[Congressional Record Volume 143, Number 64 (Thursday, May 15, 1997)]
[Extensions of Remarks]
[Page E935]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E935]]

              A BUDGET PROPOSAL THAT INVESTS IN OUR FUTURE

                                 ______
                                 

                       HON. GEORGE E. BROWN, JR.

                             of california

                    in the house of representatives

                         Thursday, May 15, 1997

  Mr. BROWN of California. Mr. Speaker, today we are in budgetary 
limbo. We have been told that we will soon be presented with a budget 
agreement that will set us on an economically sustainable course for 
the future. We have been told that the package of spending cuts and tax 
cuts will benefit all Americans from Main Street to Wall Street. We 
have been told that the only thing left is to fill out the details. We 
do not know what these details are today and we may not understand 
their significance until long after we have voted on this package on 
the floor.
  Unfortunately it is these very details that will govern, not only 
whether this package can hold together during the remainder of the 
budget process, but also whether this agreement will have any 
beneficial effect at all on the economy 10 years from now. 
Unfortunately, this budget resolution we will vote on will be nothing 
more than an accounting game--how can we get to a zero deficit in 5 
years.
  The real question should not be whether the deficit is zero, whether 
we have a $10 billion deficit, or whether we have a $10 billion 
surplus. To a first approximation, all of these will have about the 
same effect on the economy and they are all arbitrary accounting 
benchmarks. The real question should be whether we are spending Federal 
resources on investments that will help us achieve productivity gains 
in the future. The well known campaign slogan ``it's the economy 
stupid!'' should be replaced by ``it's productivity stupid!''.
  This year, the President's budget clearly shows that Federal 
investments, especially nondefense investments, have continued their 
decline both as a percent of total outlays and as a percent of the GDP. 
The percent of our total outlays which are invested in things such as 
transportation, R&D, and education has fallen to an all-time low of 
less than 13 percent of the budget. This is less than half of what we 
invested in these categories in 1970.
  Today, I am introducing a budget alternative called the investment 
budget intended to reverse this decline and establish clearer budgetary 
goals for Federal investments. Earlier this year, I introduced House 
Concurrent Resolution 58 which encompassed many of these concepts. That 
bill increased funding for R&D, transportation, and human capital while 
decreasing funding for consumption spending. This bill eliminated the 
deficit in 5 years using CBO assumptions.
  The bill I am introducing today retains all of the features of House 
Concurrent Resolution 58 dealing with investments. This bill, however, 
incorporates many of those items contained in the budget agreement that 
have achieved a broad consensus. Specifically, this bill incorporates 
the Medicare package and restores certain benefits eliminated by last 
year's welfare reform bill. This bill also incorporates the revised CBO 
assumptions about future revenues.
  Perhaps more importantly, this bill drops the Medicaid reform 
provisions of House Concurrent Resolution 58 and the downward 
adjustments to the CPI. Although these represented more far-reaching 
entitlement reforms, I recognize that there was simply no political 
consensus today that would support their successful enactment.
  In sum, this bill today eliminates the deficit in 5 years while 
increasing spending on investments that will help our economy grow. 
This bill does not incorporate a tax cut. Such tax cuts should only be 
considered when the budget is actually balanced. Many have complained 
that the tax cuts being considered have become a football in partisan 
political struggles and may lead to a ballooning deficit in 10 years 
just as the 1981 tax cut did. If this does occur, the public will 
certainly recall this budget agreement as a colossal failure.
  Mr. Speaker, I intend to ask the Rules Committee to make this 
alternative in order at the time the budget resolution is considered on 
the floor. As of today, over 35 Members have expressed support for this 
request and there will be many more as the details of the budget 
resolution emerge. I believe it is important that Members have such 
genuine alternatives because there are many ways to balance the budget.
  There has been a long-running debate over the inability of the 
Government to distinguish between investment and consumption and to 
structure a workable budgetary system that recognizes the functional 
effect of investments on the economy. There has been almost a universal 
recognition by economists that the present budgetary structure has led 
to chronic underinvestment and will continue to do so. Hopefully, the 
bill I am introducing today will be a first step toward addressing this 
crucial problem.
  I am including a brief summary of the main features of this bill and 
the assumptions we have made in developing it.

                Key Provisions of the Investment Budget

       The Investment Budget was developed earlier this year as a 
     potential alternative budget resolution. It provided for 
     increases in investments including R&D, transportation, and 
     education and training. It offsets these increases by 
     limiting defense spending, incorporating the Medicare reform 
     proposals from the Budget Agreement, and including the 
     reductions in unwarranted benefits proposed by the President.
       A summary of the key provisions of the Investment Budget is 
     as follows:
       Balanced Budget--Using CBO scoring, the proposal provides a 
     surplus by the year 2002. In addition, the proposal meets the 
     previously established discretionary cap in F.Y. 1998. In 
     sum, this proposal cuts spending by $220 billion over the 
     next five years.
       Non-Defense Discretionary Spending--The proposal increases 
     non-defense discretionary spending from $282 Billion in F.Y. 
     1998 to $306 Billion by 2002. Total expenditures over the 
     next five years exceed the Budget Agreement by over $30 
     Billion in order to provide for domestic investment 
     initiatives.
       Research and Development--An overall increase in R&D, 
     including basic research, energy research, health, space, 
     agricultural research, and defense research of $30 billion 
     over the President's request over the next five years.
       Transportation--An increase in physical capital investment 
     spending of $40 billion over five years above the President's 
     request including an increase in highway spending up to $26 
     billion per year, the maximum spending level that leaves 
     stable trust fund balances.
       Energy Conservation--Increased spending 5% per year for 
     energy supply R&D and energy conservation will enable a more 
     robust relationship between energy policy and other emerging 
     environmental and economic influences that will affect future 
     energy consumption patterns.
       Environment--The proposal increases spending for Superfund 
     cleanup, an expansion of Brownfields initiative, and clean 
     and safe drinking water state revolving funds. This will 
     enhance the economic development and use of natural resources 
     in an environmentally sustainable manner.
       Technology Development--Increased funding for the National 
     Institute of Standards will enable NIST to maintain its core 
     scientific research programs and to expand its technology and 
     manufacturing partnership programs. Steady growth in the 
     Advanced Technology Program will promote industrial alliances 
     and lead to the direct creation of new, high tech jobs in the 
     future. Sustaining funding for the Manufacturing Extension 
     Program will provide technical and business assistance to 
     improve the competitiveness of U.S. manufacturers.
       Enforcing Investment Spending Targets--Overall investment 
     spending targets exceed the President's budget by over $70 
     billion over the five year period and will begin to halt the 
     decline in investment spending. The proposal includes an 
     enforcement mechanism through the 602 budgetary allocations 
     which protects investment spending from consumption spending 
     during the appropriations process.
       Future Investment Spending--Establishment of a trust fund 
     from the proceeds of FCC spectrum auctioning that may be used 
     to fund future investment.
       Medicare--The proposal incorporates the Medicare reform 
     package included in the Budget Agreement. This extends the 
     25% part B premium payments, reforms provider payments, and 
     extends Medicare solvency through 2007.
       Medicaid--Medicaid savings are offset by Medicaid expansion 
     to restore benefits for disabled legal immigrants, legal 
     child immigrants, to finance children's health insurance. No 
     net change in Medicaid is assumed.
       Consumer Price Index--No legislative change in the CPI is 
     included.
       Tax Cuts--No tax cuts are assumed in this proposal until 
     the budget is balanced.
       Welfare Reform Restorations--The proposal restores both 
     Medicaid and SSI benefits for most of the legal immigrants 
     that would have been affected by last year's law.

     

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