[Congressional Record Volume 143, Number 37 (Thursday, March 20, 1997)]
[Senate]
[Pages S2626-S2627]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE BUDGET
Mr. CONRAD. Mr. President, let me just say that Senator Domenici, the
chairman of the Budget Committee, has come to the floor this afternoon
and presented two possible budgets. One is the President's budget, but
without the trigger mechanism the President provided to assure balance
even if the Congressional Budget Office projections are the ones that
are used.
The President's budget, of course, reaches unified balance by the
estimates of the Office of Management and Budget, but it does not reach
balance by the estimates of the Congressional Budget Office. And I want
to emphasize, ``unified balance.'' All of us need to understand that is
not real balance.
Nobody should be fooled anywhere about any of these budgets that talk
about balancing on a so-called unified basis, because when they use
that big word, what they are talking about is putting all of the trust
funds into the pot to claim balance. So I think it is important to
understand I do not believe any of these budgets that claim unified
balance are really balanced budgets at all.
But, with that said, I think it is also important to understand when
you hear these differences between Office of Management and Budget
projections and Congressional Budget Office projections, the fact is
both of them over the last 4 years have been overly pessimistic. They
have overestimated what the deficit would be. And I think that is also
important to keep in mind.
As I understand it, the Senator from New Mexico, the chairman of the
Budget Committee, offered the President's budget but without his
trigger mechanism. Why did the President not balance according to CBO's
projections? Well, very simply, when he did his budget he did not have
available to him the CBO baseline. He did not have available the CBO
projections. Although he asked for them, and asked for them repeatedly,
they were not prepared in time.
So in order to fulfill his responsibility to present a budget, he
used his Office of Management and Budget projections, which, again, I
emphasize have been overly pessimistic, not a rosy scenario, overly
pessimistic over the last 4 years in order to present a budget. He
provided a trigger mechanism so that if, in fact, CBO's projections
were different, were even more pessimistic than his own Office of
Management and Budget's, that he could still be in unified balance by
the year 2002.
I also understand the Senator from New Mexico has offered a second
budget that has no tax cuts or no net tax cuts and also has very deep
cuts in domestic discretionary spending. When we use the term
``domestic discretionary spending,'' what we are talking about is that
category of spending that includes education, roads, bridges, airports,
parks. Those are the categories of spending that are included in so-
called domestic discretionary spending.
Mr. President, if I could, the reason I came to the floor this
afternoon was to try to put this all in some perspective. Because I
think unless people have an idea of what we are talking about in terms
of the estimated expenditures of the Federal Government over the next 5
years and the estimated revenues and where the money goes, it is very
hard to understand the nuances of these budget discussions.
This chart shows over the next 5 years what we are anticipating
spending from the Federal Government: $9.3 trillion. The revenue that
is forecasted for the Federal Government over the next 5 years is here
in this block: $8.5 trillion.
So it is readily apparent that we are faced with a circumstance that,
without change, we are going to be adding $800 billion to the national
debt.
Unfortunately, our friends on the other side of the aisle in Senate
bill 2, which means clearly that is one of their highest priorities,
says the first thing to do is to cut the revenue anticipated by $200
billion. So they take this sliver off to start with. They reduce our
revenue from $8.5 trillion down to $8.3 trillion as the initial step in
addressing this gap between expenditure and revenue. It makes no sense
to me why you would dig the hole deeper before you start filling it in.
That is what our friends on the other side of the aisle have been
talking about.
Instead of addressing this $9.3 trillion worth of expenditures with
$8.5 trillion of revenue, they say cut it to $8.3 trillion of revenue
to begin with. So now we have $1 trillion that will be added to the
national debt.
Mr. President, this chart shows where the money is going to be going
over the next 5 years. This is where the money is scheduled to be
spent, and I think this is what our friends across the way are
struggling with as they struggle to come up with a budget resolution.
Where are you going to cut? If we can see we are faced with adding $1
trillion to the national debt based on scheduled spending and scheduled
revenues, and they start out by first taking $200 billion of revenue
away, so you create a $1 trillion hole to fill in, where are you going
to cut?
Here is where the money is scheduled to go: Social Security, $2.1
trillion of the $9.3 trillion that we are scheduled to spend over the
next 5 years. Interest on the debt, $1.3 trillion. Clearly you cannot
cut interest on the debt. Everybody is against cutting Social Security.
Those two alone are 37 percent of the scheduled expenditures. Defense,
$1.4 trillion, another 15 percent. We do not hear much of anybody
talking about cutting defense. So you start adding it up, defense is 15
percent, Social Security is 23 percent, which is 38 percent, and
interest on the debt is 14 percent. That is 52 percent of the scheduled
expenditures which nobody is talking about cutting.
That takes us to Medicare, $1.3 trillion, or another 14 percent of
Federal expenditures. Medicaid, $600 billion, about 7 percent of
Federal expenditures over the next 5 years. Other entitlements. We use
that terminology and it refers to things like retirement, nutrition for
children, welfare. Those are things that are in the categories of
``other entitlements.''
[[Page S2627]]
Then there is nondefense discretionary spending, which I referred to
earlier and which Senator Domenici, in the second budget that he laid
down here, would cut very deeply. He would cut from an unconstrained
baseline $263 billion out of this category. That is a tremendous amount
of money out of defense and nondefense. Those two are called
discretionary spending. From the nondefense discretionary side, the
budget he just presented would cut $183 billion out of a total that we
are scheduled to spend over the next 5 years of $1.5 trillion. Again,
what we are talking about there is education, roads, bridges, airports,
parks, law enforcement.
Do we really want to be cutting those areas in the magnitude of the
budget that the chairman of the Budget Committee has laid down? I do
not think so. I do not think Senator Domenici thinks so. In fact, I am
quite confident he does not think so. He is just making a point with
the second budget he laid down of what it would take even with no tax
cuts to achieve unified balance. Remember, unified balance is not
balance at all. That is when you take all the money from all the trust
funds and throw those into the pot to claim that you are balancing the
budget.
I hope this puts in some perspective what it is that we face this
year. This is not going to be easy. That is, hopefully, the message
that I have communicated here. When you look at what the scheduled
revenue is of the Federal Government--maybe we could show that chart
again--$9.3 trillion are the expenditures, and we are scheduled to have
$8.5 trillion of revenue. If the first thing you do is take $200
billion out of the revenue column, now you are at $8.3 trillion, and
you have $9.3 trillion of expenditures, you have $1 trillion added to
the national debt. Is that what we want to do? To have the kind of
massive tax cut that some have talked about, you have to borrow it all.
Does that make sense? Should we borrow money to have a tax cut? Does
that make sense to people? We already have a $5 trillion national debt.
How deep in the hole are we going to go around here before we respond?
Mr. President, these are the major categories of Federal spending. I
think one can see that if we are going to be serious about balancing
the budget and doing it in an honest way, we have a tall order in front
of us. Talking about tax cuts of $200 billion over the next 5 years,
which our friends on the other side of the aisle have put up as their
Senate bill No. 2, really makes no sense to me. It especially makes no
sense when you look at what happens to that tax cut proposal in the
second 5 years. This is not just a matter of reaching some kind of
balance in the year 2002. We have to be looking over the horizon here,
because the real challenge is, where is this all going? The real
challenge is we have the baby boom generation coming along, and they
are going to start retiring in the year 2012, and they will double the
number of people almost overnight eligible for our major programs.
We are headed for a circumstance in which, if we fail to change
course, we are going to either have an 80 percent tax rate--yes, 80
percent; does anybody believe we will do that?--or a one-third cut in
all benefits. Cut Social Security one-third, cut Medicare one-third,
cut all veterans benefits one-third. Those are the kind of draconian
options that will be presented to this Congress and a future President
if we fail to act.
We have a responsibility to respond. I submit that having tax cuts of
$200 billion over the next 5 years that explode to $500 billion over
the next 10 years is not rational, is not responsible, is not the way
to begin to fill in the hole. I have never seen anybody that went out
to fill in a hole and the first thing they did was dig it deeper. It
makes very little sense to me.
I hope that Senator Domenici, by presenting these budget options this
afternoon, sobers up people on both sides of the aisle here, sobers up
those who think that we can have massive tax cuts. That is not in the
cards. That is not serious if people are going to be honest with the
long-term fiscal imbalances this country faces. That is not facing it
head on or squarely. Also, I hope it stands as a message to people on
my side of the aisle, some who are opposed, for example, to correcting
the Consumer Price Index that we use to adjust for the cost of living.
The evidence is overwhelming that we are making an overcorrection for
the cost of living by as much as perhaps 1 percent a year. It sounds
like a small amount, but it makes a big difference over time. That 1
percent mistake will cost the U.S. Government $1 trillion over the next
12 years. Some on my side say we cannot touch that.
If we can't touch that, and the other side says we have to have a big
tax break, you begin to wonder what can we do around here? Goodness
knows, if we can't correct a mistake, which I believe the CPI is in
terms of adjusting for the cost of living based on the best evidence
that we have, what can we do? If our friends on the other side want to
have dessert before we start eating our vegetables in the face of this
enormous challenge of these long-term fiscal imbalances, then how
serious are they really about addressing the challenges facing
America's future?
We have an opportunity here to do something great for America,
because this isn't just some dry discussion about making columns of
numbers add up. That isn't what this is about. This is not a counting
exercise. This is about the future economic strength of America. This
is about what kind of jobs are going to be available for our kids. This
is about what kind of life future Americans are going to enjoy. This is
about the competitive position of America. That is what is at stake. It
is not just some dull, lifeless debate about balancing a budget. This
discussion is about what we can do to strengthen America for the future
and the difference that we can make in the lives of the people of our
country by being responsible now, because what we have been told is, if
we balance this budget in this window of opportunity we have before the
baby boomers start to retire, our economy in the future will be 30
percent larger than if we fail to act.
Some may be listening to this saying, ``Wait a minute. I am lost.
What is the connection between balancing the budget now and having a
bigger economy later?'' It is very simple, but it is very real. If we
are going to grow the economy, if we are going to make it bigger, if we
are going to have more jobs, we need investment. To have investment you
have to have savings. The biggest threat to savings in this country is
the deficits that the Federal Government runs, because those deficits
take money out of the pool of savings of our society.
That is why this debate matters. It is perhaps the single most
important debate we will have in this Congress this year. If we all do
it seriously and honestly and face our responsibilities squarely, we
can do something great for our country.
I thank the Chair. I yield the floor.
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER (Mr. Bennett). The Senator from Illinois.
Mr. DURBIN. Thank you, Mr. President.
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