[Congressional Record Volume 143, Number 87 (Friday, June 20, 1997)]
[House]
[Pages H4123-H4130]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 THE ECONOMY: PAST, PRESENT AND FUTURE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Wisconsin [Mr. Neumann] is 
recognized for 60 minutes as the designee of the majority leader.

[[Page H4124]]

  Mr. NEUMANN. Mr. Speaker, in the interests of true bipartisan 
cooperation, I yield 10 minutes to my good friend, the gentleman from 
Minnesota [Mr. Minge].


        The Federal Government Policy Toward the Ethanol Program

  Mr. MINGE. Mr. Speaker, I would like to thank the gentleman from 
Wisconsin for yielding to me.
  Mr. Speaker, I rise this afternoon to discuss a topic which has 
become increasingly controversial in this country. The topic is the 
policy that this Government, the Federal Government, ought to have 
toward the ethanol program.
  This policy was initiated in the 1970's. It was recognized that this 
country ought to be more energy self-sufficient. One way to achieve 
that was to produce a fuel that could be used in motor vehicles from 
crops that are grown in this country. That fuel is ethanol.
  Over the last 25 years, hundreds of millions of dollars have been 
invested in the production of ethanol. At this point in time, most of 
the ethanol produced in this country comes from corn, the largest 
single crop that is grown in the United States. In 1997, there has been 
a considered attack against the ethanol tax credits that are part of 
the Internal Revenue Code.
  This week the Committee on Ways and Means has passed and forwarded on 
to the Committee on the Budget a reconciliation bill that would 
eliminate the ethanol tax cut by the year 2000, but more importantly, 
would substantially complicate that particular tax credit. I would like 
to take my remaining time to briefly speak about some aspects of this 
legislation.
  Mr. Speaker, I really think we can best characterize it by an 
allusion to a program that talks about stupid pet tricks. This is 
really stupid tricks that is being played on the American farmer and on 
the ethanol industry. It is strangulating ethanol. This is occurring 
for several reasons and in several ways.
  First of all, I think it is important to note that the legislation 
coming out of the Committee on Ways and Means of this body is a 
repudiation of market principles. We may ask, why is it a repudiation 
of market principles? This occurs because the legislation states that 
any ethanol produced in the United States in excess of an artificially 
designated base will be subject to a 51-cent-a-gallon penalty, a 
penalty that is not even a business expense that can be recognized in 
calculating taxable income. As a result, we find that the production of 
ethanol would essentially be frozen at current levels.
  We also find that it is a repudiation of market principles, because 
what is happening is that petroleum-based fuel and additives are not 
subject to such a penalty. So as a consequence, rather than relying on 
the market system, we simply have an effort by legislative fiat to 
destroy the industry. The market is not present at all. We have, for 
the last several years, attempted to steer this country's economy to 
market principles, the basic concepts of supply and demand. This is a 
repudiation of that principle.
  The second point, which is closely allied, is the destructive 
character of this penalty itself. Ethanol simply cannot be produced if 
there is a 51-cent-a-gallon penalty on that production. To be sure, the 
base quantity of ethanol can be produced. For that base quantity, there 
is still for a temporary period of time a tax credit. But any 
additional production would be subject to this confiscatory or 
destructive penalty.
  The third point that I would like to make is that this is a reversal 
of the principles of the freedom to farm legislation that passed this 
body in 1996. Not all of us agreed with the 1996 farm bill, but I think 
most of us agreed that market principles ought to be the cornerstone of 
the Federal farm program for the next 5 years. Let us try it, let us 
see if it works. Corn has probably been the crop that has received more 
assistance over the years than any other crop.
  So what are we saying? We ought to be trying the market. As farmers, 
you ought to be in freedom to farm, producing for the market. The 
farmers have gone out, they have attempted to help establish a market. 
They have been innovative, they have invested in consumer-owned 
cooperatives. Now we are saying to those farmers: Tough; we fooled you, 
did we not?
  Indeed, we ought to recognize the freedom to farm principles. We 
ought to recognize the market principles. We ought to let farmers 
produce ethanol from the corn they are growing and market that. Somehow 
the destruction of this market has to be recognized by all as a 
repudiation of the principles that we have told these farmers that they 
ought to follow in the wake of the repeal of the traditional Federal 
farm programs.
  The fourth point that I would like to make is that this is a breach 
of faith with the automobile industry. The American automobile industry 
was not initially enthusiastic about alcohol or ethanol. Consumers were 
wary of the product. There were stories about what it might do to 
engines. It turned out most of them were not accurate, they were 
rumors. But nonetheless, these stories persisted.
  Over the last few years ethanol has gained a foothold. Now we find 
the Ford Motor Co. has announced that it is producing Taurus cars and 
pickups that will operate on 85 percent ethanol. Chrysler Corp. has 
announced it is moving in that direction. In Brazil, much of the 
country's vehicle fleet operates on ethanol or alcohol fuels.
  Now that the automobile industry is making that commitment, we are 
pulling the rug out from underneath the automobile industry. Instead of 
being able to expand production, we are forcing the curtailment of 
production.
  The fifth point that I would like to make is that this is death by 
ambiguity. There are ambiguous provisions in the law as it comes out of 
the Committee on Ways and Means that make it very difficult for the 
farmer-owned cooperatives to know whether or not they will be able to 
continue production, for the farmers who are interested in investing in 
cooperatives to manufacture ethanol to know whether or not that 
investment is worth making, and for cooperatives and investor-owned 
facilities that are already in place to know whether or not they can 
continue to produce at their capacity, as opposed to some previous 
level that was not the capacity of that plant.
  This, in turn, is going to undermine the ability of the American 
economy, the agricultural economy particularly, to make the investment 
that is so important to ensure that this fuel is available to the 
American consumer, and that rural America can continue to participate 
in the prosperity of this Nation.
  Finally, I would like to say that this proposal as it comes out of 
the Committee on Ways and Means is an example of creative accounting. 
Why so? It is creative accounting because the committee decided that by 
extending the ethanol tax credit until the year 2007 and then 
simultaneously repealing that tax credit back to the year 2000, they 
can realize approximately $3 billion of savings that can be used to 
finance or offset tax cuts.
  What they are doing is artificially extending a credit that is 
sunsetting in the year 2000, and then claiming that due to the 
termination of this artificial extension, they have generated $3 
billion of savings to the U.S. Treasury. This is fictitious. This is 
smoke-and-mirrors accounting. This is the type of thing we have been 
decrying as undermining our ability to balance the budget.
  Mr. Speaker, I submit that what the Committee on Ways and Means 
proposal has done to the American farmer, the American consumer, 
American industry and candor in budgeting is tragic.

                              {time}  1430

  What we must do in Congress, Mr. Speaker, is forthrightly address 
this problem and make sure that this proposal from the House Committee 
on Ways and Means moves no further and that instead we embrace the 
proposal that has come from the U.S. Senate which recognizes the 
importance of the ethanol program.
  I thank my colleague from Wisconsin for yielding this time to me.
  Mr. NEUMANN. Mr. Speaker, I yield to the other gentleman from 
Minnesota [Mr. Gutknecht] who has an announcement on this very topic.
  Mr. GUTKNECHT. Mr. Speaker, I would echo virtually everything that my 
colleague from Minnesota has just said. I would add that we have had 
meetings this morning both with the

[[Page H4125]]

Speaker of the House as well as the chairman of the Committee on Ways 
and Means, and we have had assurances from both that the ethanol 
program, as we have known it, will survive, at least through the end of 
the century.
  Obviously, we still have our work cut out for us, to continue to 
resell the benefits of the program, but I think by the time this bill 
ultimately is settled on in the House, the ethanol program will be 
saved.
  I happen to agree. I think ethanol is a great product. I think it is 
good for the farmer. But more importantly, it is good for our economy, 
good for our balance of trade and, more importantly, I think, perhaps 
than anything else, it is good for the environment.
  I have had assurances from both the Speaker and the gentleman from 
Texas [Mr. Archer]. I met with him personally not more than an hour and 
a half ago. He assured me that by the time this bill ultimately is 
finalized, that the ethanol program will be protected as it is today, 
at least through the end of the century. We are making progress and our 
voices are being heard.
  Mr. NEUMANN. That is certainly good news for the farmers in the 
Midwest, which all of us represent.
  With that, we will turn our attention to the reason that we are here 
today, that is to talk about the budget process, the debt, the deficit, 
where we have been, where we are today, and where we are going to, and 
we are going to divide this into three separate parts today as we talk 
about first the past, where we have come before, before any of us who 
are here on the floor right now were here in Congress. But I think it 
is important that we talk about the past and that we take note of how 
fast and how much of this debt has accumulated.
  I start with the chart that I have here. This chart shows the growth 
in Federal debt. It can be readily seen that from 1960 to 1980, there 
was very little growth in Federal debt. As a matter of fact, it is 
almost a flat line. But from 1980 forward, this thing has grown right 
off the charts. Before my colleagues react to this, I know 1980 is the 
year Ronald Reagan became President and all the Democrats will blame 
him. I know 1980 is the year that all the Republicans say the Democrats 
ran spending out of control and ran the deficit up.
  The bottom line is today we as a Nation stand way up here on this 
deficit chart. And the facts are that whether you are Republican or 
Democrat, this is a problem that we as a nation must now address. That 
is the reason that many of us, the three of us here on the floor and 
many of the rest of us, came to Congress in the first place. The size 
of this debt is somewhat staggering. We currently stand about $5.3 
trillion in debt. That is a number too big almost for anyone to 
comprehend. I used to teach math. Let me put this in perspective the 
way we used to in the math classroom.
  If we divide the debt by the number of people in this country, we 
would find that every single man, woman, and child in the United States 
of America is responsible for $20,000 of debt. Let me put that another 
way. The Federal Government has primarily over the last 15 years spent 
$20,000 for every man, woman, and child more than what it has collected 
in taxes. They have run up $100,000 of debt for a family of five like 
mine. The real kicker in this thing is the real impact it has on the 
family. A family of five like mine sends $580 a month to Washington, DC 
to do nothing but pay the interest on the Federal debt. A lot of folks 
out there are going: I do not pay that much in taxes, and they feel 
pretty good. That is not entirely true. The fact of the matter is, when 
you walk into a grocery store and you buy a loaf of bread, the store 
owner makes a small profit on that loaf of bread. And part of that 
money that you paid to the store owner gets sent down here to 
Washington in the form of taxes because that is part of his profit 
margin. The bottom line is when people add up all of the money that 
they are paying in taxes to the Federal Government to Washington, a 
family of five like mine is in fact paying $580 every month to do 
nothing but pay the interest on the Federal debt.
  It is somewhat a staggering number, and in the past Members of this 
body have talked about fixing this problem. They have had all kinds of 
different proposals. The most remembered perhaps is what is called the 
Gramm-Rudman-Hollings. In 1985, we passed a bill through this body 
called the Gramm-Rudman-Hollings Act and it promised the American 
people that we would have a deficit stream that goes along this blue 
line and reach a balanced budget in the year 1991. But in fact what 
happened is they did not meet the deficit stream and in fact what 
happened is the deficit ballooned.
  So they passed a new bill. They called it Gramm-Rudman-Hollings 1987. 
And they again promised the American people a balanced budget that a 
deficit stream that would follow this blue line reaching zero this time 
in 1993. Again, the red line shows the actual deficit and they did not 
meet the targets.
  This city is the most amazing place in the world. We look back on 
this track record where promises were made and promises were not kept 
to the American people. And for some reason the American people seem a 
little cynical right now about whether or not they should believe what 
they are being told here in Washington.
  It does not take me long to figure out exactly why the American 
people are as cynical as they are. Frankly, it is this chart that 
caused me to leave a very good business in the private sector and run 
for Congress in the first place with no prior involvement in politics 
in any way, shape or form.
  I am a homebuilder by trade. But when I heard these promises out here 
and realized how important it was we get to a balanced budget and after 
hearing these promises the first time and seeing the deficit balloon 
and then hearing the promises the second time and seeing the deficit 
balloon again, I realized that we as a nation had to do something about 
this. That is what caused me to leave the private sector and to run for 
this office.
  I yield to the gentleman from Minnesota.
  Mr. GUTKNECHT. Mr. Speaker, I think there is another point that needs 
to be made. We are working on a chart in my office that demonstrates 
what a big part of the problem has been. The history has been for about 
a 20-year period for every dollar that Congress would take in, it would 
spend about $1.22. In fact many people made the point, I think it is a 
good one, that the problem was not that the Government was not taking 
in enough money. In fact one farmer in my district said it so well. He 
said the problem is not that we are not sending enough money into 
Washington. The problem is that Washington spends it faster than we can 
send it in.

  And that has been the problem, the problem has always been on the 
spending side because many of those fixed programs involve some kind 
of, quote, revenue enhancement or tax increase; and for every dollar 
that tax revenues were supposed to go up, Congress just spent another 
$1.22, $1.23 of that. And that is the history of this place. I think we 
want to talk about what is happening now.
  Mr. NEUMANN. Before we get there, I think my colleague has made 
another very important point that needs to be brought out here. In both 
1990 and especially in 1993, we saw the biggest tax increase in 
American history. In 1993, people started looking at these deficit 
lines and realized we had to do something about the deficit and in 
clear Washington-style thinking, they concluded what we ought to do is 
raise taxes on the American people. They said: We have an idea here. To 
balance the budget we will reach into the back pockets of the American 
people, take more money out and maybe that somehow will help us to 
balance the budget.
  This is the past we are talking about. In the past the way to move to 
a balanced budget was to raise taxes. In fact, that bill passed this 
body, the House of Representatives, in 1993, the biggest tax increase 
in history; that bill passed this body by one single solitary vote. I 
think it is important to note it went over to the Senate. Not many 
Members agreed with it over there either. It passed the Senate by one 
single solitary vote also. So that past kind of Washington thinking 
that the right way to go to a balanced budget is to raise taxes, to 
reach into the back pockets of the American people. That thinking is 
not here anymore but it was sure prevalent in 1993 before we got here.
  In 1994, pretty amazing thing happened. For the first time in 40 
years,

[[Page H4126]]

the Republicans were elected to control the House of Representatives. 
First time in 40 years. And I do not like this to be partisan at all 
but it was a very significant change in control of what was going on 
out here. A whole new philosophy came in with the Republicans. We 
brought with us a theoretical model. I want to lay that model out as we 
talk about the present, as we talk about where we are at today and what 
is happening in 1995, 1996, 1997. We brought with us this theoretical 
model and it worked like this. We do not want to raise taxes on the 
American people. Instead what we are going to do is curtail the growth 
of spending in Washington, DC. We are going to keep this Government 
from growing rapidly, instead we are going to curtail that growth.
  And if we could curtail the growth of spending in Washington, that 
would mean the deficits would be lower and the Government would borrow 
less money out of the private sector. When the Government borrowed less 
money out of the private sector, that of course left more money out 
there in the private sector. More money available led to lower interest 
rates. Lower interest rates of course meant people could afford to buy 
houses and cars, the American dream. They could afford to do these 
things and, very important, when people bought more houses and cars, 
somebody had to go to work building those houses and cars.
  And the theory went like this. When they went to work they would 
leave the welfare role, reducing the cost to the Federal Government for 
welfare and they would get into a job paying taxes. So the theory was 
curtail the growth of Government spending, Washington would spend less 
and therefore borrow less out of the private sector. Borrowing less out 
of the private sector would leave more money available there. More 
money available would keep the interest rates down. Lower interests 
rates meant people would buy more houses and cars, and when they bought 
more houses and cars that meant people would have to go to work 
building them. More jobs meant people left the welfare roll and went 
into the work force and this whole picture should work without raising 
taxes on the American people. That brings us to the present. What has 
happened?
  Mr. Speaker, I yield to the gentleman from Kansas [Mr. Tiahrt].
  Mr. TIAHRT. Mr. Speaker, in the present we are enjoying one of the 
strongest economies we have had for a long time. Our gross domestic 
product is up. Unemployment is at an all-time low in Wichita, KS, it is 
approximately 3 percent. We have the stock market setting new goals 
every week. And a lot of our economy is based on a perception. Right 
now the perception is that we are going to do something about the 
Federal debt.
  We are going to do something about the $355 billion that we will 
spend this year just to pay the interest on the Federal debt. By 
stopping the growth in our Federal debt, we will eventually get a lower 
interest level and that will mean more money available to build 
highways or provide for national defense or provide health care dollars 
or nutrition programs, the things that traditional people think that 
ought to be done by our Federal Government.
  So we have this very strong economy, and it is based on the 
perception that we will get to a balanced budget. There is finally hope 
out there that we are going to control the spending at the Federal 
level and that we are going to allow people to have more control of 
their own money. People do two things when they are more in control of 
their own money. They either spend it or save it, and both things are 
good for the company. If they save it, that makes more capital 
available. That capital is then invested in innovative ideas which 
become in reality new jobs, and they provide more goods, or people 
spend the money.
  If they spend the money, then that is also good because they create 
jobs to make the goods. And my colleague pointed out earlier that they 
want to buy for themselves or their children or their home or an 
automobile. So in today's economy, we have a very strong sense of hope, 
and people are having faith that we are going to continue to have a 
strong growth in our economy; and it is, I believe, based on the 
perception that we will control Federal spending and balance our budget 
and eliminate the Federal debt.
  Mr. NEUMANN. I think it is important again, we have moved into the 
present and what is happening and how is it different than the past. 
The Gramm-Rudman-Hollings chart shows when the targets were not met. We 
have moved into the new theoretical model that we need to control the 
growth of Government spending. Have either one of my colleagues heard 
about cuts in Government spending?
  Mr. GUTKNECHT. Mr. Speaker, we heard a lot about it in the last 
campaign about these draconian cuts. The truth of matter is, we have 
made some reductions. We eliminated 279 programs here. We replaced the 
welfare state with the opportunity society. We have had serious, real 
welfare reform. There have been some serious changes but there have not 
been the draconian cuts that some of our colleagues on the left have 
said.
  Some of the Members who ultimately believe that Washington knows 
best, their end of that debate is losing. The American people no longer 
believe that. They believe that the decisions are best left to families 
and to communities and to States, and that is what we are trying to do, 
is to send more of the authority, the responsibility and the resources 
back so they will have more accountability for that money. And as a 
result we have a stronger economy. There is more consumer confidence. 
They understand that Washington is limiting the growth of entitlements, 
that we are cutting some of those duplicative programs, that we are 
trying to streamline Government and as a result there is more 
confidence.
  They see the deficit coming down because revenues to the Federal 
Government are going up. I hate to steal your numbers here but I love 
this number so much. If we compare what happened in the past when 
Congress would take in a dollar, it would spend $1.22. But I think the 
numbers that we have come up with about what has happened over the last 
2 years when we passed our budget resolution in 1995, this Congress, 
this House said that in fiscal year 1997, we were going to spend $1,624 
billion on Government programs. That is still a lot of money. But what 
has really happened is because of the fiscal discipline, because the 
demands for welfare and so forth are less, we are actually only going 
to spend in fiscal year 1997, $1,622 billion.
  This Congress is actually going to spend less money in this fiscal 
year than we said we were going to spend just 2 years ago. That is good 
news. But the news gets even better when we apply what is happening on 
the revenue side. Because of the growing economy, because we have 
offered more opportunity to more people, we have actually taken in over 
$100 billion more than we expected.

                              {time}  1445

  That is incredibly good news. I guess good news does not always make 
the national news, but hopefully the American people, without this 
being a major headline story, are beginning to figure out that this 
Congress is actually doing what it said it was going to do: It is 
limiting the growth of Federal spending, it is allowing taxpayers to 
keep more of their own money. We have a stronger economy, and we are 
going to apply these additional revenues, rather than to new Federal 
programs that waste so much, we are going to give a big chunk of that 
back to the American people and apply some of it to the debt.
  Mr. NEUMANN. If the gentleman will allow me to reclaim my time, I 
cannot help but think that, first off, we are all here yet because we 
are waiting for a Committee on the Budget meeting to actually carry 
this to the next step, and I will not see my wife Sue until later.
  The first time I called my wife and said I just looked at the 1995 
projections, and for 1997 they said we should spend $1,624 billion and 
we actually spent $2 billion less than that. Then I looked at the other 
side and we had received $100 billion more in revenue, and this means 
we received this extra revenue and did not spend it, we applied it to 
the deficit. She said I should check the numbers, that somebody was 
lying to me out here.
  I have to accept that as kind of the reaction of the American people. 
The American people do not understand

[[Page H4127]]

that we did lay out this track record in 1995 when we came here. They 
are so used to the Gramm-Rudman-Hollings thing, where they never met 
their targets and never did what they said, that they failed to 
recognize that we have in fact curtailed the growth of government 
spending.
  I have a chart that shows what is actually happening, and all of this 
talk about the cuts and the government spending as being draconian 
cuts, the reality of the picture is this. Before we came here 
government spending was growing each year by 5.2 percent. That is this 
red column. That is the last 7 years before we got here. In the first 7 
years after we got here, it has only grown by 3.2 percent.
  Is it still growing? Yes. Would some of us like to see a zero in this 
column? Yes. But the reality is, what we have done has slowed the 
growth of government by about 40 percent. Folks, that is our first 2 
years here. We have slowed the growth of government spending by about 
40 percent.
  If anyone is interested in inflation-adjusted dollars, it was going 
up by about 1.8 percent before we got here. It has now gone up by about 
.6 percent.
  Again, would I prefer to see that as zero out there, that there is no 
real growth in government spending? Yes. But do I think we should 
recognize the very significant progress that has been made, the fact we 
have reduced the real growth of government spending by two-thirds in 2 
short years? I think that should be recognized.
  I think the American people should be cheering, because here is what 
that has led to. Again, I cannot emphasize enough, as I show this next 
chart, keep in mind the Gramm-Rudman-Hollings promises that were never 
met. This chart shows what we promised in 1995 for a deficit stream. In 
1995 we made a projection for 1996. We made a promise, just like they 
did in Gramm-Rudman-Hollings. This red column shows what we promised. 
The blue column shows the actual deficit. Again, I emphasize, we not 
only met our target but we were ahead of schedule by almost $50 
billion.
  So we go into year 2 of our plan, and year 2 of our plan is 1997. 
Fiscal year 1997 is virtually over. We said that the deficit stream, in 
order to reach a balanced budget by 2002, had to be less than 174, 
again, this red column. The blue column shows actual. We are not only 
on track in year 2, but we are ahead of schedule.
  This is why we are still out here on Friday afternoon. We are about 
to put this plan into place. The third year of our 7-year plan to 
balance the budget, the red column again shows what was promised to the 
American people. I would emphasize that we are once again on schedule, 
not only on track but ahead of schedule with this deficit stream.
  I will make a projection right here and now today. This theoretical 
model of curtailing the growth of government spending, to leave more 
capital available in the private sector, leading to lower interest 
rates, so people buy more houses, and cars and other people go to work 
building them and start paying taxes instead of drawing welfare, that 
is reflected in this chart. The fact they have left the welfare rolls 
means lower costs, and the fact they are in a job paying taxes means 
more revenue. That is why we are not only on track but ahead of 
schedule.
  We are in the third year of our 7-year promise to the American 
people. We are on track and ahead of schedule in each of those 3 years. 
My prediction is this: We will not only reach our 7-year goal of 
balancing the budget, but the budget will, in fact, be balanced by the 
year 2000. We will run our first surplus since 1969 in the year 2000.
  I just want to add one more thing to this that I think is real 
important. We are doing this, we are laying down this track record of 
staying ahead of schedule, and at the same time turning to the American 
people and saying that they are sending too much of their hard-earned 
money to Washington, to keep some more of it themselves.
  The tax cuts we are implementing, the reason we are still here is to 
get these to the next level so they are actually implemented into law. 
A family with children gets to keep $500 more a year of their own 
money. It is not a gift from Washington. This is the taxpayers' hard-
earned dollars that stay in their house, to maybe buy a nicer house or 
maybe use it for education for their children. It is their money. They 
should spend it.
  So tax cuts are being implemented at the same time we move along this 
track to a balanced budget, and in fact we are going to balance the 
budget by the year 2000 and provide additional tax cuts to the American 
people, $500 per child. If someone plans to die and pass their estate 
on to their children or the next generation, that is a tax that will be 
lowered. Capital gains is lowered. If folks have college students out 
there, they are going to get to keep an extra $1,500 of their own money 
if they are paying college tuition for one of their children.
  That is not a bad tax cut package. I assure my colleagues of this. In 
this town they are having all kinds of fights about this, saying the 
American people really do not want tax cuts. When I go to church on 
Sunday and I see my friends with kids and they are sitting there in the 
pews, I know good and well these families that are earning between 30, 
40 and $50,000 a year, that they are going to get to keep an extra $500 
per child. In a family with three kids, they keep $1,500 a year.
  If someone is earning $40,000 a year, getting up, going to work 
everyday, and maybe both spouses are working in the house, $1,500 a 
year cash in their pocket is a lot of money, and the people in this 
country understand what we are doing here.

  We are on track, we are ahead of schedule, we are going to balance 
the budget. We are in the third year of this plan to balance the 
budget. We are ahead of schedule, and we are doing it while we are 
fulfilling the rest of our promises to the American people, and that is 
the tax reductions as promised.
  I would be happy to yield to my good friend from Kansas.
  Mr. TIAHRT. In January of 1995, when the three of us were sworn in in 
the 104th Congress, the projected budget that we were looking at from 
the administration said we would have a $200 billion deficit in fiscal 
year 1996. And it pretty much continued all the way out to 2002 as a 
deficit of $200 billion per year every year.
  We then came forward, and all of us supported this plan, which is 
indicated by the red columns in the chart the gentleman has shown us, 
and said that we would get to a balanced budget by 2002. I think that 
was made with a reasonable set of judgments that could be called 
conservative, and, apparently, we have gone even beyond those 
expectations.
  The very first year of the plan we were ahead of schedule by $50 
billion, I believe the gentleman told us; by the second year of the 
plan, we were ahead by over $100 billion of what we had projected; and 
now, as we approach the next 5 years of the plan, starting with fiscal 
year 1998, the gentleman is making the prediction that we will be ahead 
of schedule, of our new updated projections, and even get to a balanced 
budget by the year 2000. So we have 3 more years.
  Based on the judgment or the past experience in fiscal year 1996 and 
1997, where we were $50 billion ahead of schedule and then $100 billion 
ahead of schedule, it looks very likely that we will get to a balanced 
budget by the year 2000 instead of waiting until 2002.
  Mr. GUTKNECHT. If the gentleman will yield, I think it is interesting 
to see how much the rhetoric around this building has changed since we 
first came here. If my colleagues will recall, when we first started 
talking about balancing the budget in 7 years, there were a lot of 
people that said we could not balance the budget in 7 years; that it 
will take at least 8 years, maybe 9, maybe 10.
  In fact some of us recall seeing the President on several different 
occasions say, well, maybe we could do it in 9, maybe we could do it in 
10. And then there were an awful lot of people here in the body who 
said, well, maybe we can balance the budget, we might be able to do it 
in 7 years, but we cannot do it and provide tax relief for American 
families. That just cannot be done.
  I think we are demonstrating not only can we balance the budget in 
less than 7 years, as we first stated, but we can do it while we 
provide tax relief for American families.
  I want to point out one other argument we have had here in Congress 
over the last several years, and that is about saving and securing 
Medicare,

[[Page H4128]]

not only for our parents but hopefully into the next generation. All of 
us are baby boomers, and we want to make certain our fellow baby 
boomers are not left out completely in the cold as it relates to 
Medicare.
  But the debate last year was that we could not offer seniors the 
kinds of choices that Members of Congress get as it relates to 
Medicare, and save the system and do all these other things. My 
colleagues will remember some of the ads run against people like my 
colleagues and I. I think all three of us were the recipients of some 
of the advertising and all the negative nay saying about what we were 
doing to Medicare.
  But it is interesting that the Medicare plan that we are going to 
vote on in the Committee on the Budget, hopefully in a few minutes, is 
essentially the same in both policy and in price tag that, A, was 
vetoed just a year and a half ago but, more importantly, was demagogued 
in the last election.
  So it is really interesting for me to see how much the debate has 
changed from, A, we cannot balance the budget; B, we cannot balance in 
7 years; C, we cannot balance it and give tax relief; and, D, we 
certainly cannot save Medicare along the way. Well, the beauty of all 
of that is, as we begin to work on this reconciliation package and this 
budget agreement between the White House and the Congress and the 
Republicans and the Democrats, the interesting thing is that virtually 
everything we talked about 2 years ago is now coming to fruition. We 
are balancing the budget, we are saving Medicare and, more importantly, 
we are going to start to lay the groundwork of actually paying off the 
debt.
  If I can say one more point, because I have to leave, I know there 
were an awful lot of children here and there were some on the floor 
earlier. Sometimes we forget. We start talking about numbers and 
balancing the budget, and 2.3 and 3.8, and $1624 billion, and all these 
big numbers. We lose track of what this debate really is about, and 
what the debate really is all about is preserving the American dream 
for our kids.
  Because what was happening in Congress for so many years is that we 
were mortgaging their future so that we could have more and more 
Washington spending. And the American people in 1994 said enough is 
enough, because they understand who can spend the money better.
  So we are making tremendous progress. We are keeping our promise. We 
are going to balance the budget no later than 2002. We will provide 
honest tax relief. And I think in terms of seniors and baby boomers, 
the other good news is, we are going to save and secure Medicare.
  Mr. NEUMANN. If the gentleman will allow me to reclaim my time, I 
think it is real important now we move to the future and talk about the 
future. The past is the promises that were not kept. We had Gramm-
Rudman-Hollings. They never hit their targets. We had all sorts of 
promises out there. The past was that we had to reach into the pockets 
of the American people and take more money to get to a balanced budget. 
That is the past.
  The present is we lay down a track record of actually meeting our 
targets, staying ahead of schedule and keeping our commitment to lower 
taxes on the American people. And how do we do that? We curtail the 
growth of Government spending. That is the present. That is what is 
actually happening today, and in fact we are going to reach a balanced 
budget by at least the year 2002 and probably sooner.
  So I think it is time to start thinking about the future, because 
even if we reach a balanced budget, we still have a $5.3 trillion debt 
hanging over our heads. It is not right that our generation has 
borrowed $5 trillion, has spent $5 trillion and is now willing to pass 
that debt on to the next generation. So I think it is time we start 
thinking about what we might do about that.
  Shortly I will be introducing a bill called the National Debt 
Repayment Act, and there are two real parts to the National Debt 
Repayment Act. The first part does this: It says once we reach a 
balanced budget, we will then cap the growth of Government spending at 
a rate 1 percent below the rate of revenue growth. Once we reach a 
balanced budget, we then cap the growth of government spending 1 
percent below the rate of revenue growth. That creates a surplus.

  Now, in fact, and I brought this other chart with me, revenue for the 
last 3 years has been growing by over 7 percent. So for those afraid of 
this, that somehow that will curtail Government spending too much, that 
will not happen. For the last 5 years, the average growth has been 7 
percent. For the last 10 years it has been 6.2 percent. For the last 17 
years it has been 6.8.
  So all we are really saying in the first part of this bill is that we 
are going to look at the growth of revenue and we are going to cap the 
growth of Government spending at least 1 percent below that number.
  Here is what happens: If we cap the growth of Government spending 1 
percent below the rate of revenue growth, we create a surplus. That 
brings us to the second part of the National Debt Repayment Act.
  We take that surplus and we dedicate two-thirds to repaying the debt 
and one-third toward additional tax cuts for the American people. So 
two-thirds to debt repayment; one-third to additional tax cuts.
  Now, there are some important things that start developing. The first 
one is obvious. When we devote part of the surplus to additional tax 
cuts, the American people can start thinking of keeping even more of 
their own money in their house and in their home, to provide a better 
house or maybe a better education for their kids. So the first part of 
this bill, what happens is they keep more of their money in their own 
home, to spend it as they see fit, as opposed to sending it down here 
to Washington.
  So the bill creates a surplus. The first third of that surplus goes 
to additional tax relief. The other two-thirds goes to paying down that 
$5.3 trillion debt, so that we in our generation live up to our 
responsibility, so we can pass this Nation on to our children debt 
free.
  Under this plan, by the year 2026 the debt would be repaid in its 
entirety. Just think about this. We, in our generation, before I leave 
the work force, can literally pay off the entire Federal debt and pass 
this Nation on to our children debt free.
  What does that actually mean? A couple of things. First off, we 
talked before about a family of 5 sending $500, $600 a month down to 
Washington to do nothing but pay the interest on the Federal debt. If 
we had the Federal debt paid off, there would be no reason for the 
families to send $600 a month to Washington to pay that interest, so 
they could keep that money in their own home.
  Just think about $600 a month. Of course, that would be adjusted for 
inflation, but $600 a month in the home to do what the families see fit 
with. Whether that is better education or a better home or a new car or 
whatever that is, that stays out there for them to make the decision on 
how they spend their money, instead of sending it here to Washington 
for us to make the decision of how we are going to spend it.

                              {time}  1500

  So the first ramification of paying off the debt is there is no need 
for families to send $600 a month to Washington to pay the interest. 
But there is another ramification that is very, very important for our 
senior citizens.
  Social Security today collects more money than it pays back out to 
our seniors in benefits. That extra money is supposed to be sitting in 
a savings account out here. Well, there is no savings account. There is 
only IOU's in that savings account, and it is all part of that $5.3 
trillion debt.
  It follows that if we are going to repay the Federal debt, we will be 
putting the money back into the Social Security trust fund that has 
been confiscated by the people in this community over the last 15 to 20 
years.
  So think about this. By simply capping the growth of Government 
spending 1 percent below the rate of revenue growth, we literally pay 
off the entire Federal debt, our children receive this Nation debt 
free, they have no reason to send $500 a month down here to Washington 
to pay interest on the Federal debt; and the good news for seniors is 
that the Social Security trust fund that is supposed to have a savings 
account with real money in it, we will be

[[Page H4129]]

putting the real money back into the Social Security trust fund so 
Social Security would once again be solvent for the future of our 
senior citizens in this great country.
  Mr. TIAHRT. Mr. Speaker, if the gentleman would yield, if we go back 
to what we are currently paying this year on interest on the Federal 
debt, it is about $355 billion. That is our gross payments. It is not 
the net payment. But if we were to eliminate this debt and gradually 
pay it off, that means that our interest payments would actually become 
less and less and less. So right now it consumes about 20 percent of 
the Federal budget; is that not correct?
  Mr. NEUMANN. If the gentleman would yield, about 17.
  Mr. TIAHRT. About 17 percent of the Federal budget. Well, as that 
becomes less and less, it will make more money available to pay off 
more of the Federal debt. So it kind of gains momentum as we go on. As 
we pay off a portion of the debt, we pay less in interest payments. 
That makes more money available to pay off other parts of the debt and 
releases some of the burden that is on our children and on ourselves 
who are paying those additional taxes. So it is a pretty good plan. We 
are going to limit the growth of Government and allow extra revenue, 
surplus revenue that will be used to pay off the mortgage that this 
company has already taken.
  Mr. NEUMANN. If the gentleman would yield, he might be interested to 
know my background as a home builder. And this not a whole lot 
different than what folks did when they came into our office and bought 
a home from us, they put it on a 30-year mortgage and paid the home 
off.
  So this idea conceptually of paying down the Federal debt over a 
period of time, it is not a lot different what every American family 
goes through when they go out and buy the American dream or home. This 
is not a farfetched idea that cannot happen. In fact, we have reached a 
point in this Nation where it can happen and should happen.
  All we have to do is pass what is called the National Debt Repayment 
Act. We are hoping that that actually gets added into the 
reconciliation bill next week. We are hoping that this portion of the 
reconciliation bill will be put in so we actually get on this path to 
repay the Federal debt, thereby passing the Nation on to our children 
debt free and ensuring that Social Security is solvent again.
  Mr. TIAHRT. If the gentleman would yield, I am also an original 
cosponsor of this legislation. But I want to go back to some things he 
said here, because now the projections that we are making for the 
future are based on revenue growth of about 4 percent increase each 
year. And yet our history over the last decade and a half has been at 
about 6.8, 6.5, over 6 percent.
  So if it does grow at 6 percent, which is a very reasonable thought 
pattern, a very conservative view, we could get to this surplus by as 
early as 2000. And then at 2000, we start into the National Debt 
Repayment Act, which then takes a third for tax relief for working 
Americans.
  And again, that is a good thing, because people do two things with 
their money once they have tax relief. They either save it, which is 
more capital and, therefore, more jobs that are created, or they spend 
it; and when they spend it, that stimulates our economy and, once 
again, creates more jobs.
  So we have one-third going to tax relief and then two-thirds goes to 
repay the debt. And that kind of gains momentum. As we pay off the 
debt, the interest goes down and we have more money available. So it is 
a very conservative plan. Historically, it looks like it very well 
could work, barring any unforeseen circumstances.
  Mr. NEUMANN. If the gentleman would yield, that is really what this 
chart shows. It shows the growth of revenue to the Federal Government. 
It has been 7.3 percent the last 3 years, 7.3 over 5 years, 6.2 over 
10, 6.8. Those are all numbers.
  But what is significant is to note the difference in those numbers 
versus what is actually in our budget agreement. We are only projecting 
growth at 4 percent. Our budget agreement is very, very conservative 
when compared to his historical perspective. In fact, if it grows at 6 
percent, still slower than what we see up here, but if it were to grow 
at 6 percent, we would in fact have a balanced budget by the year 2000 
and run our first surplus.
  Just think what a wonderful situation. Just think, as we get to the 
turn of the century, instead of being burdened with the $300 billion 
deficit we were looking at when we came here 2 short years ago, if 
instead of that, this working model of controlling the growth of 
Government spending, not the old model of reaching into the back 
pockets of the American people back in 1993, with the biggest tax 
increase in history, the new model of controlling the growth of 
Washington spending, that model is working so well that we reach a 
balanced budget at the turn of the century and we get up on January 1, 
2000, realizing that our Government has changed completely from where 
it was in 1994 and 1993 and back in this new model of controlled 
Government spending, as opposed to runaway Government spending, the new 
model of leaving more money in the pockets of the people instead of 
reaching into their back pocket and getting more money out for 
Washington, that new model where we control Government spending instead 
of raising taxes, that in the year 2000, on January 1, we get up in the 
morning and we realize that it actually has happened. It is going to be 
a startling day for America, because they are going to get up and they 
are going to see this come to reality.
  These projections are very, very conservative. And I fully expect on 
January 1, 2000, the American people will get up and we will be talking 
about what we are doing with the surplus.
  Mr. TIAHRT. If the gentleman would yield, when I think about how this 
is in relationship to the people in Wichita, KS, which is a big part of 
my congressional district, I think about a young woman that I met who 
works second shift at the Raytheon Plant. She has three children, and 
she is a single mom. When I asked her, ``What is the most important 
thing that the Federal Government could do for you?" she said, ``If you 
could give me some tax relief so I could take care of my three kids, I 
would be very happy.''

  At that time, we were talking about a lot of other issues, raising 
the minimum wage; we were talking about whether we should work on some 
other social programs, how we could save Medicare, et cetera. But the 
most important thing to her was that she could take care of her family. 
And I think most Americans are that way, they would like to be able to 
financially take care of their family.
  Under the plan that we have put in place, we can achieve the goals 
that this country thinks is very important, balancing the Federal 
budget, paying off the debt we have, and giving more money to working 
Americans so they can take care of their families and take care of 
themselves.
  This plan we have on the National Debt Repayment Act achieves those 
goals that we have in common here in America. It reduces the debt and 
it gives tax relief and restores integrity to very important funds that 
we have now, the trust fund for transportation and social security, 
very important issues. So as we move forward into the next few years, 
it is very exciting to see our economy doing well, that our plans are 
starting to take shape, that there is promise and hope for the future.
  I think this is a wonderful time to be in Congress and to be in 
America because we see this plan coming into shape. It provides hope, 
does it not?
  Mr. NEUMANN. If the gentleman would yield, it surely does. I think as 
we near the end of our hour here, I think it is important that we wrap 
this up.
  We now have been talking about the future. This is not just a series 
of promises being made by people here in Washington. I think it is very 
important that we remember that, in the present, we are in the third 
year of our plan to balance the Federal budget. The first year, the red 
was promised, the blue was achieved; we were ahead of schedule. The 
second year, the red was promised, the blue was achieved; we are ahead 
of schedule.
  I am about to head over to join somebody who I think is an American 
hero, and that is the gentleman from Ohio [Mr. Kasich], the chairman of 
the Committee on the Budget. He is right now crafting this third-year 
plan, and we are about to go and pass it, I hope this

[[Page H4130]]

afternoon. But in the third year, we are not only on track, but again 
we are ahead of schedule. I think it is very important.
  We just dedicated about 10 minutes here to the future and the 
National Debt Repayment Act. This is not just a series of empty 
promises like back in the past with Gramm-Rudman-Hollings, and it is 
not a series of promises based on the past model of how much more money 
can we confiscate from the American people. These are discussions being 
held, based on a 3-year track record that have us not only on track but 
ahead of schedule from what was promised.
  I think it is very, very important as we near the end of our hour 
here that we go back to the past, we cover the present, and we look to 
the future again and make sure we remember what that means. I cannot 
help, as we near the end here, thinking about our families back in 
Janesville, WI, and thinking about our friends in church with three 
kids, one headed off to college, and they look at the package that is 
now on the table, it is not fiction, it is here and now, that they are 
going to get that $1,500 help to send that student to college. They get 
to keep $1,500 more, instead of sending it out here to Washington. And 
the two kids they still have in their house back in Janesville, WI, 
they get $1,000 for them, $500 for each one of those kids.
  This is not the past, it is the present, and it is happening here and 
now. We are on track to balancing the budget and reducing the taxes.
  The first time I ever saw this really work, I was a little cynical of 
can we actually reduce taxes and balance the budget. But Tommy Thompson 
did it out in the great State of Wisconsin. If he can do it out there, 
this is just kind of a Wisconsin carry-through out here in Washington, 
DC.
  The past is a series of promises that were broken, made by people 
here in Washington. The past and those broken promises motivated people 
like us to leave the private sector and come out here and serve in this 
Government to change it. The past and those broken promises of Gramm-
Rudman-Hollings, where they promised to balance the budget and never 
did it. The past, 1993, the biggest tax increase in history, how much 
more money can we get out of the pockets of the American people to say 
that we are making progress towards balancing the budget? That is the 
past.
  The present is our now-working model of controlling the growth of 
Government spending, because we know when the Government spends less, 
it leaves more money available in the private sector. More money in the 
private sector keeps the interest rates down. And this means something 
in Janesville, WI. This means lower interest rates so people can afford 
to buy more houses. And when they buy more houses and cars, somebody 
has to go to work building those houses and cars. And those people are 
leaving the welfare roles, getting jobs and paying taxes. And that is 
this working model that is making this whole thing happen.
  That is the present. The present is not the old ways of the past, 
reaching into the pockets of American people. It is this new model of 
curtailing the growth of Government spending. This new model has us not 
only on track of fulfilling our commitments, but ahead of schedule. It 
has got us providing the tax relief to American families that had been 
promised 2 years ago. It is here and now and it is the present. It is 
not an empty set of promises, but it is actually happening now, as we 
speak.
  The future holds an even brighter picture for our children and for 
future generations of Americans. The future holds us continuing down 
this path, passing a bill called the National Debt Repayment Act where 
we generate a surplus and that surplus is used one-third for additional 
tax reduction and two-thirds to pay down the debt. Under this plan, by 
the year 2025, this is our future, before I leave the work force, 
before I retire, good Lord willing, we will have paid off the debt in 
its entirety so we can pass this Nation on to our children debt free.
  That means no interest payments out here to Washington. That means 
the Social Security system is revived and restored so our seniors can 
count on getting the money that has been promised. That is what this is 
all about, and that is my dream for the future of this country.
  Mr. TIAHRT. Mr. Speaker, in conclusion, when Thomas Jefferson sent 
Merriwether Lewis and William Clark off to the great Northwest, he had 
a great deal of hope for the future of this country. He saw it growing 
and prospering.
  Now, as we stand here in 1997, on the brink of a strong economy, we 
look forward and we have a great deal of hope, a hope of balancing the 
Federal Government, of controlling Federal spending, of giving a great 
deal of hope for the future for our country.
  I want to thank the gentleman from Wisconsin [Mr. Neumann] for coming 
down here and showing us in very clear terms where we came from in the 
past as far as Federal Government spending, where we are today, and 
what we are looking for in the future, which I believe is very 
optimistic. Again, it is a picture of hope, the same type of hope that 
Thomas Jefferson saw when he looked toward the West back in the early 
1800's, and it is the same type of hope, I think, as we look at the new 
century. We should have hope for a strong economy, of a way of paying 
off the debt so our children have a strong future, strong economy, with 
plenty of opportunity and a way that they can see that they can grow.

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