take great pride in that, through the years, on three occasions I 
joined with them to do so, because, in my judgment, 15 years ago this 
country began a radical and even dangerous experimentation with 
changing the finances of the U.S. Government. There had been for some 
200 years an unspoken compact among the generations--the Nation would 
borrow for its national defense or to provide for its domestic economy 
in times of danger or severe deprivation, but quickly return to an 
operating surplus and to pay those debts when the situation allowed.
  So from the War of 1812, and the Civil War, through the Second World 
War and the time of the Great Depression, succeeding giants of American 
history borrowed so much as was necessary to ensure the survival of the 
Republic, but almost immediately in each and every circumstance 
returned to an operating surplus and dealt with the principal of the 
debt in fairness to future generations and to assure the financial 
health of the U.S. Government.
  Our generation has the unfortunate distinction of being the first to 
break that compact. During the 1980's, the Federal deficit, from less 
than $1 trillion, grew to in excess of $4 trillion. Indeed, during the 
Reagan Presidency alone, the annual Federal debt grew at a rate in 
excess of 13 percent, reaching the extraordinary drain on the Federal 
Treasury for interest alone of 20 percent of all revenues.

  When the Clinton administration assumed office 4 years ago, President 
Clinton inherited an operating deficit of $290 billion. In 4 years we 
have experienced an extraordinary change, a 63-percent reduction in the 
annual debt of the U.S. Government as a result of the deficit reduction 
initiative of 1993. So at this point the United States has the lowest 
operating annual debt of any industrialized nation in the world with 
1.4 percent.
  The question, therefore, is whether the United States has learned a 
valuable lesson from the excesses that began in 1981 and began to abate 
in 1993, or whether, indeed, this change of fortunes in the last 4 
years is itself an aberration, and a permanent amendment to the 
Constitution is required.
  There have been few instances in the life of this Republic when any 
Congress has found it necessary to change the Constitution by which we 
govern ourselves. We recognize that the U.S. Constitution is a precious 
document in its balances, its allocation of powers. It is, I think, 
important to note, and no small achievement, that when the 20th century 
ends in but a few brief years there will be only two governments on 
this globe who will end the century with the same basic form of 
government, under the same Constitution, with the same allotment of 
powers with which they began the century. The United States of America 
is one. The certain genius of our Constitution, both how it was written 
and how it distributed powers, is certainly a reason.
  I rise, therefore, Mr. President, recognizing that any decision to 
amend the Constitution of the United States is extraordinarily serious 
and, indeed, sobering for every Member of the institution. I, 
therefore, believe if it is to be amended, it is to be done so 
carefully, and in every respect, ensuring that we understand the 
consequences.
  The amendment that I bring before the body today deals with three 
central elements of the resolution. First, whether or not the U.S. 
Government should continue to both have its current accounts and its 
capital budget reflected in a single accounting; second, how, indeed, 
under this amendment the Government will respond to times of economic 
recession; and third, how the U.S. Government would respond to threats 
to our national security under the provisions of the resolution.
  I begin, Mr. President, with a question of a capital budget. 
Throughout these last 20 years, much has been spoken about the mounting 
deficit of the U.S. Government. We have convinced the American people, 
I believe, of two conclusions that bear further scrutiny. First, that 
the principal and only debt of the United States that bears witness is 
the debt operational of the U.S. Government; and second, that the 
appropriate level of debt of the U.S. Government is zero. Neither 
conclusion, Mr. President, bears scrutiny.
  No institution which plans for its future, is properly taking 
advantage of its ability to borrow, has no operating deficit. Indeed, 
Mr. President, 43 States in this Union by calculation set the proper 
and appropriate level of deficit borrowing. The States do so through 
capital borrowing commissions. They evaluate the transportation, the 
infrastructure needs, the investment needs of their States and 
carefully calculate their ability to pay back those loans and what they 
will contribute to the economic performance of their States.

  Indeed, this has been so successful that for the last 50 years not 
only has no State defaulted, but, indeed, I know in no instance when 
there has been a serious issue of a Governor of either party or their 
respective legislatures engaging in inappropriate or excessive 
borrowing, or any borrowing, other than what was required for the 
economic future of their State.
  Unique in our society is the U.S. Government. Unlike all major 
businesses in each of these States, and all of our economic 
competitors, the U.S. Government has no capital budget. In our 
planning, we regard the construction of a road or a railroad or a 
school which may last for 20, 50, or 100 years the same way we regard 
the hiring of a new employee, the buying of a piece of paper, paying 
for the lights. The fact is that by any standard accounting--one is the 
exchange of financial resources for a lasting and productive resource, 
and the other is an immediate consumption--this has not been addressed 
and has never been changed.
  My fear, Mr. President, is that if we adopt the balanced budget 
amendment as now offered by the Senator from Utah without a capital 
budgeting provision, the thirsts of the U.S. Government for consumption 
will certainly begin to exclude what remains of long-term investments 
in this country. Because, indeed, over these years, we have seen a 
serious deterioration in the amount of investment by the United States. 
In 1960, 25 percent of the Federal budget was dedicated to long-term 
capital investments. The United States constructed a highway system 
that was the envy of the world. Our mass transit systems for railroads 
were still on the cutting edge. We built a university system that was 
without peer. By the time the 1960's concluded, no nation on Earth 
would want to be in a position to not be able to trade the American 
transportation or infrastructure or research base with their own.
  I doubt, Mr. President, few nations would make that trade today. The 
United States is now last in all developed nations in the world in our 
level of infrastructure investment in capital planning. Today, our 
Government invests only 7 percent of our revenues in capital 
expenditures, the Japanese having a rate of nearly 6 percent, as 
indicated on this graph, the Germans having a rate half again as great 
as our own. Our percentage of GDP dedicated to infrastructure 
investment is now barely 1.7 percent.
  The question, therefore, is if today we proceed to a balanced budget 
amendment without this exemption for capital expenditures, will this 
1.7 percent rate of GDP, this 7 percent rate of all Government 
spending, deteriorate further? The irony, Mr. President, of this 
situation is the exact opposite of what has happened with American 
business. American business today operates a $4.5 trillion deficit. 
American businesses learned that deficit spending, if it involves 
productivity, new

[[Page S1608]]

plant and equipment, and operating efficiency, is not only necessary, 
it is required for future economic growth.
  Mr. President, I attempt to bring that same lesson to the floor of 
this Senate. We are potentially putting a straitjacket financially on 
this Government and our ability to be competitive.
  In the United States today, there are a quarter of a million miles of 
roads that are substandard and in need of immediate repair. They will 
not serve us another century of efficient business performance. Twenty-
five percent of all the bridges in America that are handling the cargo 
of our industry, servicing our towns, leading to the productivity of 
our businesses, are in need of immediate repair. The great ports of 
America, which once rivaled any in the world--and now, indeed, the port 
of New York, once the most efficient and busiest port in the world, now 
offloads cargo in the outer harbor because it is too shallow to take 
modern ships like Japan and Europe. We are disinvesting in America, 
transforming places in this country into the efficiency of Third World 
nations. This disinvestment in the American future cannot continue.
  The Senator from Utah, in previous discussions in the Judiciary 
Committee, makes a worthwhile point: Who is to ensure that worthwhile 
capital projects are not placed in the general operating budgets of the 
U.S. Government, or vice versa? Who is to draw the line? Well, Mr. 
President, in our corporations, in our homes, and indeed in our States, 
we have learned to draw that line. States have capital planning 
commissions. Every homeowner has learned the difference between a home 
mortgage and buying a new suit or paying for the evening meal. Indeed, 
every corporation in America has learned in the marketplace to 
distinguish. So can this Government, and so it must.
  Mr. President, I believe that, more perhaps than any other provision 
I offer in my amendment today, this call for capital planning in the 
U.S. Government will reflect how serious we are at long last about 
rearranging the spending powers of the U.S. Government and making them 
responsible again. And so the first of three provisions in my amendment 
to the balanced budget amendment is for dealing with capital spending.
  Mr. President, my second provision deals with the ability of the U.S. 
Government to respond to another set of contingencies, just as 
important as dealing with the long-term financial planning of this 
Government and its investments. I mentioned the question of dealing 
with national military emergencies. The Senator from Utah appropriately 
has placed in his balanced budget amendment a provision that, if the 
United States engages in a war, through a declaration of war, three-
fifths of the Congress can waive the provision of a balanced budget. He 
is right to do so. But it is also inadequate.
  Mr. President, in the experiences of the 20th century, the most 
important military expenditures to defend this Union have not always 
been made solely after a declaration of war. Given the enormity of 
preparing for armed conflict, the complexity of technology and the time 
necessary to construct the implements of war, the most important 
expenditures have often been made in the months or years preceding 
armed conflict. Indeed, the principal battles of the Second World War, 
when the implements of war were considerably less costly or complex 
than those that we will meet in the 21st century, the principal 
investments for that conflict were made not only in the months, but in 
the years preceding the Second World War.
  President Roosevelt's decision to rebuild the U.S. Navy and double 
its size was made not after Pearl Harbor, but in the years before. The 
question, therefore, with this amendment, that we are to waive these 
provisions only after a declaration of war--what does that do to an 
American President and the American military that recognizes an 
imminent threat, can discern an almost certain conflict, and needs 
desperately to prepare the Union to defend itself?

  Indeed, Mr. President, in our own time, in the Persian Gulf war, on a 
far smaller scale, we recognized exactly these circumstances. It was 5 
months from the time that Saddam Hussein invaded Kuwait to the 
beginning of hostilities on the Kuwaiti-Iraqi border. In those 5 
months, the U.S. Government was operating at a $220 billion deficit. 
President Bush consumed an additional $10 billion in deficit spending 
to prepare for the almost certain conflict with Iraqi Armed Forces. 
There was no declaration of war, but there was no mistaking what was 
going to happen. It was as certain as Franklin Delano Roosevelt saw an 
imminent conflict with Germany and Japan, and as certain as President 
Wilson knew there would be a conflict in Europe, and indeed as certain 
as in the opening weeks of his administration, President Lincoln knew 
the inevitability of a war between the States. Each began to plan for 
conflict. Each began to borrow. And when the conflict began, this 
country at least approached being prepared.
  And so, Mr. President, the second principal change that I offer to 
the balanced budget amendment--the first was to allow for a separate 
capital planning expenditure budget to deal with long-term economic 
investments. My second is to allow, by a joint resolution, the 
declaration of a national military emergency so that the country can 
properly plan.
  I do so in fairness to the Senator from Utah. I also want to mention 
that I do so without there being a declaration of war, but also 
changing to a majority vote, in recognition that I do not want any 
foreign adversary to ever miscalculate that because we are unable to 
reach a three-fifths vote, we will also be unable to defend the United 
States.
  It is worth noting that, at no point in the years preceding the 
Second World War, at no point preceding the First World War, and it was 
demonstrated at no point before the Persian Gulf war, did three-fifths 
of this institution stand for the proper preparations for war. Indeed, 
as a Democratic author of the Persian Gulf war measure in the House of 
Representatives, we never did get a three-fifths vote. With Germany 
having overrun half of Europe, these institutions of the Congress 
passed the Selective Service Act to prepare the United States for a 
war, which was almost certain, by a single vote. Therefore, not only do 
I provide for a joint resolution so the United States can prepare for 
imminent hostilities, but I do so by a majority vote.

  Third, Mr. President, I have an additional change which deals with an 
equally important matter of economic recession. There are those who 
come to the floor of the Senate and argue that deficit spending is 
necessary to maintain the economic performance of the United States, 
and they provide evidence that, indeed, the rapid growth of this 
economy in the latter half of the 20th century and the extraordinary 
standard of living that we have achieved is due in no small part to the 
ability of the United States to borrow. Others argue that that right 
has been abused. Indeed, we have drawn upon our credit to such an 
extent that we have placed a burden on the future which is 
unsustainable, and, with 20 percent of our tax dollars going not to 
build new roads, not to educate another generation, but to only pay 
interest on the debt, they are right. Indeed, Mr. President, both are 
right on the question of achieving a balance between the two.
  There has been in this latter half of the 20th century a notable and 
even extraordinary change in the business cycle of growth and 
recession. Indeed, between 1900 and 1950 there were 33 quarters of real 
negative economic growth. Through the experience of the Great 
Depression the U.S. Government learned, and then admittedly abused, the 
ability to adjust the business cycle through borrowing in times of 
recession to compensate for declining private investment and 
expenditures. The result is that in these last 47 years compared with 
the 33 quarters of negative economic growth in the first half of the 
century, we have experienced only four quarters of negative economic 
growth since 1950.
  The question then is, How do we achieve a balance? The Senator from 
Utah appropriately noted that the power to borrow has been abused with 
a mounting deficit which is unsustainable on its face versus losing 
this ability to deal with real economic downturns and provide 
adjustments. Indeed, Secretary Rubin in his testimony provided a 
warning that without some ability to stabilize we could

[[Page S1609]]

``turn slowdowns into recessions and recessions into more severe 
recessions or even depressions.''
  The Treasury Department has estimated that during the 1992 recession, 
without the ability to engage in some deficit spending, the recession 
that lasted from 1990 to 1992 would have had in excess of 9 percent 
unemployment instead of 7.7 percent with an additional 1 million jobs 
being lost.
  Mr. President, I have attempted in my amendment in its final 
provision to strike a balance. That is where the institutions of the 
Congress could by joint resolution declare an economic emergency and 
allow it, only for so long as it believes that emergency exists, to 
engage in deficit spending to ensure that the public works programs and 
job creation ability of the Government is not lost.
  Mr. President, we will never know what would have happened in the 
Great Depression had there not been a Second World War or a New Deal 
and the massive deficit spending of that period to end the economic 
debt into which this country had gone. It was by any measure a real 
threat to American democracy. In the Second World War this country 
approached 60 percent of GDP in deficit spending. It is a debt burden 
which the Nation must bear. It also provided a foundation for a 
standard of living and an economic performance which in all of human 
history has never been equaled.

  My amendment seeks to use the creditworthiness powers of this 
Government to deal with those economic contingencies but making certain 
that they are used only in periods of economic emergency.
  In short, Mr. President, in each of these provisions I have attempted 
to do by constitutional amendment what common sense provided that we do 
through 200 years of American history. I do so with considerable 
regret. Succeeding generations in this country provided for capital 
spending because they cared about the future. The Constitution didn't 
require that they do it. They did it because it made sense for the 
American future. Succeeding generations borrowed to defend the Nation 
when it was threatened because they cared about the defense of the 
Republic, not because the Constitution required that they only borrow 
to provide for the national defense and not exceed that authority when 
the Nation was not threatened. Succeeding generations borrowed to deal 
with economic recessions and depressions because they cared about the 
economic future of the country and our people and did not abuse it.
  No Member of the Senate should take pride in the fact that in our 
generation it might be necessary to amend the United States 
Constitution to provide for these capital expenditures in dealing with 
military threats and economic emergencies, to assure that our country 
is responsible in dealing with that borrowing, and that the borrowing 
is done only to the extent and to the degree that it is appropriate. We 
should do so because we care about our people and the future of the 
Republic. Yet, like the Senator from Utah, I rise because there is the 
unmistakable fact that in our own time that power has been abused.
  Therefore, I rise with amendments to the resolution recognizing that 
amending the Constitution is unlike any other action taken by the 
Congress of the United States. We legislate not for our time; we write 
for all time. These are words that will govern contingencies that we 
cannot imagine, circumstances that we cannot foresee. If it is 
necessary to amend the Constitution of the United States, it is 
necessary to do so to the fullest extent possible with all the wisdom 
that we can muster. I believe the amendment of the Senator from Utah 
would be improved and enhanced by these changes. Indeed, I believe 
these changes are necessary to responsibly add to the work of our 
ancestors who wrote this great document and provided for the political 
stability of this Nation through these two centuries and allowed it to 
become the unique society and the extraordinary Nation that we have 
become.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Roberts). Who yields time?
  Mr. HATCH. Mr. President, I yield 3 minutes to the distinguished 
Senator from Wisconsin.
  Mr. KOHL. Mr. President, I rise today as a strong supporter of the 
balanced budget amendment and a strong supporter of the Torricelli 
amendment. I do not believe that the two are inconsistent

  Those of us who support amending the Constitution to balance the 
budget have an obligation to make sure that we are supporting the best 
possible balanced budget amendment. I listened carefully to Senator 
Byrd earlier this week when he talked about the sanctity of the 
Constitution. He argued, and I agree, that we ought to amend this most 
basic and important document of our Government with only our best 
ideas, principles and language.
  The balanced budget amendment does, in my opinion, embody a principle 
simple and vital enough to deserve inclusion in the Constitution. It 
says that we ought to spend no more than we take in. It says that this 
generation has no right to finance its own consumption with money 
borrowed from the next generation. It asks the Federal Government to 
run its finances in a manner that both provides for a strong America in 
the present and builds a stronger America in the future.
  The Torricelli amendment would improve the balanced budget amendment 
by bringing it closer to this fundamental principle. The Torricelli 
amendment would exclude investments in physical infrastructure that 
provide long-term economic benefits from the definition of Federal 
outlays. In other words, it would put into the balanced budget 
amendment the requirement that we balance our operating budget but 
would allow debt financing of long-term public investments.
  To me this makes eminently good sense. It is how everyone else keeps 
their books, from State governments, to businesses, to families. You 
pay now for things that are going to benefit you now, and you pay over 
time for investments, the value of which accrues over time. A State 
government issues bonds to finance major highway projects and new 
construction of public buildings. A business goes to the bank for a 
loan to upgrade its machinery. A family takes out a mortgage to buy a 
house.
  When we say on the Senate floor that the Government ought to balance 
its books just like an American family has to, we mean that the 
Government ought to balance its operating budget just like an American 
family has to. No one is suggesting that a family wait until they save 
up enough money to pay cash for a home. If we operated that way, there 
would be very few homes bought in this country.
  If the Federal Government must balance its budget without separating 
out its capital expenditures, there will be very few public investments 
made in this country, and that would be very wrong. Already, the 
Federal Government woefully underinvests in the capital that will grow 
our economy--in our roads, in our schools, in our cities. The 
Torricelli amendment will ensure that in pursuing a balanced budget we 
do not have a perverse incentive to avoid those public expenditures 
that would most benefit future generations.
  State governments understand this. Forty-three of them have balanced 
budget requirements that separate out the capital budget. In my State 
of Wisconsin, the constitution requires that taxes cover expenses. But 
it also states that debt may be incurred ``to acquire, construct, 
develop, extend, enlarge or improve land, waters, property, highways, 
railways, buildings, equipment, or facilities for public purposes.''
  That is a simple, straightforward and correct approach that we ought 
to take in the Federal balanced budget amendment, and I hope my fellow 
supporters of the balanced budget amendment will agree. This debate has 
always been about stopping the practice of robbing Peter and Paul, Jr. 
to pay for Peter and Paul, Sr. Supporters of a balanced budget 
amendment want to look beyond our needs today and toward our hopes for 
the future.
  That means not spending more than we take in. And that means making 
wise, long-term investments in the economy that will sustain future 
generations. We can do both with a balanced budget amendment to the 
Constitution if we also pass the Torricelli amendment, and so I urge my 
colleagues to do so.
  I yield the floor.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. I yield 15 minutes to the distinguished Senator from 
Tennessee.

[[Page S1610]]

  The PRESIDING OFFICER. The Senator from Tennessee is recognized.
  Mr. THOMPSON. I thank the Chair. I thank the Senator from Utah for 
his strong leadership on this issue. It is not easy carrying the ball 
for so long and so well. He has done such an admirable job of that. I 
am sure our colleagues on both sides of the aisle admire him for what 
he has done.
  I want to talk for a few minutes on the broader question of the need 
for the constitutional amendment to balance the budget. It seems to me 
that among all of the things we address in this body, there are some 
basic considerations that should underlie it all, and we should focus 
from time to time on what we really should be about, what we should do 
as those who govern.
  I think it comes down to two basic categories, that is, trying to 
institute policies that make for the long-term strength of this 
country, and to try to do things that will encourage people to have 
more confidence and faith in their system of government.
  I believe those are the two basic things we ought always keep in mind 
as we go about our structured existence around here, the hurly-burly 
that we all have to contend with in passing thousands of pieces of 
legislation. Does it contribute to the long-term strength and viability 
of this country and does it contribute to people's confidence in their 
form of Government. I feel that is what we are dealing with here. I 
feel that every once in a while something comes up that really is 
important with regard to one or the other of those considerations, and 
I think the constitutional amendment to balance the budget has to do 
with both of those considerations, because I fear for the economic 
future of this country if we do not pass such an amendment.

  I feel that when the results of our economic policies today are felt 
a little bit further down the road and we see that once again the so-
called balanced budget agreements that we may reach around here do not, 
in fact, balance the budget, we are going to increase the cynicism that 
the American people already have toward this Government. That is why I 
think a constitutional amendment to balance the budget is so important.
  There has been a lot of discussion as to whether or not there really 
is a need. I think most all of us take seriously the proposition of 
amending the Constitution, even though our forefathers certainly 
contemplated it. Thomas Jefferson is often quoted. Certainly they felt 
that from time to time we need to reexamine our basic institutions and 
not be afraid after due deliberation to make changes that in the course 
of history are proven necessary to improve our system of government. 
But it is not something to be taken lightly, and I do not think any of 
us do take it lightly.
  It is clear that from time to time we must sit down and see whether 
or not we are functioning as we should, whether we are getting the job 
done for this country and, if not, what should we do about it. We can 
go down the same old road or we can try to do something about it.
  This constitutional amendment constitutes doing something about it 
because it is clear that we will go down in history under present 
circumstances as the first generation to leave their children in worse 
shape than they found their country when they took positions of 
leadership. It is true, without question, that we are leaving the next 
generation with astronomical tax rates to face, astronomical interest 
rates to face, a slower economy. We certainly are on the road, the path 
that most and great civilizations have followed through history. Some 
historians say you can calculate it almost to the year. Some say they 
survive for 250 years. A case can be made that we are on the downside 
of that mountain, that we are certainly going in the same direction of 
other great powers--the Turks or Ottoman Empire or Spanish Empire, ones 
that ruled the world once upon a time but proved they could slide off 
into second-rate powers and nations that were much less than what they 
aspired to be or were in prior times.
  A good case can be made that we are on track for that. We know, our 
own entitlement commission tells us that by the year 2012 we will be 
paying out all of the tax collections we receive in entitlement and 
interest rates and have nothing for national defense, have nothing for 
infrastructure, have nothing for education. That is the road we are 
going down.
  Some say, no, we are making progress; all we need to do is get about 
the business of balancing the budget, that we are really making 
progress. If history is to be any indication of that, though, I hope 
that plea falls on deaf ears, as it should.
  The President's budget is used as an example of the fact that we are 
making progress, we might even have a so-called balanced budget 
amendment agreement. However, upon examination, we see readily that the 
President's budget or anything that might come from the President's 
budget that we might agree to is not going to solve the problem. It 
will not balance the budget. It adds over $1 trillion to the debt. It 
is based on assumptions that in all likelihood will not play out. It is 
based on assumptions having to do with current economic expansion which 
is now in the sixth year, making it the third longest on record. The 
likelihood is that will not continue indefinitely. It is based upon 
high projections of corporate profits that the CBO says are 
unrealistic. It is based upon the proposition that we will continue to 
have medical savings, and many, many experts, including the Budget 
Committee, think we have got most of those savings on the front end, 
that they will not be occurring year after year after year, and that 
will impact our tax revenues.
  The President's budget is based upon extremely optimistic projections 
for long-term interest rates. And last but not least, of course, three-
quarters of the cuts in the President's budget come after the President 
is no longer in office, the last 2 years.
  In other words, it is based on the proposition that a future Congress 
will have more courage than this one does and we will be making cuts in 
discretionary programs, things that most all of us agree we need to be 
more attentive to, things like infrastructure and research and 
development and things of that nature that provide for the long-term 
viability of this Nation. But the proposition is that we will continue 
to squeeze that 17 percent of nonentitlement, nondefense, noninterest 
portion of the budget, that narrow 17 percent, for those infrastructure 
items and parks and that sort of thing, and get astronomical savings 
from cutting those areas in the last 2 years.
  We know that will not happen. We know that will never take place. So 
that is why David Broder referred to the budget as one of ``no hard 
choices.'' But, as we know, the time is past for no hard choices. We 
cannot get by with that any longer. We cannot get by with that 
indefinitely.
  Last Saturday I was watching on television, on C-SPAN, a former 
colleague of ours, Senator Packwood. He was speaking to a group out in 
Oregon about things that he knows a lot about, about our tax structure, 
about budgetary matters. As chairman of the Finance Committee, of 
course, he was deeply involved in those matters. He had some charts.
  I called and asked for those tables with regard to percentages of 
taxing and spending as a percentage of gross domestic product with 
regard to this country and other countries. There are some very 
interesting things in there in terms of where we are today and where we 
are likely to be tomorrow.
  Mr. President, I ask unanimous consent that those tables be printed 
in the Record.
  There being no objection, the tables were ordered to be printed in 
the Record, as follows:

 FEDERAL, STATE/LOCAL AND TOTAL GOVERNMENT TAXES AND SPENDING AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT: 1950-95
                                        [United States only; in percent]
----------------------------------------------------------------------------------------------------------------
                                                                        Federal     State/Local *      Total
                                Year                                --------------------------------------------
                                                                      Tax    Spend   Tax    Spend   Tax    Spend
----------------------------------------------------------------------------------------------------------------
1950...............................................................   14.8    16.0    6.6     7.1   21.4    23.1
1955...............................................................   17.0    17.8    6.9     7.3   23.9    25.1
1960...............................................................   18.3    18.3    7.9     7.8   26.2    26.1
1965...............................................................   17.4    17.6    8.7     8.6   26.1    26.2
1970...............................................................   19.6    19.9   10.2     9.8   29.7    29.7
1975...............................................................   18.5    22.0   10.8    10.4   29.3    32.4
1980...............................................................   19.6    22.3   10.1     9.2   29.6    31.5
1985...............................................................   18.5    23.9   10.6     9.2   29.1    33.0
1990...............................................................   18.8    22.8   10.7    10.2   29.5    33.0
1991...............................................................   18.6    23.3   10.9    10.7   29.5    34.0
1992...............................................................   18.4    23.3   11.1    10.8   29.5    34.1
1993...............................................................   18.4    22.5   11.2    10.7   29.6    33.3
1994...............................................................   19.0    22.0   11.1    10.7   30.0    32.7
1995...............................................................   19.3    21.7   11.0    10.7   30.4    32.4
----------------------------------------------------------------------------------------------------------------
* Does not include the receipt or spending of grants-in-aid from the federal government, which are counted as
  federal expenditures.
 
Note: Totals may not add due to rounding.
Source: Budget of the United States Government, Historical Tables, Office of Management and Budget, March, 1996.


[[Page S1611]]


    TOTAL GOVERNMENT TAXES AND SPENDING FOR SELECTED ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD) COUNTRIES AS A PERCENTAGE OF GROSS
                                                                DOMESTIC PRODUCT, 1970-95
                                                                      [In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      1970              1980              1985              1990              1995*
                            Country                            -----------------------------------------------------------------------------------------
                                                                  Tax     Spend     Tax     Spend     Tax     Spend     Tax     Spend     Tax     Spend
--------------------------------------------------------------------------------------------------------------------------------------------------------
United States.................................................      29        32      31        32      30        33      31        33      32        34
Japan.........................................................      21        19      28        32      31        32      35        32      34        38
United Kingdom................................................      40        39      40        43      41        44      39        40      37        42
Canada........................................................      34        35      36        39      39        45      42        46      42        46
Germany.......................................................      38        39      45        48      46        47      43        45      46        50
Netherlands...................................................      42        44      51        55      54        57      49        54      48        51
France........................................................      39        39      46        46      49        52      48        50      49        54
Italy.........................................................      30        34      33        42      38        51      42        53      45        52
Norway........................................................      44        41      48        43      50        41      52        49      47        46
Denmark.......................................................      42        40      53        56      57        59      57        59      60        62
Sweden........................................................      47        43      56        60      60        63      63        59      59        67
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Projected.
 
Note: All figures rounded. The percentages in this chart are compiled by the OECD, an association of the major industrialized countries of the world.
  The OECD uses a different method of calculating government expenditures and revenues than the standard budget accounting method the U.S. government
  uses. Therefore, while the figures in this table give an accurate comparison of the spending and revenue trends of our major competitors, these
  figures should not be compared directly to other data.
 
Source: Organization for Economic Cooperation and Development Outlook, December 1995.


              TOTAL GOVERNMENT TAXES AND SPENDING FOR SELECTED INDUSTRIALIZING COUNTRIES AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT, 1998-94
                                                           [Pacific rim countries; in percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    1998              1990              1991              1992              1993              1994
                   Country                   -----------------------------------------------------------------------------------------------------------
                                                Tax     Spend     Tax     Spend     Tax     Spend     Tax     Spend     Tax     Spend     Tax     Spend
--------------------------------------------------------------------------------------------------------------------------------------------------------
Thailand....................................      18        14      19        14      18        14      18        16      18        16      19        15
Taiwan......................................      15        14      17        15      14        16      14        20      14        18      14        16
Korea.......................................      17        16      18        16      17        16      18        17      19        18      20        18
Bangladesh..................................       9        17       9        17      10        16      11        16      12        17      12        19
Hong Kong...................................      16        14      15        15      17        14      17        14      19        15      17        16
India.......................................      18        20      18        20      17        18      16        17      17        18      16        17
Indonesia...................................      17        19      20        19      18        19      19        19      18        17      17        17
Philippines.................................      16        18      17        20      18        19      18        19      18        19      20        19
China.......................................      20        23      20        22      18        21      16        19      15        18      15        18
Chile.......................................      21        27      21        20      22        21      22        20      23        21      22        20
Malaysia....................................      25        28      26        30      26        28      27        28      31        25      31        24
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: All figures rounded. Many nations use different methods of calculating government expenditures and revenues than the standard budget accounting
  method the U.S. government uses. These series can, however, give an approximate comparison of these spending and revenue trends of these countries.
 
Source: Government Finance Statistics Yearbook, International Monetary Fund, 1995. Asia Development Outlook, 1995-1996, Asian Development Bank.


Mr. THOMPSON. What road are we on? If we do not need a constitutional 
amendment to balance the budget and if we do not have that, what is 
likely to happen based on history and based on reasonable projections?
  First of all, he gave me a chart that had to do with United States, 
State/local, and total government taxes and spending as a percentage of 
GNP. It showed a couple of different things.
  In 1950, the tax take was 21.4 percent. In 1950, 21.4 percent of GDP. 
In 1995 it was 30.4 percent. But, spending went from 23.1 percent to 
32.4 percent.
  So the point that he made, which I think is a valid one, is you 
cannot tax your way out of this problem. We are increasing taxes both 
in real terms and in terms of percentage of GDP, but of course, 
spending continues to increase right along with it. So, today, we are 
taxing a little over 30 percent and spending a little over 32 percent.
  Then he made some comparisons with some other countries. I think it 
is some indication of our future, and some indication of maybe our past 
in a way. As far as our future is concerned, the direction it looks 
like we are likely to go is the same direction that many of our friends 
in Europe and Scandinavian countries went. Figures with regard to 
Germany, France, Norway, Denmark, and Sweden--there, interestingly 
enough, they, too, are spending a greater percentage of their GDP than 
their taxing reflects.
  In Germany they are taxing 46 percent, spending 50; France, 49 
percent, spending 54; Norway and Denmark and Sweden--Denmark, of 
course, taxing 60 percent of GDP and spending 62 percent.
  What is in common among all of these countries is they all have 
economic problems. They are all having problems with unemployment. They 
are all having the problems with the demographics that we will soon be 
facing, problems of a growing elderly population. They are all 
economies that, I think it would be fair to be say, generally are 
stagnating and having great problems. They are all economies that 
historically, just like us, always spend a little more than they tax. 
They continue to raise taxes, but always spend a little more than they 
tax. That seems to be our future on the present course.
  On the other hand, if you look at some countries around the Pacific 
rim--Taiwan, Hong Kong, Indonesia, countries of that nature, you see 
they are taxing in the neighborhood of between 14 and 17 percent of GDP 
and spending in the neighborhood of 16 and 17 percent of GDP. So, not 
only do they have very low rates of taxation and low rates of spending, 
but their spending is not outstripping their taxes.
  What do we have there that is common among those countries? High 
rates of growth, high employment rates, economic prosperity. They are 
behind us right now in many respects. They are on the move. They are 
catching up with these policies, and we are looking to a future with 
these other policies.
  There is no reason to believe we will not go down that same road that 
our European neighbors and our Scandinavian neighbors have gone. That, 
of course, will put us in an extremely vulnerable position when the 
baby boomers start retiring and all of our social services are flooded 
with those numbers. We are not going to be able to make it. It is going 
to take all of our revenues. We all know that. We all dance around and 
make sounds about a balanced budget because we are putting the numbers 
down on the back of an envelope. You could put numbers on the back of 
an envelope, saying that future Congresses will cut when the time comes 
so, therefore, we have a balanced budget. It is the easiest thing in 
the world to do on paper but everybody knows it is not going to happen. 
And when it does not happen, once again we will wonder why only 48 
percent of the people in this Nation are even bothering to vote. It is 
because they feel there is a kind of joint, tacit understanding we will 
say whatever is necessary and do whatever is necessary for temporary 
political advantage, telling people we are going to have something that 
we are not really going to have, while continuing to spend because 
spending garners political support, political votes, and political 
contributions, and hoping that the hatchet will fall on somebody else's 
watch, years down the road.
                                ____
[[Page S1612]]

  That is what this is all about. We can make arguments about various 
amendments to this constitutional amendment. Some of them are well 
thought out, well reasoned and so forth. But they avoid the hard 
question. Are we going to limit ourselves?
  Again, people say we do not need to mess with the Constitution in 
order to do that because we have it within our means to do the right 
thing. By that logic, we should not have to have the first amendment. 
We have it in our means not to pass a law abridging freedom of speech. 
All we have to do is not do it. Yet, we decided that we ought to have a 
constitutional amendment because we know historically, and our Founding 
Fathers certainly knew, that there seemed to be a tendency--I ask 
unanimous consent for another 3 minutes.
  Mr. TORRICELLI. I yield 3 more minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THOMPSON. Our Founding Fathers knew historically governments like 
to pass laws abridging freedom of speech. They knew historically that 
governments like to pass laws or carry out activities that constitute 
illegal searches and seizures, and that is why we came up with the 
fourth amendment. Governments historically like to do things that we 
decided a long time ago that we don't want them to do.
  What has history shown with regard to our ability to pass a balanced 
budget, or our ability to restrain spending? If we have any track 
record at all, it is one that is clear as can possibly be and that is 
we do not have that ability, we do not have that will in order to do 
that.
  Interestingly and parenthetically, after it was over with, in Q and 
A, Senator Packwood was asked, ``Senator Packwood, where do we get that 
will?"
  He thought for a minute and said, ``I am reluctantly coming to the 
conclusion that the only thing that will cause it will be term 
limits.''
  But that is a debate for another day.
  I yield the floor.
  Mr. TORRICELLI. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HATCH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Mr. President, we have before us an amendment that 
contains three separate changes to the balanced budget amendment. I do 
not believe that any of these three changes would be appropriate. I 
don't think they are wise or necessary, and so I have to oppose Senator 
Torricelli's amendment.
  Let me add that all of these things, at least in concept, have 
already been rejected by the Senate. There is no reason to adopt them 
now.
  The first change in the amendment would allow for a waiver of the 
balanced budget rule by a majority vote in any year where the United 
States is in a period of economic recession or significant economic 
hardship.
  Mr. President, this portion of the Torricelli amendment is similar to 
the Durbin amendment that the Senate defeated by an overwhelming 64 to 
35 vote just 2 weeks ago. The reasons it was rejected apply to the 
Torricelli amendment as well. In fact, they may apply with greater 
force, as this language is more permissive and less clear than was the 
Durbin amendment.
  The terms used in this amendment are undefined. The determination of 
``an economic recession,'' or ``significant economic hardship,'' could 
easily be manipulated by a spendthrift Congress as a way to avoid the 
discipline of the balanced budget amendment. Nearly anything could be 
seen as a significant economic hardship if considered from a certain 
point of view. It is important to note that even during times of 
national economic prosperity, some regions may experience localized 
downturns. This proposal could allow such regional hardships to justify 
waiving the balanced budget amendment and giving the country deficits 
at the exact time it should be running surpluses.
  Thus, the amendment, I am sorry to say, would create a huge loophole, 
a giant loophole, that would swallow the balanced budget rule. It is 
also important to note that if the balanced budget amendment is waived 
for a session, it is waived for all spending in that year. In other 
words, the amendment would permit deficit spending for any number of 
projects that are in no way related to the so-called significant 
economic hardship.
  Just remember President Clinton's 1993 attempt to push through a 
multibillion-dollar emergency stimulus boondoggle under the guise of 
trying to end a recession which had, in fact, already ended. Mr. 
President, if you take your finger out of the hole in the dike, then 
the whole town can be flooded.
  One of the arguments made in favor of this proposal is that without 
it, the balanced budget amendment will somehow inhibit the functions of 
the so-called automatic stabilizers. I have spoken extensively on this 
issue, and I think it is clear that the importance of automatic 
stabilizers has been overstated and, in any case, the balanced budget 
amendment will not inhibit their functioning.
  Moreover, this amendment does not respond to the concerns raised 
about the automatic stabilizers. It simply allows Congress to avoid the 
balanced budget by a lower threshold. Put simply, this proposal is a 
loophole and should be rejected, as I hope it will be, just as a 
similar proposal was overwhelmingly rejected a couple of weeks ago.

  The next change this amendment would make to the balanced budget 
amendment would be to permit a waiver by a simple majority when the 
United States ``faces an imminent and serious military threat to 
national security.'' If this proposal sounds familiar to my colleagues, 
it is because it is the same amendment that Senator Dodd proposed about 
2 weeks ago. That amendment was discussed thoroughly and soundly 
defeated by a vote of 64 to 36.
  This provision would permit a waiver if the United States merely 
faces a threat. I understand what military conflict is. It involves 
shooting. But the notion of a mere threat is far more pliable. Indeed, 
ever since the advent and proliferation of nuclear weapons, it could be 
cogently argued that the United States ``faces an imminent and serious 
military threat to national security'' every minute of every day. Thus, 
anyone who seeks refuge from the tough choices necessary to balance the 
budget could invoke this threat and waive the balanced budget rule if 
this provision is incorporated into this balanced budget amendment.
  In short, Mr. President, this proposal is another huge loophole, or 
would create a potentially huge loophole. Its effect is to weaken and 
confuse the standard by which the balanced budget amendment may be 
waived and, thus, it would weaken the balanced budget amendment. It 
should be rejected, as it was before.
  The third change that the amendment of my friend from New Jersey 
would make would be to exempt spending on capital items from the 
balanced budget rule. Similar proposals were contained in the Feinstein 
amendment that the Senate just rejected only a few moments ago.
  One part of this proposal is that the definition of receipts, instead 
of excluding all funds derived from borrowing, would now exclude only 
those derived from ``net borrowing and the disposition of major public 
physical capital assets.'' Outlays still include repayment of debt 
principal, but also would exclude ``those dedicated to a capital 
budget.''
  While I am not entirely clear on the purpose or full ramifications of 
the net borrowing provision from its placement, it appears to take 
account of depreciation of the current year's capital or economic 
income of an item in the capital budget. It might perhaps have other 
effects. In any event, it might artificially make receipts seem higher, 
as a matter of accounting, than they really are. That, in turn, could 
allow future Congresses to avoid a three-fifths vote in some years 
where there is a deficit by manipulation of the net borrowing provision 
of this amendment. I expressed concerns about this language when my 
colleague from New Jersey proposed it in the Judiciary Committee. Those 
concerns have increased now that he has expanded the exception from 
what it was in his committee amendment. Depreciation is a highly 
malleable concept which could allow

[[Page S1613]]

substantial gaming of this provision. Additionally, this proposal would 
not count the proceeds from the sale of capital assets. I do not 
understand why we would limit commonsense flexibility in this way.
  The next change this amendment would make would be to exclude 
``investments in major public physical capital that provides long-term 
benefits'' from the definition of outlays. Mr. President, what does 
this mean? How big must an investment be to be considered major? How 
far into the future must benefits be realized for the investment to be 
considered long term? Is a health program for children physical because 
children are an asset?
  I could go on for hours on the interpretation, or the potential 
interpretations, this huge loophole would make and allow. Exempting 
capital budgets from the balanced budget amendment opens up a 
tremendous loophole in the amendment. There would be powerful 
incentives for Congress and the President to balance the budget by 
redefining more programs as capital expenditures.
  A gimmick capital budget exemption could actually endanger capital 
investments, as fake investments crowd out real capital investments. 
The most basic problem with that is that all discussions of capital 
accounts are that there is no clear standard definition of a capital 
budget. So no one knows what expenditures will fall within that 
definition. Attempts to limit the reach of the capital budget 
definition are largely exercises in futility, because the terms are 
inherently malleable.
  Creative budgeters can find a way to get more spending into that 
capital category.
  Just yesterday the President recognized these activities and created 
a Capital Budget Commission to study whether the Federal Government 
should implement a capital budgeting procedure, since many in his 
administration, including the Secretary of Treasury, think it would be 
horrible to implement a capital budget procedure from the Federal 
standpoint.
  One of the primary duties of this Commission will be to report on the 
appropriate definition of capital budgets including ``use of capital 
for the Federal Government itself or the economy at large; ownership by 
the Federal Government or some other entity; defense and nondefense 
capital; physical capital and intangible or human capital; distinctions 
among investments in and for current, future, and retired workers, 
capital to increase productivity and capital to enhance the quality of 
life; and existing definitions of capital for budgeting.''
  Gee, that covers everything. It just means that the balanced budget 
amendment would be a worthless piece of paper--with this amendment, it 
would become a worthless piece of the Constitution.
  This list of possible items to be included certainly suggests the 
difficulties in defining capital budgets and limiting the exceptions to 
the balanced budget amendment. Yet, today we are asked to enshrine some 
form of capital budgets in the Constitution before this Commission has 
even started its work.
  To be honest with you, nobody should be deceived. I think we are 
going through what we went through before when they needed a vote and 
formed a Commission to get that vote, and then totally ignored the 
findings of the Commission afterward. There is nobody in this 
administration that really believes in capital budgets for the Federal 
Government, or at least I do not know of anybody. And I have seen 
plenty of evidence that they do not believe in the use of capital 
budgets and that it is inappropriate to use them for the Federal 
Government. So it is just another attempt to try to defeat the balanced 
budget amendment by the White House. And I do not think anybody fails 
to understand that who has been around here for any period of time.
  The definitional problems inherent in capital budgeting are made 
clear in President Clinton's proposed fiscal year 1998 budget. In it, 
the OMB, that is, the Office of Management and Budget, lists four broad 
categories of programs that may or may not be considered capital 
expenditures, ranging from physical assets owned by the Federal 
Government to social investment including nutrition programs, health 
care, and drug rehabilitation, among other social welfare spending. 
That is taken from the ``Office of Management and Budget, Analytical 
Perspectives, Proposed FY 1998 Budget,'' at page 101. Even within those 
four broad categories, there are questions about which programs should 
be included. It is particularly inappropriate to place capital 
budgeting in the Constitution when there is no agreement on what 
constitutes a capital budget. Nor is there likely to be agreement after 
the so-called suddenly created Commission does its work.
  This concern has been echoed by the Congressional Budget Office in 
the testimony of Robert Hartman before the House Subcommittee on 
Economic Development in 1993. He stated the following:

       Establishing a capital budget imposes a significant risk of 
     increasing Government consumption by reducing budget 
     discipline and encouraging the reclassification of operating 
     expenditures as investment.

  Now, put another way, capital budgets are a loophole which could 
reduce budgetary discipline. The very last thing our children need is 
for us to have less budgetary discipline.
  Mr. Hartman continued his criticism of capital budgeting by noting 
that the Federal Government is not constrained by the normal 
disciplinary factors that face most potential borrowers. Most people 
who want to borrow must demonstrate to the bank a reasonable likelihood 
that the investment will pay off, so that the bank can judge the risk 
of the investment.

       [T]he Federal Government--with the sovereign power to tax 
     and create money--faces little discipline from lenders, who 
     are assured of being repaid independent of the productivity 
     of the Government's investment. The restraint that does exist 
     is almost entirely internal and must be self-imposed. That 
     was Robert Hartman.

  You know, we have seen, Mr. President, what happens when Congress 
tries to discipline itself. I think the best illustration I could give 
is standing right here, 28 straight undisciplined, unbalanced budgets.
  The fact is, these two stacks represent 28 solid straight years of 
unbalanced budgets. Yeah, we have people coming in here and saying, we 
can just do this. All we have to do is vote. This is the kind of 
discipline that we have without the balanced budget amendment. I tell 
you this. If we do not pass a balanced budget amendment, these two 
stacks are going to go to the ceiling of this Chamber and beyond 
because there is no way that there is going to be the fiscal discipline 
that really is needed. We have 28 straight years of unbalanced budgets.
  In the absence of external discipline, borrowing choices may not be 
made on economic grounds. Borrowing can instead become a source of 
seemingly unlimited money from which Congress could fund any special 
interest with sufficient political clout. It is exactly these types of 
perverse incentives that have gotten us into $5.3 trillion of debt.
  Building on the testimony of Robert Hartman, CBO has noted that:

       [The Federal Government] Unlike private investment that is 
     guided by market considerations, political factors may 
     dominate the choice of public investment projects.

  That is a nice way of saying what financial markets expert David 
Malpass stated as part of his testimony before the Judiciary Committee 
last month, regarding a Federal capital budget exemption:

       One person's capital investment is another person's pork-
     barreling.

  The Washington Post was even less diplomatic in an editorial that was 
highly critical of capital budgeting when the idea was floated during 
the Reagan administration. This is what the Washington Post said about 
capital budgets:

       The concept of a capital budget, applied to the Federal 
     Government, is pure fakery. It is the resort of an 
     administration that, finding the realities of the budget 
     intractable, wants to fuzz up the numbers. . . . To introduce 
     capital budgeting into the Federal accounts would create such 
     wide realms of discretion, and such sponginess of the 
     figures, that a diligent budget director could bring the 
     deficit out at any number he chose.

  Well, as you can see, the Clinton administration joined the consensus 
against debt-financed capital budgeting when it stated in the 
President's 1998 budget document:

       . . . the rationale for borrowing to finance . . . 
     investment is not persuasive. . . . A capital budget is not a 
     justification to relax current and proposed budget 
     constraints.

  The proposed budget constraints in the balanced budget amendment most 
certainly should not be relaxed.

[[Page S1614]]

  They further suggested that the Government borrowing crowds out 
private use of that capital which has offsetting negative effects on 
the overall economy and the return of the Government's investment.
  Let me add, that the Capital Budget Commission that the President 
announced yesterday specifically did not authorize the consideration of 
deficit-funded capital budgets. The administration clearly appears to 
be opposed to such proposals. But that is exactly what my friend from 
New Jersey's amendment encourages. I may not object to having a capital 
budget that is funded out of annual tax receipts, but it would be a 
risky gimmick to have debt-funded capital budgets which nearly 
everybody agrees should not be enshrined into our beloved Constitution.
  Mr. President, the nonpartisan General Accounting Office has also 
found fault with the notion of debt financing of capital budgeting. In 
a 1992 study by the GAO, entitled ``Prompt Action Necessary to Prevent 
Long-term Damage to the Economy,'' the GAO on capital budgets said:

       The creation of explicit categories for governmental 
     capital and developmental investment expenditures should not 
     be viewed as a license to run deficits to finance these 
     categories. In the short run, both consumption and investment 
     goods use economic resources, and deficit financing for 
     either will absorb resources that would otherwise be 
     available for private investment. Deficits also raise Federal 
     interest costs, regardless of the source of the deficit . . . 
     the choice between spending for investment and spending for 
     consumption should be seen as the setting of priorities 
     within an overall fiscal constraint, not as a reason for 
     relaxing that constraint and permitting a larger deficit.

  In other words, capital expenditures should be kept inside the 
balanced budget role of the amendment, something that my friend's 
amendment would not do.
  Now, Mr. President, OMB, GAO, and CBO have all expressed serious 
reservations about implementing a debt-financed capital budget in even 
a statutory manner. Yet this amendment would enshrine it in the 
Constitution. Proponents of capital budgets have suggested that because 
States rely on capital budgets to finance depreciable investment 
expenditures, the Federal Government should likewise be able to account 
for such expenditures separately from its main operating budget.
  The simple fact is, Mr. President, that the Federal budget, unlike 
State budgets, is sufficiently large to handle capital expenditures. 
The Federal budget for fiscal year 1997 is projected to exceed $1.6 
trillion. Of that we will spend approximately $21 billion in direct 
Federal outlays for what the President's budget defines as nondefense, 
physical capital investment, the category most analogous to State 
government or private capital budgets. That is a mere 1.3 percent of 
the total Federal budget for that year. There is no reason why these 
relatively small investment expenditures cannot compete with other 
budget priorities under the stricture of the balanced budget amendment.
  The fact is that the Federal Government does not need capital 
budgeting as much as smaller entities because it commands such a large 
budget. The analogy to capital budgeting by businesses or States is 
inept because the Federal Government is not subject to the same checks 
as either private businesses or State and local institutions or 
governments.
  Private businesses are disciplined by markets. State and local 
government capital budgeting is subject to bond ratings. These checks 
on the abuse of capital budgets will not exist under a Federal capital 
budget, making it far more likely that a Federal capital budget would 
be abused. CBO has observed, and let me just quote them,

       The main difficulty with relying on Government investment 
     spending is that unlike private investment that is guided by 
     market considerations, political factors may dominate the 
     choice of the public investment projects.

  Now, Mr. President, all three proposals in the amendment of my friend 
from New Jersey have already been debated, all have been rejected 
during this debate, two of them in stand-alone amendments. The last 
thing we need to do is weaken the rules requiring a balanced budget. We 
have 28 years of unbalanced budgets here to show that.
  Under the Torricelli amendment, we would absolutely be expecting more 
of the same. There is no question about it. I know the distinguished 
Senator from New Jersey, and I know that he wants to get spending under 
control. I know that he is sincere in bringing this amendment forth. 
Literally, it would open up so many doors to violating the balanced 
budget rule that I have to oppose it, I reluctantly have to oppose it.
  What we need is a straightforward amendment like we have, like Senate 
Joint Resolution 1, the amendment that most of us are fighting for so 
hard, an amendment without risky gimmicks and without loopholes. Senate 
Joint Resolution 1 is such an amendment. It has been carefully drafted 
over many years and represents a balanced, bipartisan, bicameral 
approach, and it is the only way that we can return fiscal 
responsibility and sanity to this Government. I am convinced of that, 
and I think there is no question the vast majority of our Senators are 
convinced of it. The question is, can we get 67 votes in order to pass? 
I believe we can. I have faith that we can. I think this is the last 
chance. This is the only amendment that has any chance of passage for 
the Congress. It is the last chance to do it, and it really is coming 
down to just one vote.
  Now, I pray with all my heart that we will be able to pass it here. I 
do not know what they will do in the House. I suspect if we pass it 
here, it will have momentum going to the House, and I expect it to be 
passed there. I expect to pass it here.
  I do not want to spend any more time on this amendment. I have done 
the best I can to explain why I cannot support it and why I am asking 
my colleagues not to support it. Yet I understand that it is a serious 
amendment, and I appreciate the seriousness of my colleague from New 
Jersey. He is on our committee. He played a significant role during the 
debate of this matter in the committee, and I respect him.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. BYRD. Mr. President, would the distinguished Senator from New 
Jersey yield me 5 minutes of his time?
  Mr. TORRICELLI. Mr. President, I am happy to yield to the Senator 
from West Virginia 10 minutes.
  Mr. BYRD. I thank the distinguished Senator.
  Mr. President, I have sat on this floor today and listened carefully 
to the distinguished Senator from New Jersey as he explained his 
amendment and as he has recounted the reasons for his having offered 
the amendment. I see no other Senator on the floor other than perhaps 
Mr. Hatch, the distinguished manager of the amendment, who sat through 
the entirety of Mr. Torricelli's speech.
  Mr. President, I say that to say this: The speech by the 
distinguished Senator from New Jersey was one of the most thoughtful, 
most thought provoking, most reasonable speeches that I have heard on 
any subject, and particularly on the subject matter of the resolution 
that is before the Senate. One could not listen to Mr. Torricelli 
without immediately knowing that a great deal of work and thought and 
agonizing went into that speech.
  The Senator from New Jersey is the one Senator whose vote has not yet 
been announced. We do not know how the Senator from New Jersey is going 
to vote, and that realization in itself would be indicative that he 
must have spent some tormenting, agonizing moments in the preparation 
of that speech. I am going to vote for the amendment that has been 
offered by Mr. Torricelli because I think it is a needed amendment. 
Whether the Senator, in the final analysis, casts his vote for the 
constitutional amendment or against the constitutional amendment is 
beside the point here at the moment. I respect the Senator for the 
thought that he has invested in this speech, and I admire him for that.
  I would have understood Henry Clay, who was a proponent of the great 
American system, to have made the kind of speech that has been made by 
the Senator from New Jersey. I would have understood Webster, in his 
debate with Hayne, on January 26 and 27, 1830--he spoke along the same 
line, saying that the people of New England did not recognize 
boundaries of rivers or lines of latitude, or mountains, as boundaries 
to their political patriotism. He thought that if an investment in 
infrastructure in South Carolina, for

[[Page S1615]]

example, would benefit the Nation, it was a matter great enough for him 
as a Senator from New England to support. The Old Cumberland Road was a 
project that was supported by Henry Clay. They recognized the necessity 
for building up the Nation's infrastructure. They were looking not just 
at the present, but they were also looking at the future.
  Now, when they propose investments in infrastructure, investments in 
railroads, investments in canals, investments in bridges and highways, 
it seems to me that our friends on the other side cannot have it both 
ways. I have listened to their speeches, and they support, they say, 
doing the same thing that the States do--having a balanced budget 
amendment to the Constitution. We have heard them say over and over 
again, ``Let's do what the States do. The Federal Government should do 
what the States do. We need a constitutional amendment to the 
Constitution that will force us to do what the States do, and the 
States have a constitutional amendment.'' They have amendments in their 
constitution or they have it written into the constitution that they 
have to balance their budgets.
  The proponents don't bother to explain that States have both a 
capital budget and an operating budget. They don't bother to explain 
that. The people who listen to this debate are to take it on faith that 
we are not talking about apples and oranges, but we are talking about 
apples and apples.
  Mr. LEAHY. Will the Senator yield on that one point?
  Mr. BYRD. If I may, I want to ask the Senator from Utah a question. 
They say, ``Let's do like the States do. They have constitutions that 
require them to balance their budgets.'' But the proponents of this 
constitutional amendment don't bother to enlighten their listeners and 
readers to the fact that the States have capital budgets which they 
don't balance every year.
  So now the distinguished Senator from New Jersey [Mr. Torricelli], 
seeks to meet that argument and put, indeed, into the Constitution 
language that will allow the Federal Government to operate on two 
budgets--an operating budget and a capital budget--so that the Federal 
Government will be, indeed, operating like the State governments, it 
will have a Constitution insofar as capital budgeting is concerned, 
like the State governments. It will continue to have an operating 
budget, and it will also have a capital budget. But it cannot have a 
capital budget, under the language of the proposed constitutional 
amendment. Section 1 provides against that. Section 1 says: ``Total 
outlays for any fiscal year shall not exceed total receipts for that 
fiscal year.''
  So, right there, in section 1, as plain as the nose on your face, we 
would be precluded from passing a law once this constitutional 
amendment is adopted here and ratified by the States--the Federal 
Government would be precluded from having a capital budget. Well, the 
Senator from New Jersey seeks to remedy that. He seeks to provide that 
the Federal Government will have two budgets, so that indeed the 
Federal Government would be on a par with the States.

  Mr. President, I ask unanimous consent that I may ask a question of 
another Senator without losing the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BYRD. Mr. President, I ask the distinguished Senator from Utah, 
how is it that the proponents are able to talk out of both sides of 
their mouths? They say, on the one hand, that the Federal Government 
should be like the States; it should have in its Constitution a 
provision for a balanced budget; the Federal Government should operate 
on a balanced budget. Now, the States all have operating budgets and 
capital budgets----
  The PRESIDING OFFICER. The 10 minutes allotted to the Senator from 
West Virginia have expired.
  Mr. TORRICELLI. I yield 5 more minutes to the Senator from West 
Virginia.
  Mr. BYRD. I thank my friend. How can my friends on the Republican 
side--and let me say that I have great admiration for the Senator from 
Utah. He has stood here day after day and labored in the vineyard and 
carried the burden of the arguments. I marvel at his equanimity, his 
patience, and his characteristic courtesy. But how can the Senator 
argue, on the one hand, that the Federal Government should be like the 
States, that it should be constitutionally required to balance its 
budget, but he opposes letting the Federal Government be like the 
States when he opposes having the Federal Government operate not only 
on an operating budget but also with a capital budget?
  Mr. HATCH. Well, I think the Senator raises a very good point, which 
is that there are some who say that we ought to balance the budget like 
the States. Well, there are 44 States that have balanced budget 
amendments. First, that is a difference there. We don't have a balanced 
budget amendment in the Constitution; they do in theirs. Second, some 
States do have capital budgets and, therefore, are different. But the 
reason they are different is because States don't print the money. We 
print the money. We have a huge budget. They have to live within 
certain constraints. So it isn't exactly alike, there is no question. 
What we are requiring here is the Federal Government--I mentioned in my 
remarks that in the fiscal 1998 budget are some $20 billion-plus, less 
than 1.6 percent of the total budget, that would be used for capital 
budgets.
  The Federal Government has such a massive budget that it doesn't need 
capital budgets. Most budgeteers will say don't do it to the Federal 
Government, for a wide variety of reasons. Let me read from this 
because I think it applies directly to what my friend has raised. He 
always raises good questions, and this is certainly a good one. This 
book is entitled ``Analytical Perspectives: Budget of the United States 
Government, Fiscal Year 1998,'' prepared by the administration.
  In one section here, it says:

       State borrowing to finance investment, like business 
     borrowing, is subject to limitations that do not apply to 
     Federal borrowing. Like business borrowing, it is constrained 
     by the credit market's assessment of the State's capacity to 
     repay. Furthermore, it is usually designated for specified 
     investments, and it is almost always subject to 
     constitutional limits or referendum requirements.

  We are not subject to referendum requirements. We are not subject to 
constitutional limits. If we had the amendment of the Senator from New 
Jersey and that became part of this constitutional amendment, we would 
not have the same designated, specified investment routine. You could 
do almost anything you wanted to do with the language in that 
amendment. Of course, there is no bond rating that can rate the Federal 
Government. I think that is why we don't have the same free market or 
even economic marketplace ideas that literally would constrain the 
Federal Government.
  I have to also say that the amendment of the distinguished Senator 
from New Jersey literally opens up the door to anything. You could call 
anything capital budgeting, including perhaps even physical welfare 
matters which, of course, when you think of capital budgeting you think 
of roads and bridges. Frankly, you could just put anything in there. 
That is why this language is so broad that it can't be put into the 
Constitution because there is no definition. It could be used in any 
way that the proponents of more spending want to use it. There would be 
no limitation of restraint. There are no referendums that you could use 
to stop impropriety and excessive spending and vesting, if you will.
  The PRESIDING OFFICER. The 5 minutes allotted to the Senator has 
expired.
  Mr. LEAHY. Mr. President, will the Senator yield for a question from 
the Senator from West Virginia and for a question from the Democratic 
floor manager?
  The PRESIDING OFFICER. The Chair observes that the time is under the 
control of the Senator from New Jersey.
  Mr. BYRD. Mr. President, I hope the distinguished Senator from Utah 
will exercise his usual fairness and charge a little of the time to 
himself.
  Mr. HATCH. I would be glad to do that. If my colleague gets short on 
time, I will try to accommodate him.
  Mr. TORRICELLI. I am happy to yield to the Senator from West 
Virginia. I enjoyed listening to the Senator from Utah. But I would 
enjoy it much more if I was listening to him on my own time.

[[Page S1616]]

  Mr. LEAHY. How much time is available to this side, Mr. President, of 
the argument, and how much time to that side of the argument?
  The PRESIDING OFFICER. The Senator from New Jersey has 41 minutes and 
2 seconds, and the Senator from Utah has 44 minutes and 34 seconds.
  Mr. LEAHY. Mr. President, I wonder if the Democratic floor manager 
could have 5 minutes?
  Mr. TORRICELLI. I am happy to yield to the Senator from Vermont.
  Mr. LEAHY. Mr. President, as I listened to the question of the 
Senator from West Virginia and the response, I do not believe that the 
question was fully answered. I say to my good friend from Utah that he 
and I have debated this matter in committee now for several years. We 
have debated it on the floor of the Senate for the past couple of 
weeks, which also feels like several years. We have gone back and 
forth.
  Mr. HATCH. Indeed, it does.
  Mr. LEAHY. I ask us to think back to 1804 when Thomas Jefferson 
financed the Louisiana Purchase. He spent, I believe, $15 million at 
that time, which he had to borrow. Put that $15 million, I say to my 
friend from New Jersey, in today's dollars and it would amount to $225 
billion. He had to borrow the equivalent of $225 billion in 1 year for 
that transaction. We have not had a deficit as high as $225 billion, I 
do not think since the last deficit during the Bush administration. In 
fact, $225 billion exceeds all annual Federal deficits except for those 
in the last 2 years of the Bush administration.
  I think that we ought to commend Senator Torricelli for the 
constructive way in which he has acted in this debate. I agree with 
what the preeminent historian of the Senate, the Senator from West 
Virginia, said when he spoke of the debates of Clay and others.
  I also agree that this amendment and this debate shows a great deal 
of thought from the Senator from New Jersey. He was thoughtful and 
serious during our committee proceedings and debate, as well. He has 
consistently shown that he has thought hard about and wrestled with 
this matter. I hope everyone, whether they are for or against his 
amendment, will listen to his speech. Whether they are for or against 
this constitutional amendment, I hope everyone will seriously consider 
the amendment offered by the Senator from New Jersey. The Nation's 
leading economists all agree that a capital budget is an essential part 
of the State experience with balanced budget requirements, and that the 
omission of a capital budget in this proposed constitutional amendment 
is a major flaw. Over 1,000 economists, including 11 Nobel laureates, 
noted in a statement of opposition announced by the Senator from West 
Virginia that you should have this. It is a major flaw in this whole 
poorly written Senate Joint Resolution 1. Unfortunately, as I have said 
before, this resolution is one that is written more for a bumper 
sticker than it is for the Constitution of the United States of 
America, the greatest Constitution ever.
  I wish the manager, my good friend from Utah, and his cosponsors 
would abandon their blood oath of not allowing amendments and consider 
the merits of this suggested amendment.
  All Senators should consider favorably Senator Torricelli's effort to 
correct dangerous aspects of the underlying proposed constitutional 
amendment.


                           Capital Budgeting

  Senator Torricelli forcefully pointed out during the Judiciary 
Committee deliberations on the underlying measure that we as a nation 
are suffering from a capital investment crisis. In 1965, more than 6 
percent of Federal expenditures were invested in infrastructure such as 
roads, bridges, ports, and mass transit systems. By 1992, that share of 
capital investment had fallen by more than half to about 3 percent of 
our Federal budget and this year it will approach barely 2 percent.
  At the same time as our infrastructure funding has been shrinking, 
our Nation's needs have continued to grow. The result is that we are 
becoming a nation in disrepair. For instance, more than a quarter of a 
million miles of roads need repair and more than 25 percent of our 
bridges have exceeded their life span.
  This failure to maintain adequate infrastructure is hurting our 
competitiveness in the global economy. We are competing against other 
countries with the foresight to repair their roads and bridges, 
modernize their transit systems, maintain their ports, build new 
schools and make the investments in telecommunications infrastructure 
that are the keys to success in today's global competition. The United 
States is dead last among the G-7 nations in public infrastructure 
investment as a percentage of gross domestic product.
  Senator Torricelli is correct that we must reverse this trend and 
make the long-term investments needed to support a strong economy. I am 
glad to see President Clinton calling for study and action on capital 
budgeting. We must be able to invest in capital improvements--and, in 
my view, in education--if we are to give our children their best chance 
to compete and win in the coming century.
  The underlying proposed constitutional amendment prohibits budgeting 
for capital expenditures. Instead it would include all expenditures on 
an annual basis for purposes of calculating balance. All expenditures, 
whether the equivalent of operating expenses or capital investments, 
are tallied the same for purposes of the underlying proposed 
constitutional amendment.
  The sponsors and proponents of this measure refuse to permit any 
exception and future Congresses will be forever barred from solving our 
infrastructure crisis by creating a capital budget for long-term 
investments.
  The majority report is silent on this important subject. The 
Committee's past hearings, however, establish an extensive record in 
support of maintaining a separate capital budget. Herbert Stein, of the 
American Enterprise Institute and former economic adviser to President 
Nixon; Edward V. Regan, of the Jerome Levy Economics Institute and 
former New York State Controller; and Dr. Fred Bergsten, on behalf of 
the bipartisan Competitiveness Policy Council and former Assistant 
Secretary of the Treasury during the Carter administration; differed on 
the wisdom of enacting a constitutional amendment on the budget but all 
agreed on one thing: If such an amendment were to be considered it 
should separate capital investments for any annual balance requirement.
  Nonetheless, when the Judiciary Committee had the opportunity last 
month to consider amendments that would have allowed for a separate 
budget for capital investments, it rejected them. Senator Torricelli 
offered a substitute amendment to establish a Federal capital budget 
but the committee rejected the Torricelli amendment by an 8 to 9 vote 
with all Republican members who voted, voting against capital 
budgeting.
  This inflexibility is one of the principal reasons that President 
Clinton opposes this constitutional amendment on budgeting. The 
President stated:

       We must give future generations the freedom to formulate 
     the Federal budget in ways they deem most appropriate. For 
     example, some believe that the Federal Government should do 
     what many State governments do: adopt a balanced operating 
     budget and a separate capital budget. Under this 
     constitutional balanced budget proposal, the government 
     would be precluded from doing so.

  During the committee's January 17 hearing, Robert Greenstein of the 
Center on Budget and Policy Priorities explained:

       What families do when they balance their budget is families 
     say that all of their income, including money they borrow, 
     equals all the cash they pay out. Families borrow money when 
     they purchase a house through a mortgage, whey they buy a 
     car, and especially when they send a child to college. If 
     families had to operate on the basis that this amendment 
     does, they would have to pay for all of college education out 
     of the current year's income, all of the entire cost of a 
     home, not the down payment, the whole thing, out of the 
     current year's income. Nobody operates that way.

  The actions of Thomas Jefferson as President, as opposed to his oft-
quoted ruminations about the evils of public debt, are also instructive 
but ignored by the proponents of the underlying measure. In 1804, 
President Jefferson had the United States borrow $15 million, in 1804 
dollars, by selling bonds to finance the Louisiana Purchase. That 
amount approximates more than $225 billion in 1993 dollars and exceeds 
every Federal budget deficit except for the final 2 years of the Bush 
administration.
  Was President Jefferson wrong to invest in the Louisiana Territory 
that provided this country with 15 States?

[[Page S1617]]

Of course not. But had the provisions of Senate Joint Resolution 1 been 
included in the Constitution in the early 1800's, our Nation's westward 
expansion might well have ended at the Mississippi River.
  Under this proposed constitutional amendment, the failure to permit a 
capital budget would have severe consequences by discouraging long-term 
investment and ignoring our infrastructure crisis. Just as a budget 
deficit unfairly harms future generations so, too, does the failure to 
differentiate capital investments from operating and consumption 
expenditures. The inevitable result will be less investment in our 
country's future, pressure to operate through inefficient leasing 
practices and gimmickry.
  The Torricelli amendment should reduce the pressure to engage in some 
of the gimmickry otherwise likely to be occasioned by this proposed 
constitutional amendment. It may also result in more accurate 
disclosure to Americans about how their money is being spent and how 
the budget is being balanced.
  Not many of us could afford homes if we could not borrow and get a 
mortgage on our home. When we talk about balancing our family budgets, 
we do not normally mean that we should not invest in a house or a car. 
We mean that we should not spend more every week or every month than we 
can afford. We mean to include our mortgage and car payments but not 
the full extent of the 5-, 15- or 30-year liability.
  Likewise, small businesses and large corporations could not do 
business is they could not borrow to meet their capital budget needs.
  Most States with balanced budget amendments have separate capital 
budgets, as well. I am told that number is 42 States. Indeed, I believe 
that most States with balanced budget requirements obtain capital funds 
that finance major capital projects by issuing long-term debt.
  The Nation's leading economists agree that a capital budget is an 
essential part of the State experience with balanced-budget 
requirements and that the omission of a capital budget in this proposed 
constitutional amendment is a major flaw. Over 1,000 economists, 
including 11 Nobel laureates, noted in their January 30, 1997 
statement:

       Unlike many State constitutions, which permit borrowing to 
     finance capital expenditures, the proposed Federal amendment 
     makes no distinction between capital investments and current 
     outlays. . . . The amendment would prevent Federal borrowing 
     to finance expenditures for infrastructure, education, 
     research and development, environmental protection, and other 
     investments vital to the Nation's future well-being.

  The Torricelli amendment to allow capital budgeting is in keeping 
with traditional notions of balancing our budgets.


                            Military Threats

  I further commend Senator Torricelli for including within his 
amendment language to correct a dangerous flaw in the proposed 
constitutional amendment. The underlying proposed constitutional 
amendment requires the United States to be engaged in military conflict 
before a waiver may be obtained. Moreover, the Senate report's section-
by-section on this language compounds the problem by indicating that 
only military conflict that involve the actual use of military force 
may serve as a basis for this waiver.
  I hope that this is not what the authors, sponsors and proponents of 
the underlying constitutional proposal truly intend, although their 
votes to table the Dodd amendment seem to indicate that they mean what 
they say. They are creating constitutional circumstances that make 
military spending and preparations easier only when military force is 
actually used and military conflict ensures. Arming to deter aggression 
would no longer be the preferred course, aiding allies in a conflict 
rather than dispatching U.S. military forces would no longer be as 
viable an alternative and rebuilding our military capabilities after a 
conflict would no longer be possible without a supermajority vote of 
three-fifths of the Congress.
  I cannot support such restrictive measures. I have spent much of my 
time in the Senate working with Republican and Democratic 
administrations to avoid the actual use of military force. This 
amendment is written is such a way that it serves to encourage such 
use. Nothing that would serve to place our men and women in harm's way 
more quickly or would leave them less well equipped or prepared should 
garner the support of this Senate.
  I hope that all Senators will consider favorably Senator Torricelli's 
effort to correct this dangerous aspect of the underlying proposed 
constitutional amendment and render it more consistent with the foreign 
policy objectives and vision outlined last night by Senator Torricelli.
  I urge the manager and the sponsors of the resolution to abandon 
their ``no amendments'' strategy and consider the merits of this 
suggested amendment. Balancing the budget is important. But their 
underlying proposal turns the world topsy-turvy by making that goal the 
be-all and end-all of national policy without considering what a 
supermajority requirement can mean to our Nation's security and 
defense, to our foreign policy and our military preparedness.
  As Senator Sarbanes has so eloquently reminded us, one historic 
example points out the folly of such a supermajority requirements. In 
the summer of 1941, Congress was confronted with extending the time of 
service of those members of the armed services who had been drafted the 
year before. With the prospect of war increasing, President Roosevelt, 
in a special message to Capitol Hill, asked Congress to declare a 
national emergency that would allow the Army to extend the service of 
draftees. Speaker Sam Rayburn had to twist arms in the well of the 
House of Representative to get the House to pass the measure regarding 
the draft for World War II by just one vote, 203 to 202. It then passed 
the Senate by a vote of 45 to 30.
  The Nation was literally a few months away from the outbreak of World 
War II. But neither the House nor the Senate vote would have met the 
supermajority requirement in the underlying proposal. Even after the 
President had declared a national emergency, Congress could not muster 
a supermajority vote in either body.


                           Economic Recession

  The third prong of the Torricelli amendment would allow the proposed 
constitutional restrictions for end of the year balance to be waived in 
the event of an economic recession or serious economic emergency. He is 
right on point. More than 1,000 of the Nation's most respected 
economists, including 11 Nobel laureates, as well as the former chair 
of President Nixon's Council of Economic Advisors, the current and 
former Federal Reserve Board Chairmen, and former Democrat and 
Republican Directors of the Congressional Budget Office all agree that 
the underlying proposal is unsound economic policy. They all agree that 
the underlying proposal would hamper the Government's ability to cope 
with economic downturns.
  Economists and financial experts agree that the underlying proposal 
will straitjacket the economy in hard times. It will hamstring the 
adjustment mechanisms that have been developed since the Great 
Depression to preserve jobs and restore the economy after a downturn. 
The 1,060 economists and 11 Nobel laureates who are opposing the 
underlying proposed constitutional amendment condemn it because it 
mandates perverse actions in the face of recessions.
  If the economy takes a downturn and Americans are losing their jobs--
as happened in the early 1990's--the underlying proposal makes it more 
difficult for our Government to respond to the needs of working 
families. As Treasury Secretary Rubin testified before the Judiciary 
Committee:

       A balanced budget amendment would subject the Nation to 
     unacceptable economic risks in perpetuity. . . . A balanced 
     budget amendment could turn slowdowns into recessions, and 
     recessions into more severe recessions or even depressions.

  I am deeply concerned about the impact that the underlying proposal 
might have on jobs for working families in Vermont and across the 
country during times of recession. As Secretary Rubin explained, the 
so-called automatic stabilizers in our economy would be ineffective 
under the underlying proposal. These are mechanisms that have been 
developed over the last 50 years to reduce the extremes of the ``boom-
and-bust'' cycles. They are intended to prevent another Great 
Depression and have proven effective over time.

[[Page S1618]]

  Secretary Rubin testified:

       [W]ithout automatic stabilizers, the Treasury Department 
     has estimated that unemployment in 1992 that resulted from 
     the 1990 recession might have hit 9 percent instead of 7.7 
     percent, which would have been in excess of 1 million jobs 
     lost.

  Federal Reserve Chairman Alan Greenspan recently reiterated his 
opposition to the proposed constitutional amendment during questioning 
by Senator Lautenberg during his testimony before the Senate Budget 
Committee. He urged the Senate Budget Committee to continue to 
eliminate the deficit, but he joined Secretary Rubin and our Nation's 
leading economists in the conclusion that the underlying proposed 
constitutional amendment places too many constraints on our economy.
  Although the sponsors of the underlying measure repeatedly outline 
the dangers of a budget deficit, they fail to address how the proposed 
constitutional amendment will provide for the flexibility needed in 
economic downturns without holding working families and hard hit 
regions hostage to a supermajority vote. This aspect of the Torricelli 
amendment restores that flexibility by requiring a simple majority vote 
to respond to economic recessions and emergencies.
  When he spoke last night in this historic Chamber, Senator Torricelli 
spoke about the proper role of Government and redefining its role 
without sacrificing our ability and ignoring our responsibilities to 
help our neighbors when they need help. He is right to offer this 
essential change in the underlying proposal to amend the Constitution.
  A waiver of these provisions by a supermajority vote of three-fifths 
of both Houses of Congress is small comfort to America's working 
families. Many national recessions start out in different regions of 
the country. For example, the most recent recession hit New England 
first. What if citizens of New England, who have fewer Members of the 
House of Representatives than other regions of the country, needed 
help? Could they get Senators and Representatives from other States, 
which were still experiencing good times, to waive a constitutional 
balanced budget requirement to help protect their livelihoods?
  Prof. Robert Eisner of Northwestern University and past president of 
the American Economic Association understood the economic problems 
under the underlying proposed constitutional amendment when he recently 
wrote:

       One need only recall the near-collapses, in recent years, 
     of the economies in New England, California and Texas. Who 
     would bail them out if their own tax revenues again declined 
     and there were surges of claims for unemployment benefits, 
     food stamps and general assistance?

  Relief for economic recessions and emergencies must be flexible. 
Usually, a swift response from the Federal Government is needed to aid 
State and local relief efforts. Economic emergency relief by 
constitutional supermajority mandate is a prescription for gridlock, 
not swift action. When your State or region is hit by recession or 
economic emergency, do you want critical Federal assistance to hang on 
the whims of 41 Senators or 175 Representatives from other regions?
  I find it ironic that the supporters of the underlying constitutional 
amendment, who do not trust Congress to continue to reduce the deficit, 
argue that we should trust future Congresses to muster supermajority 
votes in both bodies.
  Our Founders rejected requirements of supermajorities. We should look 
to their sound reasons for rejecting supermajority requirements before 
we impose on our most vulnerable citizens a three-fifths supermajority 
requirement to provide them Federal relief from recessions and serious 
economic emergencies. I believe this supermajority requirement would 
recklessly endanger our economy and our democracy.
  We do not need to theorize or speculate about the costs and risks. 
The Nation got a taste of it just 2 years ago with the longest 
Government shutdown in history and a debt limit crisis that when on for 
months. In 1995, 165 Republican Members of the House of Representatives 
pledged to refuse to vote for raising the debt limit, unless President 
Clinton accepted their balanced budget plan. The Speaker of the House, 
Newt Gingrich, went along with this ultimatum, by declaring ``I am with 
them * * * I do not care what the price is.'' As a result of this 
blackmail politics, the American people suffered through two Government 
shutdowns for a total of 27 days. In the 22 years I have served in the 
Senate, I have not seen an action more irresponsible by either 
Democrats or Republicans.

  Fortunately, the President stood up to this blackmail and the 
American public convinced a majority in Congress to act responsibly. 
Who knows what would have happened under the supermajority votes 
required in the underlying proposal.
  The supermajority requirement lowers the blackmail threshold, in the 
words of some it its House sponsors. This three-fifths supermajority 
requirement invites political blackmail and rewards extremism. If both 
the House and Senate require three-fifths of their Members to agree to 
waive the end of the year balance requirement or raise the debt limit, 
then 40 percent plus one in either the House or the Senate could hold 
the country hostage to their demands.
  The House sponsors of this proposed constitutional amendment have 
acknowledged this folly. In a November 1996 paper on the underlying 
proposal, Representatives Dan Schaefer and Charles Stenholm wrote that 
their proposal would have the effect of ``lowering the `blackmail 
threshold' * * * from 50 percent plus one in either body to 40 percent 
plus one * * *.'' These are the words of the House sponsors of the 
underlying proposal, not mine.
  As Robert Greenstein of the Center on Budget and Policy Priorities, a 
distinguished expert on Congress' ways, testified before the Judiciary 
Committee, the underlying proposal's supermajority requirements would 
permit minority factions to extort pork barrel projects or extreme 
legislation as their price.
  Coming from a State with a congressional delegation of three Members, 
I know something about the rights of small States. Supermajority vote 
requirements trample on the rights of small States and reward large 
ones. In the House, a combination of Representatives from six large 
States could hold a waiver hostage to their demands, even if the vast 
majority of Representatives from 44 States were in agreement that a 
waiver was justified.
  Our Founders rejected such supermajority voting requirements on 
matters within Congress' purview. Alexander Hamilton described 
supermajority requirements as a poison that serves to substitute the 
pleasure, caprice, or artifices of an insignificant, turbulent, or 
corrupt junta to the regular deliberations and decisions of a 
respectable majority. Such supermajority requirements reflect a basic 
distrust not just of Congress, but of the electorate itself. I reject 
that notion and am prepared to keep faith with and in the American 
people. We should honor the fundamental principle of majority rule, a 
principle that has been enshrined in our Constitution for more than 200 
years, and a principle embodied in the Torricelli amendment.
  Senator Torricelli has approached this matter with seriousness and 
sincerity. He is attempting to perfect the underlying proposal for a 
constitutional amendment and cure several of its flaws.
  When the Judiciary Committee considered this proposed constitutional 
amendment last month, we did so on an expedited basis. Nonetheless, 
Senator Torricelli was a full participant at our hearings. He examined 
former Acting Attorney General Stuart Gerson and Mr. Gerson conceded to 
him that the underlying amendment presents the most likely situation in 
which congressional standing, which has never been recognized, might be 
recognized and Mr. Gerson described to him the unfortunate Federal 
precedent in which a Federal court ordered local taxes to be raised. I 
recall his exchange with Senator Simon regarding the relationship of 
our national debt to our gross domestic product and how we compare 
favorably with the other industrialized countries of Europe and the 
world.
  He continued his thoughtful approach to the proposed constitutional 
amendment during our committee markup when he offered an amendment that 
Chairman Hatch first praised, then defeated by casting a final and 
deciding vote against it. At least at the committee we afforded members 
an opportunity to offer amendments and to obtain votes on those 
amendments.

[[Page S1619]]

  This is one of the most important legislative matters we will 
consider this Congress. It is a proposed amendment to our fundamental 
charter, the United States Constitution. In my view, allowing 
amendments, debating amendments and voting on amendments is an 
essential aspect of developing any legislation and, in particular, a 
proposed constitutional amendment.
  Early in this debate the distinguished minority leader made the point 
that we do not have the luxury of reexamining constitutional amendments 
as we would a statute. Once a constitutional amendment is passed, it is 
almost impossible to revisit. Accordingly, it is essential that 
Senators have the opportunity to seek to improve the text of the 
proposed amendment. Even the witnesses called by the proponents of the 
underlying measure acknowledged that it is not perfect, that it has 
shortcomings, and that its text could be improved. To do otherwise is 
to disregard our obligations to our constituents, the Constitution and 
the future.
  Senator Torricelli has come forward with a very important amendment. 
He is most sincere and serious in this effort and he deserves the 
courtesy and opportunity to have the Senate vote on the merits of his 
amendment. Respected economists, the current Chairman and past Chairman 
of the Federal Reserve, the Secretary of the Treasury, numerous 
witnesses and the President of the United States have all noted that 
the underlying proposal for a constitutional amendment runs the risk of 
strait-jacketing the future, of creating military difficulties and 
reducing our ability to respond to international crises and of making 
economic downturns deeper and turning recessions into depressions.
  Here is a Senator who has come to this floor willing to put himself 
on the line and debate, honestly debate, the critical issues affected 
by this amendment. In matters that affect our Nation's supreme law, we 
need to vote consistent with our best judgment and our conscience as we 
represent those who elected us and entrusted us to make these votes. 
Senator Torricelli has offered this Senate, the people of New Jersey 
and this country his best judgment regarding how to improve this 
constitutional proposal. Before we return to the economic and fiscal 
policies of the Hoover era that led to the Great Depression, I urge the 
Senate be given an opportunity to vote on the Torricelli amendment on 
its merits.
  I hope that the other side, which has rejected every amendment on 
Social Security, on protecting working families or protecting 
children's programs from disproportionate cuts and on everything else--
no matter how good the amendment might be--would not require their 
followers to leap blindly off the cliff of tabling motions but would 
allow them to listen to this debate and vote honestly on it.
  The Senator from New Jersey has raised a very clear issue. Let me 
tell you right now, anybody who thinks the Louisiana Purchase was a 
good idea ought to be listening to the Senator from New Jersey and 
supporting him.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, there may be some responsible economists 
who are for putting capital budgets into the Federal Government's 
budget process. I personally do not know of any. If there are, I do not 
think that their arguments would stand up. To compare the State and the 
Federal Government, the distinguished Senator from West Virginia raises 
a good issue. You can't fully compare State budgeting with Federal 
budgeting. I agree with him. On the other hand, you can't say we should 
have a capital budget in the Federal budget because it is clear that 
the Federal Government doesn't operate like the States. We print the 
money. We don't have a referendum nor do we have a balanced budget 
amendment that would restrain the spending. If you have these huge 
loopholes, whether you have a balanced budget amendment or not, it just 
wouldn't work. Plus you have 50 States where it is pretty tough for 
State legislators in an individual State with a balanced budget 
amendment to fudge and fuzz up the language. In the Federal Government 
it is a lot easier. We just can't put this kind of language in there. 
It is just that simple. And if you do that, then you have made a 
loophole, an undefined loophole that would allow any subsequent 
Congress that is irresponsible--and we have had 28 years of 
irresponsibility. I mean all you have to do is look at this stack of 
unbalanced budgets for the last 28 years, and headed higher. I have to 
tell you. Here is one which I am just now discussing which is certainly 
going higher, this 1998 budget. Without the balanced budget amendment 
we are just lost. We are going to have more and more of this and less 
and less responsibility.
  I yield the floor.
  Mr. BYRD. Mr. President, will the Senator yield?
  Mr. HATCH. I am happy to yield.
  Mr. BYRD. Mr. President, I want to take 2 or 3 minutes.
  I want to close by again thanking the distinguished Senator from New 
Jersey. I wish to compliment him. I think he has exposed a major flaw 
in the argument of the proponents. He has made it indubitably clear 
that the proponents meet themselves in their arguments coming back. 
They argue both ways, as I have already indicated, that the Federal 
Government should operate like the States on a balanced budget. Now, 
when the Senator from New Jersey seeks to put the Federal Government on 
a par with the States and have a capital budget, on which almost all of 
the States operate, then the proponents say, oh, no. My friend, Mr. 
Hatch, says, oh, no, we do not want to do that. We do not want to put 
that kind of thing in the Constitution. This is the glittering gewgaw--
--
  Mr. HATCH. Now, be nice. Be nice.
  Mr. BYRD. The glittering gewgaw of glorified garbage that the 
proponents are seeking to nail into the Constitution.
  But, Mr. President, my friend, Mr. Hatch, says, oh, we do not print 
the money.
  Well, that is true but that is not an answer to what we have been 
talking about here and the need for a capital budget.
  Let me just close by saying to my friend from Utah, who continues to 
go over to his props, the books, I hope he will pause to explain that 
beginning with Mr. Reagan, Mr. Reagan's administration, the total debt 
of the United States at that time was $997 billion. Going right down to 
the close of September 30, 1981, which was the end of the last fiscal 
year for which Mr. Carter was responsible, the total Federal debt was 
just under $1 trillion. But going right down to the end of the last 
fiscal year for which Mr. Bush was responsible, September 30, 1993, the 
Federal debt was $4.316 trillion.
  Now, that will help to explain what is inside those budgets that are 
stacked on the Senator's desk. That would help to explain the great 
difference between the debt as it stood accumulated after the first 192 
years of its existence under 39 administrations, 38 Presidents--one of 
them, Grover Cleveland, served two terms which were separated--which 
was slightly under $1 trillion----
  Mr. HATCH. And $4.3 trillion.
  Mr. BYRD. Slightly under $1 trillion for all of the administrations 
down to the last minute of the fiscal year for which Mr. Carter was 
responsible, and then comparing that figure, which was under $1 
trillion, with the massive debt of $4.316 trillion, down to the last 
minute of the last fiscal year for which Mr. Bush was responsible. I am 
talking about the Reagan-Bush budgets. They are the largest part of 
that massive pile of books there.
  Mr. HATCH. That is true.
  Mr. BYRD. It might be well to consider how much of that massive pile 
of books was debt that was encountered under the Reagan-Bush 
administrations.
  I thank the Senator for yielding.
  Mr. HATCH. Mr. President, if I could answer that, I would be more 
than happy to. First of all, these are not props. These are real books. 
These are real unbalanced budgets, 28 of them.
  Mr. BYRD. That is real debt.
  Mr. HATCH. That is real debt. And let us just understand the basic 
principle of government. The President proposes, whoever that President 
may be, but the Congress disposes.
  To be honest with you, Reagan's tax cuts involved 40 percent growth 
in revenues more than they had predicted. But he had to deal primarily 
with the House of Representatives where all money bills must originate, 
controlled by those who did not agree with him, who kept spending. And 
that is Congress. And even those in the 1980's who

[[Page S1620]]

did not agree with President Reagan and wanted to spend more in 
Congress, even they should not be totally blamed for this because this 
all began basically with the Great Society programs that have been 
going out of control ever since. We now have almost two-thirds of the 
budget in entitlement spending. I know President Reagan did not ask for 
that. Neither did President Bush, and neither, I guess you can say, has 
President Clinton. I do not even think President Carter asked for that. 
We did that.
  Mr. BYRD. Will the Senator yield on that point?
  Mr. HATCH. If I could finish. I would like to finish. I want to make 
this point because the Senator has raised this.
  We did that. Congress did that. Congress is responsible primarily for 
this. I admit it could take some Presidential leadership from time to 
time, too.
  Mr. BYRD. And some Presidential vetoes.
  Mr. HATCH. As well as some Presidential vetoes. That is true. I 
remember when President Ford used the veto some 60 times. He was vastly 
criticized by his political opponents for what he did. Now, I think 
there is plenty of blame for everybody involved--Presidents, but mostly 
Congress.
  See, I am not particularly picking on Presidents today. I am picking 
on us. The President can propose but we dispose. We are the ones who 
create these appropriations bills and these budget bills. We are the 
ones who have done the spending. We are the ones who have failed to get 
entitlement spending under control. We are the ones who have failed to 
reform Medicaid and Medicare that are going into bankruptcy. All money 
bills have to originate in the House of Representatives, and during all 
of the Reagan years the House of Representatives was controlled 
primarily by those of the liberal persuasion, in both parties I might 
add. I suspect you could say the Senate was, also, if you added up the 
liberals versus moderates and conservatives. I think there were more 
liberals in almost every year of the Reagan administration in both 
Houses of Congress.

  Frankly, I am not going to blame President Reagan. I am not going to 
blame President Bush. I am not going to blame President Clinton or 
President Carter. I might go back to President Johnson and say there 
were some problems there. That is when all these Great Society 
programs, all well-intentioned, many of which do good but many of which 
are out of control today, that is when they originated. I believe the 
distinguished Senator from West Virginia was here at that time
  Mr. BYRD. Mr. President, will the Senator yield? He mentioned me.
  Mr. HATCH. What is the time for both sides?
  The PRESIDING OFFICER. The Senator from Utah has 34 minutes remaining 
on his time; the Senator from New Jersey has 36 minutes.
  Mr. HATCH. I will be glad to yield.
  Mr. BYRD. Only to say that I was a part of the problem.
  Mr. HATCH. Not really.
  Mr. BYRD. No, no.
  Mr. HATCH. The Senator was a part of the Congress.
  Mr. BYRD. I was a part of the problem when I voted for the Reagan tax 
cut, and I have kicked myself in the seat of the pants ever since. That 
was----
  Mr. HATCH. I kind of admired the Senator for it.
  Mr. BYRD. I did not hear the Senator.
  Mr. HATCH. I said I admired the Senator for that.
  Mr. BYRD. Well, I thank the Senator.
  Mr. HATCH. That the Senator came across the line and actually 
produced 40 percent more revenues than they thought. The problem is we 
kept spending.
  Mr. BYRD. May I finish.
  Mr. HATCH. Sure.
  Mr. BYRD. I was rolling along pretty well.
  Mr. HATCH. I am still proud.
  Mr. BYRD. Mr. President, I sought to get Mr. Reagan to postpone the 
third year of his proposed 3-year tax cut until such time as we could 
see what the budget deficit was, until such time as we could see what 
was happening to the economy. No, he wouldn't do that. So I offered 
legislation here, as minority leader, at that time, to require that 
that third year of the tax cut be delayed. But my amendment was 
rejected, just like all amendments that we are offering now to the 
constitutional amendment are being rejected summarily. My amendment was 
rejected. And then I voted for the Reagan tax cut.

  My people said, ``Go along with this new President. Give him a 
chance. Give him what he wants.'' And so I did, and I have been sorry 
of it ever since.
  I voted for that Reagan tax cut. I also voted for his massive 
military buildup. And, so, I am that much to blame. But let it not be 
said that the President should escape the charge of having overblown 
spending, and the debt, by saying, ``We are the Congress. The President 
proposes, the Congress disposes.'' Mr. Reagan had a veto pen. Why 
didn't he veto some of the appropriations bills? He didn't. He didn't 
use the veto pen, perhaps, enough.
  Mr. HATCH. If I could----
  Mr. BYRD. But, Mr. President, I was guilty. I supported Mr. Reagan on 
his tax cut, and to that extent I am sorry.
  Mr. HATCH. I understand.
  Mr. BYRD. Because that represents the major portion of the Federal 
debt that we owe today, the massive tax cut, the massive military 
buildup, and there you have it. I will repeat the figures once more and 
then I will take my chair.
  When Mr. Reagan became responsible for his first fiscal year budget--
the total debt was $999 billion, total debt over the period of all the 
years and all the administrations since the Republic began. And when 
the last fiscal year for which he was responsible had ended, the debt 
was $2,830,000,000,000. And then when the last moment of the last 
fiscal year for which Mr. Bush was responsible had ended, the debt was 
$4,316,000,000,000. So much for the pile of books.
  Mr. HATCH. Let me just say this in response. The fact of the matter 
is, I do not think anybody escapes responsibility. But I know one 
thing, the Reagan tax cuts resulted in an increase of revenues because 
there was more opportunity, more investment, more creation of jobs, 
more people paying taxes. And we actually had more tax revenues come in 
by 40 percent over what was estimated.
  Where Reagan got into trouble--and I was here--was in the 1981 or 
1982 tax bill. In order to get the marginal tax rate reductions that 
all of us knew would work--and they did, and this administration is 
benefiting from that to this day because the tax rates were 70 percent 
at that time. I have to admit they are outrageously high today, but 
they are not 70 percent. But, in order to get that, they had to agree, 
the President had to agree to all kinds of congressional spending 
programs. He wanted the marginal tax rate so bad because he knew that 
would create a good economy. And it did for 8 solid years, some say 
longer. And it is really one of the things that is benefiting this 
economy today, because the tax rates are so much lower than they were 
before Reagan took office. But then, in the 1986 tax bill, which I 
voted against, he wanted marginal rates reduced again, and to get that 
he had to give all kinds of concessions that I think helped trigger the 
S&L crisis. And it was Congress that did it. It was Members of both 
parties in Congress that did it.
  I do not think we can avoid the responsibility by just saying, well, 
the debt went up during the Reagan and Bush years, and now, with the 
biggest tax increase, it has come down as a total number. But it is 
still a $107 billion deficit this year, and next year it will be more. 
It is going up every year for the next 4 years until we are supposed to 
somehow conjure up 75-percent savings to bring it down in the 2 years 
after President Clinton leaves office, according to his budget.
  Mr. BYRD. Mr. President, will the Senator yield?
  Mr. HATCH. If I can just finish? These books were created by us, 
these 28 years of deficits. I am saying we have to do something to help 
us to be responsible. If we do that, the President, whoever that 
President may be--whether that President is a supply-sider like Reagan, 
or not--will have to be more responsible. If we do not do it, we are 
going to have more of the same.
  I have to say it was triggered long before the Great Society 
programs, because we have had 58 years of unbalanced budgets in the 
last 66 years. So it

[[Page S1621]]

happened even before the Great Society. But once the Great Society 
programs started and this move toward entitlement spending--I know my 
dear colleague knows that. He has to deal with it every day on the 
Appropriations Committee, and he deals with it very intelligently. But 
he is stuck because almost two-thirds of the budget is entitlements. It 
was not the Presidents who did that; it is us. I have to tell you, the 
only hope for this country to get these things under control--and I 
have to say I don't want my dear friend to make another mistake. He is 
repentant for having voted for the Reagan tax cuts. I don't think he 
should make another mistake that he is going to have to repent for 
by not voting for the balanced budget amendment.

  I really am still hoping I can get him to change his ways and to come 
across here and help get this thing done. Because he, above all people 
in both bodies, knows how really irresponsible the Congress has been 
through these years.
  Mr. BYRD. Mr. President, will the Senator yield?
  Mr. HATCH. On Mr. Torricelli's time.
  Mr. BYRD. Oh, no.
  Mr. HATCH. I will, because I know how much time--how much time do I 
have left?
  The PRESIDING OFFICER. The Senator from Utah has 26 minutes 
remaining; the Senator from New Jersey has 36.
  Mr. HATCH. Will you mind if we do it for just a limited period of 
time?
  Mr. BYRD. Make it 2 minutes.
  Mr. HATCH. I yield 2 minutes.
  Mr. BYRD. Mr. President, I thank the distinguished Senator from Utah. 
Let me remind the listeners as to who was in charge in the Senate 
during the first 6 years of the Reagan administration. I say this 
because my friend has just said, well, after all, Congress has----
  Mr. HATCH. Will the Senator yield on that point?
  Mr. BYRD. Yes.
  Mr. HATCH. Where do all money bills have to originate under the 
Constitution?
  Mr. BYRD. In the House.
  Mr. HATCH. Who was in charge during those years?
  Mr. BYRD. Over here?
  Mr. HATCH. No, in the House I'm talking about, where all money bills 
originate.
  Mr. BYRD. Listen----
  Mr. HATCH. Wait, it wasn't Republicans in charge. We didn't originate 
those money bills. Or did we?
  Mr. BYRD. Listen, the Senator is trying to obfuscate something. I am 
not going to let him do that.
  Mr. HATCH. All right.
  Mr. BYRD. Those bills come to this Senate and, under the 
Constitution, the Senate may amend revenue-raising bills, as in all 
other bills, and appropriations bills. So, let us not say that the 
Senate escapes its responsibility.
  Mr. HATCH. I am not saying that.
  Mr. BYRD. But my friend, his party was in charge during those first 6 
years of the Reagan administration, in charge of the Senate. That is 
when I made--that is when I committed my almost unpardonable sin, by 
voting for that Reagan tax cut.
  I do not want to chew up the remainder of the manager's 2 minutes 
but----
  The PRESIDING OFFICER. The Senator's 2 minutes has expired.
  Mr. BYRD. May we proceed 1 more minute?
  Mr. HATCH. Mr. President, 1 more minute.
  Mr. BYRD. The distinguished Senator from Utah says under that tax 
cut, under that tax cut about which I have just now begged for 
forgiveness for the umpteenth time----
  Mr. HATCH. I forgive you.
  Mr. BYRD. I have been begging forgiveness for that mistake for years. 
But he said, as I recall, under that tax cut the revenues were 
increased. I hope I didn't misstate it.
  Mr. HATCH. No. They were.
  Mr. BYRD. Is that what the Senator said?
  Mr. HATCH. That's what I said.
  Mr. BYRD. Let us take a look at what the facts show. I have a chart 
in my hand, which is titled ``Major Causes of Increased Federal Debt, 
Fiscal Years 1981 to 1991.''
  The bar right here is the bar showing the costs of the 1981 tax cuts. 
They did not bring in revenues----
  The PRESIDING OFFICER (Mr. Stevens). The Senator's additional 1 
minute's time has expired.
  Mr. HATCH. Could the Senator from New Jersey yield additional time, 
because I have some other speakers coming.
  Mr. TORRICELLI. I yield 2 minutes.
  Mr. BYRD. The tax cuts were responsible for $2.1 trillion in losses, 
the tax cut for which I voted. And other causes of increased Federal 
debt are likewise shown: Entitlements, defense, interest, and so on--
failed S&L's.
  But the Senator was wrong in saying that the tax cut increased the 
revenues. The tax cuts were responsible for losses to the Treasury of 
$2.1 trillion over the fiscal years 1981 to 1991.
  I thank the Senator for having yielded. I hope that he will allow a 
vote up or down on the Torricelli amendment.
  Mr. HATCH. Let me just say this, I will allow a vote up or down on 
the Torricelli amendment. It is the only exception I am going to make. 
I hope my colleagues on my side will----
  Mr. BYRD. Mr. President, I thank the Senator.
  Mr. HATCH. I will do it at your request. But let me just say this, 
the Senator is talking about overall spending. I am talking about 
revenues that came from the tax cut. We actually had revenues increase 
40 percent during that period of time.
  Be that as it may, whether I am wrong and you are right, the fact of 
the matter is that the Congress, during all of those Reagan years, was 
controlled by the more liberal persuasion, and all money bills 
originated in the House, which was controlled by the Democratic Party. 
Now, allegedly we did have Republican control in the Senate, but if you 
look at the total number of liberals versus moderate conservatives, the 
Senate was still liberal during those years, and we were the ones 
primarily responsible for these 28 years of unbalanced budgets. To lay 
it at the feet of Reagan, Bush, or Clinton is not right.
  I yield the floor. I reserve the remainder of my time.
  Mr. TORRICELLI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. TORRICELLI. Thank you, Mr. President. While it is my hope to 
return the debate to the amendment at hand--it is my intention to yield 
to my colleague, the senior Senator from New Jersey--nevertheless, 
since our debate is in the Record, it should at least be accurate in 
this respect: I notice the Senator from Utah has the last 28 years of 
budgets of the U.S. Government. That means his books start in the 
fiscal year 1969.
  Debate between the Senator from West Virginia and the Senator from 
Utah seemed to be on the relative merits between the Reagan and the 
Johnson administrations and their responsibilities for the Federal 
deficit. It is extraordinary that the Senator from Utah stopped there 
before 1969, the last year of the Great Society, the last budget 
written by Lyndon Johnson and the last year the U.S. Government had a 
surplus.
  It is, I think, instructive, Mr. President, that as we assign 
responsibility, which is no doubt, at least as an aside, a useful 
exercise on this day, as someone who served in the House of 
Representatives during some of those years, I want the Record to 
clearly reflect one element of that responsibility. In 8 years of the 
Reagan administration, in all the appropriations bills passed, Mr. 
Reagan vetoed one. He vetoed one appropriations bill in 8 years, while 
the Federal deficit soared from less than $1 trillion to $4 trillion. 
And if you look at his veto message, it is because, in his judgment, 
spending was inadequate in that year.
  We will leave it for historians to gauge whether it was the Great 
Society that produced this deficit problem, in spite of the fact that 
he left office with a surplus, or it was the Reagan administration, 
which talked about fiscal austerity but left the Nation with a $4 
trillion accumulated deficit and never exercised a veto of any 
appropriation.
  But perhaps the comments of my colleagues should be punctuated simply 
with this: The genuine level of debt that should be of concern to every 
American is the debt as a proportion of our national economy. Like in 
our households and our businesses, it is not

[[Page S1622]]

whether you have a debt--the mortgage on your home, borrowing for 
expansion--it is your ability to pay it. Two Presidents in the last 40 
years have administered the U.S. Government with a deficit under 2 
percent of gross national product. One was named Johnson, and one is 
named Clinton. The others have exceeded that marker, which is now 
recognized by our friends in Asia and the European Community as the 
marker to which you do not want to pass.
  So while I hope we can return to the issue of the balanced budget 
amendment and look prospectively and leave to others, the historians, 
the question of relative responsibility, I did want, along with my 
colleague from West Virginia, to ensure the Record was accurate.
  At this time, I yield to the senior Senator from the State of New 
Jersey for 20 minutes.
  Mr. LAUTENBERG. Mr. President, that is very generous of my colleague. 
I will not take 20.
  Mr. President, I rise in support of the amendment offered by my 
distinguished colleague, the junior Senator from our great State of New 
Jersey, and I salute him for his initiative.
  Mr. President, I want to make it clear that I strongly oppose the 
balanced budget amendment. But if we are going to pass it, the least we 
should do is include the Torricelli amendment. Without it, the 
underlying balanced budget amendment would forever preclude our Nation 
from adopting what I believe is the essential nature of budgeting and 
investing in America--capital budgeting.
  As many of my colleagues know, I have long advocated dividing the 
Federal budget into separate capital and operating budgets.
  This is not budget or fiscal heresy. Quite the contrary. Most States 
do it. Almost every business does it. It's sound government. It's sound 
business. It's common sense.
  The balanced budget requirement that many States have affects only 
their operating budgets with capital budgets and pension funds 
excluded. Capital budgeting is a fundamental accounting principle 
employed by every major corporation in America. Fortune 500 companies 
use their borrowing power and creditworthiness to brag about their 
financial stability.
  I must admit that I am somewhat perplexed by my colleagues who 
support a balanced budget amendment. On the one hand, they say that we 
should operate the Government like a business.
  But on the other hand, they reject outright one of the most 
fundamental principles of operating a business--separate capital and 
operating budgets. Mr. President, you can't have it both ways.
  I come to the Senate from the business world and that experience 
gives me an invaluable and unique perspective. The company I founded 
with two friends, Automatic Data Processing, is the largest computing 
services firm in the world, and it employs 29,000 people in a number of 
countries.
  But it wasn't always that way. We grew that company from scratch, and 
we didn't do it with the type of budgeting required of the Federal 
Government today. We borrowed money. We took out loans. We didn't make 
across-the-board cuts or ask someone else to take the responsibility 
for making cuts.
  When I was CEO, I would look over my various departments, and say, I 
need more in marketing or more in product development or more in 
production.
  Mr. President, we budgeted those investments the way any business 
does. We didn't have a unified budget like the Federal Government. We 
had separate capital and operating budgets. We balanced our books in 
terms of day-to-day operations, and cut waste wherever we found it. But 
we weren't afraid to take out a loan for the long term. And those 
investments paid off. That's how most successful businesses do it.
  This is nothing radical, and it's certainly not confined to the 
business world. Families take out loans to finance homes and cars. 
Students rely on student loans to help finance their college education. 
States with balanced budget requirements float bonds and take on debt 
for capital expenditures. There's no reason why the Federal Government 
shouldn't do so as well.
  So if Congress wants to run the Government like a business, it will 
pass the Torricelli amendment.
  To get on the right track--the investment track--we must distinguish 
between short-term consumption and long-term investment spending.
  So far we have failed to recognize, let alone embrace, this 
elementary business practice. And as Government continues to 
underinvest in the long term, all Americans pay a big price.
  Public investment is crucial because these are investments that the 
private sector will not make on their own. Only Government will. The 
economic benefits of a first-rate education system, or a well-
functioning transportation system, are spread throughout the economy 
making life better for all of us. These are capital investments.

  At a recent Budget Committee hearing on education, I emphasized my 
belief that greater public investment in education is of critical 
importance to our Nation's economic future.
  While parents fear for their children's future, and business worries 
about the quality of the work force, the ratio of workers to retirees 
is predicted to shrink to less than 2 to 1. Improving the output of our 
education system is not only desirable; it has become an imperative if 
our future work force will be able to support the growing number of 
retirees.
  The same is true with transportation. When we invest in roads, 
bridges, and transit, we lessen congestion and improve the efficiency 
of the economy for many years.
  I believe that the solution to many of our long-term investment 
problems is to create a separate capital budget. I see no other way to 
do it.
  So if my colleagues are serious about running this Government like a 
business--if they are serious about investing in America--they will 
vote for this amendment. If they don't, we will never have the chance 
to even consider capital budgeting and that would shortchange our great 
Nation.
  Mr. President, I commend my new colleague from New Jersey for his 
work here thus far. I salute him for this initiative. I think it is a 
very wisely developed thesis that this Government ought to operate just 
like other entities across our country, like the largest of the 
businesses, like virtually all businesses. When we talk about a capital 
budget, it is done for a sensible business purpose--the Government 
recognizes it--the depreciation of the asset over its life, and it 
entitles companies to take the value of the asset each year, charge 
that off to its operating statement so that you get an accurate picture 
of what it is that is being done within the company. And so it ought to 
be here.
  What we are talking about, almost forgotten in the recent debate, is 
the balanced budget amendment. I think it is fairly clear around here 
that this Senator stands in opposition to that balanced budget 
amendment. I have done whatever I could to assure that we are not going 
to permit the balanced budget amendment to become part of the 
Constitution. I think it would be poor judgment. I think it would be a 
poor tactic to have the Constitution amended to provide for a balanced 
budget when, in fact, if we look at the record--and that is one of the 
things, frankly, that astounds me at times--the record of the last 4 
years has been quite spectacular when we examine the results of the 
Clinton leadership.
  The reduction in annual budget deficit has been enormous, some 60 
percent, down to $107 billion last year. The CBO, our auditing arm, 
said in May that they thought we would be some $50 billion higher. And 
then in February they had to change their estimate to something 
considerably lower in a period of 8 months, with no understanding of 
the fact there was a dynamic change taking place. The same thing was 
true in an earlier year when the misestimate was by such an enormous 
amount that had we had a balanced budget in place, we would have made 
all kinds of adjustments, and we probably could have, without meaning 
to, sent this country into recession.
  Mr. President, the principal discussion here is how do we tell the 
truth to the American public about what is going on here? If we had a 
capital budget, I think it would be quite clear. Right now, we talk 
about obscure things. We talk about adjustments in

[[Page S1623]]

the CPI. We talk about taking Social Security and other trust funds off 
budget.
  The fact of the matter is that we would be hamstringing ourselves 
with a balanced budget amendment that prevented us from responding to 
our national needs at any given time. Whether on the brink of 
recession, whether on the brink of war, whether on the brink of other 
national catastrophes, we would be limiting our capacity to operate. 
And I do not understand why we insist on doing that when, in fact, the 
record is good.
  The President has presented a budget that will be in balance in the 
year 2002. As a matter of fact, it is proposed there would be a surplus 
of some $17 billion at that time.
  But to my colleague from New Jersey, my junior colleague from New 
Jersey--I am not quite used to the ranks--but I want to say that this 
is a very thoughtful amendment that you have developed. You have not 
said where, when, precisely how--do not lock us out of having a capital 
budget as part of our accounting process in the future.
  I come from the corporate world. I ran a fairly large company--today, 
with 29,000 employees. I never would have dreamed of agreeing to a 
board of directors directive that said: OK, you can run this company, 
but understand what the conditions are under which you can run this 
company, that at the end of each year you are not allowed to be 
borrowing, not allowed to be doing anything else unless you prevent 
this company from having any kind of a deficit using an operating 
accounting process all the way through; when, if we erected a building, 
if we bought computer equipment, no matter what it was, you could not 
write it off over the life of the assets. Some of these assets are 40-, 
50-year assets. Some of the assets we acquire in the Federal Government 
have lifetimes going way beyond that.
  If they said to me, those are the conditions, I would say this job 
cannot be done. You cannot restrict yourself in advance to certain 
conditions at the end of a year over which you have no control. If we 
had to cut back on expenses, I never took a wholesale approach to it 
and said, OK, cut marketing, cut product development, cut production, 
cut facilities. You could not do it that way. Each of these things 
requires thought.
  Here we are, 100 U.S. Senators, sent by people who elect us to 
represent them, unable, we are saying, unable to do it by ourselves. We 
need the constriction of a balanced budget amendment so we will all be 
good boys and girls here, so that we will remove the intuition, the 
judgment that we bring here from any decision we make because we want 
to be free of that kind of restraint. I, frankly, think that it shows 
very poorly in the public domain.
  I think we ought to do it the old-fashioned way. I think what we 
ought to do, as proposed by my colleague from New Jersey, is amend it 
if we can to be a better product, to amend that balanced budget 
amendment in case it does pass. And I hope it does not. In case it does 
pass, we ought to have conditions in there that permit us to operate in 
as free a condition as we can possibly do it.
  So, Mr. President, I see it as a fairly simple thing. The first thing 
we should do, look at the record, see where we are. I started to say 
before, I am astonished by the unwillingness of our colleagues on the 
other side of the aisle to recognize what has been accomplished since 
President Clinton took over, whether it is the reduction in the 
deficit, the growth in jobs, the icons of American industry, companies 
with whom you could tie your future, never worry about another thing as 
long as they do work--gone, shrunken, dissolved, in many cases. The 
President found a way to replace many of those jobs by encouraging 
small business investment. We have over 11 million new jobs in this 
period of time. We have the lowest portion of deficit to GDP of any 
country. We are the envy of all the developed nations in the world.

  I looked at the expectation for the future, as we look at the budget 
proposal. Mr. President, in the next 5 years our economy is expected to 
grow by $2 trillion--$2 trillion of GDP in the next 5 years, at the 
same time, expecting, based on the numbers developed thus far, that we 
will have a surplus in our operations for the year without a capital 
budget, which, again, we should have, without adjustments, in the CPI.
  I think that it is imperative that we vote on the Torricelli 
amendment, that we give it as much support as we can.
  Mr. President, I hope, perhaps contrary to the view of some very good 
friends here, that in the final analysis, that despite the fact that I 
want this amendment to pass, I hope we do not attempt to balance the 
budget with a constitutional amendment.
  I yield the floor, and I once again commend my colleague.
  Mr. SARBANES addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. TORRICELLI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. TORRICELLI. Mr. President, I yield to the Senator from Maryland 5 
minutes.
  Mr. SARBANES. Three minutes.
  Mr. TORRICELLI. Three minutes.
  Mr. SARBANES. I will be very quick.
  First of all, I commend the able Senator from New Jersey for the very 
thoughtful and careful analysis he made in his statement upon offering 
his amendment.
  One of the difficulties with a balanced budget constitutional 
amendment generally, of course, is that it is purely symbolic. The real 
way to balance the budget is to do it when Congress considers and 
passes the budget, not by amending the constitution.
  But the Senator from New Jersey has pointed out three, I think, clear 
difficulties with this particular version of a balanced budget 
amendment to the Constitution, Senate Joint Resolution 1. One is that 
our current Federal process does not provide for a capital budget. 
Every State and locality has a capital budget. Businesses have capital 
budgets. Private individuals have capital budgets. People do not go out 
and pay for a house, or an automobile, or finance a college education 
with cash the same year that they make these purchases. They make 
prudent investments in the future, and they borrow and amortize them 
over a period of time. State governments do exactly the same thing. It 
is a prudent and sensible way to do business.
  I will never forget a budget committee hearing at which we had two 
Governors testifying in favor of amending the Constitution to require a 
balanced budget. They said, well, our States require a balanced budget, 
and, as a consequence of our States requiring it, the Governors went on 
to say, our States get a better credit rating, so that when we borrow 
in the market we get a better interest rate.

  Of course, the obvious question becomes, if states have a 
constitutional requirement to balance the budget, why do they need to 
borrow money? What does a credit rating matter to these states? So I 
asked them that question. Of course, their response was, well, you do 
not understand. We have a capital budget that is separate and apart 
from the operating budget. We have a capital budget that we fund by 
borrowing--by borrowing. So I said, well, we do not have a capital 
budget at the Federal level. I noted that we in the Federal Government 
do not make a distinction between capital and operating expenses, 
though it is a wise distinction because then you can fund your long-
term investments through borrowing, get the full benefit of the 
investment, and pay back the debt over the useful life of the capital 
asset.
  The Governors' response was that the Federal Government ought to have 
a capital budget. I note to my colleagues that if you are really 
serious about trying to write a balanced budget requirement into the 
Constitution of the United States, the first thing you ought to do, as 
a minimum, is separate out operating and capital budgets--just the way 
State and local governments do.
  So this analogy to State and local government falls of its own weight 
as soon as you recognize the fact that unlike the Federal Government, 
State and local governments have capital budgets which they fund by 
borrowing. We do not have a capital budget at the Federal level, but if 
we have a constitutional balanced budget amendment, we should.
  Second, I think the emphasis which the Senator from New Jersey has 
made

[[Page S1624]]

on the necessity of being able to respond in a crisis situation 
involving either the national security of the country or an economic 
downturn is extremely important.
  As regards economic conditions, we have managed to ameliorate the 
business cycle, not to eliminate it, but to ameliorate it. We are able 
to do that in part because we are now able to conduct countercyclical 
fiscal policy when we have an economic downturn. The balanced budget 
amendment to the Constitution, without a provision such as is contained 
in the amendment that has been sent to the desk by the Senator from New 
Jersey, runs the very great risk of turning economic downturns into 
recessions and recessions into depressions, because it will not allow 
us to respond to dire economic circumstances when we are confronted 
with them.
  The same thing is true about the national security provisions of the 
balanced budget amendment as it has been drawn by its sponsors. These 
provisions are much too restrictive, much too confined, and they run 
the substantial risk that we will not be able to respond in a national 
emergency.

  Now, the response made to this argument by the supporters of Senate 
Joint Resolution 1 is that if we confront a national emergency we will 
get the supermajority vote in order to waive the balancing provisions 
of Senate Joint Resolution 1 and there will be no problem. Well, our 
own history does not sustain that contention.
  In 1940, the House of Representatives instituted a 1-year draft. That 
came up for renewal in the autumn of 1941, literally weeks before Pearl 
Harbor. They took a vote in the House of Representatives on extending 
the draft for another year. Speaker Rayburn went into the well of the 
House in order to plead with his colleagues to pass this extension. It 
passed on a vote of 203 to 202. But that vote, which is a majority, 
would not have met the supermajority requirements contained in the 
balanced budget amendment that has been brought forth from the 
committee by Senator Hatch. It would have fallen short because it was 
not a majority of the whole membership of the body, which required 218 
votes, and which under this amendment is necessary to avoid the 
balancing requirements in Senate Joint Resolution 1. There we have a 
classic example of a crisis situation, right out of our own history. 
This is not a hypothetical. Looking at our own history, we can see that 
we would not have been able to respond and meet the requirements of the 
time, when we were facing this crisis situation, under the provisions 
of the balanced budget amendment as currently drafted.
  I want to strongly commend the Senator from New Jersey for the very 
careful analysis that has brought forth these proposals pending before 
us. Clearly, at a minimum, if this constitutional amendment is to move 
forward, it requires the adoption of the Senator's amendment. I yield 
the floor.
  Mr. ENZI. Mr. President, before I yield some time to the Senator from 
North Carolina, how much time remains?
  The PRESIDING OFFICER. There are almost 22 minutes for the majority 
and almost 14 minutes for the minority.
  Mr. ENZI. I yield to the Senator from Idaho for a moment.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. Mr. President, I thank the Senator from Wyoming for 
yielding. I stand in opposition to the Torricelli amendment. I think it 
is critically important we maintain a unified budget to assure fiscal 
solvency and responsibility in this country.
  I ask unanimous consent that a fact sheet be printed in the Record.
  There being no objection, the fact-sheet was ordered to be printed in 
the Record, as follows:

Congressional Leaders United for a Balanced Budget--A Capital Spending 
           Exemption Not a Capital Idea for the Constitution

     A special exemption for ``capital'' or ``investment'' 
         spending does not belong in the balanced budget amendment 
         to the Constitution
       A constitution deals with the most fundamental 
     responsibilities of the government and the broadest, timeless 
     principles of governance. It should not set budget priorities 
     or contain narrow policy decisions such as defining a capital 
     budget.
       Whatever the merits are of making such spending a higher or 
     lower priority than it has been, this question is best 
     addressed in the annual budget process.
     The debt is the threat to capital investment
       Escalating interest payments on the huge federal debt are 
     crowding out all other priorities. According to the National 
     Entitlement Commission's 1995 report: ``By 2012, unless 
     appropriate policy changes are made in the interim, projected 
     outlays for entitlements and interest on the national debt 
     will consume all tax revenues collected by the federal 
     government.'' That means no money left for capital 
     investment--or defense, education, the environment, law 
     enforcement, science, or other domestic discretionary 
     programs.
     If states, businesses, and families can borrow, why shouldn't 
         the federal government?
       Everyone else repays the principal they have borrowed. 
     Families take out a mortgage and then spend years paying it 
     down. The same is true of capital investments by businesses 
     and state and local governments. But the federal government 
     just keeps borrowing more. And more.
     Unlike state budgets or family finances, the federal budget 
         is large enough to accommodate virtually all capital 
         expenditures on a regular, ongoing basis
       The justification that most businesses and state and local 
     governments have for capital budgeting is that they 
     occasionally need to make on-time, extraordinary expenditures 
     that are amortized over a long period of time.
       The federal budget is so huge--now more than $1.6 
     trillion--that almost no conceivable, one-shot project would 
     make even a small dent in it.
     Even the federal Interstate Highway System, which has been 
         called the largest peacetime undertaking in all of human 
         history, was financed on a pay-as-you-go basis
       President Eisenhower initially proposed that the Interstate 
     System be financed through borrowing by selling special 
     bonds. However, Congress kept it on-budget and financed it 
     through a gas tax at the urging of then-Senator Albert Gore, 
     Sr.
     There are protections against the abuse of capital budgets in 
         state budgeting that do not constrain federal borrowing
       State and local governments have a check on their use of 
     capital budgets through bond ratings. If a state government 
     were to abuse its capital budget, then its bond rating would 
     drop and it would become difficult or impossible to continue 
     borrowing to finance additional expenditures.
       In addition, many states require that bond issues be 
     approved by the voters.
     While state capital spending is often placed off-budget, so 
         are state trust fund surpluses
       According to a Price-Waterhouse study, in recent years, 
     state budgets would have been roughly in balance if both 
     capital expenditures and trust funds (such as retirement 
     funds) were included on-budget.
     The process of defining ``capital spending'' could be abused
       Even a category of ``capital'' or ``investment'' spending 
     that appeared to be tightly defined at first could become a 
     tempting loophole to future Congresses and Presidents. For 
     example, New York City, prior to its financial crisis in the 
     1970s, amortized spending for school textbooks by declaring 
     their ``useful life'' to be 30 years.
     Virtually any form of ``capital spending'' exemption would 
         perpetuate the crisis of deficit spending
       Even an exemption from the Balanced Budget Amendment for a 
     narrow category in the President's budget, major public 
     physical capital investment, would have allowed a deficit 
     larger than the one that actually occurred in FY 1996 ($116 
     billion vs. $107 billion). It would result in an FY 1997 
     deficit that would be, at most, 9 percent lower than current 
     CBO projections ($113 billion vs. $124 billion).
       Allowing deficit spending for total federal investment 
     outlays would have allowed deficits larger than those that 
     actually occurred in 28 of the last 35 years.
       These estimates, of course, assume no manipulation of 
     definitions or accounting that would allow still larger 
     deficits.
     The concept of a ``capital budget'' is too poorly defined to 
         put in the Constitution--Estimates of ``capital 
         spending'' could vary widely
       There is wide disagreement among policymakers about what 
     should be included in a federal capital budget. There is no 
     commonly accepted federal budget concept of this term. 
     Therefore, any capital spending exemption included in the 
     Constitution would be left open to a wide range of 
     interpretations.
       In fact, the President's budget includes several different 
     categories of ``capital'' and ``investment'' spending. For 
     fiscal years 1996 and 1997, these include:

                        [In billions of dollars]
------------------------------------------------------------------------
                                                       FY 1996   FY 1997
------------------------------------------------------------------------
Major physical capital investment...................    $115.9    $113.0
Net miscellaneous physical investment...............       3.1       3.1
Research and development............................      68.4      70.3
Education and training..............................      43.6      42.5
                                                     -------------------
      Total federal investment outlays..............     230.9     228.9
------------------------------------------------------------------------


[[Page S1625]]

     The balanced budget amendment already allows for the 
         establishment of a capital budget--within the context of 
         regularly balanced budgets
       The amendment does not prevent the creation of separate 
     operating and capital accounts. But extraordinary 
     expenditures which are large enough and unusual enough to 
     require significant new borrowing should be subject to a 
     higher threshold of approval, such as a three-fifth majority 
     vote.
       This is consistent with the recommendations of General 
     Accounting Office, which stated in its 1992 report, Prompt 
     Action Necessary to Avert Long-Term Damage to the Economy: 
     ``* * * the creation of explicit categories for government 
     capital and investment expenditures should not be viewed as a 
     license to run deficits to finance those categories * * *. 
     The choice between spending for investment and spending for 
     consumption should be seen as setting priorities within an 
     overall fiscal constraint, not as a reason for relaxing that 
     constraint and permitting a larger deficit.''

  Ms. LANDRIEU. Mr. President, I believe that we should adopt a capital 
budget and I strongly urge its incorporation into Senate Joint 
Resolution 1. This amendment offered by my distinguished colleague from 
New Jersey, Mr. Torricelli, establishes a capital budget and should 
receive the support of every Member of this Chamber who truly wants to 
see a balanced budget become a reality. A capital budget will help us 
achieve that end and will bring more financial accountability to the 
Federal level.
  Many supporters of a balanced budget amendment to the Constitution 
believe that the Federal Government should manage its funds like many 
hard-working families across our Nation. Families must balance their 
checkbooks or they face serious financial consequences. Why, amendment 
supporters ask, should the Federal Government be any different?
  The reason is clear, Mr. President. Families do not balance their 
budgets, they balance their checkbooks. They sit at the kitchen table 
once or twice a month to make sure that there is enough money to pay 
the bills. However, not all of their expenses are paid in full at the 
time they are purchased. Most Americans can only afford such items if 
they spread their payment obligations over a longer period of time, 
sometimes with the help of loans. People do not receive the benefits of 
such expenditures at one time, either--they drive their cars and live 
in their homes for years, perhaps decades.
  Most States operate in the same manner. While almost every State has 
some type of constitutional or statutory requirement to balance their 
budgets, such limitations normally apply to a state's operating 
budget--like a family's checkbook. State expenses for constructing such 
items as roads and buildings or purchasing land do not fall within the 
balanced budget requirements.
  The Federal Government, however, is being asked to balance its budget 
without a distinction between capital outlays and operating expenses. 
In fact, were the balanced budget amendment to pass without providing 
for the establishment of a capital budget, this country would place 
upon itself a restriction not followed by families, businesses or 
States. Furthermore, such a limitation would make the United States 
unique among the major economic powers in the world--not a single 
nation among the G-7 has such budget constraints.
  Federal outlays for capital investments are significantly different 
from outlays for operating expenses because they represent asset 
exchanges. When the United States spends money to purchase a building 
or land, the United States receives an appreciable asset in exchange 
for that expense. That asset will produce future streams of revenue to 
the United States either through the increase in the value of the 
property or simply as a place to conduct the Government's business. 
Such expenditures do not contribute to the deficit wholly because the 
resulting purchase or investment leaves the Government with 
calculations on both sides of the ledger.
  Additionally, a lack of such a distinction is an inadequate way for 
the Government to manage the Nation's funds. To use the example 
provided by Bruce Bartlett, a conservative economist who served in both 
the Reagan and Bush administrations, a ``$10 million building that will 
last 30 years must be fully accounted for in a single year's budget, 
the same as a $10 million outlay for airplane fuel or some other 
operating expense.'' In Mr. Bartlett's view, in my own view, and in the 
opinion of hundreds of economists nationwide, ``the lack of a [Federal] 
capital budget creates biases in the budget that lead to uneconomical 
decisions.''
  Mr. ENZI. Mr. President, I yield 12 minutes to the Senator from North 
Carolina.
  The PRESIDING OFFICER. The Senator is recognized for 12 minutes.
  Mr. FAIRCLOTH. Mr. President, I rise today in strong support of the 
balanced budget amendment to the Constitution. Quite simply, no other 
legislative issue the Senate will consider is more important than this 
one. It was true in the last Congress. It is true in this Congress. It 
will be true in the next one if we do not pass it.
  Now, there are more reasons than I have ever heard not to balance the 
budget. We have heard them day after day. We just heard them, and they 
keep coming. But the future of the United States and the well-being of 
our children, grandchildren, and children yet unborn rests entirely on 
whether we pass this amendment or not.
  Mr. President, if we fail to enact this amendment I am concerned we 
will never balance a budget on any sort of a continuing basis. I have 
heard a lot of talk on the Senate floor about the need to balance a 
budget. Many have said that we can balance a budget but not necessarily 
on a continuing basis. Talk is cheap. The real question is, what will 
guarantee that we balance a budget year in, year out, and guarantee 
fiscal responsibility to the Federal Government, something we have not 
had? What guarantees will we make to our children and grandchildren and 
children yet unborn that we will not continue to mortgage their future 
with feel-good politics of the day?
  There is a lot of rhetoric in this body about the need to help 
children-- more resources for education, greater health care for 
children. In fact, if there is anything we really want to pass, we put 
children in front of it. But if we really want to help the children of 
this country that are here now and yet to be born we can stop piling a 
financial burden on them that they cannot pay. It is as simple as that.
  We could give them a society, if not debt free, at least be coming 
out of debt, reducing it. We are already seeing the effects of the 30-
year spending spree. Most two-income families have difficulty 
sustaining the same lifestyle as their parents and grandparents that 
lived on one income. Why is it that one paycheck does not go as far 
today? The answer is simple: Taxes and debt. The enormous tax burden 
that has been created because of bigger government, taxes that are 
everywhere, and the IRS considers taxing everything--endless taxes, 
Federal taxes, State, local, sales, gasoline, property, personal, 
estate taxes, telephone, airline, the list goes on into infinity. We 
are taxing ourselves to death to pay for more government that we do not 
need because so much of what is already collected is being spent on 
interest for money we have already borrowed and already spent.
  Already we send $1.5 trillion to the Federal Government each year. 
That is not enough. Nor will any amount ever be enough. It is an all-
consuming Government and no amount will ever satisfy the appetite.
  Mr. President, the debt is not going away. Today, every man, woman, 
and child in this country owes $20,000. A family of four owes $80,000, 
the cost of the average home. The money will have to be paid back. It 
will never disappear. What we have done is extremely wrong--we have 
ignored the reality of our time and have put the burden of the future 
on our children to pay for our folly.
  Mr. President, I have often thought what is it about the last 40 
years that has brought us into this position? Certainly, too many 
people believe Government is the answer to every problem. We have spent 
approximately $5 trillion on Federal welfare programs since 1960, 
roughly the size of the debt. But we have more poverty today than we 
did when we started--a total failure.
  Another problem has been that an active Federal Government has 
regulated American business too much, stifling the productivity and 
unduly burdening small business.

[[Page S1626]]

  This is another unique problem that is recent: The Congress has no 
boundaries. The age of instant information and Congress' driven attempt 
to please everyone, we are never forced to choose between programs. We 
can be for anything and everything and against nothing and it rolls on. 
We are never forced to make a choice because we do not have the 
requirement of a balanced budget amendment. This is a fundamental flaw 
of the Federal Government. We have no limit on our ability to incur 
debt. Thomas Jefferson noted it 200 years ago. It was true then. It is 
true today.
  Mr. President, finally let me talk about the national debt that is 
consuming us. It took this country 200 years to acquire a $1 trillion 
debt, and we did that in 1983. Now, in just 14 additional years we have 
acquired an additional $4 trillion in debt. We clearly are out of 
control with our spending, and if we do not constrain ourselves we will 
destroy the fiscal integrity of this country. By the time we balance a 
budget, even by most conservative figures, we will have a $6.5 trillion 
debt. Every person who has ever had a debt knows that interest is a 
piranha and it will eat you alive. The same thing is happening to the 
Federal Government. Interest is eating us alive.
  We spend $366 billion on gross interest each year--that is, to the 
public and the Government trust funds. To put it in more real terms, 
when we file our tax returns on April 15, we should know that 52 
percent of all income taxes that are sent to Washington will be used 
for the one purpose of paying the interest on the Government's gross 
debt.
  By the year 2000, our national debt will be equal to 52 percent of 
the gross domestic product. In 1980, the figure was half that. Besides 
interest, the only thing we spend more on is Social Security. I think 
it is so ironic that we have heard over and over that Social Security 
is being used as a block to a constitutional amendment to balance the 
budget. If we want to ensure the future of Social Security and Medicare 
for the people of this country in the future, the best thing we can do 
is balance the budget. It is the only way we can secure the future of 
Social Security--with a balanced budget. It should never be considered 
separately.
  Mr. President, if we could just control Federal spending, we might 
not need this amendment. But we won't control Federal spending. For 35 
years we have been unable to muster the fortitude to stop or control 
Federal spending. The truth is, had we frozen Federal spending in 1994, 
we would have balanced the budget in 1997.
  Mr. President, we all know what the problem is. The question is, what 
are we going to do about it? The answer is that we must pass the 
balanced budget amendment if we are going to leave our children a clean 
slate, not a lifetime of debt, excessive taxes, and a contingent 
liability of $7 trillion.
  I yield the remainder of my time.
  The PRESIDING OFFICER (Mr. Gregg). Who seeks recognition?
  Mr. ENZI. Mr. President, several questions have been raised through 
the course of this debate. I have a couple of others, as well. I 
appreciate the efforts that have gone into this amendment, but I am 
very concerned about a couple of the areas we have been talking about, 
the largest of which is the capital budget area in this.
  When we talk about capital budget--I have read what the President had 
in his budget message about capital budgeting. With the definitions 
that I see that appear in this bill, what we are talking about is 
putting anything that we can call a capital investment off budget; and 
by putting it off budget, it removes itself from having to be a part of 
the formula. I would like more clarification on that term.
  There is also wording on that which says that net borrowing and the 
disposition of major public physical capital assets would be excluded 
from the receipts. I am concerned about how we handle some of the 
disposition of major physical capital assets. One of those we are 
talking about is selling the spectrum. That is one-time revenue. I am 
very concerned that we may take one-time revenue and use it to buy 
recurring types of things in the budget. That is why I, too, have been 
asking for capital budgeting and, more important, cash flow budgeting, 
so that we know that when we are getting a one-time revenue, we are 
matching that up with a one-time expenditure.
  If we have net borrowing and the disposition of major public physical 
capital assets excluded, what's the mechanism for handling that? What's 
the budget phenomenon for handling that? Everybody has to have capital 
budgets, as has been mentioned here today. Unfortunately, the Federal 
Government is the only entity that doesn't have to have oversight--
unless we pass the balanced budget constitutional amendment. Then we, 
too, will have to have oversight.
  I mentioned this morning that, as a mayor, we had capital budgeting, 
cash flow budgets, and performance budgets. It is very important not 
only to building what needed to be built, but to paying off the debt 
for what we built. I mentioned that the city I was mayor of is now one 
of the few debt-free cities in the United States. That comes from good 
planning.
  In the debate we have had on the balanced budget constitutional 
amendment, we are not talking about paying off the debt that we have 
already incurred. We are not talking about planning to pay off what we 
have already incurred on behalf of the future generations--those kids 
and grandkids that we keep talking about, as well as the parents and 
grandparents that are relying on Social Security. We have to balance 
the budget to take care of our kids, grandkids, parents, and 
grandparents, as well as ourselves.
  There is a lot at stake in this. Unless we build in some oversight 
for ourselves, something that forces us to pay back loans, then all we 
are doing is giving ourselves a license to spend. We are coming up with 
another risky gimmick that will let us slip things into a category and 
not have to account for them. That is not the purpose of capital 
budgeting. I have even heard some reference, in capital budgeting, to 
putting things into a capital budget that would be social investments. 
I don't know how you pay off the social investments any different way 
than you pay for any other expenditure under the budget. That, in my 
opinion, is not a capital budgeting thing. That is an expense budgeting 
item. I think there has to be a distinction made there.
  I am really worried that section 7 of this bill will give us a 
license to move things from the normal budgeting process to a capital 
budgeting process and kind of forget about how we handle the payback on 
that. Somebody mentioned earlier that if you buy a home, you are doing 
capital budgeting. You are, but you have oversight. The banker sets up 
specific parameters for you to be able to get the loan. If you don't 
meet those parameters, he is not going to be a happy fellow. What we 
are trying to do here is set up some parameters for ourselves. Capital 
budgeting, cash flow budgeting, and performance budgeting need to be 
done. Those are part of an enabling act of a clean balanced budget 
amendment.
  One of the problems that we have in this body, I think, is that we 
think of things more as a Christmas list, and I know that at Christmas 
time I delight in going through the catalogs that come in and seeing 
what things I like. There has never been a limit to the number of 
things that a person could pick--particularly when they are children. 
We talk about balancing budgets, and every one of us wants to balance 
the budget. Individually, we say that. It is collectively that we seem 
to run into the problem. The balanced budget constitutional amendment 
will take care of that. It will force us to uphold the Constitution of 
the United States. It will force us to put parameters on ourselves.
  Everybody wants to buy everything, and they want to buy it right now. 
Good budgeting will set up some parameters that will help us with that. 
I am glad we are thinking about good budgeting, good accounting 
techniques, because we need to start setting up our Social Security 
trust fund under some better accounting techniques, so that we are 
recognizing some of the actuarial differences that are there. It is 
good to be thinking about that. It is a must that we do that. Right 
now, we are building up some incredible actuarial debts that we are not 
recognizing at all. We owe about $9.3 trillion to the Social Security 
fund. If we put the same kind of parameters on ourselves that we put on 
business--we tell business they have to set up a trust fund,

[[Page S1627]]

and it has to have the amount of money necessary to pay for the people 
who are retiring at the time they retire. But we don't put that 
parameter on ourselves. The balanced budget constitutional amendment 
will put those kinds of things on the line to be done. We will have to 
follow the promises we made in the campaign.
  When I campaigned, we talked a lot about balancing the budget. When 
the President talked, he talked a lot about balancing the budget. In 
his State of the Union speech, he said, ``We need to balance the 
budget, but we don't need a balanced budget amendment. All we need is 
action.'' Then we got a budget that was not in balance. We did not get 
the action to go with the words. I made a promise during my campaign 
that I would vote for the balanced budget constitutional amendment. I 
knew what that was at the time, and I am here to do that.
  The people of America want us to protect the future for our kids and 
our grandkids. Our kids want us to end the child abuse of taxation 
without representation, cosigning on notes for them without their 
permission. That is what we are doing by balancing the budget. I want 
to say that we either balance the budget--and I think we need the 
discipline based on these two stacks of 28 years of unbalanced budgets. 
We need the discipline of a balanced budget constitutional amendment. 
If we do not balance that budget we will be the longest running game 
show, and we will wind up with the lowest possible ratings.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. ENZI. I retain the remainder of my time.
  Mr. TORRICELLI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. TORRICELLI. Mr. President, may I have a counting of the time, 
respectfully, please?
  The PRESIDING OFFICER. The Senator has 13 minutes and 40 seconds. The 
Senator from Wyoming has 3 minutes and 4 seconds.
  Mr. TORRICELLI. Mr. President, I have listened patiently to the 
analysis of my amendment by Members of the minority and by Members of 
the majority for some time. I am also aware of the uniqueness of the 
moment. We are debating an amendment to the Constitution of the United 
States. The vote on that amendment is extraordinarily close. It is 
argued by my friend, the Senator from Utah, that the balanced budget 
amendment is as good as we can produce. Mr. President, the Constitution 
of the United States is as close to perfection as has ever been 
achieved in managing the affairs of men and women. This is one case 
when good is not good enough. There are those who say that providing 
for a capital budget and the ability to respond to international 
military emergencies or national economic crises are simply amending 
gimmicks of a balanced budget amendment. Mr. President, meeting our 
historic responsibility to defend the United States in military 
emergencies, or dealing with economic recessions, or depressions is not 
a gimmick. It is a profound responsibility.
  I have voted for a balanced budget amendment on other occasions, and 
I want to do so again. I approach it with extraordinary regret because 
I believe that our generation should be no less in managing the 
financial affairs of this country than all of those who preceded us. 
They did so because they cared about the future. They cared about the 
country, and they refused to abuse their ability and their power to 
borrow beyond their means. This generation has not so cared for the 
country.
  So it is with real regret on previous occasions that I have voted for 
a balanced budget amendment. But I rise today to amend this joint 
resolution to amend the Constitution of the United States because I 
seek for us to meet the same high standard as those who founded this 
Republic and those who have cared for it through the years; not an 
amendment that is good enough but one that approaches perfection.
  I have offered three principal changes. The first is for a capital 
budget. But I am told that it would be abused if we were to provide for 
a separate capital budget to ensure that we were building an 
infrastructure and maintaining a modern and productive means of 
commerce in the country, that it would be abused by regular spending 
and consumption. Yet, the Senator from Utah knows that, whether his 
amendment passes in its original form or with my amendment to it, 
enacting legislation will be required. His amendment is not operational 
on its face and neither is mine. This Congress would have to return 
after enactment by the States for enacting legislation to make it 
operational. And under the capital budgeting provisions we would 
clearly have to establish a separate and independent Government agency 
that would review the actions of the President and the Congress to 
ensure that anything in a capital budget is actually designed to 
enhance the productive capabilities of the country and its economy. We 
could not allow items of consumption to be part of a capital budget. 
That is the means by which every Governor operates in getting 
independent authority to ensure that it is a genuine bondable 
expenditure as I am sure my friend, the Senator from Wyoming, needed to 
operate as a mayor of his own community.
  But at the end of the day, Mr. President, I leave my colleagues with 
this reality because this isn't good enough. In our understandable and 
justifiable efforts to balance the budget of the United States, the 
principal victim is long-term investment in this country--2 million 
miles of substandard roads, a quarter of a million bridges that are not 
safe or operational, deteriorating ports, 100 billion dollars' worth of 
repairs needed in our schools. We are last among the industrialized 
nations of the world in planning for our future. Without a capital 
budget, the internal pressures of this institution are going to force 
protecting consumption and victimizing planning and investment. It is 
not enough to rise on in this floor and say that a capital budget might 
be abused but not provide an answer to this reality.
  Second, we are told that a war powers exemption, the ability to 
deficit spend if the United States is facing an imminent military 
threat, could not be accommodated despite the historic analogies that I 
have raised in World War II, the Persian Gulf, World War I, all of 
which required deficit spending in advance of a declaration of war.
  I am told by my friend, the Senator from Utah, that the cold war is 
evidence that my analogies are not sufficient because we could have 
used this as an excuse throughout the cold war for deficit spending 
unless we have agreement. In 1962, with a nation only hours away, 
during the worst of the cold war, during the Cuban military crisis, 
John Kennedy mobilized the American Armed Forces. The United States was 
in deficit. It was also facing an imminent threat of war. In the Berlin 
crisis, in succeeding crises of the cold war, the President of the 
United States and our military leadership needed the ability to respond 
immediately. The vision of the amendment of the Senator from Utah is 
that upon a declaration of war and a three-fifths vote we will then 
respond and defend the national interest. It is good. It is a good 
amendment. It does not approach the historic standards of the U.S. 
Constitution.
  Finally, we are told the country has the means and the ability to 
respond to the vagaries of the business cycle without the need or the 
ability to borrow.
  History teaches us a different result. This Nation has learned a 
painful lesson from a historic perspective when capitalism fails or 
goes through intense difficulties. The debate in Europe and in the 
United States in the 1930's was often between those who believed that 
the future belonged to fascism and those who believed it belonged to 
communism, democratic communism or fascism. Democratic capitalism, to 
many, was an anachronism that had failed in the depths of the 
Depression. Capitalism was saved by the easing of the business cycle. 
We learned how in times of high unemployment and deep recession to 
prevent the national economy from victimizing our own people. The 
triumph of capitalism, as certainly as it was earned on the 
battlefields and through ideological struggle, was also earned by our 
learning how to deal with the difficulties of recession, the pain of 
depression, by using the fiscal and budgetary powers of the U.S. 
Government to care for the Nation in times of real need.

[[Page S1628]]

  The Senator from Utah says his amendment is good enough; we can have 
a vote to ease its restrictions. Good is not good enough. The level of 
perfection required to amend the Constitution of the United States 
requires more. These are not theoretical problems, not in another 
century, not even in a different generation. Each of them has been 
experienced in our own time--dealing with the problems of recession, 
the regular and serious problems of international conflict, and the 
deterioration of national investment.
  I stand here prepared to vote to change the Constitution of the 
United States. It is something that I believe requires an extraordinary 
burden of proof. Anyone attempting to change this document must bear a 
higher burden than in any other Chamber and undertaking any other 
legislative goal because the Constitution of the United States has no 
peer. I am prepared to recognize that this burden would be met given 
the mounting problems of debt in this Nation and the need to restore 
some permanent fiscal responsibility, but it cannot be met unless these 
questions are answered.
  Constitutions are not written for any one time. Laws are written for 
our time. Constitutions are written for all time. I need the Senator 
from Utah to explain to me how a generation unborn, in circumstances 
unforeseen, will deal with renewed military hostilities, deep 
recessions, with the problem of international economic competitiveness 
in the face of declining national investment. I offer my vote for 
change, will accept that this burden of proof has been met and will 
otherwise change a document which I believe in only the rarest of 
instances we ever meet the burden of change----
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. TORRICELLI. But that requires enactment of this amendment and 
answers to these questions.
  I thank the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming has 3 minutes.
  Mr. ENZI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mrs. BOXER. Mr. President, if I might ask unanimous consent just to 
set aside the pending amendment and offer an amendment and lay that 
aside. I have been told by the floor staff that would expedite matters.
  The PRESIDING OFFICER. The Senator from Wyoming was recognized.
  Mr. ENZI. I assume that that will not come out of my time, if that 
were to happen.
  Mrs. BOXER. That is correct.
  Mr. ENZI. We are running out of time. I am sure that will not happen 
in my time.
  The PRESIDING OFFICER. The Senator's time will not be charged for 
unanimous consent.
  Is there objection? Without objection, it is so ordered.
  Mrs. BOXER. I thank my colleague so very much.


                            Amendment No. 16

 (Purpose: To provide Federal assistance to supplement State and local 
efforts to alleviate the damage, loss, hardship and suffering caused by 
   disasters or emergencies by exempting spending that is designated 
    emergency requirements by both the President and the Congress.)

  Mrs. BOXER. I ask unanimous consent to set aside the pending 
amendment, and I send an amendment to the desk, and I ask unanimous 
consent that it be set aside for debate at a later time.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from California [Mrs. Boxer] proposes an 
     amendment numbered 16:
       At the end of Section 5, add the following: ``The 
     provisions of this article may be waived for any fiscal year 
     in which there is a declaration made by the President (and a 
     designation by the Congress) that a major disaster or 
     emergency exists, adopted by a majority vote in each House of 
     those present and voting.''

  Mr. ENZI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. I thank the Senator from New Jersey for his comments, his 
answers, and his passion. We share that passion for this country. I am 
pleased to be in the entering class with him.
  I appreciate the approach that he has taken was not set on a course 
to scare anybody but to get something done, and I really appreciate 
that. I am appreciative also of the talk that we are having here on 
this floor about good accounting systems. That is of the utmost 
necessity for our country and for us.
  The reason it is important for us is to know exactly where we are. I 
pledge I will work with the Senator from New Jersey to get those kinds 
of accounting procedures so that we can do the kinds of things we need 
to do for this United States and do it within the constraints of a 
balanced budget so we are not continuing to pass on things to our kids 
and our grandkids.
  I will remind everybody that we cannot go into a capital budget 
situation without the clarification that we are not just creating 
another loophole. When I was in the legislature, one of the biggest 
frustrations I had was that we would propose the bill, and I knew there 
were people listening to that proposition who were already designing 
loopholes in the bill, ways to get around what we were doing and not 
sharing with us the ways to get around what we were trying to do. That 
is what we have to overcome, with the immense responsibility that we 
have in amending the Constitution.
  I think the original amendment has that capability. I think it is 
important that we vote for the original amendment, not the substitute, 
but that under any circumstance we do have a balanced budget 
constitutional amendment that will preserve this country for ourselves, 
our kids, and our grandkids, and make sure that we are taking care of 
our parents and our grandparents.
  Mr. President, I ask for the yeas and nays on the amendment.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second. The yeas and nays are ordered.
  Does the Senator from Wyoming yield back the remainder of his time? 
He has 27 seconds.
  Mr. ENZI. I yield back the remainder of my time.
  The PRESIDING OFFICER. All time has expired. The question is on 
agreeing to the amendment. The yeas and nays have been ordered. The 
clerk will call the roll.
  The legislative clerk called the roll.
  The result was announced--yeas 37, nays 63, as follows:

                      [Rollcall Vote No. 16 Leg.]

                                YEAS--37

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

                                NAYS--63

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bryan
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Enzi
     Faircloth
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Moseley-Braun
     Murkowski
     Nickles
     Reid
     Robb
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith, Bob
     Smith, Gordon
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner
     Wyden
  The amendment (No. 15) was rejected.
  Mr. HATCH. Mr. President, I move to reconsider the vote.
  Mr. KENNEDY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
North Dakota is recognized.
  Mr. DORGAN. Mr. President, under the previous order, I was to be 
recognized to offer an amendment.


                            Amendment No. 17

              (Purpose: To propose a substitute amendment)

  Mr. DORGAN. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  Mr. DORGAN. It is in the nature of a substitute.
  The bill clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] for himself, Mr. 
     Daschle, Mr. Ford, Mr.

[[Page S1629]]

     Reid, Mr. Hollings, Mrs. Feinstein, Mr. Wyden, Ms. Landrieu, 
     and Mr. Johnson, proposes an amendment numbered 17.

  Mr. DORGAN. Mr. President, I ask unanimous consent that the amendment 
be considered as read.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       Strike all after the resolving clause and insert the 
     following:
       That the following article is proposed as an amendment to 
     the Constitution of the United States, which shall be valid 
     to all intents and purposes as part of the Constitution when 
     ratified by the legislatures of three-fourths of the several 
     States within seven years after the date of its submission to 
     the States for ratification:

                              ``Article--

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

  Mr. DORGAN. Mr. President, I offer this amendment on behalf of 
myself, Mr. Daschle, Mr. Ford, Mr. Reid, Mr. Hollings, Mrs. Feinstein, 
Mr. Wyden, Ms. Landrieu, and Mr. Johnson.
  Mr. President, I would like, as I offer this amendment, to describe 
it and begin at the beginning. I know that this issue has been debated 
again and again, and yet it seems to me it is probably appropriate now 
to describe what this is and what it is not.
  Mr. President, I offer a substitute constitutional amendment. This 
substitute is essentially the same as the amendment offered by Senator 
Hatch, amended, if it would have been amended, by the amendment offered 
by Senator Reid. Senator Reid offered a perfecting amendment. It 
failed. So I am offering a substitute constitutional amendment to 
balance the budget.
  Mr. President, the stack of books that has resided on that desk for 
some long time now is apparently designed to illustrate a number of 
budgets that have not been in balance. There is no one in this Chamber, 
I believe, who stands on the floor of the Senate trying to make a case 
for unbalanced budgets. I have known no one who stands up and says, 
``I've come from my office to the floor of the Senate to put in a few 
good words about the deficit,'' or, ``I come to the floor to be a 
champion of Federal debt.'' I know of no one who says that, no one who 
believes that, and no one who comes and argues that on the floor of the 
Senate.
  There is not a difference, it seems to me, about the will or the 
interest of Members of the Senate to see a balanced budget. This 
Government ought to spend within its means. It ought not keep charging 
consumption today to our children and grandchildren. We ought not 
continue to add to the Federal debt. We ought to have some fiscal 
policy that is in balance.
  But this is not about balancing the budget. This debate is about 
altering the Constitution of the United States. We can alter the 
Constitution of the United States at 3 o'clock--that is 1 minute from 
now--and at 1 minute after 3, there will not have been one cent 
difference in the Federal debt or Federal budget deficits.
  So it is about altering the Constitution. How do we do that? Should 
we do that? We have some people who come to this floor wanting to alter 
this Constitution at the drop of a hat. Some people think the 
Constitution is a rough draft and they have better ideas.
  Last year we had three proposals to alter the Constitution offered in 
1 month here in the U.S. Senate--three. We have had about 2,000 or 
3,000 proposals to alter the Constitution since it was written. I do 
not peer around the Senate--and I do not mean this to sound 
disrespectful of the wonderful people I serve with--but I do not really 
see Madison and Mason and Franklin and George Washington. Thomas 
Jefferson was not at the constitutional convention. He was in Europe at 
the time, but he contributed greatly to the Bill of Rights and 
especially the first amendment. It is hard to recognize the folks here 
and compare them to those who wrote the Constitution. But we sure have 
a lot of folks who want to alter the Constitution.
  Last evening I was at the National Archives, and I got to take a look 
at Thomas Jefferson's original draft of the Declaration of 
Independence, written, I think, when he was 33 years old.
  I got a chance to take a look at the Senate markup of the Bill of 
Rights. It is really quite remarkable when you see the documents that 
represent the framework of our democracy, the system of Government, 
created in a Constitution of the United States by some wonderful 
people.
  Included in the Constitution is a procedure by which we can change 
it.
  Mr. HATCH. Will the Senator yield?
  Mr. DORGAN. I am happy to yield to the Senator.


                      Unanimous Consent Agreements

  Mr. HATCH. I appreciate the courtesy of the Senator.
  I ask unanimous consent that when the Senate resumes Senate Joint 
Resolution 1 on Thursday at 11 a.m., Senator Graham of Florida be 
recognized to offer his amendment regarding public debt; I further ask 
unanimous consent that there be 90 minutes for debate equally divided 
in the usual form, and following the expiration or yielding back of 
time, the Senate proceed to a vote on or in relation to the Graham 
amendment.
  The PRESIDING OFFICER (Ms. Collins). Without objection, it is so 
ordered.
  Mr. HATCH. I ask unanimous consent that immediately following the 
vote on the Dorgan amendment today, the Senate resume consideration of 
Senator Boxer's amendment No. 16 relating to a disaster exemption, and 
the amendment be limited to 30 minutes of debate equally divided in the 
usual form, with a vote occurring on or in relation to the Boxer 
amendment at the expiration or yielding back of any debate time.
  I further ask unanimous consent that on Thursday, immediately 
following the disposition of the Graham amendment, the Senate resume 
consideration of Senator Feingold's amendment No. 13 under a 30-minute 
debate limitation equally divided in the usual form, and following that 
debate, the Senate resume debate on Senator Feingold's amendment No. 14 
under a 40-minute time limitation equally divided, after which both 
Feingold amendments will be temporarily set aside, and the Senate will 
then begin 2 hours of debate equally divided on the Kennedy amendment 
No. 10.
  I finally ask unanimous consent that immediately following the 
expiration or yielding back of that debate time, the Senate proceed to 
a vote on or in relation to the Kennedy amendment No. 10, to be 
followed by 1 minute equally divided for debate, then a vote on or in 
relation to the Feingold amendment No. 13, to be followed by 1 minute 
equally divided for debate, and a vote on or in relation to the 
Feingold amendment No. 14.
  I further ask unanimous consent that following those votes, the 
Senate begin 2 hours of debate equally divided on the Bumpers amendment 
No. 12, with a vote occurring on or in relation to the Bumpers 
amendment at the expiration or yielding back of time.
  Mr. LEAHY. We do not object.

[[Page S1630]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LEAHY. Madam President, I yield to the Senator from North Dakota.


                            Amendment No. 17

  Mr. DORGAN. Madam President, I was in the process before the 
unanimous-consent requests of just trying to describe exactly where we 
are and what we are doing here. I was talking about the Constitution of 
the United States. I pointed out that there is a process in the 
Constitution of the United States that describes how we can change the 
Constitution. And we have, in fact, changed it from time to time.
  I was not around, but I recall that we changed it and put something 
called the 18th amendment in the Constitution. That had to do with 
outlawing drinking; it was called prohibition. And then if you go to 
the 21st amendment to the Constitution, it says the 18th amendment to 
the Constitution is hereby repealed. That is a short, little amendment. 
That is the 21st amendment to the Constitution. I guess because at that 
point the American people felt we made a mistake on the 18th amendment, 
so the Framers of the Constitution not only provided a method by which 
we could change the Constitution but also described how we might 
correct a mistake. It is far better, however, not to make a mistake 
when you are changing the Constitution of the United States. There is a 
right way to do it and a wrong way to do it. This is not a debate so 
much about whether we should balance the budget. We should, and some of 
us have cast tough votes to reduce the budget deficit by 60 percent. 
Some have not cast those tough votes. Some have just bellowed on the 
floor of the Senate, thumbing their suspenders and going out and 
puffing on their cigars and ranting to anybody who listens, how much 
they oppose the deficit. But would they vote to reduce the deficit? No, 
it was ``count them out.'' They just wanted to talk about it.

  Some of us have cast hard and tough votes and paid a price to reduce 
the budget deficit. The only way you can reduce the budget deficit is 
individual votes on taxing and spending issues. You can change the 
Constitution until you are purple, and it will not alter the budget 
deficit or the Federal debt.
  Shall we, however, change the Constitution? I say that yes, there are 
circumstances under which I will support that, and I have supported 
amending the Constitution dealing with fiscal policy, because I think 
there is merit--especially after the last decade and a half--there is 
merit in suggesting that the fiscal discipline that would come from 
requiring a balanced budget in the Constitution would be worthy and 
worthwhile. So then the question is, if a suggestion to alter the 
Constitution to require a balanced budget has merit, how do you alter 
the Constitution to do that? That is the question today.
  I have said before, and the Senator from Utah will not find it 
surprising, that I think this amendment is terribly flawed with respect 
to the Social Security surpluses that it will use to claim it has 
balanced the budget.
  Madam President, when Abe Lincoln and Stephen Douglas were involved 
in their famous debates, I was reading at one point that Abe Lincoln 
was enormously frustrated with Douglas because he could not get Douglas 
to understand his point. He just could not get it through. Finally, he 
said to Douglas, ``Listen, tell me, how many legs does a horse have?'' 
Mr. Douglas said, ``Why, four of course.'' Lincoln said, ``Yes, and now 
if you call a horse's tail a leg, then how many legs will the horse 
have?'' And Douglas said, ``Why, five.'' And Lincoln said, ``You see, 
that is where you are wrong. Simply calling a tail a leg does not make 
it a leg at all.''
  That is what we have here. We have a tail called a leg. They say if 
we pass this constitutional amendment to balance the budget, the budget 
will be balanced. But a ninth grader with elementary math will have 
known the budget is not balanced because, guess what? This will 
enshrine in the Constitution a practice of using $1 trillion and more 
of Social Security trust funds, and in the year in which they claim the 
budget is balanced, that neon debt clock that ratchets up the Federal 
debt so we can all see where it is going, that debt clock will keep 
going, because the very year in which the budget is supposedly balanced 
the Federal debt will increase by $130 billion. The year in which the 
Federal deficit that is supposed to have been in balance, eliminate the 
deficit, 2002, the year in which those who support this will claim they 
have eliminated the Federal deficit, they will have to increase the 
Federal debt limit by $130 billion.
  I have asked why, I guess for 2 weeks now, and no one will be able to 
answer: Why is the Federal debt continuing to increase at a time when 
they claim they balance the budget? Because they will have locked in 
the Constitution a process that allows them to use tens and tens of 
billions of dollars that are needed elsewhere, that are taken from 
workers out of paychecks to put in a trust fund to be saved for the 
future. They are able to use that money over here to claim they 
balanced the budget even as the Federal debt continues to increase. 
That is the weakness and the fatal flaw of this proposal. That is why 
this is not a balanced budget proposal. That is why this is 
masquerading as a leg, when, in fact, it is not a leg at all.
  Now, I want to go back to the beginning, and I know that for some 
this is probably a debate that provides wonderful sleep medicine. It is 
so filled with complexity and dates and positions and laws. But I want 
to go back to the beginning, in 1983. In 1983, there were no Social 
Security surpluses. The Social Security system was taking in almost as 
much as it was spending out. But we knew that, in the long term, there 
was going to be a real problem because we knew of the baby boom--the 
largest baby crop in the history of our country. These folks would 
eventually find their way through the work system and go onto the 
retirement rolls, and we knew that at some time we would have a 
problem.

  In 1983, the Greenspan commission convened and said, all right, 
Republicans and Democrats and outsiders and insiders working, here is a 
menu or a strategy by which we are going to respond to this problem in 
our country, where in the future we have the largest baby group retire, 
supported by the smallest working group, and we have a demographic time 
bomb and a problem. Here is the recipe by which we address it. That 
recipe included a lot of things. It included increasing the retirement 
age, beginning after the turn of the century, to age 67. That extends 
out some long while before it finally happens, but it goes to 67, the 
new retirement age. That was done in 1983. A series of benefits were 
cut from the Social Security system in 1983. In addition to that, 
Social Security payroll taxes were increased for workers and for 
employers in 1983 and beyond. And the point and purpose was that the 
Social Security system would accrue a surplus, year by year, to be used 
later when it is needed.
  I would like to just show my colleagues some of these surpluses that 
are going to exist. This chart shows what is happening to the Social 
Security trust fund. The Social Security trust fund isn't contributing 
a penny to the Federal deficit. In fact, the taxes taken out of the 
workers' paychecks and the taxes coming in from business, which are 
being paid for the purpose of keeping the Social Security system 
solvent, are in this year $78 billion more than is necessary to be 
spent in Social Security--just this year, $78 billion more. But you 
will see from the chart, every year from 1996 on up to the year 2010--
and the surplus goes on out to 2019--surpluses every single year. This 
program doesn't contribute a penny to the Federal budget deficit, not a 
penny. It is taking in far more than it is using, at this point, every 
single year. This year, $78 billion more than is spent--just in this 
year alone--is taken in and put into the Social Security trust fund.
  Now, I don't think those facts are in dispute. At least I have not 
heard anybody come to contest them. These are numbers from the Social 
Security Administration. I think the Congressional Budget Office 
reaffirms these numbers. Nobody is contesting that. So if these 
surpluses exist, why do they exist? Why are workers paying more than is 
needed to run the Social Security system today? Because the plan was to 
save it for the future when they and their children will need it.
  What happens under this constitutional amendment to balance the 
budget? Under the majority's proposal, this money is not part of a 
savings account, in a trust fund. This money becomes

[[Page S1631]]

part of all the other money in the system. This money is no different 
than a dollar of income tax. It is no different than any other dollar 
of revenue the Federal Government has and is used as an offset against 
all other spending.
  In 1983, I was on the House Ways and Means Committee and we largely 
accepted the Greenspan commission's report. That report included a 
whole series of steps to respond to the Social Security problem that we 
faced. In 1983, when the Ways and Means Committee considered this 
legislation, I offered an amendment and I had thought the amendment was 
defeated. I said that on the floor, and I was wrong. I looked it up. 
The amendment actually passed in the Ways and Means Committee of the 
House of Representatives. It was dropped out in conference with the 
Senate. That was before I served in the Senate, and I spoke less well 
of the Senate at that point. But the amendment I offered in the Ways 
and Means Committee was approved, and it got through the House. I want 
to describe the amendment, just to say that I am not on this floor as a 
Johnny-come-lately on this issue.

  Fourteen years ago, in 1983, when we debated the Social Security 
reform package in the Ways and Means Committee, which was the committee 
of jurisdiction--that is where it all originated, and I was a member of 
the committee--I offered an amendment on March 1. My amendment was 
exactly what I am talking about here, in 1997, in the U.S. Senate, to 
take the Social Security system and its trust funds and the surpluses 
it is going to have out of the unified budget so that its money cannot 
be used for every other purpose in Government that some would want to 
use it for--take it out, separate it, make Social Security whole and 
make decisions about Social Security, both on spending and taxing, on 
the basis of whether you are going to make the Social Security System 
solvent. Don't make Social Security decisions on the basis of whether 
you want to fund the star wars program, or whether you want to fund 
some other program in some other agency. Make decisions about Social 
Security and its future based upon the merits of Social Security 
solvency. On March 1, 1983, I offered an amendment. The amendment would 
have removed the Social Security system from the unified budget 
effective October 1, 1988. I gave it a 5-year phase-in, so it could be 
removed completely in 1988. I made a statement. I will not make it 
today, but it is essentially what I have been saying ever since. There 
is a tendency for everyone to want to use those funds for purposes 
other than solvency of the Social Security system.
  Now, when I offered that amendment, in 1983, I was supported, among 
others, by Congressman Archer, who now happens to be chairman of the 
House Ways and Means Committee. Congressman Archer made the point in 
1983 that ``if the Social Security funds are permitted to be used in 
the unified budget, it will distort all of the spending and permit 
massive deficit spending out of the general fund.'' And so Congressman 
Archer supported me--a Republican, now head of the Ways and Means 
Committee, supported me. Congressman Gradison supported me, also a 
Republican on the Ways and Means Committee.
  The point is, in 1983, we started down the road of doing the right 
thing with my amendment, and then it got thwarted. Here we are, 14 
years later, building substantial surpluses in the system that we need 
when the baby boomers retire. This constitutional amendment--yes, every 
President, including this President, and every Congress, including this 
Congress, has used the money the same way. It is wrong. The budget 
deficit, last year, was not $107 billion, as advertised by the CBO; it 
was $107 billion plus the $70 billion they used of Social Security 
funds. The same was true back when it was a Federal deficit of nearly 
$300 billion. It was more than that, because then they were using the 
Social Security funds as well.
  My point is, the proposal in the Senate will enshrine in the 
Constitution a practice that is fundamentally wrong. It says, take all 
these Social Security trust funds--one of the few sober things done in 
the 1980's, to save for the future--and just throw them in with other 
revenue and balance it out and measure it. If you come to zero, that is 
fine. But it is not fine, because nobody can answer the question I have 
asked: When you say you have come to zero, why does the Federal debt 
continue to increase? Why, in the year in which you claim you balance 
the budget, does the debt increase $130 billion? Because you are not 
truly saving in the Social Security trust funds. That is the point of 
the substitute amendment I offer.
  If we had done the right thing 14 years ago, in 1983, we would not 
even be discussing this. Well, we might. My fear back then was the 
tendency for those who want to get their mitts on this and use it for 
another purpose.
  But I can't think of one Member of Congress who would come to the 
floor and say: I have a plan. Here is my plan. I think it is going to 
be really politically popular. My plan is to tell workers and their 
employers that we want to have them contribute to Social Security, and 
then take some taxes from them and call it the Social Security tax, 
promise them to put it in a trust fund, promise that we are going to 
dedicate it for one purpose, and that it will be available when it is 
needed in the future. And then the second part of my plan is more 
intriguing. The second part of the plan is that, once we get it, then 
ignore all the promises and throw it in a pot with all the rest of the 
money and use it to add up the revenue so you can say you have balanced 
the budget.
  I would like to know of one man or woman serving in the House or 
Senate who is willing to stand up and wave their handkerchief and say, 
``Count me in, sign me up to that, let me do that right now.'' Is there 
one? Is there one Senator? I do not think so. Yet, if you vote for this 
constitutional amendment, that is exactly the proposition you support, 
exactly. There isn't any way to argue it another way.
  You can argue that pigs fly and shrimp whistle and that this piece of 
paper is purple and that grass is black. You can argue it in whatever 
way you like. But when the day is done, what you have described, under 
the constitutional amendment offered by the majority, is that you 
believe it is OK to take dedicated trust funds to the tune of over $1 
trillion and mix them up with other revenues so that you can claim you 
have balanced the budget.
  What I offer is a substitute constitutional amendment that includes 
the Reid provision which, if passed, would prevent that very thing from 
happening. It would say that, if we are going to balance the budget, we 
should do it honestly. Let's do it honestly. It would say that at the 
end of the day when you have balanced the budget, the debt clock will 
not still be increasing, the debt clock will be a stopwatch, and there 
will be no increase in the Federal debt. Maybe we will start seeing a 
paydown or a drawdown on the debt. Wouldn't that be a nice thing to see 
happen? The proposal that is on the floor of the Senate by the majority 
would enshrine in the Constitution this practice which I have 
described. My substitute constitutional amendment would prevent that 
very practice. That is a pretty stark difference. Those who want a 
constitutional amendment, those who want a balanced budget, if they 
will support my substitute--I think we will have 70 to 75 votes this 
afternoon--we will have a constitutional amendment to balance the 
budget, and we will have done it the right way and we will not have 
misused the Social Security trust funds.
  We have a law. I know Senator Hollings has been over to the floor. 
Long after 1983 when I did what I did in the House Ways and Means 
Committee successfully, but then it was dropped in conference, Senator 
Hollings in 1990 wrote a law that requires the Social Security System 
to be treated as off budget and not part of the unified budget. That is 
now the law, section 13301 of the Budget Enforcement Act. Senator 
Hollings has talked about it a number of times. That existing law will 
effectively be nullified by this constitutional amendment. Senator 
Hollings makes that point. There is no one in this Chamber who has said 
Senator Hollings is wrong because they can't say he is wrong. This 
constitutional amendment will nullify Senator Hollings' law. And it 
will enshrine in the Constitution a practice that I think is 
fundamentally wrong.
  I said last year that we have three different arguments, and it is 
hard for me to reconcile them. I try to keep them straight.

[[Page S1632]]

  There is one group who stands up and says, ``What are you talking 
about, the Social Security trust fund? Don't you know there is no trust 
fund? There is no Social Security trust fund.''
  Then we have the second position. These are the three stages of 
denial. The second position is, ``Yes, there is a trust fund, but we 
insist we are not misusing it.''
  The third position is, ``There is a trust fund. We are misusing it, 
and we pledge to stop doing so in the year 2008.'' That was the third 
thing I was told on the Senate floor in the 1995 debate.
  So those are the three stages of denial as best I am able to 
interpret them.
  I don't know what people think when they hear this debate about this 
issue because it is so intriguing to see all of this maneuvering and 
movement. This is not rocket science. It is important. It is critically 
important. But it is not rocket science to understand that you have a 
certain amount of money, a certain amount of expenditure, and a certain 
money dedicated for a certain thing. So you have money left. Either it 
matches or it doesn't. Let's say that we take the amount of money 
dedicated for something else and bring it over here and claim it is all 
matched up. It doesn't take sophisticated mathematics to understand the 
bankruptcy of that. That is why you end up, when they say they have 
balanced the budget, with $130 billion in increased debt.

  The Congressional Research Service has reviewed this matter several 
times. I am amused actually by the folks who came rushing to the floor 
of the Senate with six dozen different interpretations of the 
Congressional Research Service missive on this issue.
  But the Congressional Research Service has concluded something 
interesting. What they have concluded is that, under the majority's 
proposed balanced budget amendment, if you save this money to be used 
for the future, you can't spend it in the future, according to the 
Congressional Research Service, unless when you decide to spend it you 
have a corresponding tax increase or a corresponding budget cut 
somewhere else. You are simply, with this amendment that they are 
offering, prevented from spending the savings that you have accrued.
  That will be interesting--when somebody shows up for their Christmas 
Club savings account or to cash in their bonds someplace and the bank 
says, ``Well, the only way you can take your savings out is if you 
cough up a like amount yourself,'' people would look at them like they 
have been drinking all afternoon.
  That is exactly what the Congressional Research Service says is 
required by enshrining this practice in the Constitution: save money 
for a specific purpose and then later call on that money to be used, 
what are you required to do? Raise taxes in order to use it. That is 
not much of a bargain, in my judgment. That is what the Congressional 
Research Service says. We had people knocking each other down at the 
door over here trying to get through the door waving several iterations 
of the Congressional Research Service memos, all of which said the same 
thing with different language.
  So they all had a chance to wrap it around on the floor, wave it, 
create a bunch of wind with it, and all of them said exactly the same 
thing. There isn't any way, with the proposal that we have before the 
Senate, where you can use the savings that we have promised people we 
would use for Social Security unless it is timely to do it. You either 
cut other spending or raise other taxes to do so.
  There are other points that I wanted to make. But I am going to at 
this point conclude my remarks--there are others who want to speak on 
this issue--by saying this:
  There have been a lot of polls cited about this issue on the floor of 
the Senate. Frankly, I think there are too many polls in our country, 
and there are too many pollsters in our country. I wish people would 
stop polling and stop worrying what the pollsters are telling us and do 
what is in their guts, but do what they think is right, do what the 
message somewhere between the brain and the pit of the stomach tells 
them is right to themselves and to their constituents of the country. I 
am a little tired of hearing about this poll or that poll, this cross 
tab and that cross tab. Yes, the polls will show that the American 
people want a balanced budget, that they support a constitutional 
amendment to balance the budget, and, yes, polls will show, if you ask 
them the question: ``Should you enshrine in the Constitution the issue 
of Social Security trust fund?'' those same people will say, ``No; 
absolutely not.'' Seventy to seventy-five percent will say that is 
fundamentally wrong.
  So you can find polls every way from Sunday to support every position 
on the floor of the Senate. The only thing that matters to the American 
people, in my judgment, is, are we going to make the decision to 
honestly balance this budget? If one of those decisions is to alter the 
U.S. Constitution to require more fiscal discipline, I will participate 
in doing so and I will vote for it. But I will not in any event vote 
for a proposition that alters the Constitution that will in my judgment 
require us to come back just as we did on the 21st amendment and repeal 
it because it is a dishonest budgeting practice--yes, practiced by both 
political parties. It is dishonest, in my judgment. It takes from those 
who are now paying taxes under the pretense of savings for the future 
when they are going to need it, and it says to them, ``We will give you 
an IOU instead'' that we are not going to be able to pay because we are 
going to use the money now. That engages in a practice of let us 
pretend that we have balanced the budget even as we increased the debt.

  When this is an honest proposal, and a proposal as I offered as a 
substitute that is an honest proposal that will not allow that budget 
practice to occur, then we will alter the Constitution. If my friends 
in this Chamber who are anxious to alter the Constitution will join us 
in doing it the right way, they will have this afternoon 70 to 75 votes 
for doing it and they will be able to celebrate an achievement that is 
significant. If not, they may not be able to alter the Constitution 
because there are some of us who refuse to support something that is as 
flawed as that which is being proposed on the floor of the Senate 
today.
  I yield the floor. I reserve the remainder of my time.
  Mr. ENZI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Madam President, I have appreciated the history lesson in 
preserving the Social Security system. I wish that the history lesson 
included a much better ending than where the Senator ended. I wish that 
the Senator's amendment included an ending for where we are going. The 
Senator's chart goes out to the year 2010. I think he could have 
carried it out to the year 2019 and had a pretty good-looking chart. It 
starts to curve off the other end if you get past 2010. So he is 
showing the best of the best, the best times for building up money that 
should be in a reserve for Social Security. He is leaving off the time 
that it starts to taper off. And the Senator is leaving off the real 
lie of a substitute amendment that says take Social Security off 
budget. The Senator is leaving out the part where we have to pay in for 
my generation to draw the money out. The Senator is talking about a 
short-term solution rather than a longer term solution. We have to have 
a long-term solution.

  I appreciate the efforts the Senator went to when he was in the 
House. We have to have a long-term solution for that. And we have to do 
it through enabling legislation so that it doesn't just cover from now 
till the best of times but covers from now till the best of times 
through the worst of times. We need to have an accounting system for 
Social Security that is honest with our seniors.
  One of the things I have been doing through this debate is to mention 
that we are not even talking about what the true cost is out there of 
making this system actuarially sound, of putting the same kind of 
requirement on this retirement fund that we have forced on every 
business retirement fund in this country, one that includes annual 
audits to make sure that we are not lying with those business pensions 
the way we are lying with Social Security.
  We tell the businesses of this country that they are going to take 
their pension funds and they are going to contribute to those pension 
funds to the extent that the money will be there at the time that the 
person retires so that

[[Page S1633]]

they will have an annuity that lasts through the rest of their 
lifetime. There is a variety of them. Some of them have COLA's with 
them, some of them do not have COLA's with them. But there is an honest 
attempt by the Senate and the U.S. Government to force them to have 
money on hand, true money on hand, true trust funds that will pay those 
people through the time they expect to be paid. Then we turn around and 
we say, well, that is not the requirement for us. The Senator is trying 
to go to that in the amendment, but he does not get all the way. He 
only gets through the good times and we do not talk about the future 
times.
  Mr. DORGAN. If the Senator will yield for a question, I would be 
happy to share the time with him on this.
  Mr. ENZI. As long as it does not come out of my time.
  Mr. DORGAN. I will be happy to ask the question and have the response 
come out of my time.
  This is a chart that shows what happens to Social Security through 
2035. The Senator is correct: at 2029, you run out of money; there is 
nothing left in the trust fund. And the purpose of this saving, 
incidentally, is so that you have an amount of money to cover the 
deficits, at least between 2019 and 2029. There are going to have to be 
deficits beyond 2019, no question. But with this constitutional 
amendment, if you do not have this money available, what you have done 
is you have shortened the life of the Social Security trust fund by 10 
years--10 years, and that is the problem. Current law provides that the 
trust fund will go broke in 2029 or thereabouts. But this 
constitutional amendment that is on the floor would in effect make the 
trust fund go broke 10 years earlier, unless the Government raises 
taxes or cuts spending to fund the deficits between 2019 and 2029. So 
the question of the responsibility here on the side of saving to meet 
the future, the constitutional amendment that the Senator supports does 
precisely the opposite, and that is the point I was trying to make.
  I appreciate the Senator yielding.
  Mr. ENZI. Madam President, the constitutional amendment that I 
support recognizes the red that is out there on the end as well as the 
green and recognizes a need to stop doing to Social Security what that 
huge green there shows at the present time. I am saying that we need to 
start recognizing Social Security honestly, not calling it off budget 
so we can force things into Social Security in future years by merely 
naming them ``Social Security'' and not having to account for them in 
the deficit--to recognize them honestly.
  Our seniors think that there is a trust fund out there, that there is 
money out there that will continue to fund them. I am always fascinated 
when I see the articles which suggest that we should privatize Social 
Security. If we tried to privatize it, we would recognize that it does 
not have the money there; that the money is not there to be able to do 
it because we have this system of taking the money that is paid in now 
and spending it at the moment that it is paid in, with a piddly 
surplus. And when you look at the future of Social Security, that 
little green line there is not a big surplus. It is $1.3 trillion, but 
that is not a big surplus. The actuarial liability on the Social 
Security system is $9.2 trillion.
  This is money that people expect to be there. We are giving the 
impression that it is there. This balanced budget constitutional 
amendment is not a constitutional amendment just for the next few 
years. It is a balanced budget constitutional amendment hopefully for 
the rest of the history of the United States, and it will require us to 
have good accounting.
  As an accountant, I have been fascinated with all of the debate that 
we have had in this process to talk about things that we should be 
doing as a nation. This is the place we have to start, not by scaring 
our seniors but by answering our seniors, not by scaring our seniors 
but by setting up a system where they understand the system and where 
it is and help us to force the kind of accounting, the kind of 
disclosure that will help to assure that that money will be there, not 
just for the ones on the system now but for you and me and the 
generations to come.
  I have explained before that the kids in this country, if you ask 
them if they are going to get Social Security, will agree that they are 
more likely to see an unidentified flying object, than to see $1 of 
their Social Security money.
  They already believe they are not going to get this money, and they 
are paying 7.45 percent of their paycheck, every time they get one, 
into Social Security. And that is being matched by their employer for 
another 7.45 percent. That is almost 15 percent. That would be one tidy 
pension fund if it were truly a pension fund.
  I keep asking, if we do not have good accounting for this, beyond the 
year 2010, not just for the present time, will not that next generation 
cause a revolution in this country if they are paying, and there are 
estimates that they will be paying 84 percent of their wages in taxes--
that includes their Social Security taxes, 84 percent of their taxes, 
and at a point that will only be going to pay interest on the national 
debt. It will not build another road that we have been talking about in 
capital budgeting. It will not add to the defense of this country that 
we have been talking about. It will not provide anything for education 
that we have been talking about. It will pay interest on the national 
debt.
  Now, if you and I were paying all of our taxes, and they are not 
nearly as high as what we are talking about those kids paying, if we 
were paying all of that and it was only paying interest on the national 
debt, what would we do? We would say we paid into that fund. How come 
we are not going to get it? Is anybody entitled to it? I am afraid 
there could be a revolutionary generation there. They may do it calmly 
and precisely by joining this body and the one down there and the 
Presidency and taking that away because they will be paying taxes that 
they have never see. That is what they already believe.
  If we move Social Security off budget, if we quit having to account 
for it as part of the deficit--we can add more stringent requirements 
to the balanced budget constitutional amendment that is before us, we 
can add more stringent requirements to that to recognize what has been 
said here, and it can be done through a normal statute, the enabling 
act, for instance. We can put the enabling legislation in it that will 
take care of recognizing the surplus spending we are having now and the 
huge deficits we are going to have in the future.
  I remember not too long ago sitting in on the President's State of 
the Union Message, and I was kind of surprised when he got to page 2, 
about halfway down the page, after he had said all the things about how 
we needed to be bipartisan and how we needed to balance the budget and 
we did not need a balanced budget constitutional amendment to do that; 
we just needed action, and then a couple of days later, making use of 
the extra time that he was given by this body and the one across the 
hall, he presented a budget. And was it balanced? No, it was not 
balanced. Did it do with Social Security what the Senator is talking 
about doing? No, it did not do it.
  Do we need other constraints to make sure that there is good 
accounting for Social Security? To make absolutely sure, as all of us 
want to do, that there is Social Security there? No, it did not 
recognize that surplus from Social Security in such a way as to 
preserve it as a surplus.
  I have said before that, individually, we all promise a balanced 
budget; collectively we just don't seem to be able to get there. We 
have to do that, for our kids and our grandkids.
  And we cannot ignore the seniors in 2019. On behalf of the seniors, 
we do need to recognize the debt, we do need to recognize what is 
happening now and into the future. And we are only going to do that by 
legislation forced on us by a balanced budget constitutional amendment 
and one that goes further than what is being done here. I join in 
protecting Social Security, as would all the other Senators, but not 
through one that only solves half the problem.
  I reserve the remainder of my time.
  Mr. DORGAN. Madam President, I appreciate the opportunity to serve 
with the distinguished Senator from Wyoming. I appreciated his 
statement. I obviously disagree strongly with his contention that doing 
what he proposes to do will in any way strengthen Social Security. It 
will do exactly the opposite. In fact, the surpluses that we are

[[Page S1634]]

desiring to save are not going to be there and that is precisely my 
point. Let us balance the budget, but let us also do what we need to do 
to make sure the surpluses are to be saved for the future.
  I ask my friend from Wyoming, it is probably unfair for me to ask him 
this, but if he is able to answer the question: Why, at a time when we 
have a balanced budget, presumably, by the constitutional amendment and 
by the mandate, in 2002, why the Federal debt will continue to 
increase? Is that not because the trust funds are used to show a 
balanced budget?
  Mr. ENZI. Madam President, the reason that debt has to increase is a 
requirement that we be honest with those seniors. That is being honest. 
That is the utilization of those funds, which are a trust fund, which 
are an intergovernmental transfer that has to be recognized as a part 
of the Federal debt under the accounting system that we use. It is not 
an adequate accounting system to show where the money has gone.
  Mr. DORGAN. If we are going to be honest with senior citizens and 
take the money out of the trust fund and claim you take the money over 
here but the Federal deficit keeps growing, isn't the purpose of 
limiting the Federal deficit to discontinue the building of additional 
debt? The whole purpose here, in my judgment, is to stop burdening the 
shoulders of our kids and grandkids with more debt. If we claim to 
balance the budget at the very time the debt keeps increasing, what 
have we added onto our children's shoulders? Shouldn't we, and if we 
should, won't you join us--shouldn't we decide we want to do two 
things: Balance the budget and stop the Federal debt from increasing? 
Are those not two goals we ought to aspire to? And if we are going to 
require discipline in the Constitution, shouldn't we aspire to acquire 
that discipline rather than say we balanced the budget even as the 
Federal debt keeps increasing?
  I am not asking the Senator to respond for everybody on his side of 
the aisle, but I continue to ask the question, and will this week, 
because I think the Senator from Nevada and I have proposed something 
that will respond to both issues. Let us balance the budget and let us 
do so in a way that does not have the Federal debt continue to 
increase, even after those who claim they have balanced the budget have 
finished the job, according to them.
  Mr. REID. Will my friend yield to the Senator from Nevada, 10 
minutes?
  Mr. DORGAN. I will be happy to yield to the Senator from Nevada 10 
minutes and appreciate the response of the Senator from Wyoming. We 
obviously disagree on this, but I hope, as we move through this, maybe 
we will all understand. I am going to vote for my substitute, as is the 
Senator from Nevada. I will support a constitutional amendment, the 
right one and the one that both discontinues deficits and discontinues 
the growth in Federal debt.

  I will be happy to yield 10 minutes to the Senator from Nevada.
  The PRESIDING OFFICER. The Senator from Nevada is recognized.
  Mr. REID. Madam President, I saw my friend this afternoon offer the 
amendment, my friend from North Dakota. I wanted to come to the floor 
for a couple of reasons. One is to express my personal appreciation for 
the determination and the expertise he has lent to this argument over 
these last several years. The Senator from North Dakota has a 
background in finance. He was a State tax commissioner. He served in 
the other body, the House of Representatives, on the Ways and Means 
Committee for many Congresses. So he brought that with him when he came 
here.
  I have read with interest the numerous op-ed pieces he has written 
for newspapers all over this country on this issue, on the matter now 
before this body. I do not think there is anyone--I can say with 
certainty--there is no Senate delegation that has the financial 
expertise that the delegation from North Dakota has. The senior Senator 
and the junior Senator from North Dakota are people whom I, and many 
people in this body, look to for guidance when it comes to matters 
dealing with finances. So I express my appreciation, again publicly, to 
my friend from North Dakota for what he has done to narrow the issue 
and to make sure that it is an understandable issue.
  Mr. DORGAN. I wonder if the Senator will yield for a moment? I deeply 
appreciate the compliments. There are probably too many compliments on 
the floor of the Senate. I suspect there are a lot of people out there 
who view us all as a bunch of windbags in blue suits. The fact is, 
people judge us not on what they think we say or do here on the Senate 
floor but whether the public policy we create improves their lives, 
whether at the end of the day we advance this country's interests, 
whether we have helped them find a way to send their kids to a better 
school, whether we have helped them find a better job, whether kids 
have an opportunity to breathe clean air and clean water.
  Compliments aside, the real task is for us to do the right thing for 
the future of this country, and that is part of this debate. When you 
put something in the Constitution, it ought to be right for the future 
of this country.
  Mr. REID. I say to my friend from North Dakota--a couple of things. 
First of all, the debate that has taken place, and this is what I 
wanted to add, after my compliment, the debate that has taken place has 
led to the ability of the American public to understand this issue. Now 
75 percent of the American public agrees with us. That is not the way 
it was, when all this information that was not right was put out in 
years past. We have been able to put this issue so the American public 
understands it.
  That is, the amendment we are offering, the amendment that has been 
offered by my friend from North Dakota, of which I am a sponsor, is 
what I refer to as the honest balanced budget amendment. I have been 
struck by the statements made by those proponents of the underlying 
amendment who come on this floor and say we cannot balance the budget 
unless we use Social Security moneys. That is my whole point. I do not 
want to do that. I want to balance the budget in the honest way and 
that is the right way.
  I ask a question to my friend from North Dakota. Why do we refer to 
this as the honest balanced budget amendment?
  Mr. DORGAN. It relates to the question I asked the Senator from 
Wyoming a few moments ago. With the alternative that is being proposed, 
the majority party's proposal, we will not achieve both a balanced 
budget and a freezing of the debt. What we will have is an increase in 
public debt, building up even as those in the Chamber claim they have 
balanced the budget.
  I come from a very small town, as I have said repeatedly: 300 people. 
On Main Street on Saturday night everybody would come to downtown. The 
barber would cut hair until midnight--a wonderful place. You could not 
take this proposition we are talking about here today to my hometown 
and take it to the barber shop or the bar and tell people about it and 
have them say, ``Yes, that sounds OK to me.'' There is not anybody who 
says this sounds OK. You cannot take money from people's paychecks and 
say to them this money we are taking is for Social Security and we 
promise to put it in a dedicated trust fund and we will save it for 
you, you cannot do that and say: By the way, we have changed our mind. 
The trust fund doesn't exist, or the trust fund exists and we are now 
misusing it, or it does exist and we promise to stop misusing it in 15 
years. That does not work in a small town where people think through 
these things a little more rationally than I think is exhibited by some 
of the debate in Congress.
  What we are proposing is to amend the Constitution of the United 
States the right way, sufficient so that at the end of the day we will 
require both the budget to be in balance and we will stop the growth of 
the increase in the Federal debt.
  Mr. REID. I would also hope that people would look closely at the 
vote yesterday on the amendment that I offered to Senate Joint 
Resolution 1. We got 44 votes with one Senator being ill who is here 
today. And we will get on this amendment, I assume, a bare minimum 45 
votes. I hope there will be some people like John McCain. You really do 
not have to talk about his courage. I think that has been established. 
It was established even before he was confined for 6 or 7 years to a 
prison camp in Vietnam. He is a courageous man. I think part of his 
courage

[[Page S1635]]

was, certainly, apparent yesterday when he decided to vote with us on 
the amendment that I offered.
  The senior Senator from Pennsylvania also voted with us.
  I hope that we would get some other courageous people on the other 
side of the aisle to vote with us. Why? Because the balanced budget 
debate would be over for all time, because we would have to balance a 
budget. And it would be hard. We would have to make significant cuts or 
we would have to phase in and balance the budget, maybe by the year 
2008, or maybe even 2010. But when that budget was balanced, I say to 
my friend from North Dakota, the debt clock would no longer continue to 
run.
  I am willing to do that. If we are going to stop playing games with 
the American public, then let's balance the budget the right way, the 
honest way.
  I had somebody come to me today and say, ``Well, if you want to take 
the Social Security trust fund, why don't you take the other trust 
funds?'' I told them the same thing I said on this floor yesterday. The 
Social Security trust fund is where the big bucks are. As Willie Sutton 
said when they asked him why he robbed banks, he said, ``That's where 
the money is.'' The other trust funds don't mean anything in the whole 
scheme of things. But when you have budget surpluses that go into the 
trillions of dollars, that is the real money, and that is why we have 
to have a real honest balanced budget amendment. I hope the substitute 
is one that is adopted.
  I read in the paper today that the majority leader had a trick up his 
sleeve. I hope the trick up his sleeve is they will vote for our 
amendment. We can have a celebration. I repeat, the celebration would 
be short-lived, because we would have to come back here, if the House 
adopts it and the States adopt it, and make some real tough decisions, 
but we won't be playing games with the American public. We would have a 
real balanced budget amendment.
  Madam President, as I said yesterday, we are talking about small sums 
of money for millions of people. We don't have millions and billions 
and trillions of dollars that represent certain interests that want 
this Senate Joint Resolution 1 passed. We represent small numbers in 
dollars but large numbers in people. They are concerned about whether 
or not they are going to continue to be able to get their check of $700 
a month to maintain their dignity. That is why this amendment is so 
important. We represent the working men and women of this country, not 
just the seniors, people who want to maintain the Social Security 
system for the years to come.
  Social Security is the finest social program in the history of the 
world. This substitute will allow this finest social program in the 
history of the world to continue. I support the amendment that has been 
offered by my friend and would certainly ask my friends on the other 
side of the aisle to support it also.
  Mr. ENZI addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Madam President, in the short time that I have been here, 
and this is my first year in the Senate, which means I have been here 
about 6 weeks, this is not even the first time we have debated and 
voted on this particular issue. We have had it thrown out several 
different ways, talked about several different ways, but it is always 
the same thing that we are redoing.
  Of course, one of the reasons we do that and one of the reasons we 
exclude those other trust funds we talked about is that this is where 
the people are. It isn't this is where the dollars are, because we are 
talking about deficits in the year 2019, we are talking about people 
who rely on Social Security. There are people who need it badly, and 
they scare easily at the thought of losing it, and should. We are right 
there worrying about it with them, but we can't accept something that 
is half an answer.
  I mentioned that we have voted on this three separate times. I think 
we talked about it most of the ways that we can, but I want to try and 
answer some of the questions.
  Madam President, the balanced budget amendment does, indeed, require 
a balanced budget. Outlays must not exceed receipts under section 1 of 
this resolution. But it is also true that gross debt may still 
increase, even if the budget is balanced. That is because the 
Government's exchange of securities for Social Security taxes is 
counted as gross debt, and we had better count it somewhere. I don't 
think there is anybody out there who wants us to take those funds and 
not account for them somehow.
  We passed a law that says that those Social Security funds have to be 
invested in the Federal Government. That is where they are. The way 
that we account for them is to show them as Government debt. Should we 
loan them and not show them as Government debt? It is merely an 
accounting or bookkeeping notation of what one agency of the Government 
owes another agency. It is analogous to a corporation buying back 
stocks and debentures. Such stocks and bonds are considered retired 
obligations that, once paid, have no economic or fiscal significance. 
Thus, if we enact a balanced budget constitutional amendment, the debt 
the United States owes to everyone, but itself, will stop growing. It 
will not stop growing as long as we have the Social Security funds paid 
out as an investment in the Federal Government.
  This type of debt, termed ``net debt'' or debt held by the public, is 
legally enforceable, and it better be. But if we don't balance that 
budget, the funds will not be there to pay this legal debt when the 
time for the legal debt comes due. Those bonds that we have in that 
great storeroom called Social Security, the bonds that have already 
been loaned to the Federal Government, have to be paid off at the time 
they come due. We will not be able to do that without a balanced 
budget.

  If the debt zooms because of interest payments of debt, which last 
year amounted to $250 billion, budget deficits balloon with all the 
dire economic consequences, and we have been talking about those 
economic consequences and the advantages of a balanced budget. To 
assure that budgets will be balanced, unless extraordinary situations 
arise, debt held by the public cannot be increased unless there is a 
three-fifths of the whole number of each House concurring.
  That net debt is considered to be a far greater economic significance 
than the gross debt is a widely held truism among economists. Indeed, 
in the study ``Analytical Perspectives: Budget of the United States 
Government Fiscal Year 1998,'' the Clinton administration concludes 
that net debt, or borrowing from the public, whether by the Treasury or 
by some other Federal agency, has a significant impact on the economy.
  On the other hand, the study also maintains that gross debt, or debt 
issued to Government accounts, does not have any of the economic 
effects of borrowing from the public. It is merely an internal 
transaction between two accounts within the Government itself. We have 
to account for the debt. We have to account for it honestly, and we 
have to balance the budget more than past the year 2010. A balanced 
budget constitutional amendment is for all time until altered by us, 
and we don't do that on a regular basis. It is extremely tough.
  Our forefathers did provide a mechanism for doing it. That is the 
process we are going through now, and they made it an extremely tough 
one, with a two-thirds vote and then ratification by three-fourths of 
the States.
  If this balanced budget didn't have so much backing, would there be 
all of this opposition to having it? In checking, if just the Senators 
from the States that oppose the balanced budget did not ratify this, 
there would never be a balanced budget constitutional amendment. But I 
know from traveling out there that those States are saying we live 
under a balanced budget constitutional amendment. It works. We don't 
have to go through all of these other funny little accounting gimmicks 
to get there. The people know when it is balanced. You don't hear of 
lawsuits on a regular basis dealing with their balanced budget 
constitutional amendments. Consequently, they will ratify this if they 
can get Senators from those States to back a balanced budget 
constitutional amendment.
  I think that in a number of years, if not right now--I do think it 
will happen right now. I think this is the most

[[Page S1636]]

important debate we could possibly be having in our lifetime because of 
the consequences in our lifetime and for generations to come. This is 
the most important thing we can be discussing. I do think if the last 
election didn't make the difference, the next election will make the 
difference, because people have promised their people at home that they 
will vote for a balanced budget constitutional amendment. We have to 
move on those promises so we can meet the expectations of the people at 
home, the people who voted for us, the people who sent us here with a 
trust in the political process. It is up to us now to fulfill that 
trust. I reserve the remainder of my time and yield the floor.

  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Madam President, the views offered by the Senator from 
Wyoming made the point I have been trying to make so hard here this 
afternoon. The Senator from Wyoming indicated what the Senator from 
Utah has indicated before him, and others, saying that the gross debt 
will continue to increase even after the budget is balanced because we 
have to be honest about that to the senior citizens.
  Gross debt will continue to increase--translated, that means that 
once the budget is balanced, the Federal debt will continue to 
increase. But they say, ``Gross debt is different than net debt; net 
debt is different than gross debt,'' and it is, you know, ``Honey, 
you're complaining about the credit card debt I owe, but you don't 
understand it's net debt versus gross debt. Net debt is more important 
than gross debt. You just don't understand.''
  I am sorry. Is it debt or is it not? Is it an obligation or is it 
not? Will it have to be paid back or won't it? We know the answer to 
that. Gross debt will continue to increase, the Senator says. That is 
the problem. That strips naked the entire proposition here and is why I 
hope Senators will vote for the substitute constitutional amendment I 
offer.
  When the Senator says people have promised to vote for a 
constitutional amendment, they can vote for the one that I offer today, 
the right one, the one that at the end of the day will not have a 
budget in balance with gross Federal debt continuing to increase, but 
will have instead a budget that is in balance without an increase in 
gross debt. Gross or net does not make much matter to folks in my 
hometown. It is a debt and an obligation, it is saddling their children 
and grandchildren.
  I will simply observe that as we discuss this, the end goal is not 
just to alter the Constitution of the United States; the end goal is to 
alter the decision-making process here in Congress sufficient so that 
we have done what the American people want us to do--put our budget in 
balance, eliminate budget deficits, and especially eliminate the 
increases in Federal debt.
  I want to make one more point responding to something the Senator 
from Wyoming said. He talked about Governors and States. I have heard 
all these Governors and other folks from States come here and talk 
about their balanced budgets. It is interesting to me that those same 
Governors and States who claim to have balanced budgets also have debt.
  Question: Why would a State that has a constitutional prohibition 
against having a deficit, why would a State like that have a debt? 
Answer: Because they have capital budgets. If they accounted for their 
budget the way the Federal Government accounts for its budget, they 
would not have balanced their budgets.
  In fact, we have had Governors come up to a table and sit there and 
talk about the fact that they have balanced their budgets and then talk 
about fiscal policy and how it impacts their credit rating in their 
State. Credit rating? Why do you need a credit rating? Because of 
borrowing money. Why are they borrowing money if they have a 
constitutional provision that prohibits deficits? Because they have 
debt. They have a capital budget. I mean, that is a fact of life. We do 
not, of course. We probably should. I think we should. But, 
nonetheless, that is a different issue. I always am constrained to 
respond when people talk about the States balancing their budget--
balancing their budget and then ending up with a debt.
  So I will just conclude my presentation--Senator Conrad is on his way 
to the floor, I believe--by again pointing out there is more than one 
constitutional amendment being offered. I am offering one now as a 
substitute. Those who choose to vote for it can choose to alter this 
Constitution of the United States the right way.
  The Constitution is just a mere, small portion of this booklet. We 
can alter this the right way. We can do it in a way that will not 
require us to come back as we did with the 21st amendment and say the 
18th amendment is hereby repealed. It will happen, I guarantee you, if 
we pass the amendment offered by the majority party. That will not 
happen if we enact the amendment and send to the States the amendment I 
now propose as a substitute because it does the two things 
simultaneously. It requires the budget be in balance and does it in a 
way that you are not using large portions of trust funds and creating a 
future obligation by misusing them now so that you have claimed a 
balanced budget and then have increased the Federal debt.
  Again, you can, until you are blue in the face, talk about gross debt 
and net debt and gross and net, this and that.
  The question I ask is this: At the end of the day, when you claim the 
budget is in balance, is the Federal debt increasing? The answer is 
yes, and that is exactly what is wrong with this proposal.

  The answer will not be yes if this Senate adopts my substitute. The 
question will be: At the end of the day, is the Federal debt continuing 
to increase? The answer will be no. The budget will have to be in 
balance and there will be no further increases in Federal debt. I yield 
the floor and reserve my time.
  Mr. ENZI addressed the Chair.
  The PRESIDING OFFICER (Mr. Faircloth). The Chair recognizes the 
Senator from Wyoming.
  Mr. ENZI. Mr. President, I feel compelled to speak a little bit on 
debt. That seems to be what we are talking about here today. We have 
talked about the Social Security debt for quite a while. There does not 
seem to be a lot of willingness to agree on some of the basics on it.
  Again, I want to explain that if we are paying our Social Security in 
and that money is being invested in the U.S. Government, if we do not 
recognize it as debt, we are lying to the people right now. We have to 
admit what we have and what we are using.
  The solution that is suggested by this substitute amendment is one 
that wants to take the Social Security numbers and just recognize them 
while there is this surplus, but really only recognize them while there 
is a surplus, to scare people about Social Security. We really ought to 
be worrying about Social Security.
  Debt is really a difficult thing to explain unless it is your own. 
Then it is even scarier. We heard a little explanation of State debt 
here a moment ago. State debt is a whole lot different than this 
Federal debt we are talking about, because in every State that has a 
balanced budget, they are expected to pay the debt back.
  We have yet to talk about paying debt back. We have a national debt, 
but I do not recall us saying that we are going to start budgeting not 
only to balance it, but we are going to balance it and pay back some of 
the national debt. We put that kind of requirement on the States. The 
States put that kind of requirement on themselves. They agree that if 
they borrow money, they have to agree to pay it back by a time 
specific.
  They have covenants. They have to meet covenants on those bonds, 
which means they put a little extra away. Sometimes they have to fund 
things up front. So when they are talking about capital debts, they are 
talking about a whole different ballgame than we are talking about. 
They are talking about the same one that that mortgage lender is doing 
when he enters into a home loan. When you go out and buy a house, you 
do not just ask to pay the interest and expect to get a house loan. You 
do not expect to be able to buy two or three houses, if you feel like 
it, and just pay the interest. The banker expects you to pay the loan 
back.
  I talked about municipal governments this morning. They are expected 
to pay the loans back. They are forced to pay the loans back. Many of 
them are forced to have a balanced budget. It

[[Page S1637]]

is kind of interesting how their balanced budget estimates work. Theirs 
are a little more conservative than ours. They say, unless you can show 
that the economy has declined and you will not get as much revenue as 
last year, you will use last year's revenue estimates. That is pretty 
conservative.
  If we had to say that in a growing economy we had to use last year's 
numbers, we would be able to pay back some of the national debt with 
what was left in a growing economy. We would be putting aside some in 
the good times to take care of the bad times.
  That is the kind of an accounting system that we have to get to. That 
is the kind of budgeting that we have to get to if we are going to be 
fair, not only with today's generation alone, but with the ones of the 
future. We cannot keep buying the things out of the Christmas book that 
we want to have and expect our kids and grandkids to pay for it.
  That is what we are doing at the moment. Any way we try and phrase 
Social Security so that we only want to recognize the money through the 
good times, not adjust for it in the bad times, we are not properly 
accounting for Social Security. We have to take care of it past 2010. 
The amendment before the Senate only takes care of it through 2010 and 
then allows us to lie about it, to ignore it, to not have to worry 
about it.
  That is when the bonds come due. That is when the debt comes due from 
raising the debt limits over these years. I want to protect my seniors. 
I want to be sure there is money there in the year 2019 as well.
  I yield the floor but retain the balance of my time.
  Mr. CONRAD. I yield myself 8 minutes off the time controlled by the 
Senator from North Dakota.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Amendment No. 18

     (Purpose: To protect the Medicare Health Insurance Trust Fund)

  Mr. CONRAD. Mr. President, I ask unanimous consent that the pending 
amendment be set aside so Senator Rockefeller's amendment can be called 
up.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. I now send to the desk that amendent, and immediately 
after it is reported, I ask unanimous consent Senator Rockefeller's 
amendment be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The bill clerk read as follows:

       The Senator from North Dakota [Mr. Conrad] for Mr. 
     Rockefeller proposes an amendent No. 18.
       Beginning on page 3, strike lines 12 through 14 and insert 
     the following:
       ``Section 6. The Congress shall enforce and implement this 
     article by appropriate legislation, which may rely on 
     estimates of outlays and receipts. Medicare outlays shall not 
     be reduced in excess of the amount necessary to preserve the 
     solvency of the Medicare Health Insurance Trust Fund.


                            Amendment No. 17

  Mr. CONRAD. Mr. President, we have heard a novel argument just now 
from the other side with respect to Social Security. The argument is 
that the only way we can save Social Security is to raid it. The only 
way we can secure the future of Social Security is to loot it.
  Now, that is an argument that does not stand up to much scrutiny. The 
argument of the Senator on the other side is that if we take every 
penny of Social Security surplus funds as this balanced budget 
amendment that is before the body now contemplates, that once we have 
done that, we are then faced with a circumstance in which Social 
Security goes into deficits.
  Let me just say the one thing we know for sure is that we are running 
those surpluses. The one thing we know for certain is that each and 
every year we are taking in more money on Social Security than we are 
spending. That was designed so that we would save those funds to be 
ready for when the baby boomers start to retire. Instead, what we are 
doing is taking every penny and spending it on other programs. What we 
are going to find when the baby boomers start to retire is that there 
is a cupboard there, but the cupboard is bare, and the only thing in it 
is an IOU. The problem with that is then we are going to face draconian 
choices.
  Our friends on the other side who are defending this balanced budget 
amendment to the Constitution say that is OK. It is OK if we raid every 
penny of Social Security surplus between now and the year 2019. We take 
$1.8 trillion of Social Security surpluses to claim we have balanced 
the budget because later on in the sweet by-and-by when this thing 
starts to go negative, we will be including that, as well.
  That is an argument that frankly does not stand up very well because 
we cannot wait until Social Security goes negative. We cannot ever 
permit that to happen, not to the degree they have discussed on the 
other side, because you would never be able to meet your 
responsibilities and the promises that have been made. Those who have 
been taxed have been taxed in a regressive payroll tax in order to 
secure the promise that has been made. So the Congress is going to have 
to act and it is going to have to act soon to get our long-term fiscal 
imbalances addressed.
  What our friends on the other side are doing in the short term--and 
by short term I mean the next 20 years--is to take every penny of 
Social Security surplus, every penny, throw it into the pot, and claim 
they have balanced the budget. That is not a balanced budget. That 
would not qualify as a balanced budget in any organization that I know 
of. That would not pass the laugh test in any corporate board room in 
America. If in any corporate board room in the United States had a 
circumstance in which the chief executive officer came in and said, 
``You know what, we have a little problem in the operations of this 
company, and what I am proposing is that we take the retirement funds 
of our employees, throw those into the pot, and call it a balanced 
budget,'' well, if you tried to do that, he would be in violation of 
Federal law. No. 2, he would be in violation of every accounting 
principle known to any financial expert in America.
  I say to my friends when you hear the sweet siren song that they are 
going to balance the budget, you better ask this question, you better 
ask this question: What budget is being balanced? Because what you will 
find, as shocking as it may seem, is that they are not talking about a 
real balanced budget at all. They are talking about taking every fund 
in sight, every trust fund known to man, and taking the income from 
those and throw them into the pot and then say they balanced the 
budget.
  As I said the other day, out in North Dakota we say you can call a 
pig a cow but it does not make it a cow. It does not make it a cow to 
call a pig a cow. You can call this a balanced budget. You can call it 
anything you want. It does not make it so.
  In fact, if you look, here is what you will find. They will take in 
1998 $81 billion of Social Security surpluses, they will take every 
penny, throw it in the pot, and say they balanced the budget. By 1999, 
$169 billion, and by the year 2002 they will take $465 billion of 
Social Security surpluses to claim they have balanced the budget. They 
have not balanced the budget. They just said they did.
  That is exactly what people are tired of in Washington. That is 
Washington talk. You say something, you put a label on it, it does not 
matter if it is a true label, it does not matter if that really fits 
the description, but we just say it. That is what is wrong in 
Washington. We say things that do not mean what anybody understands 
them to mean in common parlance.
  All we have to do is look to the year 2002 to see how misleading this 
whole argument is. If we look at the year 2002, the year that they are 
claiming there is a balanced budget, they are claiming no deficit in 
the year 2002, but you pierce the veil, you look a little further, and 
what do you find? The on-budget deficit that excludes Social Security 
and postal service accounts is in deficit by $103 billion. The gross 
debt of the United States is going to increase in the year 2002 by $110 
billion. They are claiming they balanced the budget. They are claiming 
they balance the budget and the debt is increasing by $110 billion. 
Senator Dorgan had a chart that shows $130 billion. That is last year's 
budget resolution. This is this year's budget numbers for the year 
2002. That is the difference between them. The principle is identical.

[[Page S1638]]

  This, I think, shows how fraudulent this whole balanced budget 
amendment that is before the Senate now really is, because what they 
are trying to enshrine in the Constitution of the United States is the 
definition of a balanced budget that could not stand the light of day 
in any financial institution in America. There is not a single one that 
could take the retirement funds of their employees, throw those into 
the pot, and claim they have balanced their budgets. That is not a 
balanced budget.
  We ought to be straight with the American people and straight with 
ourselves as to what is happening. The best way for us to deal with 
what is before the Senate is to draft a balanced budget amendment that 
deals with the fatal flaws of this one. No. 1, define a balanced budget 
in an accurate and honest way. Let us say clearly to the American 
people, we are not going to loot every trust fund in sight. We are not 
going to raid every single surplus trust fund in America in order to 
claim a balanced budget. That is the kind of fire-sale approach that is 
just going to dig us a deeper hole for the future--in fact, a hole so 
deep we would never dig out.

  Mr. President, I yield myself another minute of my colleague's time. 
Won't he be surprised when he returns.
  Mr. President, let me just conclude by saying there is a better way. 
We have to deal with the fatal flaws. We don't loot trust funds. That 
ought to be principle No. 1. No. 2, we ought to provide for national 
economic emergencies. No. 3, we ought to have a circumstance that makes 
certain that the Justices of the Supreme Court don't write the budget 
of the United States.
  As I said yesterday, I can look through those doors and I can see a 
corner of the Supreme Court of the United States. Our forefathers never 
intended that Justices sitting around a table at the Supreme Court 
would write the budget of the United States. We ought to make certain 
they do not.
  The proposal by Senator Dorgan would address the first problem--the 
raiding of the Social Security trust fund to claim balance. I hope my 
colleagues will support it.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Ms. SNOWE. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Ms. SNOWE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. SNOWE. Mr. President, I yield as much time as he may consume to 
the Senator from Utah.
  The PRESIDING OFFICER. The Chair recognizes the honorable Senator 
from Utah [Mr. Bennett].
  Mr. BENNETT. Mr. President, during this debate, we have heard time 
and again from some of the opponents to the balanced budget amendment 
to the Constitution that we are getting toward balance without a 
constitutional amendment. The President has proposed a balanced budget 
by the year 2002. The Republicans have called for a balanced budget by 
the year 2002. Why do we need a constitutional amendment when we have 
the result before us?
  I wish to point out that we do not have this result before us. We 
have the same kind of rhetoric about the balanced budget that we have 
had for years and years. I will focus primarily upon the President's 
proposal for a balanced budget by 2002 and express why I do not believe 
that it will achieve that result and why we need the discipline and the 
balanced budget amendment in the Constitution to get that result. We 
are not getting it now.
  If I may, Mr. President, I will show some charts. Here are the levels 
of deficits outlined in the President's budget. If you look at that 
chart all by itself, it looks fine. It shows a downward trend. What it 
does not show is that, in the first year of the President's budget, in 
1997, he calls for the deficit at $125 billion, up sharply from fiscal 
year 1996. So if we are going to have a balanced budget, we start by 
increasing spending from last year to this year, we start by going from 
$106 billion, up to a deficit of $125 billion. We stay in that 
neighborhood through 1998. We stay in that neighborhood in 1999. We 
don't start coming back to the level of where we are today, at $106 
billion, until the year 2000, and we do not see a significant reduction 
in the deficit from its present level until the year 2001.
  Now, there will be cynics among us who will say that it's not a 
coincidence that the year 2001, which is the first real year of 
reduction from where we are now, happens to be the first year that Bill 
Clinton will be out of office, and the deficit reduction will come only 
under his successor and successive Congresses.
  We have seen examples of how serious the President is about these 
outyear budgets. Outyears, Mr. President, is a term that we in 
Washington use for the future. Folks back home don't understand the 
term ``outyears,'' and so maybe they don't understand what we mean when 
we say this problem will come in the outyears, or we will get it solved 
in the outyears. What they really mean is we will deal with that 
tomorrow. I have said on this floor before that I am afraid when it 
comes to budget matters, the theme song for this administration comes 
from the musical Annie: ``Tomorrow, tomorrow, I love you tomorrow, 
you're always a day away.'' That is what we see here in this deficit 
level proposed under the President's budget. It will come tomorrow. It 
will come after the President has left office. It will be future 
Congresses that will have to deal with that.
  Now, I sit on the Appropriations Committee, Mr. President. As a 
member of that committee, I see the budget requests that come from 
members of the executive branch. Last year, I sat on the subcommittee 
chaired by the Senator from Missouri, Senator Bond, and we had coming 
before us on that subcommittee a number of agencies that talked about 
their budgets. One of them was the Veterans' Administration. I have 
here what Secretary Brown of the Veterans' Administration had to say 
formally and on the record with respect to his budget. Senator Bond, 
the chairman of the subcommittee, questioned him about the drastic cuts 
in the outyears, and asked the question: ``What is going to happen when 
you have to make these drastic cuts?'' We got an answer from Secretary 
Brown that says, ``I am not going to have to make those cuts. The 
President has assured me that I will not.''

  Reading along, Senator Bond said, ``So you are saying that these 
outyears mean nothing. It is all going to be negotiated in the future. 
So we should not worry about the President's budget plan. He does not 
intend to hold you to those significant decreases in spending. This 7-
year budget plan is a sham. It has no substance is what you are saying. 
You are not planning to live with that budget.''
  That is the statement from the chairman of the subcommittee. This is 
the response from the Cabinet-level officer in the President's 
administration to that statement. He says, ``I am not planning to live 
with it. I am not planning to live with your budget * * * nor am I 
planning to live with the President's line.''
  If the Cabinet officers are not planning to live with the budgets 
laid down by the President, what credibility should the Congress give 
to the budget laid down by the President?
  The Secretary said--lest we think the Secretary is speaking on his 
own, I am quoting from his testimony--the Secretary said, ``The 
President understands that. I talked with him personally about it, and 
that is one of the reasons why he gave me his personal commitment that 
he was going to make sure that the Nation honors its commitments to 
veterans and that he will negotiate the budget each and every year. So 
the main point that is realistic up there is the President's 1996 
budget and his 1996 budget request. We all know what is going to happen 
to that, but the outyears and the tough decisions will be made each and 
every year.''
  He said on the record to the Appropriations Committee of this 
Congress that the only number he was willing to live with was the 
President's number in 1996 and the rest of it would be left to the 
future. If I may, tomorrow we will deal with that. Tomorrow, and 
tomorrow is always the day away.
  Lest you think this was an isolated incident, I take you to another 
hearing

[[Page S1639]]

that occurred in that same subcommittee on which I sat. This has to do 
with NASA. I am a great supporter of NASA. I believe we get our money 
back tenfold that we spend in NASA in terms of the technology spinoff 
that takes place, the jobs that are created. I think NASA is a place 
where we should continue to spend money. It is the same thing. NASA was 
going to have a nice budget for the near term, the present budget, and 
then there would be drastic cuts in the outyears.
  Senator Bond said to Dr. Goldin, Administrator of NASA, ``Now, I 
understand you have been told that the numbers should be expected to 
change for the outyears, so there is no need to defend any specific 
funding level in his budget, nor any likely programmatic consequence of 
such funding levels. Is that your understanding?'' Dr. Goldin, 
Presidential appointee, Administrator of NASA, said, ``Yes, and based 
upon assurances I have had by discussions with the administration, I 
expect that as the clarity comes into focus, the outyear budgets will 
change.''
  We all know which way they will change. They will go up. As I say, I 
am delighted by that because I am a strong supporter of NASA. But I am 
not delighted by the sleight of hand that occurs in the overall budget 
figures which we saw in the first chart where the President says, 
overall, yes, we can continue spending at a level higher than we are 
spending today for all of the years that I am in office and then we 
will project that the savings will come. This is what we are being told 
is the budget. This budget proves that we do need a budget amendment. 
This budget shows we do need the discipline which would come from 
writing something into the Constitution.
  Mr. President, I have one other chart that I want to share with you 
and others who may be watching which puts this whole debate into a 
different perspective. I have used this chart on the floor before. It 
is a slightly different chart than many we have seen. This is not a 
chart of the debt in absolute terms. This is a chart of the debt in 
relative terms.

  Frankly, to me, as a former businessman, the relative terms make more 
sense. If you take the debt as an absolute number and do not have 
anything to compare it to, it frankly doesn't mean much. I have used 
this analogy on the floor before. But I have learned since I have been 
in the Senate that there is no such thing as repetition. So I can use 
it again with a perfectly clear conscience.
  Taking a business with which I was involved before I came to the 
Senate, when I went to work for this business as its chief executive 
officer it had debt of $75,000. That debt, given the size of the 
company, was sufficient to sink the company. They were doing a total of 
$250,000 in business, a total volume $250,000 a year, and they owed 
$75,000 in debt. They were in serious trouble. There was no way they 
could pay that debt off with $250,000 in total volume because their 
margin on that total volume that they could keep after they bought the 
raw materials for their product was relatively small. They were in deep 
trouble at $75,000 in debt.
  When I left the company prior to my run for the Senate, that company 
had $7.5 million in debt. And if all you looked at was a chart that 
showed $75,000 to $7.5 million, you would say this company is clearly 
going broke, and what terrible stewardship Mr. Bennett provided as the 
chief executive officer of the company if he allowed the debt to rise 
from only $75,000 to $7.5 million in only 6 years. When we had $7.5 
million in debt, the company was doing $80 million in annual revenue 
and we happened to have about $20 million in cash. You say, ``Well, why 
would you have any debt if you had $20 million in cash?'' It was left 
over from the period of time when we had to mortgage some of the 
buildings in order to get some built and there were prepayment 
penalties on the mortgages. So it made more sense to the shareholders 
for us to keep the cash than to pay the prepayment penalties on the 
mortgages. So the size of the debt frankly was not the key issue. The 
question was, how big a debt do you have compared to the financial 
strength of the company? And $7.5 million in debt compared to the 
financial strength of the company when I left it was frankly nothing at 
all to be concerned about, whereas the $75,000 in debt when I began 
there was threatening to destroy the company.
  So I have taken the national debt and expressed it not in absolute 
terms, not in the debt where it was in this year and how rapidly it has 
risen to where it is now, but as a percentage of the economy, gross 
domestic product, the total production of goods and services in a year. 
And you will see that the greatest time of debt in the history of this 
country as a percentage of gross domestic product, or GDP as we 
abbreviated it, was at the height of the Second World War. This is 
1945. Our debt stood at 130 percent of our total year's output of goods 
and services.
  Now, you will notice that at the end of the war the debt as a 
percentage of GDP started falling and kept falling fairly dramatically, 
and kept falling and kept falling and it bottomed out in the mid-
1970's. It got down to about 30 percent of GDP, from 130 down to 30, 
and then something started to happen. And then something started to 
happen. It started to happen before Ronald Reagan became President. It 
started to happen before the defense buildup under Caspar Weinberger. 
It started to happen before the tax cuts that were passed by this 
Republican Senate in the early 1980's. The debt started during the 
Jimmy Carter years, and it started back up. And for the first time in 
our history we saw the debt increasing as a percentage of GDP during 
peacetime. Prior to that, the debt always came down during peacetime, 
and only went up during wartime, as a percentage of GDP.

  What happened? Was it Jimmy Carter's fault? Was it the Republican 
Congress' fault? Frankly, it was the kicking in of the automatic 
increases of entitlements in an aging population that started the debt 
to increase as a percentage of the gross domestic product. No 
politician was responsible for it, and no politician can take credit 
for having solved it until we muster the courage and the strength on 
this floor to address the issue of the automatic nature of entitlement 
increases.
  We have been unable to do that. We have talked about it, but we have 
been unable to muster the necessary political courage. We meet in the 
cloakrooms, we meet in the dining room where we talk to each other, and 
we tell each other this is what we have to do, and then we do not 
muster the majorities to do it. There is one way to make sure we will 
muster the majorities to do it and start this back down, which is where 
it needs to be moving. The way to do that is to write into the 
Constitution, the basic document that governs all of our activities, 
the requirement that we balance the budget, and have no deficit. As the 
economy grows, even if the debt stays exactly where it is, it will 
diminish as a percentage of GDP as it did in the 30 years between the 
end of the Second World War and the time when it started back up. We 
can go back to that downward trend if we just keep the debt where it 
is. And the only way we keep the debt where it is is to balance outlays 
with income every year. I say the time has come to put the requirement 
that we do that into our basic document, the Constitution, at which 
point we will then have a balanced budget.
  Mr. President, there are many other things I could say about all of 
the debate that has gone on on this floor. Frankly, much of what I have 
heard in the debate on this floor I think is irrelevant to the core 
issue. I can comment on the various amendments to the balanced budget 
amendment that have been raised. I will not because these issues have 
been dealt with by my colleagues in great depth, and I see no point in 
repeating all of that.
  I am a reluctant convert to the idea of a balanced budget amendment. 
I have made that point clear before. I do not like amending the 
Constitution. I have voted against amendments to the Constitution that 
many of my colleagues thought were meritorious simply because I think 
the Constitution is so significant a basic document that we should 
exhaust every other remedy before we consider amending it.
  It is with great reluctance that I make an exception to that position 
with respect to the question of the balanced budget. If we do not have 
the discipline written into our basic document dealing with this issue, 
our past history shows that we cannot control the impact of the 
entitlement increase on future generations.
  So for that reason, I announce, with all my misgivings about amending 
the

[[Page S1640]]

Constitution, that in this case the issue is so important, the 
challenge is so significant that an amendment to the Constitution is 
called for. That is why I intend to vote for the amendment that is 
before us, why I have voted and will continue to vote against any 
crippling amendments to that amendment and hope that the rest of the 
Senate and ultimately the rest of the country will come to realize that 
the only way to start these yellow lines going back down again in a 
significant, historic trend is to write a basic requirement into the 
Constitution of the United States.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Maine has 13 minutes 
remaining.
  Ms. SNOWE. I thank the Chair.
  Mr. President and Members of the Senate, I certainly compliment the 
Senator from Utah for his very compelling statement on the necessity of 
having a constitutional amendment to balance the budget. He rightfully 
points out the fact that if we fail to place this amendment in the 
Constitution, then there is no guarantee of providing fiscal stability 
for this country in the future.
  As we have made the case time and time again in this body, there is 
no issue more central to competitiveness, to security, to stability of 
America's future than the issue of a balanced budget. It means more 
jobs; it means increased wages; it means a better standard of living; 
it means less taxes; it means lower interest rates, all of which will 
benefit the American people and future generations.
  The overwhelming majority of people in America today are pessimistic 
about the future when it comes to their children and what kind of life 
they will enjoy. That is the essence of this issue. This issue points 
to the fact that we need to do all we can to reduce the Federal 
deficit, to reach a balanced budget, and begin to grapple with the 
burgeoning debt that we have compiled for generations. The fact is the 
next generation will be required to pay an 82-percent tax rate and a 
50-percent reduction in benefits to manage and to finance the debt that 
we leave behind.

  I do not think that is the kind of legacy we want to bequeath the 
next generation.
  We have had this debate in this body in 1995 and on many previous 
occasions, and in fact when I served in the House of Representatives I 
can remember we had this debate in 1982, and we had it many times 
thereafter. We heard the same rationale each and every time, that we 
should be able to have a balanced budget without a constitutional 
amendment. In fact, the President himself said it in the State of the 
Union. He said we do not need to rewrite the Constitution; all we need 
is your vote and my signature.
  We as Republicans worked very hard in the last Congress to design a 
balanced budget plan with specifics and in great detail, without 
gimmicks. We presented it to the President of the United States, so he 
got our vote, but, unfortunately, we did not get his signature.
  I think the reason is that without a constitutional amendment, it 
does not force consensus on all sides and between both branches of 
Government. So ultimately there is no will and there is no self-
discipline to reach a consensus on balancing the budget without a 
constitutional mandate.
  We have heard many reasons today as to why Senators cannot support 
this particular amendment. We have had many amendments that proposed 
exemptions to this amendment, all of which were designed and disguised 
as a rationale for avoiding supporting a constitutional amendment.
  Nothing could be further from the truth than suggesting that 
exempting the Social Security Program from this balanced budget 
amendment would protect the benefits of Social Security retirees. There 
is nothing in that amendment that would suggest that. In fact, quite 
the contrary. The Social Security trust fund, since its inception, has 
been on budget. We have always addressed the shortfalls. We have 
prepared for the future by redesigning the program, as was the case in 
1983, with a bipartisan commission that was chaired by the head of the 
Federal Reserve Board, Chairman Greenspan, to address those concerns.
  We have no idea, we have no track record to know what would happen to 
the Social Security trust fund off budget. No one has presented us a 
plan for how the surpluses would be used. The surpluses on budget are 
invested in Government-backed bonds. But no one has told us, those who 
presented amendments exempting the Social Security trust fund, how 
these surpluses would be invested off budget. Would they be used and 
invested in private securities with a privatized Social Security? That 
is a major issue, and certainly I think it represents a consequence of 
placing the Social Security trust fund off budget. Would the Social 
Security trust fund off budget be diverted for other purposes? That is 
a real possibility, that those funds could be used for programs other 
than Social Security. So, if I were a retiree--and I will be one long 
after the turn of the century--I would be very much concerned about how 
those trust funds would be used.
  We have also heard and we know that, by exempting the Social Security 
trust fund from this amendment, we will have to further reduce Federal 
expenditures by $295 billion over the next 5 years, between now and the 
year 2002, in addition to the more than $250 billion that is required 
to reach a balanced budget in the year 2002. In addition to that, we 
would also be required to reduce the budget another $709 billion 
between the year 2002 and the year 2007. That represents $1 trillion in 
additional cuts above and beyond what will be required to reach a 
balanced budget. Again, I think we have a right to know, from those who 
propose this exemption, as to how they would reach that target, with an 
additional $1 trillion in cuts? In fact, if you carry it further, to 
the year 2019, it would be $1.9 trillion--$1.9 trillion in additional 
cuts.
  Mr. President, 2 years ago when we were having this debate, an 
amendment was offered by the minority leader that was called the right 
to know amendment. It says if you are going to propose a constitutional 
amendment to balance the budget, then, indeed, Members of this body 
have the right to know and are entitled to know as to exactly how we 
would accomplish balancing the budget. The same is true here today. We 
have a right to know exactly how these additional cuts will be 
accomplished over and above the cuts that already will be required in 
achieving a balanced budget between now and the year 2002 and then, of 
course, beyond. I repeat, it would require $1 trillion more in 
additional reductions in order to accomplish that. Yet, again, we do 
not have a plan as to how, exactly, that would be achieved.
  In the final analysis, it gets back to the central issue, the central 
question in this constitutional amendment. That is whether or not we 
are truly committed to engaging in fiscal responsibility so future 
generations can have a secure future. We have an obligation, as one 
generation to the next, to provide a better standard of living. I think 
it is regrettable that we in this Congress decide to pursue a direction 
that accepts budgets that suggest, somehow, that higher taxes, a lower 
standard of living, sub par growth and anemic recovery are acceptable 
in a global economy as we approach the 21st century. It is certainly 
not what I want for future generations.
  So, I hope we would consider this amendment for what it is. In 
reality, it is a way of avoiding the passage of this constitutional 
amendment because, in the final analysis, it does nothing to guarantee 
the benefits for Social Security retirees. In fact, I would say, quite 
the contrary, it raises a great deal of concern as to exactly what will 
happen to this trust fund, what will happen to the benefits for 
retirees, because we have no plan from the proponents of this amendment 
as to exactly how the off-budget program would work for Social Security 
and exactly how the surpluses would be used and whether or not this 
program, the trust fund, would be used for other purposes other than 
for Social Security benefits.
  So, I hope this body will reject this amendment. I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Utah.
  Mr. HATCH. Mr. President, Senator Dorgan's substitute, simply put, 
would add to Senate Joint Resolution 1 language that would exempt 
Social Security from the requirement that ``total outlays for any 
fiscal year not exceed

[[Page S1641]]

total receipts for that fiscal year,'' unless three-fifths of each 
House concurs. In essence, the Dorgan substitute's exemption for Social 
Security is identical to the Reid amendment, which we fully debated 
yesterday. As such, we are all familiar with the arguments--pro and 
con--of the effect of removing Social Security from the safeguards of 
the balanced budget amendment.
  It is my fervent hope this renewed debate over the proposed exemption 
of the Social Security funds from the requirements of Senate Joint 
Resolution 1 will convince my colleagues to support the balanced budget 
amendment. As Justice Brandeis so eloquently wrote in the 1927 case of 
Whitney versus California, ``[i]t is the function of speech to free men 
from the bondage of irrational fears.'' I truly believe that many of my 
well-meaning colleagues' desires to exempt the Social Security Program 
is based on unfounded fears. I hope to allay those fears and 
demonstrate that far from harming Social Security, including the 
program within unified budgets subject to the amendment, will help to 
preserve the program. Moreover, ironically, by exempting Social 
Security from the amendment, the very fears of some of my colleagues 
may come about because the program will certainly be weakened if we 
agree to to remove it from the unified budget.
  Before I directly address my colleagues concerns, it is helpful to 
put this debate in a larger context. Today, the accumulated national 
debt is nearly $5.4 trillion. Interest payments on this debt consume 
$250 billion annually, which the Washington Times recently estimated, 
is more than the combined budgets of the Departments of Commerce, 
Agriculture, Education, Energy, Justice, Interior, Housing and Urban 
Development, Labor, State, and Transportation. This means that the 
share of the debt for every infant born today is about $20,000.
  There is a crying need for sound fiscal reform. Unless we do 
something, this Nation will continue to have stagnant economic growth 
with less jobs. Unless we do something, the interest payment on the 
debt will continue to devour capital that could be otherwise used for 
investment or Federal programs. Let's not kid ourselves that Washington 
politicians will remedy this problem; the blunt truth is that no 
balanced budget deal has worked in the past, that is why we need to 
amend the Constitution to provide for fiscal sanity.
  Yet opponents of Senate Joint Resolution 1 argue that Social Security 
should be removed from the protection of the balanced budget amendment. 
But to do as they request would be a risky gimmick that would harm 
Social Security and open a loophole in the constitutional amendment.


                  The Dorgan Substitute Is Unworkable

  Mr. President, the Dorgan substitute suffers from the same disease as 
the Reid amendment. It is not workable. Let me tell you why.
  First, as I discussed during the debate on the Reid amendment, it is 
necessary to include Social Security in any balanced budget plan. 
Obviously, without including Social Security, other programs must be 
cut far more than they really need to be. The proponents of this 
amendment have not told us which programs they will cut in order to 
come up with the approximately $100 billion per year that the total 
exclusion of the Social Security surpluses will cost us--astoundingly, 
this figure is greater than our combined annual expenditure on 
education, the environment, transportation and infrastructure. In fact, 
between 2002 and 2019, when Social Security outlays will exceed 
receipts, the trust fund is expected to earn more than $1.9 trillion. 
Where do supporters of the Dorgan substitute propose to come up with 
money necessary to cover this self-imposed shortfall? Show me the 
money.
  Let's put this in perspective. Discretionary spending savings from 
last year's budget resolution, which were described as draconian, were 
only $291 billion. The Dorgan substitute would require that Congress 
cut spending or raise taxes more than six times this amount. Similarly, 
the projected revenues from the 1993 Clinton tax increase--the largest 
tax increase in history--were only $241 billion. The Dorgan substitute 
would require that Congress cut spending or raise taxes over eight 
times this largest tax increase in history. These levels of spending 
cuts and tax increases are clearly unworkable, and the adoption of the 
Dorgan substitute would kill any chance the balanced budget amendment 
has of being ratified.
  Indeed, as I alluded to, the Clinton administration uses Social 
Security surpluses in formulating its own budgetary numbers, and has 
done so for the past 4 years. Secretary of the Treasury Rubin admitted 
to and defended the practice during hearings before the Judiciary 
Committee on January 17: ``We will include it * * * I believe that with 
respect to budget policy that the view of the Congress and the view of 
the President to include Social Security is correct.''
  Similarly, in a recent press conference, President Clinton noted that 
Social Security receipts are used in his budget and admitted that 
neither he nor the Republicans could balance the budget without 
including the Social Security surpluses. The fact is that all 
administrations in recent memory have relied on a unified budget 
calculation of surpluses, and it is good budgetary policy.
  Second, exempting Social Security from the mandates of the BBA for 
any considerable period of time will probably result in the demise of 
the Social Security Program years early. Such an exemption will create 
a powerful incentive to redefine spending programs as ``Social 
Security'' and pay for them through what could become a giant loophole 
in any attempt to balance the budget.
  Opponents of the BBA incorrectly contend that including present-day 
Social Security surpluses in a unified budget would raid the trust 
funds. This is a complete misnomer because the surpluses are nothing 
more than an accounting reference. Social Security FICA taxes are 
deposited with all other revenues. Interest bearing securities are 
purchased equal to the amounts of Social Security receipts. This debt 
provides a safe investment. This safety, however, would be wrecked if 
Social Security were removed from the protection of Senate Joint 
Resolution 1's balancing requirements. In fact, the very fears of the 
advocates of the Dorgan substitute will be realized. Their exemption of 
Social Security would really cause the trust funds to be raided.
  Why? Because under the Dorgan substitute, trust fund receipts would 
be used to finance other costly programs that would be relabeled as 
Social Security. With the loophole proposed by this exemption in place, 
there will be an irresistible impulse for future Congresses to redefine 
unrelated programs as Social Security. This, in turn, would create an 
incentive for Congress to include costly programs as part of Social 
Security. Congress has not been able to restrain itself from either 
wasteful spending or increasing this web of services provided by Social 
Security in the past--what would prevent combining them in the future? 
Are we willing to let future Congresses roll the dice with the 
financial security of America's seniors?
  Passing an exemption loophole, accordingly, would essentially create 
two federal budgets, one based on sound principles of solvency, and the 
other, the Social Security budget, which would not. One budget will be 
required to be in balance unless a supermajority votes to allow a 
deficit, the other--the Social Security budget--would be raided and 
bloated with unrelated spending projects. Taking Social Security off 
budget will subject its funds to Washington's special interest 
scavengers. When you have rats in your house, you need to plug up all 
the holes. If you do not, they'll 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 devour it. 
This loophole would not only blow a hole in the BBA, but it would also 
seriously harm Social Security. This, in turn, will mean the end of 
Social Security as we know it, transforming it into the least secure of 
all Government accounts.
  Under the Dorgan substitute, the other possible use for Social 
Security surpluses would be for the Government to pay down our 
staggering national debt. Thus, if there are any surpluses left over 
after programs are redesignated ``Social Security,'' the remaining 
surplus would be used to make debt repayments. This sounds wonderful, 
but

[[Page S1642]]

in fact, creates a dangerous mechanism for the Congress to continue 
deficit spending. By paying down the debt, the Congress would provide 
itself a debt cushion--that is, a gap between the statutorily limited 
debt ceiling and the actual paid down debt. Congress could therefore 
use this gap to continue to deficit spend, thus avoiding the three-
fifths vote required in section 2 of the BBA to raise the debt ceiling. 
The surpluses used for the purpose to pay down the debt will have been 
squandered as the debt ceiling is reached with a new gorge of spending 
equal in amount to the surplus that was used to pay off debt. Such a 
spending device completely frustrates real purposes for which I have 
introduced the balanced budget amendment--achieving sound fiscal policy 
and a healthy economy.
  Consequently, the net effect of the loophole will be the depletion of 
the trust funds years early, with no protection for the benefit checks 
owed our seniors. How ironic. This is exactly what the Dorgan 
substitute was designed to avoid. But the Dorgan substitute does 
absolutely nothing to protect the Social Security trust funds. Let's 
just look at the language--is there anything in this amendment that 
prevents Social Security from being cut? Of course there isn't.
  I believe that the gamesmanship and gimmickry that the Dorgan 
substitute will engender is exactly what must be avoided. The way to 
avoid it is to reject such exemptions. The best way to protect retirees 
and future generations is to adopt a clean and strong balanced budget 
amendment, free of loopholes.
  Third, let's not forget about the troubling future for Social 
Security. The Dorgan substitute does absolutely nothing to protect 
Social Security and, in fact, will make it extremely difficult--if not 
impossible--to achieve balanced budgets. The Social Security Board of 
Trustees estimates that by the year 2070, Social Security is expected 
to run an annual $7 trillion deficit. If we include Social Security in 
our balanced budget calculations, we will be able to prepare for and 
budget these massive shortfalls. Under the Dorgan substitute, we will 
not be including this deficit in our budgetary planning. As a result, 
under the Dorgan substitute, in order to raise revenue and increase the 
debt ceiling sufficient to cover the expected Social Security 
shortfalls in the next century, we will have to dramatically increase 
taxes or cut spending in other important programs, or face an annual 
three-fifths vote fiscal crisis to avoid financial default by raising 
the already staggering $5.5 trillion debt ceiling.

  Fourth, Mr. President, the Dorgan substitute should be rejected 
because the language of the exemption is confusing and its application 
may harm the Social Security program--the very thing the Dorgan 
substitute claims to protect. The substitute exempts the Social 
Security trust funds from Senate Joint Resolution 1's balancing 
requirement. But it also includes the proviso, as and if modified to 
preserve the solvency of the funds.
  Explicitly exempting Social Security by placing it in the 
Constitution may constitutionalize the program in perpetuity unless a 
subsequent constitutional amendment provides for the program to be 
altered or abolished. As a result of the Dorgan substitute, do minor 
technical changes to Social Security every year require amendments to 
the Constitution? The constitutional amendment process is a long one; 
indeed it was designed by the Framers to be lengthy to prevent specious 
changes to the Constitution. If we must go through this time consuming 
process for every change to Social Security--even minor technical 
alterations--I fear that major needed reforms to Social Security will 
come far too late.
  Similarly, does the proviso language require the solvency of the 
Social Security system or does that language merely allow Congress to 
take steps to assure the solvency of the trust funds? And if the answer 
is that Congress must take measures to assure solvency; does this 
require tax increases or benefit cuts?
  Frankly, this proviso language strands us in uncharted territory. We 
do not know exactly how this language will be interpreted. It could 
also very well mean that the scope of Social Security, as a 
constitutional provision, could be amended by statute. For instance, in 
1965, Social Security was broadened by statute to include portions of 
Medicare. My question is this: if, under the Dorgan substitute, Social 
Security can be similarly modified by statute, would we be 
constitutionalizing a massive loophole, through which we could 
constitutionally enforce spending on any program redesignated as Social 
Security? If, on the other hand, we can only modify Social Security by 
constitutional amendment, won't that require a two-thirds Senate vote, 
approval of 37 States and a 7-year delay to enact even the most minor 
changes?
  All this demonstrates the danger that the Dorgan substitute as a 
whole creates--that Congress ought to be responsible and not amend the 
Constitution to include specific statutory programs like Social 
Security. A constitutional amendment should be timeless and reflect a 
broad consensus, not make narrow policy decisions. We should not place 
technical language or overly complicated mechanisms in the Constitution 
and undercut the simplicity and universality of the balanced budget 
amendment. Explicitly exempting Social Security may constitutionalize 
the program in perpetuity unless a subsequent amendment provides for 
the program to be altered or abolished. It would also invite gaming and 
endless litigation as the terms of the program are altered.
  Former Assistant and Acting Attorney General Stuart Gerson and 
attorney Alan Morrison have both had extensive experience litigating 
constitutional issues and testified in a Judiciary Committee hearing on 
Senate Joint Resolution 1. Although the two disagree about the wisdom 
of the balanced budget amendment, they agree that exempting Social 
Security is a bad idea, and both strongly opposed exempting Social 
Security from the balanced budget Amendment.
  According to Alan Morrison, a litigator with Public Citizen who 
opposes the balanced budget amendment and 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.


                  responses to opponent's allegations

  Supporters of exempting Social Security argue that section 13301 of 
the 1990 Budget Enforcement Act [BEA] literally exempts the Social 
Security trust funds from the President's and the Congress' budget 
calculations. They claim that the balanced budget amendment would 
change this because it requires a unified budget. These critics of the 
balanced budget amendment are wrong on both counts.
  Under section 13301(a) of the BEA, the receipts and outlays of the 
Social Security trust funds are indeed not counted in both the 
President's and Congress' budgets--but only for certain specific 
reasons. The primary purpose for this exclusion was to exempt Social 
Security from sequestration by the President under the Gramm-Rudman-
Hollings procedures and from the act's pay-as-you-go requirement. In 
addition, as added protections, sections 13302 and 13303 of the BEA 
also created firewall point-of-order protections for the Social 
Security trust funds in both the House and Senate. All of this is made 
clear by the conference report accompanying the 1990 act. Indeed, the 
1990 Budget Enforcement Act does not preclude both Congress and the 
President from formulating a unitary budget--that includes Social 
Security trust funds--for national fiscal purposes. Surely, the 
opponents of the balanced budget amendment are not suggesting that the 
President of the United States and the Congress have been flouting the 
law when they include the Social Security trust funds in their 
respective budget calculations?
  Look, we all know that Social Security will need reform if it is to 
continue to be viable over the long haul. But the problem is not the 
inclusion of Social Security funds in the budget. The problem is that 
with the retirement of baby boomers, there will not be enough FICA 
taxes to fund their retirement. Moreover, the surplus Social Security 
taxes being collected today will not cover the future costs of the 
system. Most of current Social Security taxes are used to cover benefit

[[Page S1643]]

payments to present retirees. Outlays will exceed receipts of the 
system in about 2019. The guarantee of future benefits, therefore, will 
depend on the Federal Government's future ability to pay benefits.
  Not including Social Security in the budget would harm the program. 
Congress could rename social programs--as they have done before--as 
Social Security and use the FICA taxes to fund these programs. Then 
you'll really see the program raided. The problem that the Dorgan 
substitute raises--in reality--is not with the BBA, but with the 
problems the Social Security program faces. We need to fix that and 
adopting the balanced budget amendment is a good start.
  Mr. President, in a related argument that seeks to justify the 
exemption, some have argued that the balanced budget amendment will 
override the existing statutory protections for Social Security.
  Contrary to this assertion, it is clear that the current statutory 
protections for Social Security would not be eliminated by the 
amendment. Of course, the supremacy clause of the Constitution provides 
that any legislation contrary to a constitutional provision must fail. 
As the great Chief Justice John Marshall held in the landmark 1803 
decision of Marbury versus Madison, ``[a]n act of the legislature, 
repugnant to the constitution is void.'' But what critics fail to 
mention is that there is absolutely nothing in the balanced budget 
constitutional amendment that is inconsistent with the current 
statutory schemes. The Social Security statutory protections are not 
legislative acts repugnant to the Constitution as amended by Senate 
Joint Resolution 1. Congress under the balanced budget amendment can 
also create statutory protections for the Social Security program.
  Further, the Dorgan substitute has absolutely no protection against 
Social Security benefit cuts. The plain fact is that the best thing we 
can do for Social Security, the best thing we can do for retirees, and 
the best thing we can do for all Americans is to enact the balanced 
budget amendment without loopholes or exemptions, and bring fiscal 
sanity and a little common sense back to Government
  Finally, opponents of the Senate Joint Resolution 1, in arguing for a 
Social Security exemption, contend that the balanced budget amendment 
will not in reality produce a balanced budget because gross debt will 
still rise. This is clever, but misleading.
  Mr. President, the balanced budget amendment does indeed require a 
balanced budget. Outlays must not exceed receipts under section 1 of 
Senate Joint Resolution 1. But it is also true that gross debt may 
still increase even if the budget is balanced. That is because the 
Government's exchange of securities for incoming FICA taxes is counted 
as gross debt. It is merely an accounting or bookkeeping notation of 
what one agency of Government owes another agency. It is analogous to a 
corporation buying back its stock or debentures. Such stock and bonds 
are considered retired obligations that once paid have no economic or 
fiscal significance. Thus, if we enact the BBA, the debt the United 
States owes to everyone but itself will stop growing.
  This type of debt--termed net debt or debt held by the public--is 
legally enforceable and is what is economically significant. If net 
debt zooms--because of interest payments of debt--which last year 
amounted to $250 billion--budget deficits balloon with all the dire 
economic consequences. To assure that budgets will be balanced unless 
extraordinary situations arise, debt held by the public cannot be 
increased unless three-fifths of the whole number of each House concur.
  That net debt is considered to be of far greater economic 
significance than gross debt is a widely held truism among economists. 
Indeed, in the study ``Analytical Perspectives: Budget of the United 
States Government Fiscal Year 1998,'' the Clinton administration 
concludes that net debt or ``borrowing from the public, whether by the 
Treasury or by some other Federal agency, has a significant impact on 
the economy.'' On the other hand, the study also maintains that gross 
debt, or debt issued to government accounts, ``does not have any of the 
economic effects of borrowing from the public. It is [merely] an 
internal transaction between two accounts, both within the Government 
itself.'' Analytical Perspectives at 218-219.
  It is true that a balanced budget amendment does not by itself reduce 
the $5.3 billion national debt. But what it does do is to straighten-
out our national fiscal house. Passage of Senate Joint Resolution 1 
will increase economic growth and allow us to run surpluses. With this, 
our national debt may be decreased if Congress desires to do so in the 
interest of national economic stability and prosperity. Without Senate 
Joint Resolution 1, this will be an impossibility.
  The Dorgan substitute, on the other hand, adds nothing to protect the 
trust funds from accumulating debt. In fact, by creating this loophole, 
the Dorgan substitute may cause the trust fund to dry up sooner and run 
deeper deficits. Thus, the Dorgan substitute is a risky gimmick that 
endangers Social Security.
  Mr. President, the 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 BBA, but in all probability 
will also cause the Social Security trust funds to run out of money 
sooner than it would have without an exemption.
  Benjamin Franklin, moments after the Philadelphia Constitutional 
Convention adjourned in 1787, was asked what type of government was 
established. He replied, ``[a] Republic if you can keep it.'' Franklin 
knew his history. The judgement of history has always been that 
republics and democracies were frail entities prone to collapse because 
of the greed and envy of an unchecked majority. It would take a 
citizenry imbued with civic virtue to prevent that collapse. Indeed, a 
wise philosopher once opined that without that virtue a democracy 
cannot last as a permanent form of government:

       It can only exist until the voters discover that they can 
     vote themselves largesse from the public treasury. From that 
     moment on the majority always votes for the candidate 
     promising the most benefits from the public treasury with the 
     result that a democracy always collapses over loose fiscal 
     policy, always followed by a dictatorship.

  The fundamental question facing the American Republic in the coming 
millennium is how our Nation deals with the future fiscal crisis born 
of a volcano of rising debt. The success of our Republic depends on the 
virtue and morality of America--on the willingness of her people to 
eschew largesse that we simply cannot afford. We need to get our fiscal 
house in order. And to do that, past Congresses have proved that this 
Nation needs to place within our Constitution a balanced budget 
amendment.
  Finally, Mr. President, I compliment my colleague for her excellent 
remarks. She has been a stalwart on this balanced budget amendment, and 
rightly so. She has been an inspiration to me, and I personally want to 
express my gratitude.
  Mr. President, we have only 1 minute left. This is the Reid amendment 
revived. There is only one reason for this amendment and that is 
because they do not want the balanced budget amendment. I guess they 
want to continue just the same 28 years of unbalanced budgets; 58 out 
of the last 66 years.
  Let us just be honest about it, this amendment, along with most of 
the others, is what I call a downright phony amendment. First of all, I 
cannot imagine why anybody in their right mind would believe you could 
take the largest item out of the Federal budget and put it out there to 
drift aimlessly on its own where anybody could amend it, anybody could 
redefine it, anybody could add any program, anybody could use the 
surplus for additional spending rather than trying to balance the 
budget, and to argue that it is raiding the trust fund when, in 
essence, we are going to continue to put money into U.S. Government 
securities and bonds regardless of what happens.
  What they do not tell you is that unless we have a balanced budget 
amendment, we are not going to be able to

[[Page S1644]]

pay off those bonds. When the baby boomers come, and maybe even 
before--and I suggest it is going to happen before--we are going to hit 
the skids where we are not going to know what to do for our seniors 
because of the games that are played on the balanced budget amendment.
  I am not going to accuse anybody of insincerity, but I can say this: 
There is no question that there is a desire on the part of many who 
like to spend and tax to kill this balanced budget amendment, no matter 
what it takes. If they can hide behind something they can demagog 
later, they will do it. That is what this whole game is about.
  This amendment is not a good amendment. This amendment is something 
that anybody in their right mind would say, ``My gosh, how can you even 
present it as an amendment that might do some good in this country?'' 
In fact, the only thing that will do good is the balanced budget 
amendment.
  I move to table the amendment and ask for the yeas and nays.
  The PRESIDING OFFICER. The Senator from North Dakota has 2 minutes.
  Mr. DORGAN. Mr. President, the Senator from Utah is overanxious.
  ``Phony,'' ``demagog,'' he uses the words with great abandon. Phony? 
You show me a plan that says I have balanced the budget but my debt is 
still increasing, that is what I call phony. That is what the folks in 
my hometown call phony, a plan that says we have balanced the budget 
but the debt goes up.
  You say, why is that the case? Is that the case?
  Oh, yes, you don't understand, it is debt held by the public, and net 
debt is more important than gross debt. Tell that to the folks who are 
going to bear the burden of the debt.

  I have watched people make sausage and try to sell it as tenderloin. 
I see what is going on. We have a stack of books, a Tower of Babel here 
about balanced budgets. The way we are going to balance the budget is 
to make taxing and spending decisions. We had one big chance to do that 
in 1993. I signed up, and I said, ``Count me in.'' Some of the folks 
now speaking the loudest said, ``Count me out; I'm out the door because 
I want to vote no and tell the folks back home that what they did back 
there was unpopular.''
  It is not popular to make the tough decisions to really balance the 
budget. I suppose it is popular to suggest we should alter the 
Constitution and then not want to describe to the American people why, 
after we boasted we balanced the budget, we are still increasing the 
Federal debt. They may have some popularity from this, but it's not the 
right way to alter the Constitution, and it will not ultimately balance 
the Federal budget.
  Let's alter the Constitution the right way, and let's balance the 
budget the right way. At the end of the day, when the dust has settled, 
let's decide we are not increasing the Federal debt and we are not 
continuing to saddle our children and grandchildren with additional 
debt.
  Mr. President, this is a substitute constitutional amendment to 
balance the budget. I intend to support it, as I have in the past, and 
those who want a constitutional amendment to balance the budget to pass 
in this Chamber, and to do so with 70 or 75 votes, should decide to 
support this substitute constitutional amendment to balance the budget.
  Mr. President, I yield the floor and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  Mr. HATCH. I move to table the amendment 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 amendment No. 17, offered by the Senator from North 
Dakota [Mr. Dorgan]. The yeas and nays have been ordered. The clerk 
will call the roll.
  The bill clerk called the roll.
  The PRESIDING OFFICER (Mr. Abraham). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 59, nays 41, as follows:

                      [Rollcall Vote No. 17 Leg.]

                                YEAS--59

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Burns
     Byrd
     Campbell
     Chafee
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Dodd
     Domenici
     Enzi
     Faircloth
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kerrey
     Kyl
     Lott
     Lugar
     Mack
     McConnell
     Murkowski
     Murray
     Nickles
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sessions
     Shelby
     Smith, Bob
     Smith, Gordon H.
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--41

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Cleland
     Conrad
     Daschle
     Dorgan
     Durbin
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     McCain
     Mikulski
     Moseley-Braun
     Moynihan
     Reed
     Reid
     Sarbanes
     Specter
     Torricelli
     Wellstone
     Wyden
  The motion to lay on the table the amendment (No. 17) was agreed to.
  Mr. HATCH. Mr. President, I move to reconsider the vote.
  Mr. SANTORUM. I move to lay it on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from California.


                            Amendment No. 16

  Mrs. BOXER. Mr. President, thank you very much. I have an amendment 
at the desk and I ask for its immediate consideration.
  The PRESIDING OFFICER. The amendment before the Senate is amendment 
No. 16, proposed by the Senator from California. There are 30 minutes 
of time to be equally divided. The Senator from California will have 15 
minutes, and the Senator from Utah will have 15 minutes.
  Mrs. BOXER. Thank you, Mr. President. I yield myself 10 minutes.
  Mr. President, as a member of the Budget Committee and now of the 
Appropriations Committee, I am keenly aware of the benefits of a 
balanced Federal budget. I have voted for three balanced budget plans--
the Conrad plan, the Bradley plan, and the bipartisan Chafee-Breaux 
plan. As a Member of the House, I voted for a balanced budget statute.
  While I have very serious reservations about a balanced budget 
amendment, which I spoke about on this floor--as do, by the way, 1,100 
economists, including Federal Reserve Chairman Alan Greenspan--I 
believe if we are to have a balanced budget amendment, however, which 
we cannot predict today if we will or not, it should be flexible enough 
to respond to emergencies which occur as a result of natural disasters.
  Now, Mr. President, I hope that Members of this U.S. Senate will 
understand that it is not one State of the Union that gets all of the 
natural disasters, although sometimes I feel, certainly, that my State 
gets far more than its fair share. I can tell you, if you look at this 
natural disaster risk profile that was put out by the U.S. Geological 
Service, you can see that there are tremendous risks for natural 
disasters all over this country. The light blue is the low risk, the 
darker greenish blue is the high risk, and this is the medium risk. 
Almost all over the country we have serious risks. This hatched area 
shows the extreme risk of tornado in the midsection of our Nation, and 
hurricanes, the extreme risk of hurricanes, as my friends in the Gulf 
States know so well, which are also on the Atlantic.
  Clearly, in California we run the risk of earthquakes. That is our 
biggest risk. But we have many other risks, as well: such as volcanos 
and floods. Floods occur all over the country.
  I say to my friends in the Senate that I pray that none of us ever 
has to come to the floor of the Senate asking for help in times of 
emergency. I will say under this amendment if you do that and you have 
hundreds of millions of dollars or billions of dollars of damages--as 
we have seen in Florida, as we have seen in California, as we have seen 
in the Midwest, as we have seen in many other parts of the country, in 
order to get this aid under this particular balanced budget amendment, 
you need to get 60 votes in this U.S. Senate.

[[Page S1645]]

 I will tell you right now there is no certainty of that.
  So what we do in our amendment, Mr. President, is simply say that 
when there is a declaration of a natural disaster, and that declaration 
is supported by a simple majority vote in both Houses of Congress, we 
will be able to move by a simple majority vote, not a 60-vote majority, 
and send the aid that is needed.
  Mr. President, I want to remind you by way of some photographs of 
some of these disasters that we have seen in my State. Here is a 
picture of the damage to a freeway in Northridge in 1994 where 
basically the freeway completely collapsed, people were killed, and we 
had to act very, very fast. In that particular earthquake, Mr. 
President, due to the kindness, the kindness of the Clinton 
administration and this Congress, we were able to pump into the Los 
Angeles area in excess of $11 billion to repair lives, to repair homes, 
to make sure that people had shelter--children, families. And I will 
tell you, Mr. President, if we had to find that $11 billion elsewhere 
in the budget or we needed to come up with 60 votes, I think it would 
be a very difficult thing to do. A supermajority is wrong in any case. 
It is wrong to give so much power to a minority when a natural disaster 
is a question of life or death.

  Here is another photograph, Mr. President. This is from this year. 
These are homes, and you can barely tell that because they are buried 
in water. That is the kind of flooding we had when levees broke--very 
similar to the Midwest. We need to move quickly when these disasters 
hit.
  Here is a photograph of Yosemite this year, Mr. President. You can't 
even pass through the road here. The communities that rely on tourism 
are in deep trouble.
  If Senators had to go to the floor and cut other parts of the budget 
to meet the needs of these emergencies, I will tell you, it would be 
very difficult. So I am very hopeful that we will not put this U.S. 
Senate into a straitjacket. This Senate already defeated some very 
important amendments to protect Social Security. They defeated, with a 
block of votes, amendments that would have allowed us to react in a 
serious recession or depression. Those 1,100 economists said that what 
the Senate is doing is dangerous. It is dangerous to put this 
Government into an economic straitjacket. And Alan Greenspan, whom so 
many of my friends on the other side of the aisle credit with this 
economic recovery--they turn away from his advice.
  But I say to them, here we are talking about life or death. Here we 
are talking about shelter for people who get hurt in a disaster. Here 
we are talking about a serious problem where we must act and we must 
act swiftly. And if we have to do it with 60 votes, or if we must cut 
corresponding amounts from the rest of the budget, I am saying this as 
sure as I am standing here--and I am proud to be standing here--we may 
leave Americans in dire straits because we are handcuffing our ability 
to react.
  There are some people here who obviously have no trust in their 
colleagues. They are calling for a supermajority. They don't trust 
their colleagues. They want a minority to be able to hold back a very 
important vote, perhaps to save people in my State, or people even in 
their own States. I think this is wrong. I said, when I came on to this 
floor several days ago at the beginning of this debate, I believe this 
is a very radical proposal.
  I believe the evidence is in and that those people who are following 
this debate now understand that we don't need this amendment to balance 
the budget. All we need to do to balance the budget is cast the tough 
votes. What is extraordinary to me is that most of the people voting 
for this balanced budget amendment weren't there when the tough votes 
were taken and when we were able to reduce this deficit--4 years in a 
row--from $290 billion down to $107 billion. Where were those people? 
So they offer up this fiscal figleaf, and it will put us in a 
straitjacket. It will tie our hands. We won't be able to protect Social 
Security or protect jobs in a depression or a severe recession. And 
now, without my amendment--and I am not that hopeful that we will win 
this because we have not won any of these amendments--a minority of the 
Senate, or a minority of the other body, could hold up desperately 
needed disaster aid.
  I will reserve the remainder of my time to respond to my good friend 
from Utah, and I am hopeful that Members will look at this and support 
the Boxer amendment, which is also supported by Senator Durbin and 
Senator Murray.
  Again, I reserve my time.
  Mr. HATCH. Mr. President, how much time remains on both sides?
  The PRESIDING OFFICER. There are 15 minutes for the Senator from 
Utah, and 5 minutes 17 seconds for the Senator from California.
  Mr. HATCH. Mr. President, I listened to my colleague, and I know she 
is sincere. But I have to point out that her amendment, like all of the 
others, is just another way of making sure the balanced budget 
amendment has no effect. Let me read it to the people:

       At the end of section 5, add the following: ``The 
     provisions of this article may be waived for any fiscal year 
     * * * ''

  That means for the whole fiscal year.

       * * * in which there is a declaration made by the President 
     (and a designation by the Congress) that a major disaster or 
     emergency exists, adopted by a majority vote in each House of 
     those present and voting.

  This amendment is simply a permutation of the amendment we voted on 
today, the Feinstein amendment, which was rejected by 67 Senators just 
a few hours ago. It would have provided for a waiver of the balanced 
budget requirement for any fiscal year in which the United States is 
experiencing a serious economic emergency or major natural disaster. I 
was one of the 67 Senators who opposed that amendment. But I have to 
say that I actually prefer that amendment to the one being offered now 
by my friend from California. For one thing, the spending loophole 
created by this amendment is even more gaping than the one in the 
amendment we voted down this evening. As Senator Enzi said, you can 
``sail an aircraft carrier through the loophole created by the 
Feinstein amendment.'' If so, then you can sail an entire fleet through 
the loophole this amendment would provide. This would provide for a 
waiver of the balanced budget requirement in any fiscal year in which 
Congress and the President declare there is a major disaster or 
emergency. Unlike earlier amendments, this amendment does not even 
require that the disaster be a natural disaster or that the emergency 
be an economic one. That being the case, I wonder what exactly 
qualifies as a disaster and an emergency under this amendment.
  According to the language of this amendment, a disaster is whatever 
Congress says it is. I think the worst disaster we are facing are these 
continual, piled-up unbalanced budgets every year. That is what we are 
trying to resolve here. Just think of all the things that a creative 
Congress, bent on deficit spending, could categorize as a disaster or 
emergency in order to justify more borrowing. Does this amendment mean 
to say that a drop in SAT scores can be deemed an emergency by Congress 
and thereby be used as a basis for borrowing to increase educational 
funding, without having to abide by the strictures of a balanced budget 
amendment?
  The fact is that, under this amendment, just about anything can be 
classified a disaster or emergency and serve as a springboard for 
continued deficit spending.
  For one thing, Mr. President, this is precisely the type of behavior 
that has put us into the $5.3 trillion of national debt. These 
unbalanced budgets for the last 28 years demonstrate that. They 
demonstrate the sad result of such loosely defined exemptions from 
borrowing or spending limits. For another thing, this amendment does 
nothing more than preserve a distorted version of the status quo.
  Under this amendment, a waiver of the balanced budget requirement may 
be obtained by a declaration made by the President and a similar 
declaration by Congress. But the precise procedure is not clear. Does 
this mean that the President must first declare an emergency or 
disaster by Executive order before the Congress acts to ratify or adopt 
that declaration? Does it then need to be signed by the President? Or, 
if that is not what this amendment means, then perhaps, in effect, it 
means that Congress must declare an emergency or disaster--by a joint 
resolution or some other legislative vehicle--adopted by a simple 
majority vote

[[Page S1646]]

and then signed by the President. That is what we have been doing when 
we came up with these 28 straight unbalanced budgets. That is also what 
we've done in piling up unbalanced budgets in 58 of the last 66 years. 
That sounds more familiar to me. Indeed, it is familiar to me because 
it is exactly how we operate today. It is exactly how we have gotten 
our Nation into a $5.3 trillion national debt and have produced 
unbalanced budgets for every one of the last 28 years.

  Mr. President, Senate Joint Resolution 1 is a clear, concise 
amendment carefully drafted over several years with input from Members 
on both sides of the aisle. I heard earlier in the day one of our 
colleagues say that this is a Republican amendment. Give me a break. 
Yes; all 55 Republicans are supporting it. But there are 11 courageous 
Democrats supporting this. I wonder what Charlie Stenholm thinks about 
remarks like that, another courageous Democrat from the House who has 
helped to work on this. And Senator Bryan, Senator Graham, Senator 
Robb, and so many others who have played a pivotal role in this.
  The three-fifths waiver contained in section 1 strikes an important 
balance in that it is both sufficient to answer the concerns raised by 
the Senator's amendment and strong enough to keep the balanced budget 
amendment meaningful.
  The simple fact is that in actual circumstances of disaster or 
emergencies, Congress has had little difficulty achieving the 
supermajority vote required under the balanced budget amendment. I have 
done some research on the disasters in this Nation during the past 7 
years with the help of the Congressional Research Service. I found that 
in virtually every circumstance, emergency spending bills placed before 
the House and Senate passed with supermajorities, even when no such 
requirement was in place.
  For example, in fiscal year 1995 the House and Senate voted on H.R. 
1944, which provided $7.2 billion in disaster aid, mostly to help with 
recovery efforts in Los Angeles from the 1994 earthquake. The bill 
passed the Senate with a vote of 90 to 7--well over the supermajority 
requirements of Senate Joint Resolution 1. In the House, the bill 
passed by 276 votes--also a supermajority.
  The 1994 fiscal year disaster supplemental appropriations bill, H.R. 
3759, received similar treatment. That bill, to provide nearly $10 
billion in new appropriations for emergency expenses of the Los Angeles 
earthquake, humanitarian assistance and peacekeeping activities, as 
well as for Midwest flood assistance, and highway reconstruction from 
the San Francisco earthquake, passed the House by a vote of 337 to 74--
some 75 votes more than would have been necessary under Senate Joint 
Resolution 1's supermajority requirement. The same measure passed the 
Senate by a vote of 85 to 10.
  Mr. President, I could go on, but I will summarize by saying that in 
the past 7 years we have voted many times on emergency disaster 
funding. I count only two situations where a supermajority was not 
reached--this despite the fact that no supermajority was needed. The 
reality is that when there are truly meritorious circumstances the 
general three-fifths waiver will not stand in the way of what is best 
for the American people. What will stand in the way is the kind of 
frivolous expenditures and disregard for the financial well-being of 
future generations that has plagued our budget process for each of the 
last 28 years, exemplified by these two stacks of unbalanced budget 
books.
  Mr. President, we are here to instill in the budget process the 
fiscal discipline that has been lacking for much of this century. I 
will say once again that what we need to do is pass a balanced budget 
amendment free of loopholes and gimmicks. Unless we do, we will never 
rein in the out-of-control spending habits that have brought us to 
where we are today.
  I urge my colleagues to join me in opposing the Boxer amendment, and 
hopefully we will move quickly to pass the balanced budget amendment.
  Mr. President, there was a discussion earlier today on whether or not 
the Reagan tax cuts enacted by Congress caused the debt we now have or 
whether it was congressional spending that has run up our debt. I would 
like to add some more concrete figures to illuminate that discussion. I 
believe the facts are clear--the Reagan tax cuts increased revenues. 
But spending increased faster.
  Let me explain further:
  Excessive spending and not tax cuts are responsible for increased 
deficits during the 1980's.
  Even with tax cuts, Federal tax revenues continue to increase.
  In fact, Federal revenues have continued to grow in every fiscal year 
after the 1981 tax cuts. The only exception to this was fiscal year 
1983, after the recession of 1982.
  This increase in Federal revenues was consistent through the sources 
of Federal receipts--individual income taxes, corporate income taxes, 
Social Security insurance taxes and contributions, and other taxes.
  Total receipts went up by the following percentages: 1980-1986: 48.7 
percent; 1981-1986: 28.8 percent; 1981-1987: 42.5 percent. The middle 
percentage from 1981 to 1986 is probably the most representative of the 
effects of the Reagan tax cuts.
  Further, tax revenues grew faster after the Reagan tax cuts than they 
have following the Bush and Clinton tax increases. From 1983 to 1989, 
tax revenue grew at a real rate of 8.7 percent compared to a 5.9-
percent growth rate from 1990 to 1996.
  Similarly, President Kennedy knew the growth effects of lower taxes. 
During the years of the Kennedy tax cuts revenues increased 6.4 percent 
a year.
  As President Kennedy said in his address to the American people 
concerning his tax proposal:

       Prosperity is the real way to balance our budget. * * * By 
     lowering tax rates, by increasing jobs and income, we can 
     expand tax revenues and finally bring our budget into 
     balance..

  To further illustrate these points, I ask unanimous consent to have 
printed in the Record two tables from the 1996 Economic Report of the 
President.
  For further detail, I also refer my colleagues to the Joint Economic 
Committee report on taxes and long-term economic growth, dated February 
of 1997.
  There being no objection, the tables were ordered to be printed in 
the Record, as follows:

                                              TABLE B-74.--FEDERAL RECEIPTS, OUTLAYS, SURPLUS OR DEFICIT, AND DEBT, SELECTED FISCAL YEARS, 1929-95
                                                                             [In billions of dollars; fiscal years]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Total                                On-budget                              Off-budget                Gross Federal debt (end
                                     ---------------------------------------------------------------------------------------------------------------------        of period)          Addendum:
        Fiscal year or period                                                                                                                             --------------------------    Gross
                                        Receipts     Outlays     Surplus or    Receipts     Outlays     Surplus or    Receipts     Outlays     Surplus or               Held by the    domestic
                                                                deficit (-)                            deficit (-)                            deficit (-)     Total        public      product
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1929................................          3.9          3.1          0.7          3.9          3.1          0.7  ...........  ...........  ...........     \1\ 16.9  ...........  ...........
1933................................          2.0          4.6         -2.6          2.0          4.6         -2.6  ...........  ...........  ...........     \1\ 22.5  ...........         56.8
1939................................          6.3          9.1         -2.8          5.8          9.2         -3.4          0.5         -0.0          0.5         48.2         41.4         87.8
1940................................          6.5          9.5         -2.9          6.0          9.5         -3.5           .6          -.0           .6         50.7         42.8         95.4
1941................................          8.7         13.7         -4.9          8.0         13.6         -5.6           .7           .0           .7         57.5         48.2        112.5
1942................................         14.6         35.1        -20.5         13.7         35.1        -21.3           .9           .1           .8         79.2         67.8        141.8
1943................................         24.0         78.6        -54.6         22.9         78.5        -55.6          1.1           .1          1.0        142.6        127.8        175.4
1944................................         43.7         91.3        -47.6         42.5         91.2        -48.7          1.3           .1          1.2        204.1        184.8        201.7
1945................................         45.2         92.7        -47.6         43.8         92.6        -48.7          1.3           .1          1.2        260.1        235.2        212.0
1946................................         39.3         55.2        -15.9         38.1         55.0        -17.0          1.2           .2          1.0        271.0        241.9        212.5
1947................................         38.5         34.5          4.0         37.1         34.2          2.9          1.5           .3          1.2        257.1        224.3        222.9
1948................................         41.6         29.8         11.8         39.9         29.4         10.5          1.6           .4          1.2        252.0        216.3        246.7
1949................................         39.4         38.8           .6         37.7         38.4          -.7          1.7           .4          1.3        252.6        214.3        262.7
1950................................         39.4         42.6         -3.1         37.3         42.0         -4.7          2.1           .5          1.6        256.9        219.0        265.8
1951................................         51.6         45.5          6.1         48.5         44.2          4.3          3.1          1.3          1.8        255.3        214.3        313.5
1952................................         66.2         67.7         -1.5         62.6         66.0         -3.4          3.6          1.7          1.9        259.1        214.8        340.5
1953................................         69.6         76.1         -6.5         65.5         73.8         -8.3          4.1          2.3          1.8        266.0        218.4        363.8

[[Page S1647]]

 
1954................................         69.7         70.9         -1.2         65.1         67.9         -2.8          4.6          2.9          1.7        270.8        224.5        368.0
1955................................         65.5         68.4         -3.0         60.4         64.5         -4.1          5.1          4.0          1.1        274.4        226.6        384.7
1956................................         74.6         70.6          3.9         68.2         65.7          2.5          6.4          5.0          1.5        272.7        222.2        416.3
1957................................         80.0         76.6          3.4         73.2         70.6          2.6          6.8          6.0           .8        272.3        219.3        438.3
1958................................         79.6         82.4         -2.8         71.6         74.9         -3.3          8.0          7.5           .5        279.7        226.3        448.1
1959................................         79.2         92.1        -12.8         71.0         83.1        -12.1          8.3          9.0          -.7        287.5        234.7        480.2
1960................................         92.5         92.2           .3         81.9         81.3           .5         10.6         10.9          -.2        290.5        236.8        504.6
1961................................         94.4         97.7         -3.3         82.3         86.0         -3.8         12.1         11.7           .4        292.6        238.4        517.0
1962................................         99.7        106.8         -7.1         87.4         93.3         -5.9         12.3         13.5         -1.3        302.9        248.0        555.2
1963................................        106.6        111.3         -4.8         92.4         96.4         -4.0         14.2         15.0          -.8        310.3        254.0        584.5
1964................................        112.6        118.5         -5.9         96.2        102.8         -6.5         16.4         15.7           .6        316.1        256.8        625.3
1965................................        116.8        118.2         -1.4        100.1        101.7         -1.6         16.7         16.5           .2        322.3        260.8        671.0
1966................................        130.8        134.5         -3.7        111.7        114.8         -3.1         19.1         19.7          -.6        328.5        263.7        735.4
1967................................        148.8        157.5         -8.6        124.4        137.0        -12.6         24.4         20.4          4.0        340.4        266.6        793.3
1968................................        153.0        178.1        -25.2        128.1        155.8        -27.7         24.9         22.3          2.6        368.7        289.5        847.2
1969................................        186.9        183.6          3.2        157.9        158.4          -.5         29.0         25.2          3.7        365.8        278.1        925.7
1970................................        192.8        195.6         -2.8        159.3        168.0         -8.7         33.5         27.6          5.9        380.9        283.2        985.4
1971................................        187.1        210.2        -23.0        151.3        177.3        -26.1         35.8         32.8          3.0        408.2        303.0      1,050.9
1972................................        207.3        230.7        -23.4        167.4        193.8        -26.4         39.9         36.9          3.1        435.9        322.4      1,147.8
1973................................        230.8        245.7        -14.9        184.7        200.1        -15.4         46.1         45.6           .5        466.3        340.9      1,274.0
1974................................        263.2        269.4         -6.1        209.3        217.3         -8.0         53.9         52.1          1.8        483.9        343.7      1,403.6
1975................................        279.1        332.3        -53.2        216.6        271.9        -55.3         62.5         60.4          2.0        541.9        394.7      1,509.8
1976................................        298.1        371.8        -73.7        231.7        302.2        -70.5         66.4         69.6         -3.2        629.0        477.4      1,684.2
Transition quarter..................         81.2         96.0        -14.7         63.2         76.6        -13.3         18.0         19.4         -1.4        643.6        495.5        445.0
1977................................        355.6        409.2        -53.7        278.7        328.5        -49.8         76.8         80.7         -3.9        706.4        549.1      1,917.2
1978................................        399.6        458.7        -59.2        314.2        369.1        -54.9         85.4         89.7         -4.3        776.6        607.1      2,155.0
1979................................        463.3        504.0        -40.7        365.3        404.1        -38.7         98.0        100.0         -2.0        829.5        640.3      2,429.5
1980................................        517.1        590.9        -73.8        403.9        476.6        -72.7        113.2        114.3         -1.1        909.1        709.8      2,644.1
1981................................        599.3        678.2        -79.0        469.1        543.1        -74.0        130.2        135.2         -5.0        994.8        785.3      2,964.4
1982................................        617.8        745.8       -128.0        474.3        594.4       -120.1        143.5        151.4         -7.9      1,137.3        919.8      3,122.2
1983................................        600.6        808.4       -207.8        453.2        661.3       -208.0        147.3        147.1           .2      1,371.7      1,131.6      3,316.5
1984................................        666.5        851.8       -185.4        500.4        686.0       -185.7        166.1        165.8           .3      1,564.7      1,300.5      3,695.0
1985................................        734.1        946.4       -212.3        547.9        769.6       -221.7        186.2        176.8          9.4      1,817.5      1,499.9      3,967.7
1986................................        769.1        990.3       -221.3        568.9        806.8       -238.0        200.2        183.5         16.7      2,120.6      1,736.7      4,219.0
1987................................        854.1      1,003.9       -149.8        640.7        810.1       -169.3        213.4        193.8         19.6      2,346.1      1,888.7      4,452.4
1988................................        909.0      1,064.1       -155.2        667.5        861.4       -194.0        241.5        202.7         38.8      2,601.3      2,050.8      4,808.4
1989................................        990.7      1,143.2       -152.5        727.0        932.3       -205.2        263.7        210.9         52.8      2,868.0      2,189.9      5,173.3
1990................................      1,031.3      1,252.7       -221.4        749.7      1,027.6       -278.0        281.7        225.1         56.6      3,206.6      2,410.7      5.481.5
1991................................      1,054.3      1,323.4       -269.2        760.4      1,081.8       -321.4        293.9        241.7         52.2      3,598.5      2,688.1      5,676.4
1992................................      1,090.5      1,380.9       -290.4        788.0      1,128.5       -340.5        302.4        252.3         50.1      4,002.1      2,998.8      5,921.5
1993................................      1,153.5      1,408.7       -255.1        841.6      1,142.1       -300.5        311.9        266.6         45.3      4,351.4      3,247.5      6,258.6
1994................................      1,257.7      1,460.9       -203.2        922.7      1,181.5       -258.8        335.0        279.4         55.7      4,643.7      3,432.2      6,633.6
1995 \2\............................      1,350.6      1,514.4       -163.8        999.5      1,225.7       -226.2        351.1        288.7         62.4      4,921.0      3,603.3     7,004.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Not strictly comparable with later data.
\2\ Estimates for 1995 from Final Monthly Treasury Statement, October 1995, except GDP calculated using quarterly seasonally adjusted data.
 
Note.--Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1-September 30 basis. The 3-month
  period from July 1, 1976 through September 30, 1976 is a separate fiscal period known as the transition quarter.


                                                                      TABLE B-76.--FEDERAL RECEIPTS AND OUTLAYS, BY MAJOR CATEGORY, AND SURPLUS OR DEFICIT, 1940-95
                                                                                                 [In billions of dollars; fiscal years]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Receipts (on-budget and off-budget)                                                      Outlays (on-budget and off-budget)
                                             ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------  Surplus
                                                                                                                          National defense                                                                                         or
                                                                                      Social                          -----------------------                                                                                  deficit (-
            Fiscal year or period                        Individual  Corporation    insurance                                     Department  International                          Income     Social      Net                  ) (on-
                                                Total      income       income      taxes and      Other      Total                   of         affairs       Health    Medicare   security   security   interest    Other      budget
                                                            taxes       taxes     contributions                          Total     Defense,                                                                                     and off-
                                                                                                                                   military                                                                                     budget)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1940........................................        6.5         0.9         1.2           1.8          2.7        9.5        1.7  ..........          0.1          0.1  .........        1.5        0.0        0.9        5.3       -2.9
1941........................................        8.7         1.3         2.1           1.9          3.3       13.7        6.4  ..........           .1           .1  .........        1.9         .1         .9        4.1       -4.9
1942........................................       14.6         3.3         4.7           2.5          4.2       35.1       25.7  ..........          1.0           .1  .........        1.8         .1        1.1        5.4      -20.5
1943........................................       24.0         6.5         9.6           3.0          4.9       78.6       66.7  ..........          1.3           .1  .........        1.7         .2        1.5        7.0      -54.6
1944........................................       43.7        19.7        14.8           3.5          5.7       91.3       79.1  ..........          1.4           .2  .........        1.5         .2        2.2        6.6      -47.6
1945........................................       45.2        18.4        16.0           3.5          7.3       92.7       83.0  ..........          1.9           .2  .........        1.1         .3        3.1        3.1      -47.6
1946........................................       39.3        16.1        11.9           3.1          8.2       55.2       42.7  ..........          1.9           .2  .........        2.4         .4        4.1        3.6      -15.9
1947........................................       38.5        17.9         8.6           3.4          8.5       34.5       12.8  ..........          5.8           .2  .........        2.8         .5        4.2        8.2        4.0
1948........................................       41.6        19.3         9.7           3.8          8.8       29.8        9.1  ..........          4.6           .2  .........        2.5         .6        4.3        8.5       11.8
1949........................................       39.4        15.6        11.2           3.8          8.9       38.8       13.2  ..........          6.1           .2  .........        3.2         .7        4.5       11.1         .6
1950........................................       39.4        15.8        10.4           4.3          8.9       42.6       13.7  ..........          4.7           .3  .........        4.1         .8        4.8       14.2       -3.1
1951........................................       51.6        21.6        14.1           5.7         10.2       45.5       23.6  ..........          3.6           .3  .........        3.4        1.6        4.7        8.4        6.1
1952........................................       66.2        27.9        21.2           6.4         10.6       67.7       46.1  ..........          2.7           .3  .........        3.7        2.1        4.7        8.1       -1.5
1953........................................       69.6        29.8        21.2           6.8         11.7       76.1       52.8  ..........          2.1           .3  .........        3.8        2.7        5.2        9.1       -6.5
1954........................................       69.7        29.5        21.1           7.2         11.9       70.9       49.3  ..........          1.6           .3  .........        4.4        3.4        4.8        7.1       -1.2
1955........................................       65.5        28.7        17.9           7.9         11.0       68.4       42.7  ..........          2.2           .3  .........        5.1        4.4        4.9        8.9       -3.0
1956........................................       74.6        32.2        20.9           9.3         12.2       70.6       42.5  ..........          2.4           .4  .........        4.7        5.5        5.1       10.1        3.9
1957........................................       80.0        35.6        21.2          10.0         13.2       76.6       45.4  ..........          3.1           .5  .........        5.4        6.7        5.4       10.1        3.4
1958........................................       79.6        34.7        20.1          11.2         13.6       82.4       46.8  ..........          3.4           .5  .........        7.5        8.2        5.6       10.3       -2.8
1959........................................       79.2        36.7        17.3          11.7         13.5       92.1       49.0  ..........          3.1           .7  .........        8.2        9.7        5.8       15.5      -12.8
1960........................................       92.5        40.7        21.5          14.7         15.6       92.2       48.1  ..........          3.0           .8  .........        7.4       11.6        6.9       14.4         .3
1961........................................       94.4        41.3        21.0          16.4         15.7       97.7       49.6  ..........          3.2           .9  .........        9.7       12.5        6.7       15.2       -3.3
1962........................................       99.7        45.6        20.5          17.0         16.5      106.8       52.3        50.1          5.6          1.2  .........        9.2       14.4        6.9       17.2       -7.1
1963........................................      106.6        47.6        21.6          19.8         17.6      111.3       53.4        51.1          5.3          1.5  .........        9.3       15.8        7.7       18.3       -4.8
1964........................................      112.6        48.7        23.5          22.0         18.5      118.5       54.8        52.6          4.9          1.8  .........        9.7       16.6        8.2       22.6       -5.9
1965........................................      116.8        48.8        25.5          22.2         20.3      118.2       50.6        48.8          5.3          1.8  .........        9.5       17.5        8.6       25.0       -1.4
1966........................................      130.8        55.4        30.1          25.5         19.8      134.5       58.1        56.6          5.6          2.5        0.1        9.7       20.7        9.4       28.5       -3.7
1967........................................      148.8        61.5        34.0          32.6         20.7      157.5       71.4        70.1          5.6          3.4        2.7       10.3       21.7       10.3       32.1       -8.6
1968........................................      153.0        68.7        28.7          33.9         21.7      178.1       81.9        80.4          5.3          4.4        4.6       11.8       23.9       11.1       35.1      -25.2
1969........................................      186.9        87.2        36.7          39.0         23.9      183.6       82.5        80.8          4.6          5.2        5.7       13.1       27.3       12.7       32.6        3.2
1970........................................      192.8        90.4        32.8          44.4         25.2      195.6       81.7        80.1          4.3          5.9        6.2       15.6       30.3       14.4       37.2       -2.8
1971........................................      187.1        86.2        26.8          47.3         26.8      210.2       78.9        77.5          4.2          6.8        6.6       22.9       35.9       14.8       40.0      -23.0
1972........................................      207.3        94.7        32.2          52.6         27.8      230.7       79.2        77.6          4.8          8.7        7.5       27.6       40.2       15.5       47.3      -23.4
1973........................................      230.8       103.2        36.2          63.1         28.3      245.7       76.7        75.0          4.1          9.4        8.1       28.3       49.1       17.3       52.8      -14.9
1974........................................      263.2       119.0        38.6          75.1         30.6      269.4       79.3        77.9          5.7         10.7        9.6       33.7       55.9       21.4       52.9       -6.1
1975........................................      279.1       122.4        40.6          84.5         31.5      332.3       86.5        84.9          7.1         12.9       12.9       50.2       64.7       23.2       74.9      -53.2
1976........................................      298.1       131.6        41.4          90.8         34.3      371.8       89.6        87.9          6.4         15.7       15.8       60.8       73.9       26.7       82.8      -73.7
Transition quarter..........................       81.2        38.8         8.5          25.2          8.8       96.0       22.3        21.8          2.5          3.9        4.3       15.0       19.8        6.9       21.4      -14.7
1977........................................      355.6       157.6        54.9         106.5         36.6      409.2       97.2        95.1          6.4         17.3       19.3       61.0       85.1       29.9       93.0      -53.7
1978........................................      399.6       181.0        60.0         121.0         37.7      458.7      104.5       102.3          7.5         18.5       22.8       61.5       93.9       35.5      114.7      -59.2
1979........................................      463.3       217.8        65.7         138.9         40.8      504.0      116.3       113.6          7.5         20.5       26.5       66.4      104.1       42.6      120.2      -40.7
1980........................................      517.1       244.1        64.6         157.8         50.6      590.9      134.0       130.9         12.7         23.2       32.1       86.5      118.5       52.5      131.4      -73.8
1981........................................      599.3       285.9        61.1         182.7         69.5      678.2      157.5       153.9         13.1         26.9       39.1       99.7      139.6       68.8      133.5      -79.0

[[Page S1648]]

 
1982........................................      617.8       297.7        49.2         201.5         69.3      745.8      185.3       180.7         12.3         27.4       46.6      107.7      156.0       85.0      125.4     -128.0
1983........................................      600.6       288.9        37.0         209.0         65.6      808.4      209.9       204.4         11.8         28.6       52.6      122.6      170.7       89.8      122.3     -207.8
1984........................................      666.5       298.4        56.9         239.4         71.8      851.8      227.4       220.9         15.9         30.4       57.5      112.7      178.2      111.1      118.6     -185.4
1985........................................      734.1       334.5        61.3         265.2         73.0      946.4      252.7       245.2         16.2         33.5       65.8      128.2      188.6      129.5      131.8     -212.3
1986........................................      769.1       349.0        63.1         283.9         73.1      990.3      273.4       265.5         14.2         35.9       70.2      119.8      198.8      136.0      142.1     -221.2
1987........................................      854.1       392.6        83.9         303.3         74.3    1,003.9      282.0       274.0         11.6         40.0       75.1      123.3      207.4      138.7      125.9     -149.8
1988........................................      909.0       401.2        94.5         334.3         78.9    1,064.1      290.4       281.9         10.5         44.5       78.9      129.3      219.3      151.8      139.4     -155.2
1989........................................      990.7       445.7       103.3         359.4         82.3    1,143.2      303.6       294.9          9.6         48.4       85.0      136.0      232.5      169.3      158.8     -152.5
1990........................................    1.031.3       466.9        93.5         380.0         90.9    1.252.7      299.3       289.8         13.8         57.7       98.1      147.0      248.6      184.2      203.9     -221.4
1991........................................    1,054.3       467.8        98.1         396.0         92.3    1,323.4      273.3       262.4         15.9         71.2      104.5      170.3      269.0      194.5      224.5     -269.2
1992........................................    1,090.5       476.0       100.3         413.7        100.5    1,380.9      298.4       286.9         16.1         89.5      119.0      196.9      287.6      199.4      173.9     -290.4
1993........................................    1,153.5       509.7       117.5         428.3         98.0    1,408.7      291.1       278.6         17.2         99.4      130.6      207.3      304.6      198.8      159.7     -255.1
1994........................................    1,257.7       543.1       140.4         461.5        112.8    1,460.9      281.6       268.6         17.1        107.1      144.7      214.0      319.6      203.0      173.8     -203.2
1995 \1\....................................    1,350.6       590.2       157.1         484.5        118.9    1,514.4      272.2       259.6         16.4        114.8      159.9      220.2      335.8      232.2      162.9     -163.8
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimates.
 
Note.--Through fiscal year 1976, the fiscal year was on a July 1-June 30 basis; beginning October 1976 (fiscal year 1977), the fiscal year is on an October 1-September 30 basis. The 3-month period from July 1, 1976 through September
  30, 1976 is a separate fiscal period known as the transition quarter.
Refunds of receipts are excluded from receipts and outlays.
Data shown in this table are from Budget of the United States Government, Fiscal Year 1996, February 1995, except 1995 data are from Final Monthly Treasury Statement, October 1995.


  Mr. HATCH. I reserve the remainder of my time.
  Mrs. BOXER addressed the Chair.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. BOXER. Mr. President, I want to respond to my friend's comments. 
And I hope he can stay on the floor because I think he raised some 
important points, some of which I agree with.
  He said this isn't a partisan issue. I agree with my friend from 
Utah. Alan Greenspan, who is the hero of many on the Republican side of 
the aisle--indeed, when we say the President's policies have brought us 
millions of new jobs and the lowest misery index, they always say it is 
Alan Greenspan. Alan Greenspan, Republican, opposes this amendment to 
the Constitution.
  I will give you another voice, Jean M. Ross of the nonpartisan 
California Budget Project, wrote that a balanced budget amendment would 
limit the Federal Government's ability to help States needing economic 
assistance. I can say to my friend that economic assistance to States 
is not only needed during the recessions, which my friend thought was a 
big loophole, but it is certainly needed in times of disaster.
  If you look at this map, you can see almost the entire country is 
under some risk for disaster.
  My friend says we can never balance the budget. He has all these 
budgets up there. I was glad to see Senator Byrd point out that the 
biggest deficits occurred in the 1980's in those books because of 
trickle-down economics, and a huge military buildup. We didn't pay for 
it. Those are what those books say.
  My friend says we are never going to have a balanced budget until we 
have a balanced budget amendment to the Constitution. We will never 
have a balanced budget until we vote for a balanced budget, and I have 
done that three times. I voted the tough votes, and the deficit is 
going down. I feel standing up here is quite fiscally responsible 
because of those votes. But when you put this country in an economic 
straitjacket, I think it is dangerous.
  My friend says he doesn't understand my amendment. I find that 
extraordinary because I offered it the last time we voted on this 
balanced budget. No one had problems understanding it. It is the same 
amendment. But let me read to my friend the purpose as written in my 
amendment, in case he doesn't understand it. The purpose is to provide 
Federal assistance to supplement State and local efforts to alleviate 
the damage, loss, hardship, and suffering caused by disasters or 
emergencies by exempting spending that is designated emergency 
requirements by both the President and the Congress.
  The point is that it is very clear that the President will declare a 
disaster or emergency. The Congress will then take a look at it. The 
Congress will then act. And, if the Congress agrees that this is a 
disaster or an emergency, then the 60-vote requirement is waived.
  My friend says it is easy to get 60 votes in an emergency. I would 
like to tell my friend a story. We had an earthquake in San Francisco 
and a freeway collapsed. It was called the Cypress Freeway. It is in 
Oakland, and it was destroyed. I am very familiar with this because my 
husband crossed that freeway an hour before it went down. So I am very 
familiar with the Cypress Freeway. We are rebuilding the Cypress 
Freeway.
  And one of my colleagues on the other side of the aisle--as a matter 
of fact, it was the then majority leader, Bob Dole, who decided that he 
didn't like the rebuilding plan and brought the issue before us. And I 
had to fight for my life, along with Senator Feinstein, to keep the 
rebuilding of the Cypress Freeway on the floor and alive and fulfill 
our obligations to the people of Northern California. We forced a vote 
on it. We got 53 votes, and we were able to move forward. We did not 
get 60 votes. Had this balanced budget requirement been in place we 
would not have been able to finish building the Cypress Freeway.
  So for anyone who comes on this floor and thinks that it is easy to 
get 60 votes when politics plays a role in some of it, and budget 
deficits will play a role in it, I would just say to them, please don't 
give that kind of power to a minority of the U.S. Senate. Let us vote a 
simple majority vote in case of natural disasters.
  There is no confusion about this amendment. If my friend has 
confusion, all he has to do is read the purpose. It is clear what we 
are talking about.
  I will just show one more picture again of what we are talking about. 
We are talking about flooding and storms that cause roads to shut down. 
We are talking about houses being buried in the water because of 
floods. It is real simple, I say to my friend. Let's not tell people it 
is confusing. It is pretty clear.
  I yield the floor. I thank the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. HATCH. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HATCH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Mr. President, in spite of the sincerity of my colleague 
from California, I think I have said all that needs to be said on this. 
I yield back the remainder of my time, and I move to table and ask for 
the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER (Mr. Sessions). The question is on agreeing to 
the motion to table the amendment. The yeas and nays have been ordered. 
The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The result was announced--yeas 60, nays 40, as follows:

[[Page S1649]]

                      [Rollcall Vote No. 18 Leg.]

                                YEAS--60

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

                                NAYS--40

     Akaka
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Ford
     Glenn
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Reed
     Rockefeller
     Sarbanes
     Torricelli
     Wellstone
     Wyden
  The motion to lay on the table the amendment (No. 16) was agreed to.
  Mr. KYL. Mr. President, the Senate has had before it several 
amendments that include provisions their proponents say will exempt 
Social Security from the balanced budget amendment. I do not doubt the 
Senators who propose the amendments are sincere in their desire to 
protect Social Security; none of us wants to harm Social Security, 
which is so important to so many older Americans. I have to say, 
though, that well-intentioned as their amendment may be, I cannot think 
of a greater threat to Social Security.
  Consider for a moment what it would mean to exempt Social Security 
from the balanced budget amendment. In effect, Social Security would 
become the only Federal program--the only program--where deficits would 
be permitted. The rest of the Federal budget would be required to be in 
balance.
  How on earth does allowing Social Security to be in deficit protect 
our seniors? Quite the opposite. If a balanced budget is good for other 
programs, why is it not good for Social Security? There is no greater 
protection for seniors than having the money to take care of our 
obligations. In fact, we have been able to provide for seniors 
precisely because Social Security has usually been in balance or 
surplus; it is the rest of the budget that has been plagued by big, 
chronic deficits.
  Now, at the very time it appears we are near consensus about how 
detrimental deficits are, some are proposing that we allow deficits to 
begin to infect the retirement program. In fact, the amendments to 
exempt Social Security would establish a constitutional presumption 
that Social Security will be run in deficit. Why else would the program 
be exempt from a balanced budget requirement?
  Mr. President, we have always made sure that Social Security is 
actuarially sound. When Social Security faced problems back in the 
early 1980's, Republicans and Democrats came together in a bipartisan 
way to rescue the program and make sure that the benefits of current 
retirees were protected and paid on time.
  On a bipartisan basis, we have abided by rules in the Senate that 
make it virtually impossible to pass a budget that adversely affects 
the Social Security surplus; it would take a supermajority vote to pass 
such a thing. On a bipartisan basis, we made sure that Social Security 
was exempt from the across-the-board spending cuts required by the 
Gramm-Rudman-Hollings deficit-reduction law in the 1980's. The 
Republican budgets of the last 2 years proposed ways of achieving 
balance without touching Social Security, and I assume President 
Clinton's new budget will not touch Social Security, either.
  So the reality is that Republicans and Democrats have worked together 
every step of the way to protect the integrity of the Social Security 
system.
  Why? Because there is general consensus in the country that Social 
Security must be protected. It has broad bipartisan support in Congress 
and around the country. It is supported by people young and old, rich 
and poor. It works. And unlike other programs run by our Government, it 
works because we have made sure that it has always operated in balance 
or with a surplus to cover unforeseen circumstances or expected future 
needs. That commitment to sound budgeting would be upheld by the 
balanced budget amendment--and applied to the rest of the budget as 
well.

  Mr. President, I want to speak for a few moments about what I believe 
are some of the misperceptions about the balanced budget amendment and 
the Social Security exemption that is being proposed.
  First, there is nothing in the balanced budget amendment that 
requires cuts in Social Security benefits. In fact, the budgets that 
Congress passed during the last 2 years would have achieved balance 
without touching Social Security, so obviously it can be done without 
harming the retirement system.
  Second, there is nothing in the exemption that is being proposed that 
would prevent Congress from cutting retirement benefits, means-testing 
benefits, reducing cost-of-living adjustments, or raising payroll 
taxes. The exemption would not prevent the expenditure of Social 
Security funds for other purposes; in fact, it would do just the 
opposite. Given that the exemption would allow Social Security to run a 
deficit, Congress will in all likelihood simply shift spending that 
cannot be accommodated within a balanced budget to the Social Security 
budget.
  Since Social Security is a program defined in statute--and Congress 
can amend that statute at any time by simple majority vote--Congress 
would be free to call virtually anything Social Security--whether it be 
Medicare, Medicaid, education, infrastructure development, or welfare--
and thereby extend the exemption to cover those programs, too. The 
incentive would be to raid the trust funds for any project or program 
that might otherwise bust the Federal budget, and that would endanger 
the solvency of what today constitutes the Social Security Program. It 
would also mean that a provision of the Constitution could be amended 
by a simple majority vote--by just amending the statute that is 
referred to in the constitutional exemption. That, of course, would 
directly contradict the amendment clause of the Constitution itself.
  Third, there is nothing in the exemption that precludes the Social 
Security surplus from being invested in Government securities and, in 
turn, being used to cover general operating expenses, just as it is 
now. Even those using Social Security as a pretext for opposing a 
balanced budget know that Congress has always made sure that the debt 
to the Social Security trust fund has been repaid--repaid with 
interest.
  Mr. President, the fact that the Social Security surplus is invested 
in government securities and used for general operating expenses does 
not mean beneficiaries are being shortchanged of any benefits due them. 
The surpluses do not exist for current retirees, but to help cover the 
cost of benefits when the baby-boom generation retires years down the 
road.
  So, the only relevant question regarding the safety and soundness of 
Social Security is whether, when it comes time to pay those benefits to 
future retirees, the Federal government will be able to cover its IOU's 
to the Social Security trust fund. That, in turn, depends on how deeply 
in debt the Federal government is.
  Mr. President, the Congressional Budget Office projected just last 
month that the budget deficit will reverse course and begin to rise 
again--from $107 billion in 1996 to $124 billion in 1997--and it will 
keep rising to $278 billion in 2007. Debt held by the public will 
increase 55 percent in just the next 10 years. The more debt that 
accumulates, the harder it will be for the Government to repay Social 
Security in the future while also meeting all of the Nation's other 
needs--for example, in law enforcement, education, the environment, and 
health care. The balanced budget amendment will help minimize the 
accumulation of debt and the threat to future retirees that is inherent 
in it.

  If Congress does not balance the budget--if it does not constrain the 
national debt--the temptation will ultimately be to monetize the debt--
that is, pay it off by printing more money. And that would lead to 
rampant inflation. No industrialized nation has ever

[[Page S1650]]

reached the level of debt that our country is expected to face in the 
next century without monetizing the debt, printing more money, and 
experiencing destructive, rampant inflation.
  If inflation drives the cost of basic goods and services beyond the 
reach of most Americans--if, for example, bread costs $100 a loaf--it 
will not matter that a retiree's $1,000 Social Security check arrives 
promptly in the mail. The worst enemy of those on fixed incomes is 
inflation.
  So the exemption neither guards against cuts in benefits nor ensures 
that the government has the ability to repay its debts to the trust 
fund to cover future benefits. It is a false promise to the millions of 
Americans who depend on Social Security to meet their most basic of 
needs.
  Leaving Social Security under the balanced budget amendment will, 
however, make sure that the retirement system remains safe, sound, and 
balanced. And that is important because, while the system is running 
annual surpluses now, it will soon begin running huge deficits. 
Beginning in 2012, Social Security will begin spending more than it 
collects in payroll taxes. By 2029, benefits will amount to more than 
all payroll tax revenue, accumulated surpluses, and interest--meaning 
that the trust fund will have neither sufficient income nor savings to 
meet then-current obligations. If allowed to continue operating in 
deficit, the Social Security Program will rack up $7 trillion in debt 
by 2070. These deficits are the greatest threat to the Social Security 
system.
  Mr. President, the exemption will not protect benefits or guarantee 
repayment of IOU's to cover future benefits. It will not even ensure 
that Social Security surpluses are invested in something other than 
government IOU's. But it will make it far more difficult to balance the 
rest of the budget by not allowing the amounts invested in Government 
securities to be counted toward a balanced budget.
  That would mean Congress would have to cut spending, raise taxes, or 
both by an additional $706 billion over the 5-year period 2002 through 
2007 beyond what would be necessary to balance a unified budget.
  The exclusion would force deep spending cuts--an additional across-
the-board reduction of 10 percent--in education, the environment, 
Medicare, law enforcement, and other discretionary spending programs. 
Or, it would require huge tax increases--up to 12 percent higher than 
they are today.
  To put that into perspective, President Clinton's 1993 tax increase 
amounted to $241 billion. Last year's congressional budget resolution 
proposed slower Medicare-spending growth to provide savings of $158 
billion, and discretionary spending savings totalling $291 billion.
  The $706 billion in additional deficit reduction that would be 
required by the Social Security exemption would amount to more than the 
Clinton tax increase and those two sources of savings combined. It 
would obviously be very difficult to find any consensus for such huge 
reductions, and therein lies the rub. I am very concerned that the 
Social Security issue--that older Americans--are being made the 
scapegoats for a vote against the balanced budget amendment.
  Mr. President, if proponents of the exemption are serious about 
wanting to balance the budget, excluding Social Security, then they 
should lay out how they will deal with tomorrow's Social Security 
deficit as well as how they intend to cover the $706 billion gap in the 
short term.
  Or they should simply admit that they do not support a balanced 
Federal budget.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa.

                          ____________________