[Congressional Record Volume 143, Number 40 (Tuesday, April 8, 1997)]
[Extensions of Remarks]
[Pages E583-E585]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               A BUDGET THAT INVESTS IN AMERICA'S FUTURE

                                 ______
                                 

                       HON. GEORGE E. BROWN, JR.

                             of california

                    in the house of representatives

                         Tuesday, April 8, 1997

  Mr. BROWN of California. Mr. Speaker, for the last 2 months, we have 
seen a great deal of rhetoric on the budget, but there has been no 
action. Next week marks the deadline for passage of a budget 
resolution, but there is no chance that we will meet that goal. We are 
in a stalemate and seem incapable of moving ahead on the budget or any 
of the rest of the issues that confront the Congress.
  I will be the first to admit that crafting a sensible budget 
resolution is no easy task. It requires taking public positions that 
may be uncomfortable, setting spending goals and priorities that may 
bring questions and criticism, and being willing to take risks in order 
to gain some progress. I know all of this because I have struggled to 
develop a comprehensive budget over the last few months.
  Today, I am introducing a concurrent resolution on the budget aimed 
at achieving three major goals. First it will establish moderate 
budgetary growth and sustained investments in capital expenditures that 
are associated with future productivity. Second, it will incorporate a 
new structure to the budget process that more clearly identifies these 
investments and enforces the budgetary goals we set for these in the 
future. This approach has come to be called the investment budget and 
it is my hope that Congress will consider it a first step in reversing 
the dramatic decline in investments that we have witnessed over the 
past decade. Third, this investment budget reaches balance by the year 
2002.
  The 104th Congress was a crucial turning point in addressing the 
Federal deficit. The White House, the Republican majority, and the 
Democratic minority have all committed to achieving a fully balanced 
budget by the year 2002. While this will remain a political imperative, 
there is not yet a coherent or unifying policy to guide this process. 
Past proposals Congress has considered range from artful accounting 
exercises to ideological social blueprints. None have fully addressed 
the underlying imperative to create an economy that can sustain growth 
after the year 2002.
  The 105th Congress is now struggling to reach a consensus over a wide 
variety of budgetary issues including tax cuts, adjustments to the 
Consumer Price Index, defense spending, and entitlement reform. There 
is a rare opportunity at this time to offer a unifying goal to this 
discussion. The fundamental challenge Congress faces is the need to 
shift public spending away from consumption toward investment. My 
concern over our seeming inability to distinguish investment from 
consumption has led me to propose this bill today.
  In accomplishing these objectives, the investment budget will also 
eliminate the deficit by the year 2002 by proposing certain changes in 
entitlement programs, and curbing the growth of other noninvestment 
discretionary programs. Finally, the investment budget will postpone 
any proposed tax cuts until the budget is balanced.
  As I said before, I am not an expert on the budget and this 
concurrent resolution borrows heavily from those more familiar with 
this process than I am. I have drawn inspiration from

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my friends in the Conservative Coalition, the so-called Blue Dogs, by 
adopting some of their entitlement reforms. I have drawn inspiration 
from the President by adopting his education and worker training 
programs. I have drawn inspiration from my friends on the 
Transportation and Infrastructure Committee who have been articulately 
advocating enhanced physical infrastructure expenditures. And, of 
course, I have listened to colleagues on both sides of the aisle who 
demand that we lay out a course for Federal policy that will lead to a 
balanced budget by the year 2002.
  The case for investments rests on the long recognized strong 
relationship between public investments and economic growth. Growth in 
the gross domestic product is generally due to the growth in the labor 
force, which is entirely dependent on demographics, and growth in the 
productivity index, the output produced per unit of input. This later 
is strongly influenced by investments in technology, capital 
infrastructure, and human resources. That is, productivity depends 
directly on the availability of private capital stock, work force skill 
and training, and the rate at which technology is improved and applied 
in the workplace.

  The corollary to this is that economic growth and economic 
opportunity are complementary. Economic growth will make resources 
broadly available to widen opportunity and increase employment. The 
slowdown in productivity beginning in the 1970's was accompanied both 
by slower growing family real incomes and by a widening of the income 
gap.
  In order to renew and sustain productivity increases over the next 
decade, the emerging consensus among economists is that policies should 
be pursued that increase higher national savings, encourage more open 
and efficient markets, and shift public spending away from consumption 
and towards productive investment. It is this later policy goal that is 
the focus of the investment budget. It should be emphasized, however, 
that a budget resolution alone cannot address the full scope of the 
productivity problem. Additional public policies will be called for 
over the coming decade that complement this in other areas such as 
overall fiscal control, international trade, and incentives for private 
capital formation.
  The proposed investment budget sets specific targets for growth in 
investments, such as research and development, physical infrastructure, 
and education and training. The overall goal for research and 
development spending is aimed at keeping pace with the growth in the 
gross domestic product and reversing the declining trend evident in 
other budget proposals.
  The goal for physical infrastructure funding is to achieve 
productivity gains over the near term by improving surface, water, and 
air transportation systems and enhancing their efficiency. This is 
accomplished by increasing discretionary spending to a level that can 
be efficiently sustained by the existing trust fund revenues.
  The third critical element relates to human resources. Aggressive 
education and training programs will ensure that all Americans can 
participate in and benefit from these productivity gains. The goal is 
to narrow the income gap and to enable a workforce that can be 
integrated into the overall growth in the economy that technology and 
transportation investments will bring.
  In the aggregate, the investment budget identifies $910 billion in 
public investments over the 5-year period ending in 2002. This exceeds 
the President's request for these investments by over $70 billion. In 
the President's fiscal year 1998 budget request, the funding level for 
Federal investment represents 2.7 percent of the GDP. This is the 
lowest level of funding for Federal investment since definitional 
records have been kept. Although the investment budget falls far short 
of reestablishing the level of investment the Nation made in the past, 
it does begin to reverse the precipitous decline.
  In order to fully address this problem, however, it is not enough to 
simply propose higher spending levels in the future. It is also 
necessary to fix the budget process in a manner that more clearly 
distinguishes capital investments and consumption and enforces any 
target we set during the appropriations process. This would provide a 
remedy to a long-recognized irrationality in the budget process that 
treats investment and consumption as equivalent expenditures whose only 
uniqueness lies in their outlay rates rather than their functional 
effect on the economy. There are several factors that account for this 
state of affairs. First, the President's budget does not specifically 
identify investments in a manner that can be addressed in the 
congressional budget process.
  Second, the present structure of the congressional budget process for 
allocating discretionary resources is strongly influenced by the cold 
war concern for maintaining a strong defense. Thus, Congress has acted 
to construct a budgetary firewall between defense and nondefense 
discretionary expenditures. The decisionmaking process then takes place 
in two separate vacuums. Funding to continue combat-ready reserve units 
is pitted against weapons modernization, funding to advance new 
cutting-edge technologies is pitted against new prisons, the space 
program is pitted against veterans, and so on.
  The investment budget, on the other hand, is aimed at restructuring 
the budget process to directly distinguish between investments and 
consumption in the decisionmaking process. This will provide a more  
meaningful contemporary context to the decisionmaking process that will 
be needed in the coming decades. The firewall that previously existed 
between defense and nondefense will be transformed into a division 
between investments and noninvestments. Under this process, specific 
multiyear targets for investments will be set that can sustain and 
enhance productivity. The allocation process made under section 602 of 
the Budget Act will be oriented around investments and noninvestments 
rather than defense and nondefense.

  We are undergoing a number of political, economic, and social changes 
in this Nation, yet we will be unable to fully debate these issues 
until we fix the budget problem and move beyond the current 
congressional stalemate. This investment budget seeks to break the 
stalemate by suggesting a new approach that allows sensible growth 
through investment while balancing the budget. This budget also begins 
to show a way of taking advantage of the changes occurring around us, 
by investing in a base of knowledge and physical infrastructure that 
provides us with a wider range of options.
  Mr. Speaker, I am enclosing a brief summary of the resolution and a 
list of assumptions we have made in developing it. I hope that my 
colleagues join me in supporting this approach when we consider the 
budget later this month.

        Summary of Concurrent Resolution Introduced by Mr. Brown

       The Investment Budget is aimed at maintaining strong 
     Federal investment in areas such as research and development, 
     capital infrastructure, and education and training within an 
     overall balanced budget. The Investment Budget recognizes 
     that in the post-Cold War era, the critical balance should be 
     struck between investments and consumption rather than 
     defense and non-defense. The legislation establishes a 
     process which protects investments from excessive growth in 
     consumption programs.
       The following assumptions were used in developing the 
     Investment Budget:
       The bill assumes enactment of Title VII of H.R. 2530 
     introduced in the 104th Congress, adjusted as necessary for 
     current enactment dates. This provides for certain reforms 
     for the Medicaid program and was developed by the House 
     Conservative Coalition.
       The bill assumes enactment of Title VIII of H.R. 2530 
     introduced in the 104th Congress, adjusted as necessary for 
     current enactment dates. This provides for certain reforms 
     for the Medicare program and was developed by the House 
     Conservative Coalition.
       The bill assumes a uniform adjustment to the CPI of .5%.
       The bill assumes enactment of the Presidents proposals 
     contained in Table S-7 of the Budget entitled ``Eliminate 
     unwarranted benefits and adopt other revenue measures'' and 
     ``Other provisions that affect receipts''.
       Key aspects of the Investment Budget are as follows:
       Balanced Budget.--The Investment Budget complies with the 
     F.Y. 1998 discretionary spending cap and eliminates the 
     deficit by the year 2002 using CBO assumptions.
       Investments.--The legislation identifies $910 Billion ion 
     public investments over the 5 year period. This exceeds the 
     President's request for these programs by over $70 billion.
       Offsets.--In addition to eliminating the Federal deficit, 
     this proposal fully offsets all increases for investments in 
     the bill. A summary of offsets and savings relative to the 
     CBO 5 year baseline is as follows:
       Limit Defense spending--$116 B.
       Medicaid Reform--$25 B.
       Medical Reform--$121 B.
       .5% CPI Adjustment--$64 B.
       Eliminate Unwarranted Benefits--$76 B.
       Permanent Savings.--The Investment Budget is fiscally 
     responsible and includes no one-time budget balancing 
     gimmickry. It does not utilize asset sales such as spectrum 
     auctioning as a revenue enhancement to balance the budget. 
     Instead, the Investment Budget proposes to deposit all 
     proceeds from spectrum auctioning in a trust fund in order to 
     meet future public investment needs.
       No Tax Cuts.--The legislation assumes no tax cuts before 
     the budget is balanced.
       Public investments targeted by the legislation include the 
     following:
       All civil R&D programs including NIH, NSF, NIST, DOE, NASA, 
     and Department of Agriculture have been provided an annual 
     growth rate of 5% per year fully offset within a budget that 
     balances by the year 2002. In sum, this bill contains $409 
     billion over 5 years for all civil R&D, an increase of $31 
     Billion over the President's request. These budgetary targets 
     will allow R&D to keep pace with the overall growth in the 
     economy.
       Defense R&D has been increased by $4.5 billion above the 
     President's request over the 5 year period, primarily in the 
     post 1999 time frame in order to support modernization needs.

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       Stable funding for all EPA environmental regulatory, 
     research and enforcement programs including the Superfund 
     program. In sum this bill contains over $24 billion, an 
     increase of $2 billion over the President's request.
       Stable funding for all rural development and economic 
     development assistance programs. This bill contains $6.4 
     billion over 5 years, an increase of $500 million above the 
     Administration's request.
       A total of $218 billion for ground, air and water 
     transportation programs, an increase of $37 billion over the 
     President's request. This increase will optimize 
     discretionary spending relative to the trust funds for these 
     programs.
       A total of $196 billion for elementary, secondary, 
     vocational education, and higher education programs. This 
     reflects the President's F.Y. 1998 request.
       $34 billion for Social Service programs including the 
     National Service Initiative, and Children and Family Services 
     programs. This reflects the President's F.Y. 1998 request.
       $21 billion for the Special Supplemental Food Program for 
     Women, Infants and Children (WIC)--President's request.

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