[Congressional Record Volume 143, Number 68 (Wednesday, May 21, 1997)]
[Senate]
[Pages S4921-S4922]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  CONCURRENT RESOLUTION ON THE BUDGET

  Mr. CONRAD. I thank the Chair. I especially thank the Chair for his 
courtesy of remaining behind to listen as I present my remarks on the 
budget agreement. I apologize to him because I have been seeking to do 
this as we have gone through the afternoon and evening. But other 
business intervened, and it was in the best interest of the body that 
we allow those amendments to be taken up and considered. But I do 
appreciate the Chair's indulgence.
  Mr. President, as a Member of the Finance and Budget Committees, I 
rise to support the budget agreement. I believe it is a modest step--I 
want to emphasize ``modest''--step in the right direction. Before I 
discuss its provisions I would like to remind my colleagues of why we 
are in a position to consider such a budget agreement. We are here 
because Democrats made very tough choices in 1993. In 1993, we were in 
the majority and we had the burden of coming up with a budget 
resolution. We made a series of decisions, including the need to move 
toward a balanced budget and to do it as quickly as possible. And as a 
result of that agreement, the deficit has been reduced and reduced 
dramatically. I remind my colleagues that in 1992 the deficit was $290 
billion. This year CBO is now telling us the deficit will be $67 
billion, a 77 percent reduction.
  If we look at the deficit in a different way, as a percentage of the 
size of our economy, we can see that the deficit has also declined even 
more dramatically. In this case, we look at the deficit in terms of a 
percentage of our gross domestic product, or the size of our national 
economy, and we can see that we have gone from a deficit of just under 
5 percent to a deficit of just under 1 percent.
  These reductions in the deficit took pressure off interest rates and 
kicked off four years of strong economic growth. The results are that 
the United States economy has created 12 million new jobs since that 
1993 budget deal. We are the biggest job generator in the 
industrialized world.
  But the good news doesn't end there. Not only have we seen tremendous 
job generation in the United States and strong economic growth, but we 
have also seen remarkable results in terms of inflation. As you can 
see, inflation is now at its lowest level in 31 years. Inflation is now 
dramatically reduced in this country--we have an inflation rate of 
under three percent. Unemployment has similarly seen a dramatic 
decline. Unemployment is at its lowest level in 24 years. This chart 
shows what has happened to the unemployment rate. It indicates that we 
have got the lowest level since 1973; again dramatic economic results 
in part because of that 1993 budget agreement. That 1993 budget 
agreement cut spending, and also raised income taxes on the wealthiest 
one percent in this country.
  Our friends on the other side of the aisle said if we passed that 
agreement it would increase unemployment, it would increase the 
deficit, and it would crater the economy. They were wrong. That 
economic plan has worked and worked remarkably well. Not only have we 
seen terrific results in terms of unemployment and inflation, look at 
what has happened to real business fixed investment. Real business 
fixed investment has been growing at an annual rate of 9 percent for 
the last four years.
  You can see that since the 1993 agreement real business fixed 
investment has taken off. Not only do we see good results there--let's 
look at the misery index--we used to talk a lot about the misery index. 
That is the combined rate of unemployment and inflation. The misery 
index is now at its lowest

[[Page S4922]]

level since 1968. That is the lowest level in almost 30 years.
  Mr. President, incomes are going up, and poverty is going down.
  This chart speaks to some of the really remarkable economic results 
that we have gotten ever since the 1993 budget agreement. At that time 
we put in place a new economic plan. Since that time we have seen 
median household income up the largest increase in a decade. We have 
seen the largest decline in income inequality in 27 years. We see 
nearly 2 million fewer people in poverty, the largest drop in the 
poverty rate in this country in 27 years. The poverty rate for the 
elderly is at 10.5 percent, its lowest level ever, and we've seen the 
biggest drop in child poverty in 20 years. Those are remarkable 
economic results by any standard.

  Mr. President, I wanted to put in some context what the 1993 budget 
agreement meant in terms of deficit reduction compared to the agreement 
that we are working on now. I think it tells quite a story.
  This chart shows the 1997 budget agreement was possible only with the 
1993 deficit savings. The purple area shows the savings from the 1993 
deficit reduction package and the economic growth that it made 
possible. The 1993 budget agreement reduced the deficit from 1994 to 
2002 by $2 trillion. The savings in the 1997 package during that period 
will be $200 billion, or one-tenth as much.
  Mr. President, the only reason we are able to have an agreement like 
the one that is before us is because of what was done in 1993.
  But when I look at the 1997 agreement I largely see a missed 
opportunity. Eighty percent of the American people in the polls say 
they don't believe this new agreement is going to balance the budget. I 
regret to say that 80 percent of the American people are right. This 
agreement does not balance the budget.
  Unfortunately, as this chart shows, if you go out to the year 2002, 
what you find is not a zero deficit but a $109 billion deficit. The 
reason for that difference is, of course, that the only way they are 
able to claim balance as a result of this agreement is that they are 
counting all of the Social Security trust fund surpluses.
  That is not a balanced budget. That is not a balanced budget by our 
own rules. If you look in the concurrent resolution, the document that 
is before us, and you turn to the page that reports what the deficit 
will be in the year 2002, what you find is not a zero. What you find on 
page 4--I direct my colleagues to this page. I think it might be a 
revelation to those who are saying that this is a balanced budget 
agreement. If this is a balanced budget agreement, why does it say on 
page 4 that the deficit in fiscal year 2002 is $108.7 billion? Why does 
it say that? Why does it say there is a deficit if the budget is 
balanced? Of course, the answer is the budget is not balanced.
  It is remarkable to me that our colleagues report to the American 
people that this is a balanced budget agreement and the press reports 
it when the document that we are considering here, the budget 
resolution, shows clearly the budget is not balanced in 2002. There is 
almost a $109 billion deficit.
  The other thing that troubles me is, if you look at the budget line, 
as I indicated, the deficit was $290 billion, and the unified deficit 
in 1992 has come down to $67 billion this year, but for the next three 
years the deficit is going to be higher than it is this year.
  Here we are in the midst of great economic times and under this 
budget agreement the deficit is going up. How do we justify that? It 
makes no sense. In good economic times, we ought to be steadily 
reducing the deficit. We shouldn't let the deficit go up. But that is 
what this budget agreement does.
  And then, of course, on a unified basis they say it is balanced. 
Unified means they are counting all of the trust funds. Of course, that 
is the problem. We should not count the Social Security trust funds. No 
company would be able to do that. No company would be able to take the 
retirement funds of its employees and throw them into the pot and call 
it a balanced budget. But that is what we are doing here.
  I say to the President and those who might be listening, that is a 
mistake. We ought not to be counting these trust fund surpluses. This 
is really not a balanced budget. No company could claim it. If they 
did, they would be in violation of Federal law, and they would be 
headed for a Federal institution, but it would not be the United States 
Congress. They would be headed to Federal jail. And yet we blithely 
call this a balanced budget.
  Of most concern to me is that budget negotiators failed to correct 
the upward bias that currently exists in the Consumer Price Index. As 
the occupant of the Chair knows, we use the Consumer Price Index to 
adjust for the change in the cost of living in our revenue system and 
in all of our spending programs. That is an appropriate thing to do. It 
is appropriate to adjust for the cost of living, but the overwhelming 
scientific evidence is that we are overadjusting.
  In fact, the Senate Finance Committee appointed a bipartisan 
commission that was headed by Michael Boskin, who was the head of the 
economic advisers in the Bush administration. The Boskin Commission 
came back to us and said the overstatement is about 1 percent a year. 
One percent does not sound like much but over time it makes a big 
difference. A 1 percent overstatement in the Consumer Price Index means 
$1 trillion in debt of the United States over the next 12 years. That 
is a mistake we should not allow to continue.
  I also am concerned that some of the economic assumptions in this 
plan are also highly suspect. CBO's last minute revenue adjustment of 
$45 billion a year may be credible for the first few years, but its 
credibility from the years 1999 to 2007 is unclear.
  In addition, the balanced budget fiscal dividend assumes lower 
interest rates will result from balancing the budget with a credible 
deficit reduction plan. The problem is that is not what most people are 
considering in this country. There is very little debate about whether 
interest rates are going to be reduced. The question is whether 
interest rates are going to be increased.
  Mr. President, ultimately each of us must decide if this plan is 
worthy of support.
  In deciding how to vote on this package, a key question for me was 
whether or not passage of this package was better policy than doing 
nothing at all. I believe it is a fairly close call.
  Despite all of its shortcomings, the 1997 budget deal does contain 
some good policies, including about $200 billion of net deficit 
reduction. From 1998 on, the deficit declines steadily as a percentage 
of gross domestic product. Unfortunately, it ought to be declining from 
this year on, not starting only in 1998.
  In addition, debt subject to limit--and this is the final chart I 
will show--debt subject to limit as a percentage of GDP also declines 
from about 68 percent in 1998 to 66 percent by the year 2002. Federal 
debt subject to limit declines from 1997 to 2002. Finally, the 
incredible growth of the debt has been stopped. It was stopped largely 
because of the 1993 budget agreement, but this budget package will 
continue to hold down the growth of the debt, and that is critically 
important to our economic future.
  Finally, the plan protects discretionary investments for programs 
like education and transportation, provides health insurance for 5 
million insured children and helps people move from welfare to work. 
The plan also preserves the solvency of the Medicare Part A Trust Fund 
through the year 2007. And the plan includes targeted tax relief for 
working Americans. The education tax cuts in the package will help 
provide educational opportunity, and reform of the estate tax which has 
been unchanged for 10 years will help farm families and small business 
owners keep their businesses and their farming operations.
  Finally, let me say, even though I favor a far more ambitious deficit 
reduction package, I view this agreement as a step in the right 
direction. I will support this budget agreement and work to improve it 
throughout the budget process this year.
  Mr. President, I thank the indulgence of the Chair and yield the 
floor.

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