[Congressional Record Volume 143, Number 109 (Tuesday, July 29, 1997)]
[Senate]
[Pages S8210-S8211]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    RESULTS OF THE 1993 BUDGET PLAN

  Mr. CONRAD. Mr. President, I rise to comment briefly on the agreement 
that has now been reached between negotiators on the budget and tax 
package. That agreement will soon be before us.
  I would like to put what has happened in some historical perspective. 
I have been reading and listening to the commentary over the last 
several days of how we got to the position we are in today, in which we 
can consider significant tax relief and continue on a path to balance 
the unified budget by the year 2002.
  I think we have to go back to 1993 when President Clinton came into 
office and faced a $290 billion deficit he had inherited from the year 
before. I think we have to go back to the economic plan that he laid on 
the table to get our fiscal house in order and to lay the basis for 
strong economic growth.
  When we go back to that period, I think we remember the situation we 
confronted. Deficits had been growing, were out of control. There were 
many who wondered if the best years of the United States were behind 
us.
  The President put out an economic plan that proposed cutting 
spending. It also proposed higher taxes on the wealthiest among us, 
asking the wealthiest 1 percent in this country to pay higher income 
taxes. That plan passed the Congress. In fact, it passed in this body 
only because the Vice President of the United States broke a tie and 
voted in favor. There were those on the other side of the aisle who 
said this plan, which was going to raise taxes on the wealthiest and 
was going to have spending cuts, was going to crater the economy. They 
said at the time it was going to increase unemployment; it was going to 
reduce economic growth. All these bad things were going to happen.
  Now we can look back and see what has really happened. None of the 
bad things came true. Instead, what we have seen is really a remarkable 
economic record.
  Just with respect to the deficit, the so-called unified deficit, it 
was $290 billion in 1992 and came down every year under that economic 
plan. This year, the most recent projection was $67 billion, but even 
that is now outdated. We are now told that the deficit this year may be 
$45 billion, or may be as little as $30 billion.
  So the fact is that the economic plan which passed in 1993, a 5-year 
plan, has exceeded every expectation. The deficit has come down each 
and every year under that economic plan and come down sharply. In fact, 
we are close to balancing the unified budget without any additional 
action. According to the

[[Page S8211]]

Office of Management and Budget, if one looks at long term savings, 
what one sees is the savings from the 1993 deficit reduction package 
are $2 trillion over 1994-2002. The budget agreement that the Senate 
will consider tomorrow is about $200 billion, about one-tenth as much. 
So if we go back and look at what made a difference here, the 1993 
economic plan is the reason we have seen such dramatic deficit 
reduction and is the reason why we are in a position now to have tax 
relief for hard-pressed American taxpayers.
  It is very interesting to go back and review the record of what has 
happened in this economy since that 1993 economic plan was adopted. By 
the way, it is the only economic plan that was adopted during that 
period. It was adopted without any help from the other side, and now we 
can look at the record.
  The misery index. We used to talk a lot about the misery index. That 
is the combined rate of unemployment and inflation. The combined rate 
on July 14, 1997: 8.7 percent, the lowest average since the Johnson 
administration. That is a long time. Inflation: 2.8 percent per year, 
the lowest average since the Kennedy administration.
  Employment. Our friends on the other side of the aisle said when we 
passed the 1993 plan--it is still ringing in my ears--I remember a 
Senator on the other side of the aisle saying this was going to crater 
the economy. It was going to increase unemployment. It was going to 
reduce economic growth. It was going to be devastating. Well, we can 
now look back and see what happened. Employment has increased by 12.5 
million new jobs--the only administration to exceed 11 million in our 
history.

  Deficit reduction. I have already talked about that. We have seen the 
unified deficit go from $290 billion to this year perhaps as little as 
$45 billion. Maybe even less. Business investment has grown at 10.5 
percent a year, the fastest growth since the Kennedy administration.
  The stock market. We all know what has happened to the stock market. 
It has gone from 3,242 on January 20, 1993, when this President took 
office, to 7,922 on July 11 of this year. Now we know it is over 
8,000--the fastest growth since World War II.
  And the poverty rate. The poverty rate in this country has declined 
from 15.1 percent in 1993 to 13.8 percent in 1995--the largest drop 
since the Johnson administration. Median family income has gone up 
$1,600 between 1993 and 1995--the fastest growth since the Johnson 
administration.
  Mr. President, I recall this history because I think it is important. 
It is important to understand what has worked in terms of economic 
policy. Some said in 1993, if you raise taxes on anybody in this 
country, that will have a devastating economic impact.
  They were wrong. They were simply wrong. I believe the reason they 
were wrong is because the benefits of deficit reduction to the economy 
far outweighed any negative consequences. No question, when you raise 
taxes that creates some drag in the economy. But it also had a 
beneficial component. The beneficial component was that deficit 
reduction took pressure off interest rates because we really did reduce 
the deficit.
  The fact there was a move to ask the wealthiest 1 percent in this 
country to pay more in income taxes combined with the spending cuts of 
the 1993 plan meant the deficits came down. That meant there was less 
Government borrowing. That took pressure off of interest rates. 
Interest rates came down. In fact, we know every 1 percent reduction in 
interest rates takes $128 billion a year off this economy. That is 
lower borrowing costs for businesses, lowering borrowing costs for 
farmers, lowering borrowing costs for individuals. And that made a 
profound difference in this economy. It helped this economy reignite. 
And, again, since 1993, we see the results--not only this dramatic 
decline in the deficit as a result of that economic plan, but also a 
remarkable resurgence of economic growth, savings, and investment. 
We've seen the lowest level of core inflation in 31 years, and in May 
the lowest unemployment rate in 24 years. That is a remarkable economic 
record.
  Some who are listening will say, well, Senator, you can't attribute 
this all to the 1993 plan. Fair enough. You cannot attribute it all to 
the 1993 plan because economic conditions are a result of not only 
fiscal policy but monetary policy as well. But make no mistake, the 
accommodative monetary policy we have had as a result of Federal 
Reserve Board decisions, follows the fiscal policy decisions that were 
made in 1993. That is not just my opinion. Alan Greenspan, the head of 
the Federal Reserve, says that himself. He has indicated that much of 
the strength we have seen in the economy can be attributed directly to 
the 1993 economic plan.
  I think if one is fair and objective one would say, no question, this 
economic resurgence in terms of Government policy is a combination of 
fiscal policy that was passed by Congress in 1993 and the monetary 
policy that the Federal Reserve Board has followed since that time. But 
what made possible those Federal Reserve decisions was the fact that we 
bit the bullet, that we took action to reduce the deficit. Because we 
took that action in fiscal policy and the Federal Reserve Board 
responded with accommodative monetary policy, the result has been this 
remarkable economic resurgence.
  There are other factors as well, but in terms of Government policy, 
what Government can do to affect outcomes, there is no question. The 
record is absolutely clear. The 1993 economic plan worked and worked 
remarkably well to strengthen this economy.
  Mr. President, I look forward in the coming days to discussing this 
economic package that has now been agreed to by negotiators. I look 
forward to talking about the spending side of the ledger as well as the 
tax side of the ledger, the agreement that will be before us tomorrow.
  I yield the floor, Mr. President, and suggest the absence of a 
quorum.
  The PRESIDING OFFICER (Mr. Allard). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. HOLLINGS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Stevens). Without objection, it is so 
ordered.
  Mr. HOLLINGS. Mr. President, what is the pending business?

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