[Congressional Record Volume 143, Number 55 (Thursday, May 1, 1997)]
[Senate]
[Pages S3867-S3870]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          BUDGET NEGOTIATIONS

  Mr. GRAMM. Mr. President, we have been in the midst of a filibuster 
where our President and many of our notable leaders around the country 
have gone to Philadelphia and called for an expansion in voluntarism, 
something that we all believe in, something that America was built on.
  We have a bill on the floor of the Senate now to try to protect 
volunteers from frivolous lawsuits which threaten the whole process, 
and we are in the midst, basically, of a stall and a filibuster by our 
Democratic colleagues in opposition to this bill.
  In this lull, I wanted to take the opportunity to come to the floor 
of the Senate and, for the first time, publicly make a comment on the 
emerging budget agreement.
  Mr. President, I believe that the budget agreement that is now 
emerging is a good political deal, but it is a

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bad budget. It is a good political deal because, in a sense, it gives 
both parties in the negotiation what they want.
  The President in this budget negotiation gets what he wants. He gets 
an ironclad guarantee that the era of big Government is alive and well 
and guaranteed in Washington, DC. He gets new entitlement programs. He 
gets the reestablishment of entitlements that we eliminated in welfare 
reform. He gets more social spending than President Carter and nearly 
twice as much as in the 1960's under Lyndon Johnson. The President, in 
this emerging budget agreement, gets the one thing that he cares most 
about, and that is a guarantee that Government is going to continue to 
grow and that its presence in the American economy and American society 
is going to continue to be dominant.
  In a sense, Republican Members of Congress get what they want. We get 
to claim a tax cut. We get to claim that we have delivered on a 
campaign promise we made to let people keep more of what they earn. 
There are still negotiations underway as to how big that tax cut is 
going to be. But the problem is that by politically manipulating the 
Consumer Price Index, something I will talk more about in a moment, 
what is happening is that while on one hand we are going to be 
guaranteeing a cut in taxes in the short run, by manipulating the 
measure of inflation upon which the Tax Code is built, we are 
guaranteeing increases in tax rates that will, over time, offset the 
cut in taxes that we will claim from this budget agreement as a 
victory.
  The President gets what he wants: more Government and a lot of it. 
Republicans get what they want, and that is a claim of a short-term tax 
cut. But let me say the American people do not get what they want. The 
American people get no fiscal restraint. In the end, the American 
people will not get a balanced budget. In the end, the American people 
are not going to get a stronger economy from this budget. In the end, 
the American people are not going to get any lasting tax relief from 
this budget.
  This budget is a great deal for Washington, but it is a bad deal for 
America. This is the kind of budget that comes about when the two great 
political parties stop debating ideas and start conspiring against the 
public, conspiring to promote their interest but not working either 
together or in contention to promote the public interest.
  Let me say a little bit about the Consumer Price Index and about 
politicizing it.
  America is a country where statistics matter. Facts are persistent 
things. Facts have an impact on what happens in our country, and the 
measure of inflation affects everything from how much you get in Social 
Security benefits to how much veterans receive in retirement benefits 
to how much we pay in taxes to how contracts are negotiated. We have 
set up an agency which, historically, has acted independently, the 
Bureau of Labor Statistics, to try to come up with a measure of what 
inflation is, what consumer prices are.
  Obviously, no statistic is perfect. In fact, we have had a debate in 
economics for 40 years about whether the Consumer Price Index is a good 
measure of the cost of living. To listen to politicians talk about it 
in the last 4 or 5 years, there is this unanimous opinion among 
professional economists that the Consumer Price Index overstates 
inflation. Let me say that there are only two economists in the 
Congress, Dick Armey and myself, and we both oppose the change in the 
Consumer Price Index. In fact, economists are split on this subject.
  No less an authority than Milton Friedman, Nobel Prize winning 
economist, perhaps the best known economist on the planet and probably 
the most able, has concluded that the CPI may well overstate the rise 
in private prices, but it almost certainly understates the cost of 
living, which is the measure that we are using it for.
  And why does the CPI understate the cost of living? Because it leaves 
out the No. 1 cost of living for the average working family in America. 
In fact, it leaves out an involuntary expenditure that is bigger than 
health care, housing, nutrition, and transportation combined. The 
Consumer Price Index does not include the cost of Government, does not 
include taxes and, therefore, through that exclusion, Milton Friedman 
argues it understates the true cost of living, even though it might 
understate the rise in the cost of goods and services in the private 
sector. But whether CPI overstates or understates the Consumer Price 
Index, we should not have political decisions being made about economic 
statistics, and I would have to say, obviously, it was inevitable in 
the Clinton administration that the process of setting statistics was 
going to become politicized.
  We are looking in this negotiation underway at mandating, through an 
assumption that it will happen in the future, a change in the Consumer 
Price Index that will raise taxes over a decade by over $100 billion, 
and it will raise taxes by changing the inflation rate and, therefore, 
pushing working families more quickly into higher tax brackets and 
lowering the value of the personal exemption and the dependent 
exemption, which are critical factors in calculating the taxes of 
working families.
  So the bottom line is, by deciding on a political basis where Members 
of Congress and the President have decided that we are going to 
manipulate the Consumer Price Index, we are going through that process 
to cut Social Security and other benefits over a decade by about $180 
billion, and we are going to raise taxes by about $120 billion.
  What are we going to do with that money? We are going to spend every 
penny of it. So Social Security is 15 years away from insolvency, we 
are going to manipulate the Consumer Price Index and reduce benefits, 
but we are not going to put those benefits back in to saving the Social 
Security trust fund.
  We have the highest tax rates in American history. No American has 
ever lived a day where the aggregate tax rate, where you are looking at 
taxes at all levels of Government, was as high as it is today. Never; 
not a day. But what we are doing by manipulating our statistics is we 
are raising taxes on working families, and we are all doing it sort of 
quasi under the table.
  I will offer, when we debate the budget, an amendment which I think 
is a pretty important amendment. In fact, I am going to call it the CPI 
Social Security and Tax Equity Improvement Act. What this amendment is 
going to say very simply is this: That rather than having a bunch of 
politicians manipulate the Consumer Price Index to try to cut Social 
Security benefits and raise taxes so we can spend the money, we ought 
to go ahead, since this has now reached such a political fever pitch to 
seize this money and squander it will not go away, we should leave it 
to the experts but dedicate the savings to specific purposes.
  So what I am going to propose is two things. In the budget, I am 
going to say whatever we do to change the Consumer Price Index, that 
every penny that comes from raising taxes on working families ought to 
go back to those working families to raise the dependent exemption and 
the standard deduction first back to the level that existed in 1950 in 
real dollars. Today, the standard deduction is about $2,550. In 
current-day inflation adjusted dollars, in 1950, it was $3,800.
  So the first thing we would do with these savings that come with 
increases in taxes from changing the CPI, if Congress does it in the 
budget, is we would take that money rather than letting Congress spend 
it, the part that comes from raising taxes we use first to raise the 
standard deduction up to $3,800 a year, and then we would use it to 
reduce marginal tax rates. And those parts of savings that come from 
cutting Social Security benefits, we would put back in the Social 
Security trust funds, but we would set up real trust funds with it. It 
would be outside the Treasury Department. It would not count as the 
internal debt of the Federal Government, because it is the debt of the 
Federal Government to Social Security beneficiaries. When we pay 
interest on that debt, it would count as an outlay of the Federal 
Government. Today, it does not even count as an outlay of the Federal 
Government when Social Security earns interest. Finally, we would set 
up a procedure where we could look at having a real trust fund, 
including real investments.

  I also will introduce a bill that will establish an independent 
commission made up of all living American Nobel Prize winners in 
economics and have

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them, in conjunction with the Bureau of Labor Statistics, review for 6 
months the Consumer Price Index and make a recommendation to the 
Commissioner of Labor Statistics. If she decides, based on their 
recommendations, which will be made public, to change the Consumer 
Price Index, then under the bill I will introduce, the part of savings 
that come from raising taxes will go back to families to raise the 
standard deduction and cut marginal tax rates. The part of savings that 
come from the Social Security trust fund will go back into it, but into 
a real trust fund that will be set up outside the Treasury, and it 
would be capable for the first time in American history of making real 
investments.
  I am not here to criticize our leader or to criticize Senator 
Domenici for their work on these negotiations. We all have to do the 
best job we can do. We all have to try to achieve what we believe in, 
and I am sure that if the negotiations are completed along the lines 
that they have negotiated them, that they will believe they have gotten 
the best agreement they can get. But I cannot and do not support an 
agreement where the President gets what he wants, a guarantee of big 
Government in perpetuity, new entitlement spending, social spending the 
likes of which we have not seen since the 1960's; Congress gets what it 
wants, the ability to claim a tax cut, even though by manipulating the 
measure of inflation, we raise taxes and, over time, offset that tax 
cut.
  The problem is the President gets what he wants politically, Congress 
gets what Congress wants politically, but the American people do not 
get what they want politically. They want a real budget; they want 
fiscal restraint. Nobody can claim that this budget exercises fiscal 
restraint. Nobody--Democrat, Republican--no one can look at this budget 
and say that a tough decision has been made, that spending has been 
controlled. There is no fiscal restraint in this budget.
  While we will be able to claim a short-term tax cut, the reality is 
there is no permanent tax cut when you factor in the change in consumer 
prices in this budget. We do not guarantee in this budget a balanced 
budget. In fact, this budget begins by assuming a balanced budget, for 
all practical purposes. By changing the underlying assumptions in this 
budget, if we simply went with a spending level set out in 
discretionary spending in current law, which is $4 billion for next 
year below what we are spending now--that is the law of the land--and 
we did nothing else under the assumptions of this budget, for all 
practical purposes, we would have a balanced budget.
  So a balanced budget is not achieved by this budget; it is assumed by 
this budget. In the end, this budget gives both political parties what 
they need politically, but it does not give the American people what 
they need and, as a result, I am not for it. This is a bad deal in the 
making. It is a deal that is a political deal with political ends. It 
is a deal that comes about when we move away from the traditional 
function of our great political parties, which is to contest, which is 
to present competing ideas and then ultimately allow the superior ideas 
to prevail. This budget really represents what I am sure will be 
portrayed in the media as great bipartisanship, but in reality it is 
the two parties working together to claim political victories for each 
party without achieving the objective that the American people seek.
  So I do not doubt that there will be great support for this budget. 
When you claim you are balancing the budget, when you can demonstrate 
that we are creating new entitlements and the largest social spending 
that we have ever seen since the 1960's, you are going to have a lot of 
Democrats who are going to support this budget. When you can claim, no 
matter how temporary it may be--with the procedures in this budget, we 
will over time raise income taxes--but when you can claim that we are 
cutting taxes, even for a short period of time, there are going to be 
some Republicans who find this agreement to their liking.
  Finally, there is pressure on us all, and there should be, to find a 
compromise to balance the budget, to work with the President. But I do 
not see an effort here to work with the President to solve the problem. 
I do not see an effort here to work with the President to gain control 
of spending. Both parties campaigned in the last election on 
controlling spending. There is no effort here to control spending. In 
fact, there is a conspiracy here, a bipartisan one, to increase 
spending. I do not see an effort here to guarantee and lock in a 
balanced budget. I see an effort here to assume a balanced budget, so I 
see bipartisanship all right, but it is bipartisanship basically to 
achieve a political goal for each political party. I do not see 
bipartisanship to achieve a goal for America.
  Let me touch on two final points and then I will yield the floor.
  We are going to bring up next week a supplemental appropriations 
bill. That supplemental appropriations bill, for all practical 
purposes, raises the deficit $8.4 billion, though there are some 
offsets in the defense area.
  I remember when we had 43 Members of the Senate who were Republicans, 
and the Democrats tried to bring up a $17 billion so-called economic 
stimulus package, and we blocked it. We now have 55 Republicans, and 
yet next week we are going to bring up an $8.4 billion spending bill 
where virtually every penny of it is going to raise the deficit. We are 
already spending $22 billion above what we said in our 1996 budget we 
would be spending on discretionary spending this year.
  I intend to offer an amendment next week. That amendment is going to 
do two things. No. 1, it is going to say every penny we spend this year 
on emergencies--and I am in favor of disaster relief--but I think it is 
very instructive that if you look at the number of States we have had 
floods in, and then you look at the fact that we are giving disaster 
assistance to 23 States, this disaster is taking on manmade 
implications made in Washington, and the disaster is not just flooding 
houses in North and South Dakota and Minnesota, but it is increasingly 
runaway Government spending at the expense of the taxpayer and at the 
expense of the deficit.
  What I will propose is the amount of money we are going to spend for 
an emergency this year, spend it, but do an across-the-board cut in 
other programs to pay for it. Then whatever we spend next year, make it 
count as part of the budget for next year; in other words, for next 
year that it be offset against other programs that we might have spent 
it on.
  I know we will have colleagues here who will jump up and say, well, 
we have people who have been flooded out of their homes. And we do. And 
we should help them. But shouldn't we pay for it?

  What family would not like to say, when Johnny falls down the steps 
and breaks his arm, ``Well, look. We don't have any money. We have 
planned to go on vacation this year'' or ``we were going to buy a new 
refrigerator this year. So we are just going to have to assume that 
Johnny's arm gets fixed, and it would be nice if somebody would come in 
from Heaven and just give us the money.'' But that does not happen in 
American families. What they have to do is they have to go back and 
they have to not buy that new refrigerator or they have to not go on 
vacation.
  What I am saying is, help people who have been the victims of natural 
disaster, but do not create a financial disaster by simply adding it to 
the deficit. Let us provide disaster assistance, but let us cut other 
programs that now, with these disasters, we cannot afford.
  Let me also note that this is not unexpected. We have had a disaster 
every year that President Clinton has been in office and we have not 
had the money to pay for it because we did not write it into our 
budget. It has averaged about $7 billion a year. There is nothing 
unexpected. Every year in America we have floods or hurricanes or 
tornadoes or earthquakes. We know it is going to happen. When we do not 
write the money in our budget to pay for it, all we are doing is 
saying, let us borrow the money and just keep spending. My answer is, 
let us pay for it by cutting other Government programs.
  I do not believe, Mr. President, that amendment is going to be 
adopted. There is no constituency that I can determine in the Congress 
for controlling spending. But we are going to vote on it. We are going 
to know where people stand on this issue.
  The final point I want to mention is on the so-called CR. We all know 
that when the Government shut down, people were dislocated. I would 
have to say

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that I think the President did an exceptional job politically of 
exploiting it. I admire him for it. I think we did an inept job of 
explaining that in fact the President vetoed the bill and shut the 
Government down.
  But in an unusual effort to have good Government, what Republicans 
are saying on this appropriations bill we are going to vote on next 
week is, look, before we get into any disputes with the President, let 
us just agree that if at any point during the year we cannot agree on 
how much money to spend to keep the Government open, that we will keep 
it open temporarily at 98 percent of the spending we spent last year, 
which, by the way, is substantially above the budget that we adopted 
last year.
  Our Democratic colleagues are saying, ``Well, no, we can't do that. 
We can't set out that if we can't reach an agreement we will simply 
spend 98 percent of last year's level.'' They are saying that somehow 
we are trying to impose priorities on the President. What we are trying 
to do is to guarantee that we do not have a shutdown in Government. I 
think our proposal is eminently reasonable. And I intend to support it. 
I do not intend to vote for this supplemental appropriations bill if we 
do not have this provision to prevent a fiscal disaster written into 
it.
  I think it is time for us to understand that we have an obligation, 
No. 1, to pay for these bills, and, No. 2, to try to set out some way 
of gaining control of runaway Federal spending. The problem in 
Washington is still spending. We are still not controlling it. That is 
what this debate is about.
  I yield the floor.
  Mr. LEAHY addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Vermont.
  Mr. LEAHY. Mr. President, as some of my colleagues know, I was 
considering introducing, as a substitute to the bill by the 
distinguished Senator from Georgia and others, the bill of the 
distinguished gentleman from Illinois, Mr. Porter, as introduced in the 
other body. I am withholding that because staff from my office and 
staff of the distinguished Senator from Georgia and others have been 
talking about some additional amendments to the pending legislation 
that, if acceptable to all sides, would improve a number of the 
concerns that the Senator from Vermont has with the pending 
legislation, concerns I will not go into again here because the Senator 
from Vermont has discussed them on a number of occasions on the floor.

  While I was waiting to make that announcement, though, I could not 
but hear some comments of the Senator from Texas regarding the budget.
  Frankly, I will say to my friend from Texas or anybody else, if they 
are not happy with the recommendations being made by the White House or 
Democratic Senators or anything else, the Republican Party has a 
majority of the Members in the House of Representatives, the Republican 
Party has a majority of the Members in the Senate of the United States. 
All they have to do, if they have a budget they prefer to anything the 
President has, is bring it forward and pass it. They have enough votes 
to pass it. And the President cannot even veto it; it is a budget 
resolution. So it is a little bit disingenuous to suggest that somehow 
the President or anybody else is winning on this.
  The Republican Party has the majority of votes in the House and the 
Senate. A budget resolution cannot be vetoed. All they have to do is 
pass it. In fact, the law requires that they pass it by April 15--I 
mean, April 15 of this year, not next year. The law also requires that 
you and I, Mr. President, file our income taxes by April 15. If we do 
not, we get a knock on the door from the IRS. Apparently nobody is 
going to knock on the door when the Congress did not pass a budget 
resolution by April 15.
  But I suggest, before anybody goes tearing too hard after the 
President or anybody else that may have been negotiating a budget, with 
all due respect to my friends on the other side of the aisle, if they 
do not like it, just pass their own. They could have followed the law 
and passed one by April 15. They did not. I will not chastise them for 
not obeying the law, even though they want the rest of us to. But just 
pass it, if you like. You can do it. I will also say, as far as passing 
an automatic continuing resolution, whoa Nellie, that has nothing to do 
with cutting budgets. I am perfectly happy to vote for budget cuts. I 
voted for more successful budget cuts than an awful lot of people in 
this body, I mean those that actually passed in the Appropriations 
Committee and elsewhere.
  But this idea of some kind of an automatic continuing resolution is 
just a law that says we do not have to do our work. Now, by the end of 
September we have to pass 13 appropriations bills. If we all just go 
off and take another vacation, do not pass them, then this law proposed 
by the Senator from Texas and others would kick in, and nobody would 
even know if we were out of town.
  I prefer we do our work. Maybe some of the same people, some of the 
same people who were unable to come up with a budget by April 15, who 
refused to follow the law to come up with a budget by April 15, want 
this new wrinkle, this unprecedented wrinkle of basically passing 
appropriations bills in advance, because if you pass this law, this 
continuing resolution, we can just go home. Maybe the American people 
would like that, but I do not think we are meeting our 
responsibilities. So I think we should stop the gimmicks in the 
appropriations bills. And this is just one more. It is not an issue of 
whether you want to cut budgets or not. It is an issue of whether we do 
our work.
  We have had several vacations this year and we confirmed two Federal 
judges and we are now in the fifth month. There are 100 vacancies. We 
have had several vacations this year and we are now in May, even though 
the budget resolution is supposed to be here April 15. I think before 
we pass any more laws that allow us to escape the responsibility for 
carrying out our actions in this body, we ought to do what we are 
supposed to do.
  (The remarks of Mr. Leahy pertaining to the introduction of S. 678 
are located in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')

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