Congressional Record, Volume 143 Issue 110 (Wednesday, July 30, 1997)

[Congressional Record Volume 143, Number 110 (Wednesday, July 30, 1997)]
[Senate]
[Pages S8314-S8355]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

BALANCED BUDGET ACT OF 1997--CONFERENCE REPORT

The Senate continued with the consideration of the conference report.
The PRESIDING OFFICER. Who yields time?
Mr. DOMENICI. Mr. President, I suggest the absence of a quorum and
ask unanimous consent that it be charged equally.
The PRESIDING OFFICER (Mr. Coats). Without objection, it is so
ordered.
The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. DOMENICI. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Mr. President, I understand Senator Grams would like to
speak for up to 10 minutes. I yield him that time off the bill from our
side of the 10 hours.
The PRESIDING OFFICER. The Senator from Minnesota is recognized to
speak for up to 10 minutes.
Mr. GRAMS. Mr. President, I want to give my congratulations to the
chairman of the Budget Committee and all the others who have worked so
hard over the last couple of weeks to work out an especially very
important tax package, which I believe is going to be a step in the
right direction of relieving some of the tax burden placed on American
families over the last several years.
So with that, Mr. President, I rise to express my strong support for
the tax relief package that will be coming before the Senate tomorrow.
I want to take this opportunity, again, to commend and thank the
majority leader,

[[Page S8315]]

Chairman Domenici, Chairman Roth, and the negotiators for the
administration for all of their efforts to bring us to this historic
point here today.
Mr. President, when my good friend Tim Hutchinson and I went to the
floor as freshmen members of the House in June 1993 to introduce a
budget plan we called Putting Jobs and the American Family First, I
could never have guessed the long road we would have to travel to reach
the point we find ourselves at today--on the verge of enacting the $500
per-child tax credit that served as the centerpiece of our 1993
legislation.
Our proposal did not have a lot of support in Washington in 1993, and
family tax relief did not even make the radar screen of most lawmakers.
But that was not important, because we had support where it mattered
the most: with the American taxpayers. In the years since, I have
watched the enthusiasm for the $500 per-child tax credit continue to
grow until it could no longer be ignored here in Washington. After
being embraced by the President and congressional leaders in both
parties, 1997 is the year in which the $500 per-child tax credit will
finally become law.
I have been pleased with many of the changes we been able to bring
about in our Government during my service in Congress--but the vote
we'll take tomorrow on our tax relief plan charts an important new
course. This week, we fulfill what I consider to be a fundamental
promise we made 2\1/2\ years ago to the American taxpayers: that
Washington would finally listen to the people and let them keep a
little bit more of their own money at the end of the day.
This legislation is a victory--not for the Senate, or the House, or
the President, but for the working families of America. Those are the
men and women who go to work every day--and sometimes to a second job
at night--in the summer when the heat is horrific and the winter when
the car will not start and the snow is piled up to their knees. They
put in their 8 hours and often stay for another 3 or 4 for the overtime
if they are struggling to save for a new furnace or the kids need
braces. They do not ask for much--just to be treated fairly. These are
the folks who look at their checkbooks each week and wonder ``Where did
it all go?''--the same folks who stare at their tax returns each April
and ask ``How come the government takes so much?''
Thanks to the $500 per-child tax credit, the Government will be
taking a little less on tax day.
Mr. President, I am pleased with the improved $500 per-child tax
credit provision contained in the fiscal year 1998 reconciliation
conference agreement. It is a needed improvement over the Senate-passed
version, which I voted against in June.
At that time, I opposed the Senate tax bill because of the way it
restricted the use of the $500 per-child tax credit, and in the
process, diluted its value. The Senate plan offered a $250 tax credit
in 1997 for children under the age of 13, which increased to $500 per-
child in 1999. For children age 13 to 16, the tax credit was available
only if parents dedicated it toward their children's education. While I
fully support the idea of putting away those tax credit dollars for
college, I do not believe the Government should mandate exactly how the
taxpayers should spend their own money. That is not the place of
Congress and the President.
When I cast my vote against the Senate's tax cut bill in June, it was
to send a signal to budget negotiators that we must craft a $500 per-
child tax credit that does more for working families. With the recent
improvements made by the House and the Senate, it is clear Washington
finally got the message--as a result, more families will keep more of
their hard-earned tax dollars.
The $500 per-child tax credit remains the centerpiece of the our tax
relief plan. Under the agreement, working families will be provided a
$400 per-child credit in 1998, which increases to $500 per-child in
1999 for dependent children below age 17. The credit is phased out for
families earning more than $110,000 per year. The result is that the
families of 43 million children nationwide will receive more than $70
billion in tax credits over the next 5 years.
It is the Nation's middle-income families who will benefit most once
this provision is enacted. In my State of Minnesota, nearly 700,000
children from middle-class families will be the primary beneficiaries.
Those families will see over $300 million in tax relief. That is $300
million that will not go to Washington to fund the priorities of the
Federal Government. Instead, families can use that money to fund their
own priorities, whether that is groceries, medical expenses, insurance,
or education.
An additional 170,000 Minnesota children will receive the tax credit
under this expanded version than would have under President Clinton's
plan.
Another notable improvement is that the agreement broadens the child
tax credit to low-income families.
When Senators Hutchinson, Coats, and I introduced our most recent
version of the child tax relief legislation earlier this year, we urged
Congress to provide immediate tax relief to families effective in 1997,
provide it to as many families with children under age 18 as it
possibly can, regardless of their income, and make it available against
all taxes paid by workers, including payroll taxes. I am pleased the
agreement adopted our proposal and offset this tax relief by tightening
the earned income tax credit.
For a typical family of four, the $500 per-child tax credit means
$1,000 in tax relief, which would pay 1 month's mortgage and grocery
bills, or 11 months' worth of electric bills, or nearly 20 months'
worth of clothing for the children.
More significantly, the $500 per-child tax credit will reverse a 16-
year tide of rising Federal taxes to finally reduce a family's total
Federal income tax burden. This is the first tax cut in 16 years, but,
in the meantime, there have been 10 tax increases in that 16 years.
This begins to reverse the tide.
For a family of four earning $30,000 per year, $1,000 in tax relief
would cut their income tax burden by 51 percent. Meanwhile, a family of
four earning $40,000 would see their tax burden cut by 30 percent, a
family earning $75,000 would see their tax burden reduced by 12
percent, and a family earning $100,000 per year would receive a tax cut
of 7.4 percent.
This tax relief will restore some fairness for the taxpayers of my
State. Over the past several decades, the Federal tax load on Minnesota
residents has grown larger and larger while their share of Federal
spending has gotten smaller and smaller. Minnesotans last year paid an
average of $5,563 per person in taxes to the Federal Government, $203
more than the national average. But Minnesota received back only 78
cents in Federal spending for every $1 its taxpayers sent to
Washington, among the lowest return of any State. This regional
disparity is an additional financial burden to Minnesota residents.
Mr. President, I also applaud the inclusion in the agreement of
important pro-economic-growth and pro-prosperity tax provisions such as
capital gains relief and estate tax reduction. Although these tax cuts
are rather small and hardly keep pace with inflation, it is nonetheless
a move in the right direction. These tax cuts will spur job creation
and economic growth. In doing so, they will reduce the cost of capital,
increase worker productivity, and provide higher salaries for the
American people.
However, I believe Congress could have done much more in the way of
tax relief for working Americans if Washington would just spend less
and allow working families to keep more of their hard-earned money.
I personally would prefer a full and immediate $500 per-child tax
credit for all families with children under 18 without any
restrictions, zero capital gains tax, elimination of the death tax, and
ending double taxation. But those battles will have to wait for another
day.
My greatest disappointment with the tax deal is that it contains no
real tax reform. Instead of simplifying the Tax Code, this tax bill
increases its complexity. Tax policy is still used as a tool for the
redistribution of private incomes and for social engineering. Nothing
is done to end the IRS as we know it. Unfortunately, these defects
greatly diminish the positive impacts of the tax bill. I pledge to
continue to work with my colleagues on real tax reform in the future.

[[Page S8316]]

Although the tax relief in the improved bill is still tiny when
compared against both the total tax burden of the American taxpayers
and total Government spending, it is the first time in 16 years that
the Government has acknowledged that working families are being heavily
overtaxed. That is reason enough to celebrate.
Mr. President, ever since the people of Minnesota sent me to
represent them in Congress--first in the House and now in the Senate--
Americans have been writing me to share their dreams for themselves and
for their nation. Their letters fill dozens of files in my office. Some
of the most passionate stories have come from families--working
families who heard that I had proposed a $500 per child tax credit and
wanted to tell me what a difference such a seemingly simple piece of
legislation would make in their lives.

I would like to share just a few of their letters. A family in
Illinois wrote:

We are a one-paycheck family struggling to keep our heads
above water . . . It is encouraging to know there are members
of the government who understand our struggle and are working
on our behalf.

``Thank you for your efforts in trying to help families receive a tax
credit of $500 per child,'' wrote another family, this one from Texas.
``As parents of three children, we truly appreciate your endeavors in a
time when other politicians are trying to get more and more of our
hard-earned money.''
From Michigan came this letter:

There are not very many people in Washington who remember
the pro-family community--and even fewer in Washington who
will support the family.

And a family in my own State of Minnesota sent me this heartfelt
letter:

As the mother of seven children with one income, I am
especially interested in the $500 per child tax credit. We
refuse to accept aid from federal or state programs that we
qualify for.

We believe this country was built with hard work and
sacrifice, not sympathy and handouts. We also believe that we
can spend this money more effectively than the government,
which has only succeeded in creating a permanent dependent
welfare class with our money over the last 40 years. Let us
get back to basics.

Let us get back to basics.
I think ``getting back to basics'' is what this debate is all about,
Mr. President. The American family has always been our Nation's most
basic level of government. The power begins with the family and it
ought to remain with the family at the end of the day. By enacting the
$500 per child tax credit into law, Congress and the President will at
last send a message to real Americans--the folks outside the confines
of this Capitol--that we understand what it means to be a working
family in the 1990's, that we know government demands too much while
delivering too little, and that we can put aside the politics that too
often divide us and do what is right by the American taxpayers.
Mr. President, the $500 per child tax credit is not going to make
anybody rich, but we cannot measure its value in just dollars and
cents. After 16 years without a drop of tax relief, we are finally
going to let the taxpayers keep a little bit more of their own money at
the end of the day. From the vantage point of this Senator, that is a
priceless investment in the American family.
Again, after 4 years of hard work to bring about at least this
portion of the tax bill, which has been called ``the crown jewel,'' we
are going to finally succeed in giving the American family some hard-
earned tax relief.
Thank you, very much, Mr. President.
I yield the floor.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, thank you for recognizing me.
I want to make an announcement for Senators. The bill--the very large
bill that you have seen kind of appear on the desk--is available to
those who have access to the Internet. You can view the bill through a
link in the Budget Committee office. You can do it in your own offices
on the Budget Committee home page, and the bill will be here no longer
than a half-hour from now in sufficient numbers for those who want to
view it in its entirety.
As you know, the House is voting on the bill now--debating and voting
on it. Then it will officially be transmitted to us. We have decided to
start debating this so that we could all use this time during the day
and not have to be here all night to get this done in a timely manner.
Mr. President, I want to make a few observations. Obviously, Senator
Lautenberg will have his, and then I would like very much to say to
Senators that we are using time out of the 10 hours allowed.
I understand from our majority leader that we intend to get this bill
done, if possible, tonight; if not, clearly tomorrow morning. So that
means we are going to spend a lot of time here on the floor between now
and the time we quit tonight.
So, if Senators have comments they would like to make, or if they
have questions, I would particularly suggest if you have questions with
reference to the Byrd rule--one of the rules that apply to these bills
that do not apply anywhere else because it has to do with a special
test for extraneousness--I wish they would talk with us, or talk with
Senator Lautenberg's staff or our respective leadership offices about
the Byrd rule violations that we are aware of and kind of documented
now. We would all like to have a chance to work together on them. When
it comes to that issue, I would like to make the following statement so
that everybody understands. I am sure my friend, Senator Lautenberg,
will concur.
The White House has been involved from the very beginning in the
preparation of this legislation. And from time to time both the
Republicans and the White House have been involved with Democratic
legislators. But let me make it very clear. This is a historic document
in another procedural context because last evening the White House
staff stayed until late in the evening--in fact, until the early
morning hours--before they would sign off on this. They read every
single word of legislative language. And, indeed, they read every word
in the accompanying report language. Frankly, I have been around here a
long time and working with administrations and the White House with
legislation up here, and I think this may be the first time that has
ever happened.
I only say that because, obviously, it was hard to put this package
together. In the process there are many wordsmiths, and there are many
things that have to be put together in terms of language. But every bit
of it, including those few instances where there are Byrd rule
violations--and that sounds rather ominous, but it really means that we
have a technical rule that says you ought not be legislating in this
bill. You ought to be doing deficit reduction. And on some occasions it
is hard to keep that altogether and not fall into something that is
legislative in a 1,000-page document.
So let me stop the process part, and just remind Senators who would
like to speak today if you have some thoughts and things that you want
the public to hear from the floor of the Senate, as soon as you can
start calling us for time, we would be very, very glad to accommodate.
And I think we can accommodate most people on a rather short notice
because from my standpoint I have said an awful lot. I don't intend to
be here on the floor saying a lot more. I am just trying to get this
bill completed.
But let me start by saying this morning that the headline in the
Washington Post, which has not been very supportive of this, used five
very nice words. They said, ``This is a Big Deal.'' Maybe they don't
like the ``big deal,'' but it is nice that they recognize what all of
us know--that this is a big deal for the American people. It carries
out a bipartisan budget agreement that in itself was historic between
the President and the leadership of Congress back in May. It is a big
deal in this town when we could do what the American people asked us to
do, and that is to work together to live by our commitments, to reduce
spending and reduce taxes, and get our work done.
So it is pretty obvious that this is a big deal. It balances the
budget for the first time in 30 years. And I know there are many who
will continue to be skeptical until that day arrives. Frankly, I am
here saying I am a pretty good budgeteer. I understand all of these
nuances about budgeting, and how the economy impacts on it--how
inflation impacts, how the growth in the economy impacts. But absent a
real major

[[Page S8317]]

catastrophe, which nobody can plan for, this budget will be balanced.
Frankly, it is because of a number of things. The economy is doing
splendidly. That could change. But it looks like things are in place
like they haven't been for a long, long time in terms of those things
that make an economy go into recession or into an inflationary cycle.
And we are not growing out of control. It is kind of a measure of good
solid growth.

So I think we are entitled to use conservative estimates for the next
5 years, which we have done, Mr. President. The economics in this
bill's projections for the future are not overly optimistic. So when
you add it up, for those who say we have some new programs and we spend
some money, that is correct. For some there isn't enough by way of
cutting the budget in this--cutting the expenditures. But I will get to
that in a minute.
Just remember, it is a Democratic President elected by the people and
a Republican-controlled Congress with Democrats in the minority who had
to put a package together that did something significant, or spend the
next 3\1/2\ years, in my opinion, doing nothing. We would have been
around here fighting. We would have at every juncture on every bill
have had stalemates. We might have even closed down Government again.
So from my standpoint, if you look at 10 years--and I am not saying
everything in these 10 years is locked in stone, but 5 years of it is--
we reduce what we would have otherwise spent by about $1 trillion. This
time we have not included in that estimate the savings that will come
from debt service because as you reduce the amount that you borrow you
take off of that baseline that had calculated in it interest.
Yes, this balanced budget is a bipartisan budget agreement. We
followed it as well as any differing groups could follow it. We put it
together with a different group than had to implement it. So that is
not easy, for they always second-guess us and claim they should have
been in. I wish everybody in the Senate could have been in on the
negotiating. I wish every chairman could have been. I guess as I wish
it I speak the truth--that had they we wouldn't be here. That is the
reality of trying to do this kind of thing.
But we said in that agreement that we were going to spend $24
billion. We did agree to provide $24 billion in new spending for
children's health programs for insurance. We also agreed to make
changes in last year's welfare reform, which results in some additional
national spending.
I want to correct myself. The bipartisan agreement said $16 billion
in new spending for child health care coverage. The U.S. Senate voted
in $24 billion, and the Senate version prevailed in the final outcome
of negotiations.
I note on the floor of the Senate now, along with Senator Lautenberg,
is the distinguished Senator from Delaware, Senator Bill Roth.
Let me make sure that everybody understands that his chairmanship and
his committee made this the big deal that it is. I say to the Senator,
I just commented that finally the Washington Post, after being against
this budget, at least recognized one thing. They said, ``It Is a Big
Deal.'' And I am saying there would have been no big deal without the
Senator from Delaware and the marvelous bipartisan committee that he
has. I thank him right here publicly for that.
Let me just go on through. After Senator Lautenberg speaks, our
distinguished chairman of the Finance Committee, which had jurisdiction
over about 85 percent of this bill, wants to speak. I want to yield
quickly.
I want to say, however, that Republicans for a long time said we
ought to balance the budget. It has now become everybody's cry. The
President wants it. Many Democrats want it. But I take a great deal of
pride in behalf of Republicans in my capacity as chairman and ranking
member of this Budget Committee.
I have been trying to get there for a long time. And I think we have
done a great job as Republican leaders in pushing this. That is not
trying to detract from those who have joined us, including the
President of late. We also wanted some tax cuts.
Many of us thought American families were in desperate need of some
help--especially middle-income American families with kids. We have
done that. Again, even though most of that originally started on our
side of the aisle, I don't tend to, nor do I want to, denigrate the
fact that it has broad support on the other side, and the President of
the United States is supportive of it.
The capital gains differential has been part of what Republicans
thought we should have in this Tax Code for decades. As a matter of
fact, it is very interesting that we got a capital gains differential
in this bill. We joined the industrial nations of the world with
capitalistic societies that have moved that way already, and I think
that bodes well for the future.

Everybody knows the other provisions that my friend, the chairman,
will speak to. But I just wanted to make the point, for those who seem
from time to time to give up on causes and to be for them for a few
years and say we can't get them done, I believe Republicans ought to be
proud of the fact that we have stood pretty fast for those issues, the
ones I just described, and some others, and most of them are coming
true here.
That is not to say some issues that the Democratic Party and this
President have pushed very hard for are not in this bill, also. I am
sure, knowing my friend, Senator Lautenberg, he will remind us--and
that is what he ought to do. And those are some things I want, too. I
am not running around apologetic about trying to cover children that do
not have health insurance. I am not sure we know how to do it quite
right yet, I say to the occupant of the chair, who shares that concern
with me, but I think we have to get started, and we have done that.
One last thing is we all know the Medicare Program for the seniors of
America--39 million of them almost right now--we know that program is,
for many of them, something they build their confidence on as they get
older and as some of them get sick, and as they get sick, they know
they have this great hospitalization program. Now, there is no one who
ought to be anything but proud of the fact that we have taken a system
that is falling apart financially, and we fixed it for 10 years. It
probably would have gone bankrupt in 2, maybe 2\1/2\ years, so we fixed
it for 10 years.
Now, I am kind of tempted to say that is a big deal. But I think it
is. Now, it is not fixed permanently. It still continues to have big
problems out there in 15 years, 20 years, but, frankly, I am not
apologizing that a budget resolution and essentially this plan did not
solve that. Actually, I do not believe it could have. I believe it is
such a big issue in and of itself that it will be solved only when a
bipartisan national commission, which is provided for in this bill,
goes out into America and tells everybody the problems and comes up
with some solutions that are bipartisan that Presidents and Congress
will support. We started that here.
But I believe in the meantime we had to make that program more
efficient. We have done that. In fact, we made it $115 billion more
efficient by changing the rules of the game. In the meantime, we are
trying to give seniors the best of health care at the most reasonable
prices, putting some competition into the program, and that is there,
alive and kicking and strongly voicing itself in this bill--
competition.
So there are HMO's, there are professional provider organizations,
there are private fee-for-service programs, and there are PSO's. It
also has a demonstration program, a medical savings account of 390,000
beneficiaries.
Now, when you put all that together, along with a new $4 billion
preventive program that I am not going to discuss in detail, we have
done fairly well by the people who pay for Medicare, the working
people, and pretty well by the seniors. You package this all together--
a balanced budget, which means we are not going to have our children
paying our bills too much longer. That is what a deficit and a debt
are. It is asking our kids and our grandkids to pay our bills. A
balance says we are not going to do that anymore.
Now, it is a long time coming, and we owe a lot of money, so we
cannot stand up and say to our kids they are not going to pay some of
our bills, because the debt is so big we cannot get rid of it. But at
least we can stop it. So that was No. 1.

[[Page S8318]]

No. 2 was fix Medicare, and I have described it.
No. 3 was to make sure that we had a tax bill that was fair to the
American people. Frankly, after all the bickering on the edges--and
that is what it all was, on the edges. All this argument about how many
children are covered and how far down do you go were really on the
edges, small, small things, small numbers. The people that need tax
cuts and tax breaks are the American people earning between $25,000 and
$30,000 and $110,000. They are the middle-income Americans, two
jobholders, two professionals, two people working, and they are paying
the taxes, they are following the rules, and they haven't had anything
from their Government saying we would like to make it a little easier
for you--until this bill.
Now, they have three very significant new things they can look to. It
isn't like we are giving them a present. It is saying to them, keep
some of your own money and let Government grow less and let you make
your decisions on what you do for your children rather than have us
build a bigger and bigger Department of Education. Those are the kinds
of tradeoffs that are going to occur and are starting to occur,
although, when it comes to education, this bill is strong on college
education, strong as anything you can have. When it comes to the new
programs appropriations, we have been very generous. We have been very
generous to the education programs that our country has.
I am not sure before we vote on this that I will have another chance
to thank everyone, so I just wish to thank Senator Lautenberg, and I
thank our distinguished Republican leader--he did a great job--Senator
Roth, and all the other chairmen, our House counterparts, including
Representative Kasich.

But I want to make one statement on the floor. It might seem it ought
to be done on the House floor, but I want to make it here, and I think
my friend, Senator Roth, would concur. The Speaker of the House, Newt
Gingrich, in negotiations from the beginning until the end, was
absolutely a fantastic leader. I have to say to those who doubt,
because he was under a lot of pressures, I did not notice for a minute
that had anything to do with his single-mindedness, his tremendous
intellect and the way he could put things back together and get us
moving in the direction of getting things done. So my compliments to
the Republican leadership in both Houses from my side, and obviously we
had great support from Democrats.
At this point I am going to yield the floor.
Mr. ROTH. Could I ask the distinguished chairman to yield just for a
minute?
Mr. DOMENICI. Of course, yes.
Mr. ROTH. There are many people who are responsible for bringing
together this important piece of legislation, and I strongly agree with
what the distinguished Senator from New Mexico said about the Speaker
and the majority leader. They provided not only strong leadership but
ideas, were able to move ahead, and I have to say I could not agree
more that the Speaker showed every ability of providing the kind of
leadership we needed from the House in order to get this complex piece
of legislation through.
I would just like to say to my distinguished friend and colleague,
Senator Domenici, that the legislation would have gotten nowhere if it
had not been for him. I know no one in the Senate, or House for that
matter, that has a better understanding of the budgetary process, knows
the issues with which we are dealing and who has devoted, what is it, 7
or 8 months' time to getting this job accomplished.
I would also like to say in the same context I think Bill Hoagland
has been a tremendous strength for this whole process.
I, too, join the Senator in congratulating the ranking member, my
colleague and friend from New Jersey, for his outstanding work.
Mr. DOMENICI. I thank the Senator very much.
Mr. LAUTENBERG. I thank the Senator.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. Mr. President, I am pleased to join the chairman of
the Budget Committee, Senator Domenici, in supporting the conference
report on this budget reconciliation bill, which, along with the
conference report on the tax bill, will finally implement a bipartisan
plan to balance the budget.
I have to ask Senator Domenici, because he talked about the five
words that appeared in the Washington Post, I wonder whether it read
like this. I heard him say, ``This is a big deal.'' Or did it say,
``This Is A Big Deal?'' I wasn't sure quite where the emphasis was. But
I assume it was the way it was intended.
Mr. DOMENICI. The way I said it.
Mr. LAUTENBERG. The way the Senator read it himself as opposed to,
``This is a Big Deal?''
I want to say to Senator Roth, who was pulled from so many
directions, I was amazed to see him arrive in one piece each day. He
listened with great patience--great patience and great interest.
Everybody is pleased. I will speak about it from the Democratic side.
People don't realize, when there is a majority and a minority, the
minority doesn't always get a chance to present their views. But Bill
Roth, Senator Bill Roth of Delaware, is known as someone who is a fair-
minded person, and while he would not always agree, he would almost
always listen. I have never found him to say ``no,'' and I appreciated
that. I think it produced a very good product. It is, under the
circumstances, I think, perhaps the best that could have been gotten.
All of us wish there were other things in there--everybody. If you ask
any Member of the Senate whether they did not think there was another
thing that should have been in or another thing that should have been
out, they would have, I guarantee, a menu of things they would like to
select from.
I am so pleased that we are joined in the Chamber by the ranking
member of the Finance Committee, my good friend and colleague from New
York, Mr. Moynihan. Senator Moynihan is a man with vast knowledge about
so many things that I often say I would enjoy, even with all my white
hair, going to college with Professor Moynihan and hearing his views on
things. But there is always a background of information that adds so
much to the dialog and the debate, and I congratulate him for his role
and for his willingness to hear the arguments and to work to try to get
a consensus in the legislation which we now have in front of us.
Mr. DOMENICI. Will the Senator yield without losing his right to the
floor?
Mr. LAUTENBERG. Be happy to.
Mr. DOMENICI. I note the presence of Senator Moynihan, and I had not
said anything about him in his absence. I would like now to say there
are many points, as you look at the last 7\1/2\ months, when you would
say this is critical, this is where it might end. And I believe the
thing that gave us momentum to get it done was the Finance Committee's
bipartisan addressing of most of the issues in this bill.
Now, I am sure the Senator from New York didn't get everything he
wants, but I believe it was one of the big turning points when the
Senator joined with Senator Roth and between the two of them had such a
large cadre of Senators from both sides supporting some very, very
powerful things, and I thank the Senator personally for that.
Mr. MOYNIHAN. Mr. President, might I thank with great gratitude the
senior Senator from New Jersey and my friend from the day I entered
this Chamber, the chairman of the committee. They speak to what I think
is an important fact. But, of course, the person who made it possible
was Senator Roth, the chairman of the committee. I was with him in this
regard and proud to have been. I thank Senators.
Mr. DOMENICI. Mr. President, could I say that under the rule under
the Budget Act somebody is designated to manage, and I am it for today,
but I can give that to someone else. I am giving that to Senator Roth
until I return, and he will be our floor leader now. I thank the
Senator.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. Mr. President, I will continue to extend
congratulations to some who are not here. I have to take my time to
salute the efforts of Senator Daschle, who was ever present in his
encouragement to get this job done--let's see what we can negotiate
together, let's see if we can make this adjustment or that adjustment,
or talked to his counterpart on the other

[[Page S8319]]

side. And I want to say for Senator Lott, the majority leader, he, too,
was someone who wanted to get this bill behind us, get this job done,
and he has shown his interest in doing that as he runs the Senate from
the majority leader's position that we do move things along. There were
Members on both sides of the aisle who also helped, too numerous to
mention, but I think it is fair to say that those whom we have talked
about had a significant role.
Pete Domenici and I were among the four elected representatives to be
negotiating, and we were often closeted days at a time. Though the
atmosphere got stuffy, I think neither one of us did, and we were able
to continue talking in a civilized fashion.
The bill before us is the culmination of those many months of intense
effort and people of both parties deserve to be proud of this
accomplishment. This budget proves that when leaders with good will
come together, we can overcome partisan divisions and find common
ground. That is good news for all Americans.
I will say this. We have gotten a lot of salutations, a lot of
compliments about getting this job done. Threaded through those
comments were the kinds of remarks that might surprise, like: Finally,
the bickering has stopped, there is no partisanship involved; hurrah,
the Senate and the House are working to get our interests put up front.
I think that was kind of a noteworthy thing. It's not that we spend all
of our time in the boxing ring here. But sometimes, when people's
positions on legislation get too entrenched, they lose sight of the
fact that we have to stop the argument and get on with producing a
product. So, I think the Nation is going to be better off because of
this.
The budget agreement is not perfect. It is not drafted exactly as I,
as I said, nor any other Senator would have written it. But it is an
honorable compromise that, on balance, is an enormous step forward. It
will lead to the first balanced budget in this country since 1969. It
invests in education and helps ordinary Americans afford college. It
provides health coverage for many of America's uninsured children. And
it provides tax relief for middle-class families. It provides important
protections for kids and legal immigrants, people who were invited to
come here and who later became disabled. And it helps accomplish
something that President Clinton has had on the agenda for a long
time--to move people from welfare to work, and to provide the means
with which to make that transition.
More generally, it shows we can both be fiscally responsible and true
to our highest values as a nation. This budget agreement will produce
roughly $900 billion in net deficit savings over the next 10 years. It
will give us the first balanced budget in a generation. It will build
on President Clinton's tremendous success in reducing the deficit. And
one cannot ignore--and Senator Domenici knew this was coming--one could
not ignore the incredible accomplishments, economic accomplishments
that have been made since President Clinton has been in office--with a
budget deficit that was at $290 billion when he took over in 1993, and
at the moment looking like it is going to be something less than $50
billion for the year 1997. It will build on President Clinton's
tremendous success in reducing that deficit. It will build on the
success that we have had in getting new jobs for people in our
country--12 million new jobs created. And the stock market--one can't
help but notice that indicator. I noticed today, after hearing the news
and yesterday after hearing the news, the market continued to move
upward. Inflation is in check. People feel very good about the strength
of the United States, leading the world's most developed countries in
competing in the marketplace. That is a terrific record upon which to
build.
This balanced budget amendment is an extension of all of those good
things. But I think the President is due a lot of credit for having
brought that deficit down to where it was, based on his hard work and,
yes, a turn of very good events at the same time. But it was his
foresight and his planning that helped enable us to get to this point.
The budget agreement, also, will move our Nation into the 21st
century by providing the largest investment in education in 50 years.
I, as a recipient of the benefits of the GI bill--I served in the war.
I don't always like discussing which one. Sometimes people ask me if it
was the Spanish American? It was not. It was World War II. But, without
the GI bill, my widowed mother, age 36 when my father died, and the
poor circumstances in which our family found ourselves when I was
discharged from the Army--never, never would have enabled me to get a
college education and get a start on a career that has been very
satisfying for me and, I hope, worthwhile for the country. So I saw the
value of helping someone get a head start in life, someone getting an
education and being able to contribute to our society. That is what I
want to see us do and the President certainly led us to that point.
The tax bill we are going to be considering also will include a
$1,500 tax credit to make the first 2 years of college universally
available. There will be a tuition tax credit for all working Americans
who want to pursue lifelong learning, continue to learn. That enriches
the mind, enriches the body, and enriches the quality of life. That is
what we have seen in so many cases. If you look in the universities and
research laboratories and so forth, you see the people who continue to
learn and who gain vitality and youth, even as they do that. These
provisions are critically important to the future of our economy.
In addition, the budget agreement also includes $24 billion for
children's health care, the largest increase in children's health care
since the enactment of Medicaid in 1965. This will help provide health
insurance to millions of uninsured children and it is a tremendous
achievement.
The budget agreement also protects Medicare and extends the solvency
of the Medicare trust fund by roughly another 7 years. Unlike earlier
proposals, it does not ask senior citizens to bear unfair burdens and
it doesn't threaten the quality of their health care. Instead, it
reforms and modernizes the program and includes significant new
preventive benefits.
We all know there is going to be a more thorough review of Medicare
in the years ahead, to see whether we can comprehensively make changes
that will guarantee that solvency for as long as one can imagine.
In addition, the agreement provides tax relief for the middle class.
As we will discuss when we turn to the tax bill, the agreement provides
a $500 tax credit for children under the age of 17, to help families to
be able to bring up their children in the fashion that would provide
them with sustenance and direction, and perhaps help them get started
on their education. Importantly, that credit will be available to
working families with lower incomes. This sounds a little mysterious
but there are people whose incomes are supported by assistance from the
Government, earned-income tax credit, in which a family that is below a
certain level of income gets a stipend or a tax refund from the
Government. It often makes their lives livable. But there was a huge
debate about whether or not this credit would be available for people
who do not pay taxes in the first place. But we know they are working
families and they do pay payroll taxes and we decided, jointly, that it
would be appropriate to give some credit on those payroll taxes that
they pay.
We, the Democrats, made that a priority. With support from our
Republican friends we won an important victory for millions of ordinary
Americans.
The conference report also restores a basic level of fairness for
people who have come into this country legally, who have obeyed the
law, paid their taxes, and then fate delivers them a disability whether
through accident or just sickness. Last year the Congress pulled the
rug out from under these people and eliminated their disability
benefits; for some, the only provision that they have that enables them
to get along. But today we are restoring that basic safety net. It is
the right thing to do. As the Senate sponsor of this amendment I am
particularly pleased that it will be enacted into law.
Another important section of the conference report will protect
30,000 disabled children who otherwise would lose Medicaid coverage.
This corrects a serious defect in last year's welfare

[[Page S8320]]

legislation and will make a huge difference for these children and
their families. I am also pleased that the budget agreement includes a
renewed commitment to environmental protection. We will be enacting new
incentives to clean up thousands of contaminated, abandoned sites in
economically distressed areas. That not only will improve the
environment, but it will help encourage redevelopment of these areas,
known as brownfields.
I have seen it in towns in New Jersey, industrial cities that had a
glorious past but now suffer from the delinquency that often results
from industrial pollution. Some of these communities have had these
sites, dormant sites, small sites that were unused, yet with people
begging for work not blocks away, able to get there; people begging for
retail facilities--they are not used. We have seen, in New Jersey,
where we have cleaned up a few of these sites, good retail activity--in
one site in Hackensack, NJ, with a couple of hundred people working in
a discount store, a marketplace that people can go to, to get their
goods, buy their food. It has been a miracle, almost, to see these
things. And it is, often, for very small sums of money.
So we now have brownfields that I worked very hard on. It's now in
place. It's a win-win approach that will make a difference for
communities around the Nation.
Additionally, the conference report includes important provisions to
move people from welfare to work as I mentioned. One million long-term
welfare recipients stand to benefit from this initiative. And the
Nation as a whole will benefit, as more Americans leave welfare and
become productive members of our economy, lift their heads high, lift
their spirits, provide some vision for themselves and their families.
It is a wonderful vision and I am pleased to see we are putting the
resources there to make it happen.
Mr. President, I am going to leave to others the discussion on some
of the other details of this legislation. But I once again take the
opportunity to congratulate the President, President Clinton, for his
outstanding leadership in this effort. We are here today on a
bipartisan basis only because the President decided it could happen and
he wanted to make it happen. His people were all over the place,
working alike with Democrats who occasionally disagreed and Republicans
who occasionally disagreed. He brought us all together and we are
grateful for that. I think his commitment will be acknowledged for many
years to come.
Mr. President, I don't think, as I said earlier, there is anyone who
would say they are 100 percent happy with this agreement. But, while no
one sees it as perfect, everyone should see it as good. It is fair, it
is balanced, and it will serve our country well. It will balance the
budget. It will invest in education and training. It will provide tax
relief to the middle class. It will protect Medicare. It will provide
health care coverage to millions of children. It will throw a life vest
to disabled legal immigrants. It will invest in environmental
protection, move people from welfare to work, and will make life better
for millions of ordinary working Americans.

So I urge my colleagues to put aside as much challenge as they can.
Yes, everybody in this place is free to make their statements, to say
what they want. But I hope in the final analysis they are going to
support this budget agreement enthusiastically, because it sends a
message to the American people. It will say yes, this wasn't something
that was nurtured through an inch at a time. This is something that was
supported by people across the room from different States and from
different parties. That is the way it ought to be. It is the right
thing for America and I am proud to have been a part of it.
With that, Mr. President, I yield the floor.
The PRESIDING OFFICER (Mr. Gregg). Who seeks recognition?
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.

Privilege of the Floor

Mr. ROTH. Mr. President, I ask unanimous consent that Rick Werner, a
detailee to the Finance Committee from the Department of Health and
Human Services, be granted the privilege of the floor for the duration
of the debate on this conference report.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, the budget reconciliation conference between
the Senate and House has come to an end. All sides have weighed in. The
process has been long and involved, around the clock, through the
weekends. But I must say the result is well worth the exercise.
What we have achieved is a balance, a carefully crafted compromise
between the Senate and the House, between Republicans and Democrats,
between Congress and the White House. I can say with certainty that no
Senator, no Congressman, not even the President got everything he or
she would have liked. Undoubtedly there are specifics in this final
package that I would prefer to have seen written differently. But I can
say that, while there were necessary compromises to achieve balance and
to deliver the budget reconciliation to the American people, there was
no compromise on principle. Differences? Certainly, but I cannot
remember the last time I saw such a positive, bipartisan willingness to
work together in a budget effort.
This, I believe, is because there has been a profound change in the
nature and character of Washington. Two recent proclamations
demonstrate this change. The first was President Clinton's declaration
in his State of the Union Address that the era of big Government is
over. And the second came from our distinguished colleague, Senator
Daschle, when, during this debate, he agreed that the question in
Congress is no longer whether or not taxes should be cut, rather a
question of how much they should be cut.
Cutting taxes and achieving a balanced budget have long been
Republican objectives. For years now, we have advocated the need to
change the way Washington does business. Now President Clinton and the
distinguished minority leader demonstrate the growing bipartisan
consensus on these objectives, objectives that underscore this
reconciliation package.
It is a strong first step. It signals that the era of big government
is over. Certainly government has its place. There are moral and
contractual obligations that the Federal Government must maintain with
the American people. Many are enumerated in the Constitution. Others,
like Medicare and Medicaid, are more recent and have become critically
important to those who depend on them now and to those who rely on them
for the future.
Having said this, I believe a clear and growing majority realizes
that the Federal Government is not the answer to all that challenges
us. In fact, in some cases, the Government is shown to be the problem,
particularly when it comes to waste, fraud, abuse, inefficiency, and a
top-heavy, unresponsive bureaucracy. The ability of both sides to
compromise on this bill demonstrates that Washington acknowledges this
reality and that Washington is responding to the attendant frustration
and legitimate concerns felt by Americans everywhere.
Beyond signaling an end to big and inefficient government, this
package meets several other shared criteria. It places us squarely and
honestly on the road to a balanced budget by the year 2002. We all know
how important this is. The United States has not balanced a Federal
budget since 1969. This, despite the fact that our Founders made it
clear that saddling future generations with debt is immoral. According
to Thomas Jefferson, the question of whether one generation has a right
to bind another by the deficit it imposes is a question of such
consequence as to place it among the fundamental principles of
government. Jefferson said that we should consider ourselves
unauthorized to saddle posterity with our debts; we are morally bound
to pay those debts ourselves.
This budget reconciliation package is the first in years that puts us
back where we must be. It is balanced. It begins to address the dilemma
of big government's licentious legacy, a legacy that burdens every man,
woman, and child with almost $20,000 in public debt. I am happy to say
that our majority leader, Senator Lott, made it clear at the beginning
of the 105th Congress that balancing the budget in 5 years would be one
of our top priorities. Mr. President, we have delivered on that
promise.

[[Page S8321]]

Our third objective has been to strengthen the programs that would be
influenced by our actions. The reforms to entitlement that are
contained in this package are, indeed, historic. We make significant
and important changes to Medicare and Medicaid. We strengthen
assistance to children. We return authority and means to our States so
they can better meet the needs of their citizens. It was not enough to
simply change entitlement programs to reduce their rate of growth. We
sought in the process to improve, to strengthen them, to preserve them,
and, again, we succeeded.
Let me give you the specifics. But before I do that, let me reiterate
that we were able to accomplish these significant objectives because of
a growing consensus on both sides of the political aisle, and because
of our willingness to compromise, compromise not on principles but for
principles.
In our effort to control spending, the largest program we addressed
was Medicare. Our objective here was not just to control its spending,
but to strengthen the Medicare Program for the long term, and we did
this. We did this by increasing choice and competition within the
program. Choice within the Medicare Program will give beneficiaries
myriad options. It will allow them to participate in HMO's, PPO's,
PSO's and private fee-for-service programs. We have based our expansion
of choice in the Medicare Program on the successful Federal Employees
Health Benefits Program. Through these options, seniors will be able to
obtain important benefits, like prescription drugs, that are not
covered by traditional Medicare.
These changes and the money they will save also allow us to expand
Medicare coverage for certain important preventive services, including
mammography, prostate colorectal screening, bone mass measurement, and
diabetes management. Beyond increasing choice and competition within
Medicare, we strengthen and preserve the program by slowing its rate of
spending growth. Our measures save Medicare for another 10 years, while
still increasing program spending per beneficiary from $5,500 this year
to $6,800 in the year 2002.

Beyond encouraging choice and competition, this bill introduces
important innovations into the Medicare Program, innovations that could
go a long way toward strengthening the program for future generations.
One very important innovation is the creation of a demonstration
project that will explore the advantages of having medical savings
accounts available within the Medicare Program. This demonstration
project will allow up to 390,000 Medicare beneficiaries to opt into an
MSA program, a program that will allow them to choose a high-deductible
Medicare choice plan.
I believe medical savings accounts will be an important component of
Medicare's long-term viability, and to study and recommend other
innovations, our legislation creates a national bipartisan commission
on the future of Medicare. Senator Moynihan and I called for this
commission back in February as we realized that to realize long-term
solutions for the program, we needed a commission that would be above
politics. This will be a 17-member commission established for a little
more than a year. Its task will be to make recommendations to Congress
on actions necessary to ensure the long-term fiscal health of the
Medicare Program. It will report back to Congress on March 1, 1999, and
these changes to Medicare will result in a net savings of $115 billion
over 5 years, savings that will not only help us balance the budget,
but savings and reforms that will preserve the Medicare Program while
ensuring that it continues to serve those who depend on it now.
Concerning Medicaid, we were able to achieve a total savings of $13
billion. This savings will come largely from a reduction in
disproportionate share, or DSH payments, and by giving our States more
flexibility in how they run the program.
For more than a decade, there has been a tug of war between the
Federal Government and the States over Medicaid. Each side has tried to
assert its will over the other. From the mid-1980's and through the
early 1990's, the Federal Government imposed mandates on the States
and, in turn, the States shifted costs to the Federal Government. The
result was devastating to all of our budgets as Medicaid routinely grew
at a double-digit pace, reaching as high as a 29-percent increase in
1992.
This legislative package marks a new beginning, a new trend. It marks
a change in the Washington mindset that has sought, since the days of
the New Deal over 60 years ago, to centralize power in this city. With
this substantive change in the Medicaid Program, we are offering our
Governors the tools they need to control this program. This, I believe,
is the way things should be done.
With this bill, they will be able to move more individuals into
managed care without waiting years for waivers from the Federal
Government. They will be able to contract with selected provider for
services. The States will be able to ask families to take some
responsibility for the decisions they make when seeking health care
services. This power at the State level will go a long ways toward
stretching Government health care dollars.
As I said, beyond making significant and important changes to
Medicare and Medicaid, we have strengthened assistance to our children
to meet the health care needs of the most vulnerable among us. It
became clear through the conference that both sides of the aisle are
equally committed to increasing access to health care for as many
children as we can. Both sides of the aisle are committed to finding an
answer to the problem of uninsured children in this country, and this
legislation represents an important agreement in this area. It creates
a new program, a program that covers low-income, uninsured children.
The process of providing insurance and health care coverage to
vulnerable American children is complex. As I have said before, of the
71 million children in the United States, more than 86 percent are
already covered by some type of health insurance. Two-thirds of our
children are covered by insurance through the private sector. Twenty-
three percent of all children in the United States under age 18 are
covered by Medicaid, and another 3 percent are covered by other public
insurance programs.
Our plan provides $24 billion over the next 5 years to be used by
States in a manner that provides them flexibility in how they will
expand health care coverage to our children.
Our States will have two mechanisms of establishing programs. They
can expand their Medicaid coverage or they can create their own program
to address the particular needs of the children in their States. And
while the Governors are given certain flexibility in the way they can
use this money, our bill requires that they meet specific standards
regarding health care coverage for children.

Expanding Medicaid is certainly a choice States have made. Thirty-
nine have expanded Medicaid eligibility for pregnant women and children
beyond the Federal requirements. But States are also developing other
strategies for increasing coverage of children as well. There are
already public-private partnerships in more than half of our States.
There are successful programs such as New York's Child Health Plus and
Florida's Healthy Kids. These innovative programs and programs like
them can grow with these additional resources provided by this
legislation.
These, Mr. President, are the major provisions of this legislation.
They signal a new beginning in Washington--real reforms to make
programs more cost-effective, more efficient, more responsive to the
needs of our people and our States. Great care has been taken to assure
that the most vulnerable among us are protected, and this includes our
provision to restore benefits to all legal noncitizens who were
receiving Social Security when last year's welfare bill was signed into
law.
With this legislation, we also restore the ability to receive
benefits to legal noncitizens who were residing in the United States as
of that date should they become disabled in the future. These
protections, however, are handled appropriately and in keeping with our
overarching goal of restoring fiscal responsibility to Government.
With this reconciliation package, we have establish the first
balanced budget since 1969. We have met the criterion given us in the
May 2d budget compromise, and we will give Americans the first real tax
relief package that they have had in 16 years.

[[Page S8322]]

Did we accomplish everything I would have liked to accomplish? No. I
would have preferred to see some deeper, more significant fiscal
restraint. I would have preferred to see a few other major reforms to
Medicare, reforms that would have gone a long way toward strengthening
the program, and these include the provisions that were in the original
Senate package.
But recall, Mr. President, the history of the balanced budget debate;
recall Congress' effort in November 1995 to balance the budget by the
year 2002; recall the consequent Government shutdown and Bill Clinton's
veto; recall the President's 10-year balanced budget plan and Congress
insisting that balance could be achieved 5 years earlier.
Keep the history in mind, and the success of this legislation becomes
clear. We have a balanced budget. That balanced budget will be achieved
in 5 years, not 10. And we have achieved it without acrimony, without
Government shutdowns, and without vetoes.
This is a bipartisan effort. It is an excellent beginning. And I am
grateful to my colleagues on both sides of the aisle for their work,
for the spirit of cooperation that existed on the Finance Committee, on
the floor of the Senate, and throughout the conference.
I am especially grateful to my friend, Pat Moynihan, for his wise
counsel, his leadership, and cooperation in helping to bring about the
success of this package. I am also grateful to the professional staff
members on the Senate Finance Committee, as well as the Senate Budget
Committee.
Likewise, I want to thank the staffs of the Congressional Research
Service and the Congressional Budget Office, the Office of Legislative
Council in the Senate, the Prospective Payment Assessment Commission,
the Physician Payment Review Commission, the General Accounting Office,
and all others who have worked long and hard for this package. The list
of names is too long to read here, but I ask unanimous consent that
these names be printed in the Record.
There being no objection, the names were ordered to be printed in the
Record, as follows:

finance committee

Lindy Paull, Julie James, Alexander Vachon, Gioia
Bonmartini, Dede Spitznagel, Dennis Smith, Donna Ridenour,
Alexis Martin, Mark Patterson, David Podoff, Faye Drummond,
Rick Werner, Kristen Testa, and Doug Steiger.

senate legislative counsel

Jim Fransen, Mark Mathiesen, Ruth Ernst, John Goetcheus,
Janell Bentz, and the rest of the Legislative Counsel's
Office.

congressional budget office

Murray Ross, Tom Bradley, Cyndi Dudzinski, Jeanne De Sa,
Anne Hunt, Jennifer Jenson, Jeff Lemieux, Robin Rudowitz,
Kathy Ruffing, Paul Cullinan, Sheila Dacy, Joe Antos, and
Pete Welch.

congressional research service

Celinda Franco, Beth Fuchs, Tom Gabe, Jennifer O'Sullivan,
Richard Price, Richard Rimkunas, Kathy Swendiman, Madeleine
Smith, Melvina Ford, Jean Hearne, Jennifer Neisner, Pat
Purcell, Vee Burke, Christine Devere, Larry Eig, Gene Falk,
Carmen Solomon-Fears, and Joyce Vialet.

physician payment review commission

Lauren B. LeRoy, David C. Colby, Anne L. Schwartz, John F.
Hoadley, Christopher Hogan, Kevin Hayes, Katie Merrell,
Michael J. O'Grady, David W. Shapiro, Sally Trude, and
Christine M. Cushman.

prospective payment assessment commission

Donald A. Young, Laura A. Dummit, and Stuart Guterman.

Mr. ROTH. Mr. President, it is my hope that the spirit of
bipartisanship that carried us through this effort continues as we now
consider the final package and send the bill to President Clinton for
his signature.
I yield the floor.
The PRESIDING OFFICER. Who seeks time?
Mr. KERREY addressed the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. KERREY. I yield myself such time from the Democratic side.
The PRESIDING OFFICER. The Senator from Nebraska is recognized.
Mr. KERREY. Mr. President, I come to the floor and offer what I would
call my reluctant support for this budget agreement.
Today, the subject at hand is the spending portion of this bill. And
I wish it was completely different, I must say, than what is in here.
Yesterday, I spent most of the day in mourning for the loss of the
provisions relating to structural changes in Medicare that would have
added $8 billion to the HI hospitalization trust fund by imposing very
reasonable and progressive change in the premium--it would have added
$40 billion a year in spending relief in the year 2030 by accommodating
this tremendous change in the baby-boom generation between 2010 and
2030--and other provisions. I spent the day grieving those. I have
overcome my grief, and I am prepared to support this because I believe
it does balance the budget by the year 2002. I believe it finishes the
job that we started in 1990 and 1993. I voted for both of those bills,
and I find myself compelled once again to come and vote for a bill that
I am not altogether pleased with.
In this morning's New York Times there was an op-ed piece written by
William Safire talking about an age-old problem in the West where
cattlemen, because they had an interest in keeping the range open, and
sheepherders, because they had an interest in keeping the range fenced
in, were at constant odds and warring with one another. Their animals
had different needs. They, as the guardians of those animals, went to
war in order to protect the needs of those animals.
It was not until just recently that the people who manage these range
animals have come together. They came together as a consequence of a
common enemy, in this case, a rather pesky weed called leafy spurge
that has roots that can go down as deep as 150 feet, impossible to, by
any reasonable estimate, get rid of once it is in the grassland. It
will spread and take over the entire prairie.
So the cattlemen are out there saying the leafy spurge will eliminate
the grass. ``I'll have nothing for my cattle to graze on. What am I
going to do? No herbicide is effective. No burning is effective.
Nothing seems to work.'' Until one day they discover that what works is
to put a few hundred sheep out on the grassland. As a consequence of
the sheep's appetite for the leafy spurge, the sheep eliminates the
weed, and thus is joined a battle between the cattlemen and the
sheepherders. Suddenly they come together as a consequence of the
common enemy.
I am impressed that Republicans and Democrats have come together with
this bill to address a common enemy--the deficit. I wish that the 1993
bill had been bipartisan. I believe that if we had a few more spending
cuts in 1993, that might have been possible. We missed an opportunity.
It was bipartisan in 1990. It was not in 1993. And it is today. I am
impressed with it.
I believe the Nation wants us to be bipartisan. I believe the Nation
makes our greatest progress when we set aside not only our partisan
differences, but we are able to find a common opponent, in this case,
the deficit, a common objective, and we say that we are willing to risk
a bit--in some cases, risk it all--for the larger goal.
I must say, after having made that observation, and to be specific,
praising the distinguished chairman of the Budget Committee, Senator
Domenici, the ranking Democrat, Senator Lautenberg, and on our Finance
Committee, Senator Roth of Delaware, Senator Moynihan of New York, they
have worked hard to say we have a common enemy--in this case, the
deficit.
We see the connection between deficit reduction and jobs. We believe
that jobs, and good jobs, can solve almost any problem that we have.
And thus, we are willing to join forces against a common enemy.
I am reluctant to become enormously enthusiastic about this, as I
say, because I do not believe it is asking of Americans the sort of
tough decisions and choices that would enable us to say that we are
tasking the American people to do something that is truly great.
We will balance the budget. It is true, we are reforming Medicare to
give seniors more choice. I think the Federal Employee Health Benefit
provisions in this bill will have long-lasting impact, give seniors
more comfort as they make a choice to buy alternative care. The
provisions for increased coverage for children, the provisions having
to do with welfare reform, all these are good provisions and deserve
attention.

We have, in addition, a lot of provisions--and I thank all four of
the Members who have been involved with this for their assistance in
making sure that rural America has an adequate reimbursement rate under
managed care,

[[Page S8323]]

that we are able to take advantage of managed care and see increased
penetration in rural America. I appreciate, as well, the change to
increase budget enforcement to tighten some of the loopholes that were
in law.
There are a lot of things in this bill, in short, that are good. It
does, it seems to me, represent a successful compromise between
Republicans and Democrats, and we have produced a piece of legislation
that all of us, or most of us, anyway, are going to be able to come
down and be enthusiastic about.
There are four things, Mr. President, that I would like to discuss
which I would put in the category of unfinished business. First is
entitlements. I appreciate that there is a commission in this bill. I
believe it is 20 months that they have. I can save them a lot of time.
We had a bipartisan entitlement commission, Senator Danforth and I. The
distinguished occupant of the chair was on that commission as well.
There are a limited number of choices that one can make. There are
roughly 10 or 15 choices you can make. They are all ugly. They are all
difficult. And they all accommodate a demographic problem, not a
problem caused by secular humanists or by Phyllis Schlafly or Ronald
Reagan or George McGovern. This is not an ideological problem. It is a
problem of birthrates during the period of time 1945 to 1965, and the
birthrates following that. It is called the baby-boom generation.
Seventy-seven million Americans will begin to retire in 2010. And
what we attempted to do, with what I consider to be a relatively modest
change in the law with eligibility age and means testing and a
copayment on home health care, was to accommodate that large generation
of people. The sooner you do it, the better. You do not do them any
favors by saying, we will do a commission for 2 years and perhaps do
something in 1999. Then you have a Presidential campaign going. You
will probably have to wait until 2001. The longer you wait, the harder
the choices are.
As I said, the choices are fairly limited. If you do not like moving
the eligibility age, if you do not like doing some means testing, the
only thing you can hope to do is get some increases in the revenue
stream, proposing to increase taxes or increase the premium. If that is
your choice, make it now, because the longer you wait, the more likely
it is that the people you are trying to help are going to pay a lot
more. They are going to pay a bigger price. They have not been warned.
We missed an opportunity, and I am hopeful that by surfacing this in
the debate and getting strong support, bipartisan support here in the
Senate, we can keep these issues alive.
In addition to the long-term problem of entitlements is another
problem with entitlements inside of our budget. Yes, it is true, we
will have taken the final step to balance the budget with this bill,
although I note parenthetically that one of the curious things about
this particular proposal is we are going to balance the budget by
rather substantially increasing spending in some areas and lowering
taxes in others. It is an exciting proposition. We are going to balance
the budget, it is true, but the budget has another big problem, and
that is the growing percent of that budget that goes for mandatory
programs.
Many of my colleagues have come down to give great, impassioned
speeches about why we should not do all of these things. But the
question that needs to be asked in a very calm environment is, what are
you going to do about these numbers?
In this budget agreement, the amount of money we allocate for
mandatory, plus interest, will go from entitlements, plus interest, the
mandatory portion from about 66 percent, as I understand it--I haven't
seen the final numbers--to about 70 percent in 2002. The Senator from
New Mexico is shaking his head, but it does unquestionably increase. I
do not know if it goes to 70 percent, but it increases, and it
continues to increase. And it will increase even more when the baby
boomers retire. It is not a flat number.
The head of the Congressional Budget Office, June O'Neill, prepared a
report some time ago that shows how the cost of these programs
continues to go up as a percent of our overall budget, and they are
squeezing out our capacity to keep our defenses strong, our capacity to
invest in education or infrastructure, or research, and all the other
sorts of things that are being done in the other part of the budget.
One of the reasons it was made easier to do our appropriation this year
is, we put a little more money in the appropriated accounts in this
fiscal year than you are going to see in the outyears.
So I alert Members that see the appropriations bills sailing through
this year and are wondering why, there is more money this year than
there will be next year and the year after that and the year after
that. In years 4 and 5, we will have very tough decisions to make in
discretionary spending--far tougher than I believe people realize.
Thus, there is the second problem of the growing cost of entitlements
inside of the budget. It sets up tough choices. It doesn't set up easy
choices. It sets up very difficult choices that we have to make.
The second big area for me is, I must say, with the economy growing
the way it is--and one of the great pieces of news for me in this
budget debate is that as a result of the growth in the economy, I think
there are very few people left that don't understand that, in addition
to defending the Nation as the first order of business, whatever we do
with our taxes, regulatory policy, and spending policy, we do need to
ask ourselves: will this create jobs? Because if the economy is
growing, it is producing jobs, and there is a demand for labor as a
consequence of a growing economy. Lots of things get solved in a hurry.
Not only does the Treasury have lots of revenue that makes our job
easier, but the gap between rich and poor narrows, the number of people
on welfare is reduced. A lot of problems we have get solved quickly if
our economy is growing. If we recall from the recession of 1991, the
problems are made a lot worse if you have the opposite in place.
So this growth we have out there in the economy is exciting. My view
is that this is the time when we need to be investing in that public
infrastructure--research, the transportation base, education, and all
those things that will produce increased productivity and increased
economic growth sometime out in the future. We may not get an immediate
benefit from it, but we will benefit somewhere out in the future. It
connects with this entitlement problem. For my friends on this side of
the aisle who love to get up and get fired up and tell me why we can't
do anything about entitlements, the question occurs: If you don't want
to do that, Senator, where are you going to get the money to make these
public investments?
I haven't heard many people that are enthusiastic about a tax
increase. I have heard them being enthusiastic about going in the other
direction. The only way you can find the resources to invest in the
long-term growth of this country is by containing and controlling the
pace of growth of entitlements. It is a question of whether or not we
are going to endow the future, or are we going to convert the Federal
Government into an ATM machine, entitling the present solving of the
problems of me, me, me, now, now, now, but not solving the problems of
future generations.
The third issue I speak of today is health coverage. I am of the
opinion that the additional $24 billion that is in this particular
budget is going to cover a lot fewer people than leading advocates
predict. I don't believe that it is going to be a terribly efficient
way to increase coverage. Again, I don't think you are going to be able
to get the kind of increased coverage that is necessary, unless you
come to grips with the rising costs of these mandated programs. For all
the terrible things that were forecast and said about the proposal to
add a $5 fee for home health, to add a means-tested and an income-
related premium on Part B and increase the eligibility age, you thought
we were not spending any money at all on Medicare.
No account in our budget grows as fast as Medicare. It will go up, on
average, $24.5 billion per year for 10 years. Nothing grows that fast.
We are allocating more and more of our gross domestic product into
Medicare and other entitlements. Now, I am prepared to do more for low-
income seniors, and help people who are in serious trouble out

[[Page S8324]]

there, having a tough time paying the bills. But the choice that we
have to make, not only when it comes to investing in our future, but
also being able to provide additional coverage, is between one group of
Americans and another, or allocating $24.5 billion of additional money
for children over 5 years and $24.5 billion per year for 37 million
people over the age of 65.
Now, I think that is the kind of debate we need to have on this
floor. It is a tough debate, and it involves telling the American
people and, very often, giving them the facts. And the facts may be
painful and difficult for us to face, but they are the facts. I, for
one, as I said, am skeptical that $24 billion over 5 years is going to
result in the kind of increased coverage projected for children. I must
say again that I think the only way we are honestly going to be able to
increase the coverage for Americans is to get after entitlements. There
is a question of the legitimacy not only of the means test, but we must
ask ourselves fundamental questions about requiring an eligibility test
on age, another program based upon poverty, the veterans' programs,
saying if you get blown up in a war, we have a good program for you.
The final one, of course, is the income tax deduction.

The fourth problem that I think this country faces, which is not in
this bill, but it will be taken up in the tax bill and I will talk
about it later, but I think it's a big problem. We have a window into
the problem of looking at the estate tax issue, and that is the
difficulty Americans are having generating wealth. I will talk about it
at greater length when we get on the tax bill. But income and wealth
are not the same thing. It is not uncommon to pick up a newspaper and
hear a story talking about this tax bill does this or that for the
wealthy, and what they are talking about is income. They are not the
same thing. I can have a half a million dollars a year in income and
have no wealth, just as I can have $20,000 in income a year and if I
save a little bit, I can get wealth. The estate tax debate is focused
on about 2 percent of Americans who have estates at $600,000 or over. I
believe estate tax relief is reasonable. I support doing that in the
tax bill. But there are 98 percent of the American people that do not
have wealth in excess of $600,000. It would not take much of a change
in the Social Security program to enable somebody in the work force,
indeed from the moment they were born, to have a savings account that
enables them to say that when it comes time for me to retire, as I look
forward to growing old, I know that in addition to some kind of an
income transfer I am also going to have the opportunity to have
security as a result of wealth. I think wealth distribution, identified
as a problem repeatedly, cannot be solved by simply transferring
income. It can only be solved by establishing that we are going to try
to help working Americans acquire the wealth and use the principal
retirement program, Social Security, that we have in place to get that
done.
Mr. President, I close by saying that I intend to vote ``yes'' on
this bill, and I intend to vote ``yes'' on the tax relief bill that
follows. I wish it had done considerably more. I have great praise and
great appreciation for the work done by the chairman of the Budget
Committee, by the ranking Democrat, the chairman of the Finance
Committee and the ranking Democrat on that committee as well. They set
the tone of bipartisanship, which must be set if you are going to deal
with these controversial issues, if we are going to be able to go after
the common enemy, not just of deficit spending but other tempting,
irresponsible things that might produce a round of applause, but might
not be good for the United States of America.
Mr. DOMENICI. Will the Senator yield?
Mr. KERREY. I am pleased to yield.
Mr. DOMENICI. Senator, first let me make an observation, perhaps not
as eloquently. I believe the Senator from New Mexico could, someplace
or another in the United States, make a very similar speech. I think
most of what you talked about I agree with. But I would like to make
sure that everybody knows just how much you can do in a budget
resolution and in a bill that is forced by a budget resolution and how
difficult it is to try to do more than fits the bill. I want to say to
the American people that while I agree with your statement
wholeheartedly that we have to do much more with the entitlements--and
let's be very precise, the one that is really, really in need of a
long-term fix is Medicare--not because anybody wants to deny anyone
anything, but the stark fact is that it, by itself, can break this
country in another 15, 20 years all by itself.
Frankly, I never believed that we could fix Medicare in its totality
in a budget resolution and a bill that was thrust by a budget
resolution. Senator Gramm is chairman of the Subcommittee on Health. I
think he would agree with me that, while we probably could have done
better, and should have, on the three items that would have helped, we
can't force the total change of Medicare in a bill like this under a
budget resolution format. First of all, a budget resolution is only
applicable for 5 years. You are permitted to project for 10. I assume
when Senator Gramm starts that reform, he is going to start beyond 10
in terms of the real dollar impact, because that is when it is in
trouble. It is not in trouble in the next 5 years. One might have a
different mix as to how you get it to a state of solvency.
Senator, I would like you to know I never thought that we could do
much more in Medicare. But I think the three changes you made in the
Finance Committee, with your support, if we could have held them, it
would have been a good first step. I still believe the spirit of
getting this done may get us, within the next 2 or 3 years, to facing
the issues for major, permanent reform of the entitlement programs. I
am hopeful you are not giving up because we can't do it in this budget
bill, because it is a very, very big issue that requires much debate in
the Senate. I don't know exactly how that debate is going to be framed,
but I don't think it is going to be framed in a reconciliation bill
with no debate to speak of and no amendments to speak of. That is just
the U.S. Senate's way of doing things. I thank you for yielding. Maybe
you can comment on that.

Mr. KERREY. Mr. President, first of all, I say that the man who
taught me about entitlements is the distinguished Senator from New
Mexico. I recall coming to the floor, I believe it was on a budget
resolution that the distinguished Senator from New Mexico and the now-
departed Senator from Georgia, Senator Nunn, when they had the famous
Nunn-Domenici amendment that controlled the growth of entitlements. The
first time he proposed it, I voted against it. I listened to the
opponents of it and said, ``That makes sense to me; this is not a good
amendment, so I will vote no.''
Then I started looking at the facts, and I was very uncomfortable to
have to conclude that I voted wrong. The next time the Senator brought
it up, I voted for it and I became interested in this issue as a result
of both you and Senator Nunn and your elaborations and your education
that you did 3 or 4 years ago.
The point that I am trying to make, which I am afraid is sometimes
lost, is that the longer you wait, the harder the choice is. This is
not a problem that you can avoid forever. The more time you let expire,
the more difficult the choice is--that is, on Medicare. The same is
true on the budget item when it comes to Social Security. We have
people under the age of 40 who will be beneficiaries out in the future,
26 and 27 years from now, under current law, for whom we have to say,
are we going to be able to keep the promise that's on the table? We
have to say no. Social Security Commissioner designate Shirley Chater,
in 1996, when asked about it, said, ``You can expect Social Security to
have to be reduced by 30 or 40 percent in benefits, unless some change
occurs.''
Well, there is a presumption that those of us who proposed altering
these programs today are proposing cuts. But the truth is, if you do
nothing, that is what is going to happen; only the cut isn't going to
occur to a future beneficiary, it will occur to a current beneficiary.
Long after the time has passed when you can plan and make adjustments,
suddenly the Congress is going to pop up and say, ``Sorry, folks, we
have to cut the programs big time,'' in order to be able, as the
Senator said, to save either the fiscal health or the program itself.

[[Page S8325]]

So my fear is that we missed an opportunity when the distinguished
Senators from New Mexico and Georgia were down here. I recall people
coming in the one year and pulling off veterans first, and once the
floodgates were open, it was ``Katie bar the door,'' everybody got down
here and got exempt and there was nothing left. There was no group that
is entitled to payment left, and they were all exempted and there was
no real reform that occurred.
So I am not going to give up on the issue. I am not going to stop
talking about the need for these long-term changes. But I am just
saying to the American people, especially those who understand the
importance of Medicare and these entitlement programs, who consider it
a victory that the conferees were unable--and I know the Senator from
New Mexico fought for these things, but the conferees were unable to
hold these provisions. There are many people who are advocates of these
programs that consider that a victory. It is not a victory. It weakens
the program long term. And some beneficiary out in the future is not
going to thank us for this action. Maybe it gains a few votes in
elections. I doubt it. I believe the American people once they hear the
facts of the matter will be persuaded.

Anyway, it is a much longer answer. I know the Senator from Texas is
not very appreciative of the fact that the Senator caused me to talk
longer than I intended to.
But I want to underscore in closing that I do appreciate the fact
that the Senator from New Mexico, Senator Nunn, and others led on this
thing. It probably torments the Senator now to see his student come
back here speaking in this fashion.
I just close by saying that I am prepared to vote for this agreement
on the balanced budget. I believe that is good for the economy. I wish
and hope that we are able in a bipartisan spirit to do much more, if
not this year sometime relatively soon.
The PRESIDING OFFICER. Who yields time?
Mr. DOMENICI. Mr. President, I yield to Senator Gramm as much time as
he may desire.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mr. GRAMM. Mr. President, let me first thank our chairman for
yielding.
I would like to begin by congratulating some people and thanking them
for their leadership.
First of all, I want to thank Senator Domenici for his leadership. I
have had the opportunity to serve with Senator Domenici now for 13
years. I have been on the same side as Senator Domenici. I have been on
the opposite side of Senator Domenici. I have noticed that when we are
together we generally win. I wish Senator Domenici could be right more
often.
But I want to congratulate him for his leadership. I don't have any
doubt in my mind that Senator Domenici will go down as one of the great
legislators of this era, and that I will always be proud to tell my
grandchildren that I served with him. I want to congratulate him for
his great work on this bill.
I also want to congratulate Chairman Roth. This is the first full
term that Senator Roth has been chairman. He became chairman in the
middle of the last Congress. And I think he has done a terrific job in
chairing the Finance Committee and in building bipartisanship to a
level that I would not have thought beginning this process that we
could have ever had on the tax bill. I want to congratulate Chairman
Roth for his leadership, which I really think has been outstanding,
having had the opportunity to be in committee, to be actively
participating in the debate on the tax bill on the floor, and having
had a chance to be in much of the conference.
I think our colleagues ought to know, or at least hear someone say
what a great job that Chairman Roth did.
I also believe that our Democratic colleagues, especially Senator
Moynihan, have made a great contribution to this bill. Whether you like
the product, or whether you do not like anything else we do--it is as
thick as this package that many like and many dislike--I think you have
to clearly say that a tremendous amount of work has gone into the
process.
Let me begin by talking about what I believe in this bill is
unambiguously positive, and what is clearly going to be greatly
appreciated by the American people--some of it immediately, and some of
it over time--as people come to understand it.
I would like then to talk about the disappointments I have about some
parts of the bill--opportunities lost, things done. And then I would
like to conclude by simply talking about the future in the next 5 years
as we try to implement what the Congress is clearly going to adopt, and
then say a little bit about balancing the Federal budget. So I will try
to do those things.
Mr. DOMENICI. Will the Senator yield?
Mr. GRAMM. I am happy to.
Mr. DOMENICI. I must leave the floor. I will tell the Senator that I
look forward to reading the Senator's remarks. I think the Senator
knows that I mean that. I believe what he has outlined is so typical. I
mean the Senator is going to state the good things, things that are not
as good as they could be, and he is going to lay them out with clarity.
I say thank you for the generous remarks which the Senator made about
me. But I also want to say I reciprocate.
It doesn't matter in the U.S. Senate whether you agree with another
Senator half the time, all the time, or none of the time. What is
important is that you respect them. That is all we can get in this
place--is that somebody respects what we are doing. I want to tell the
Senator from Texas, whether it is his way and I am not right enough, or
whether it is my way and he is wrong too often, it doesn't matter. You
can't be in the Senate and serve with Phil Gramm of Texas without
respecting him. The Senator has a great mind, and he has learned to
apply it to our problems in a way that really means something to a lot
of us. It strikes our minds, and makes us think. I don't think the
Senator from Texas can expect to do more, and he wins plenty of them
because of the clarity and the philosophy, and the way he digs into the
issues.
There are many things that we are experimenting with in this bill
that may not work, and the Senator is going to certainly find them and
tell us why. And they have an awful lot to do with the child health
care package. The Senator is going to say something about that. And I
am not trying to preempt him because I know there are problems there. I
don't believe the people who say if it had gone straight under Medicaid
that it would have covered many, many more. I don't believe that at
all. The Medicaid Program that has not worked well in the past that we
have been struggling to fix ought not be mimicked. It ought to be
changed. And if you can, you ought to do the same thing in a different
way. That is the theory of the Senator from Texas, and he has said that
from the beginning. We are trying. But we are not there yet, and many
other things.
I want to tell you, we struggled mightily on the welfare side, on the
Fair Employment Labor Standards Act, and whether the myriad of laws
should apply to trainees. And the Senator is going to speak about that.
But I want to tell him, I couldn't win. I couldn't get it done. That is
all there is to it. Everyone now knows, including the White House--and
they will admit it--that the welfare program will not work in terms of
the people that most need the training without some relief from some of
the laws that apply across the board to people permanently employed in
companies that make enough money to get by and have to pay them. And
there is no doubt that the issue has been framed in a false way.
It is not a minimum wage issue. We have already agreed to the minimum
wage. I heard the President yesterday speak of minimum wage again. That
is not the issue. The issue is the rules that are going to govern a
nonprofit organization that we asked to train 10 people. Isn't that
right? They are going to say, ``Why should we do that?'' Every law on
the books governs these trainees, and we didn't even pick them. You
picked them for us.
So I am aware of those and many others. But I think the Senator is
going to also say that there are some good things in this bill.
I thank the Senator very much for yielding.
Mr. GRAMM. I thank the Senator from New Mexico.

[[Page S8326]]

Mr. President, let me begin with the tax cut.
First of all, I think if you are going to judge what has been done,
you have to first begin by looking at the fact that we are cutting
taxes by approximately 1 percent. The tax cut on average over the next
5 years will lower the tax burden on the American people by slightly
less than 1 percent.
So for all of those who are saying, ``Well, the Tax Code becomes more
complicated, the changes that are made are piecemeal,'' all of that was
driven by the fact that with the bipartisan nature of this bill and the
fact that we have a President who was adamantly opposed to cutting
taxes until 3 years ago, who only endorsed the concept of trying to
balance the budget 2 years ago, that we had a very limited amount of
resources. Obviously, for people who have listened to much of this
debate and have gotten the idea that we are talking about a huge tax
cut, they are going to be disappointed. But there are some people who
are going to be directly affected, and in a very positive way. Right at
the top of the list will be people who have families and who have
children. Nearly all of the $85 billion net tax cut we have in this
bill goes directly to families with children.

Why single them out? I am sure there are people who say, ``Well,
children are important. Families are important. But why such a focus of
this tax bill on children?'' Let me explain why.
In 1950, the dependent exemption--the amount you got to deduct from
your income because you had a dependent--was $500. As a result of that
$500 dependent exemption for children in 1950, 65 percent of all income
of the average income working family was not subject to income taxes in
the average family of four in America. Today the dependent exemption is
$2,500. But to cover the same expenses and to protect the same level of
income that it did in 1950, it would have to be twice that big, or
$5,000 per child.
So what has happened since 1950 is that the real dependent exemption
in terms of letting working families keep their money to invest in
their own children has effectively been cut in half.
If you look at the Tax Code, what has happened is this: In 1950, rich
people paid a lot of taxes. And today rich people pay a lot of taxes.
In 1950, poor people didn't pay any income taxes to speak of. And today
poor people do not pay any income taxes to speak of. But the explosion
of Government between 1950 and today has been almost totally funded by
a massive growing tax burden on working families with children. And we
have literally starved the one institution in America that really
works--the family.
So our primary focus--first, in the Contract with America, then the
budget 2 years ago, then the budget a year ago, and now the budget this
year--has been to give a $500 tax credit per child and to let working
families invest in their own children, their own family, their own
future, recognizing that the best housing program, nutrition program,
and education program is to let working families keep their own money
and invest in their own children, their own family, and their own
future.
Second, in this tax cut bill we begin the long process of eliminating
the death tax. People work a lifetime to build up a farm, or a small
business, or to build up assets. And they do it for their children and
their future. And they make the country rich in the process. But when
they die, even though they pay taxes on every penny they earned along
the way, when they try to pass these assets on to their children, the
Government comes in and takes up to 55 cents out of every dollar.
So it routinely happens in America every day that parents die, and
then their children have to sell the fruits of their lifetime labors--
their business, their farm, their home, their assets--in order to give
Government 55 cents out of every dollar of its value.
Republicans believe that is wrong. We believe you ought to tax income
once, and not twice. And I think the changes we made in this area,
especially for small businesses and family farms, is very, very
important.
I believe that people who are trying to educate their children will
be beneficiaries of this program.
Quite frankly, my favorite part of the tax bill in the area of
education is not the President's initiative. It is instead an
initiative that came from Senator Roth. That is the initiative that
lets people when they get out of school treat student loan interest
payments as a business expense. Think about it for a minute. If you go
out and buy a tractor, you can depreciate that tractor--write its value
off against your income. But if you invest in going to college, or
graduate school or medical school by borrowing a bunch of money on a
guaranteed student loan, when you get out of college and you start to
work with that big heavy burden of debt, none of the expenses you
incurred in getting the education that economists call ``human
capital'' can be written off as a business expense.
So our society's Tax Code has historically discriminated against
investing in our own people.
One of the provisions of this bill that is critically important is
the provision that for the first time will let a young wage earner who
has gotten out of school, who has a big guaranteed student loan, to
write off that interest against the income they are earning as a result
of the earning power they got from going to college, or graduate
school, or professional school. And I believe this is going to
encourage people to go to school longer and to accumulate greater human
capital.
There are a lot of provisions in the tax bill. I believe the tax bill
is basically a good bill, and the American people are going to benefit
from it. Not everybody is going to benefit. The top 5 percent of income
earners pay 50 percent of the taxes. They are going to benefit from
none of the general tax provisions. They will benefit marginally from
the death tax change. They will benefit from the capital gains tax. But
the focus of our benefit, quite frankly, with simply a 1-percent cut in
taxes, is where it ought to be--on working middle-income families.

We have had a long debate with the President, and the President has
won the debate in this bill. But what is the old saying? He, convinced
against his will, is unconvinced still. And let me say I think it is a
fundamental error, even though I am going to vote for the tax package,
it is a fundamental mistake in a tax bill that only provides $17
billion of tax cuts a year, it is fundamentally unfair to take part of
that tax cut away from working two-income families in order to give a
tax cut to people who do not pay income taxes. I believe that tax cut
bills should be aimed at cutting taxes for people who pay them. In any
case, that is where we are in the tax bill.
Let me turn now to the spending bill. The best provision in the
spending bill, from my point of view, is expanded choice on Medicare.
Medicare has grown by 12 percent a year in cost in the last 20 years.
No major program has ever grown that fast before, and, as a result,
even with the reforms we have instituted, even under the best of
circumstances, Medicare is destined to become the largest and most
expensive program in the history of the American Government. But by
letting our senior citizens have more choices, by encouraging
competition, by allowing a broad range of choices between the
traditional HMO and fee-for-service medicine, we are going to for the
first time bring the forces of competition to bear on controlling the
cost of Medicare.
Since 1965, we have tried to use Government regulation to control
Medicare costs, and it has been a total and absolute failure. We are
now going to try the forces of competition. I believe that they are
going to be successful, and I believe that the most remembered part of
the spending bill that is before us will be the expanded choices that
we provide under Medicare. If we allow each of these choices to
develop, if we continue to refine them and promote competition, I
believe we can and will over time drive the cost of Medicare growth
down to roughly the cost of medical care in the market system.
Last year, the cost of medical care in the private sector of the
economy actually grew less than the Consumer Price Index. Medicare
continues to outpace inflation by a wide margin. I believe that by
bringing the forces of competition to bear, we have made a fundamental
change in at least part of the Medicare problem. Our failure to deal
with the long-term Medicare problem is my greatest disappointment with
the bill before us.

[[Page S8327]]

Someone said in the newspaper this morning that the subtitle of this
bill ought to be ``Opportunity Lost.'' I agree with that. I believe
that we have missed a golden opportunity to begin the reform that will
be required to keep Medicare solvent. I am proud of the Senate. I am
proud of the three votes we cast to keep provisions in our bill that
would have raised the eligibility age on Medicare to conform to Social
Security, that would have asked very high-income retirees to pay their
full part B premiums, that being the voluntary part of Medicare that
you don't pay a penny for during your working life, and finally to have
a simple $5 copayment for home health care.
Home health care is the fastest growing part of Medicare. The
President had a 10-percent copayment in his national health insurance
bill. The Democratic leader, Senator Mitchell, when he offered the
final version of the President's plan 3 years ago, proposed a 20-
percent copayment. Prior to 1972, we had a 20-percent copayment. And
the rejection of a simple $5 copayment to try to induce people to be
cost conscious was, I believe, a sad commentary on the lack of
leadership both at the White House and in the Congress. I believe we
missed a real opportunity to reform Medicare, and I believe that each
and every one of these things will be done.
Going back to a point that our colleague, Senator Kerrey from
Nebraska, made earlier, the longer we wait to institute these reforms,
the more difficult it is going to become to make these reforms work
because the problem is going to get bigger.
Some people are encouraged by the fact that we have set up a
commission in this bill. Forgive me for being underwhelmed at setting
up yet another commission. We have already had an entitlement
commission. It has already reported. We know what the situation is.
Let me just summarize it. Under the best of circumstances, if
everything goes right, if the economy stays strong, if we have the best
possible circumstances that we could expect over the next 25 years, our
current policy on Medicare and Social Security will require the payroll
tax to double from 15 percent to 30 percent on every working person in
America. Under the best of circumstances, if we do not change policy,
we are going to have a doubling of the payroll tax in 25 years, and
nobody disputes it. Under the pessimistic scenario of lower growth, we
are going to have to triple payroll taxes.
Let me remind you what that means. It means that a low-income worker
who is paying 15 percent of his income in taxes and 15 percent in
payroll taxes will go from a 30-percent marginal tax rate to a 45-
percent marginal tax rate. What it will mean, if we do not do something
to reform Medicare and Social Security, is that, with absolute
certainty, 25 years from today the average working American will be
paying over 50 cents out of every dollar they earn in payroll taxes and
income taxes.
For those people who said, do not make these hard choices in
Medicare, they are the people who are going to have to explain why we
are doubling payroll taxes over the next 25 years.
I believe we have a crisis in this area, and let me say the first
week we are back, as chairman of the Medicare subcommittee, we are
going to hold a series of hearings on Medicare. Senator Kerrey and I
are going to reintroduce our reforms as a freestanding bill, and we are
not going to let this issue die. I am also going to expand our hearings
to begin to look at private investments and ownership of assets
especially by young workers as a way to guarantee that they have Social
Security benefits when they retire and as a way of guaranteeing that
they have Medicare benefits.
If we do not change this program, with the baby-boom generation
retiring in 14 years, we are going to have a generation of Americans
that will be paying 30 percent payroll taxes to pay benefits to
retirees who will never get benefits out of these programs that are in
any way related to what they paid in. Only if we begin to reform these
programs now and only if we begin to restructure the system so when a
young person is setting aside money for their retirement, it is not
going to some phantom account with the Social Security Administration
but where it is going in a real investment in something they own and
can depend on and trust, until we collateralize or securitize the
Social Security and the Medicare contributions of our young people,
their retirement is not going to be secure.
Senator Domenici said that I was going to talk about the welfare
reform, and I am. One of my biggest disappointments in this bill is
that, as it is currently structured, we have gone a long way toward
killing welfare reform, and let me explain why. First of all, we made
some tough decisions about denying benefits, setting higher standards
and saying, especially to immigrants, you come to America. You have to
come with your sleeves rolled up ready to go to work. You cannot come
to America with your hand held out ready to go on welfare. We have
partially reversed that in this bill, and we are going to spend tens of
billions of dollars providing benefits to people who are denied
benefits under our welfare bill, but that is the smallest part of the
problem.
As a result of the administration responding to special interest
groups, especially organized labor, we now have provisions that will
make it virtually impossible for States to require welfare recipients
to work, and let me explain why.
If a State has a mandatory work requirement, and let us say they want
to require welfare recipients who are young mothers who have one skill,
and that skill is taking care of children, and let us say they set up
in Government housing projects a day care center, and they ask some
welfare recipients to do part of the baby-sitting under supervision,
under the provisions of this bill and under the new requirements that
have been set by the administration, we would have to pay minimum wage.
We would have to provide fringe benefits. We could not count all the
welfare benefits they are getting like Medicaid and housing subsidies
as part of those wages. And so it is going to cost States substantial
amounts of money to put welfare recipients to work where they would
acquire skills that would let them go out in the marketplace and work.
The net result is going to be that we are in reality coming very
close to killing the very welfare reform bill that was the greatest
achievement of the last Congress.
These are trainees. They are people who are receiving public
benefits, and to ask them, in return for those benefits, to do
productive work is the most reasonable thing imaginable. It was
something that a large percentage of Senators and Congressmen on a
bipartisan basis agreed to last year, and yet 1 year later, with
administrative action by the President and through this bill, we are
going to make it virtually impossible for the States to have a work
program for welfare recipients.
Now, I am hopeful that we can in the future come out with a bill that
will at least let the States count all the benefits that are received
by people who are receiving welfare in calculating what their effective
wage is by working. But this is a very, very serious matter.
I am also very concerned about this massive new program to give
health insurance to children. Who can be opposed to health insurance
for children? Nobody. Bismarck once said, never does a socialist stand
on firmer ground than when he argues for the best principles of health.
And I would just paraphrase Bismarck by saying, never does a socialist
stand on firmer ground or higher ground than when he argues for the
best principles of health for children.
But here is the problem. We started off with a bill that had a broad
consensus and it was a bill where we were going to spend $16 billion to
try to help the States get access for health coverage for children from
very low-income families. What happened in the process is that the
piling on of the tobacco industry got caught up in this, so, whereas
the President started out with $16 billion, it has now already grown to
$24 billion before we adopt the bill, and does anybody believe that
this program is not going to explode in the future?
Here is the problem. Once you get up to roughly 200 percent of
poverty, 82 percent of the children are covered by private health
insurance. So, unless we are very fortunate, what is going to happen to
us in this bill is that we are going to end up having four children

[[Page S8328]]

who will give up, through their families, private health insurance, for
every one new child we get covered. So 80 percent of our money will
simply displace private health insurance. And how can you blame them?
If you have a moderate-income family, having trouble making ends meet,
and we are going to give their children private health insurance, what
rational parents are going to continue to pay for it themselves?
So, we have the very real specter, here, of spending a tremendous
amount of money and covering almost no additional children. Let me say,
I totally agree with Senator Domenici. I think the worst choice we
could have made was simply going through Medicaid, when all 50
Governors, 2 years ago, told the Congress that they could do what
Medicaid was doing for 30 percent less if we would let them do it. But
I think we have to be very concerned about this program. I hope we are
as committed to monitoring what we are doing as we are to doing it. If
it becomes clear that all we are doing is displacing private health
insurance, I hope we will be willing to go back and try to adjust this
program to try to prevent that from happening.
I am also very concerned about all of these new benefits. Again, they
are not benefits anybody can be against. We are cutting the copayment
for outpatient care under Medicare. We are adding a whole bunch of new
benefits to Medicare. The problem is, Medicare is going broke as
quickly as it can go broke. The only reason we can claim we have saved
it for 10 years is we, in the process, were forced to give in to the
administration's demand that we take the fastest growing part of
Medicare and take it out of the trust fund and put it into general
revenue. As I said when we first debated this, I can make Medicare
solvent for 100 years by simply taking hospital care out of the trust
fund. But have we changed anything by doing it? The answer is no.
I am concerned that, by creating these new benefits, all of which are
popular, that we have to look and see whether, in fact, we made the
problem better or worse. I am very skeptical that cutting
reimbursements to doctors and hospitals will really save money. The
reason I am skeptical is that, as we have gone back and looked at our
reforms in the past, that has not been a very effective way to save
money. Because what tends to happen is that doctors and hospitals--
basically, doctors are smart people or they wouldn't be doctors;
hospitals tend to be run by smart people--what they do is they figure
out how they can change the billing so they end up billing for more and
getting the same amount of money.
So, I am concerned about these add-on benefits. I am worried that
these new programs are like little baby elephants, they are little and
pretty now, but if we are not careful they are going to all grow, each
one, into a big elephant. And, as we talk about balancing the budget,
the final subject I wanted to talk about, this could be a problem for
us.
Finally, let me talk about balancing the budget. I have been involved
in budget debates since I first came to the House of Representatives.
We have, on many occasions, claimed to have balanced the budget. Many
of us on various occasions have thought we had really done it. And I
think, on balancing the budget, it is important to remember an adage
that Abraham Lincoln used to be fond of. Abraham Lincoln once said,
``The hen is the wisest of all birds. She never cackles until the egg
is laid.''
I believe that a lot of work is going to be required to make this
budget ultimately produce a balanced budget. Much of this budget is
based on assumptions about a strong economy--which today is very
strong. Obviously, we all want it to stay strong and we are going to
try to make it stronger. It is also based on the premise that these
programs are not going to grow beyond the levels we have set out in our
budgets, even the new programs, and that we are going to live up to
these discretionary spending caps. Obviously, it is hard to live up to
them. As everybody knows, we pass emergency appropriations bills for $8
billion, and we end up breaking the budget, not only in the year we are
in but for the next 3 or 4 years. We don't write money for emergencies
into the bill, knowing we will have an emergency bill. It is going to
take a tremendous amount of concerted, bipartisan effort to live up to
the commitments we made on discretionary spending. I hope our
colleagues are as committed to living up to this budget as they are to
adopting it. I think, if they are, we might have a fighting chance. But
clearly, balancing the budget is not something you buy on a one-time
payment. You buy it on the installment plan.
And the weakness of the program is it is based on the assumption that
this very strong economy is going to continue into the future. It may
and it may not. We are in the second-longest peacetime expansion in
American history. I think it is highly improbable that we would go 5
years without an adjustment. But we could still balance the budget with
a minor recession if we could control the growth of these programs. I
wish, as I said numerous times during the budget debate, we could have
done more to control spending. I wish we could have bought more
insurance.
But, in conclusion, let me say that the reforms in Medicare, the
expanded choices, represent a fundamental change in policy. And I
believe we will all benefit from them. I think we did about as good a
job, given that we had a Democrat President who had very strong goals
in the tax bill, especially a belief that you can't cut taxes for
people who pay taxes unless you give money to people who don't pay
income taxes. I think, given that we had 1 percent of taxes to deal
with and we had a President who didn't share our fundamental goal, I
think overall we did a pretty good job on the tax bill and I think we
have reason to be proud of that.
I think the reforms and choice on Medicare are good reforms. But I
think there is really reason to be concerned about what we have allowed
to happen on welfare reform, and much of our budget is assuming that
the progress we have made on reducing the welfare rolls is going to
continue. I think we have to be concerned about growth, especially in
these new programs. We have to enforce the discretionary spending caps
to have any chance of balancing the Federal budget.
So my message today is that there is a lot of work to be done. I look
forward to participating with Senator Domenici and with our colleagues
to try to get that work done.
I yield the floor.
The PRESIDING OFFICER (Mr. Hutchinson). The Senator from New Mexico.
Mr. DOMENICI. Mr. President, Senator Kennedy has been waiting. I am
only going to take a minute, Senator.
I did not get to hear Senator Gramm's entire remarks. I pledged to
him before that I would read them in their entirety, and I will. But
let me make just a couple of quick observations.
I think everybody knows--my good friend from Texas said--you can't
get a balanced budget overnight. You do buy it on the installment plan.
When you buy it on an installment plan that is 3 years, 5 years, or 10
years, you have to make some assumptions. I think, distinguished
economist that he is, he would know that.
The Senate should know we did not use optimistic economic
assumptions. In fact, we used CBO's very modest economic assumptions.
There is no way we could provide an assumption, outright, that, if we
have a serious recession, that we provided for it. But CBO's economic
assumptions versus others, more optimistic, at least build into their
model that, indeed, there could be a slowdown and, thus, they take
something off the growth edge. So I don't think we have an unduly high
one.
Senator, I am agreeing with you that unless we seek to look at the
new programs we created, in terms of are they performing as we
expected, we won't make it. And, second, I am not terribly interested
in being the enforcer on appropriations caps--which are very strenuous
after 1998. In fact, I will give you the number. The baseline for
discretionary, if we did nothing, is $2.943 trillion. Under this bill
it is $139 billion less, which means for a period of time it is going
to grow very little, in fact five-tenths of 1 percent.

But I am not going to run around being the enforcer if entitlements
are going wild again. You might, and I would respect you for it. But,
essentially, we cannot balance the budget on

[[Page S8329]]

the appropriations accounts. We have to make sure we control the
entitlements and I think you agree with that. You are not agreeing with
me that we should not worry about appropriations. I would worry less
than you about correct appropriations. But what the Senator has said
about making sure we get there, and making sure we do some things to
assure that this commitment and this path is, indeed, realized--which
is what you are saying, I believe--I think that's correct.
I think--so long as everybody leaves knowing that, in terms of making
sure we don't let things within this slip and say, ``Oh, well, $10
billion didn't matter, we thought it was that but we are wrong,'' and
just pass those tens of billions by--we will get there. And that's not
an exceptional thing to expect of a group which is out claiming a
balancing budget. Would you agree? We are out there claiming it. We
ought to be willing to say we will do what's necessary. And I think if
we do what's here that's enough. We don't have to do a lot more over
the next 5 years, but if we are going to do less, it is not going to be
enough and we are all going to be ashamed.
I thank the Senator for those observations which prompted me to say
this because I believe that's absolutely true. I yield the floor and I
yield to Senator Kennedy.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, I yield myself such time as I require.
The PRESIDING OFFICER. The Senator is recognized.
Mr. KENNEDY. Mr. President, this is a great day for America's
children. With this agreement, we have taken a giant step toward giving
all American children the healthy start in life they deserve.
The establishment of a new, $24 billion program to provide low and
moderate income families the help they need to purchase health
insurance for their children is a landmark achievement. It represents
the most far-reaching step that Congress has ever taken to help the
Nation's children and the most far-reaching advance in health care
since the enactment of Medicare and Medicaid a generation ago.
The funds provided under this bill are sufficient to assure that
every American family has access to affordable insurance for its
children.
President Clinton deserves tremendous credit for his leadership in
achieving this milestone. His fight for health security for all
Americans in the first 2 years of his administration laid the
foundation for the progress we made in the last Congress and for
today's agreement.
The Kassebaum-Kennedy legislation enacted in the last Congress
guarantees that workers can change jobs without losing their health
insurance coverage, or being denied coverage because of a pre-existing
condition. The vast majority of Americans obtain health insurance for
themselves and their families through their jobs, and ending insurance
discrimination against those in poor health was a significant step
toward greater health security for all families.
Today's expansion of health insurance coverage for children could not
have happened without President Clinton's strong support. The President
fought hard to include a $16 billion commitment for children in the
budget agreement. And it was his unwavering support that assured the
additional $8 billion added by the Senate was included in the final
bill.
I also commend several others who contributed to this victory for
children. Mrs. Clinton has made the issue of good health care for
children a lifetime of commitment, and I thank her for her strong
support. Senator Hatch's courageous leadership in the battle for health
insurance coverage financed by a cigarette tax was absolutely critical.
Senator Rockefeller, Senator Chafee, Senator Jeffords, Senator Kerry,
Representatives Nancy Johnson, Bob Matsui, and Marge Roukema and others
were effective leaders in reaching this bipartisan goal.
Among many outside groups that worked to make this day possible, the
Campaign for CHILD Health Now, co-chaired by the Children's Defense
Fund and the American Cancer Society, was indispensable in its tireless
efforts to inform and mobilize the public in support of children's
health insurance. Marian Wright Edelman, as always, was outstanding in
these efforts.
When Senator Hatch and I introduced our children's health insurance
proposal in March, we said that it would help guarantee good health
care for millions of children who have been left out and left behind.
These children come from hard-working families. Their parents work 40
hours a week, 52 weeks a year--but they still cannot afford the health
care their children need. Whether the issue is eyeglasses, or hearing
aids, or asthma, or prescription drugs, too many children do not get
the care they need for the healthy start in life they deserve.
The agreement today brings new hope to these children and their
families. It means that they will have a better opportunity to achieve
a long and healthy life. It means that our country has at last given
children's health the high priority it deserves.
I am also pleased that there will be an increase in the cigarette
tax, but I am disappointed that the cigarette companies still wield
sufficient power in the back rooms of Congress to roll back the tax
below the 20-cent increase approved by an overwhelming bipartisan vote
in the Senate. A higher tobacco tax is an effective means to discourage
children from smoking. This issue will not go away, and I expect the
Senate to return to it later this year, either in the context of
legislation on the tobacco settlement or as part of other bills.
Finally, it is gratifying that the agreement drops the harsh and ill-
thought-out proposals on Medicare, such as raising the eligibility age,
imposing a means test on premiums, and requiring copayments for home
health care that would have penalized the oldest, sickest, and poorest
senior citizens. Long-run reforms are needed to keep Medicare strong,
but any reform worth the name deserves careful deliberation by
Congress, not the short-circuited consideration imposed by the strict
rules on budget bills.
Finally, I express my very personal appreciation for the strong
leadership that was provided by Senator Daschle, on our side, and for
his strong commitment on health care. Senator Daschle had indicated
that health care for children was going to be one of our Democratic
strong priorities in this Congress. His unflagging strength and
commitment and support for this program was invaluable in seeing its
achievement.
Mr. President, I yield the floor and suggest the absence of a quorum.
Mr. DOMENICI. Mr. President, I ask unanimous consent that the time be
charged equally to both sides.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DASCHLE. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DASCHLE. Mr. President, I want to take a few moments to talk
about the budget agreement, and this reconciliation bill in particular.
Let me begin by complimenting the distinguished majority chairman,
Senator Domenici, and the ranking member, Senator Lautenberg, for their
outstanding work in this whole effort. As has been said now by many
Members, this would not have been possible were it not for their effort
and the leadership they have demonstrated.
Let me commend the administration's negotiators--Secretary Rubin,
Chief of Staff Erskine Bowles, John Hilley, and others--for the
extraordinary effort they have made in working with us on the
President's behalf.
The majority leader deserves a great deal of credit. This would not
have been possible without his direct participation. He ought to take
great pride in this agreement's accomplishments.
Many others on both sides of the aisle have worked diligently over
the last several weeks to bring us to this point, and they too deserve
credit. I am very appreciative of their efforts. This agreement is one
of the most extraordinary accomplishments achieved, at least since I
have been leader and perhaps since I have been in the Senate.
I think the message in the last election on the part of the American
people all over the country was very simple:

[[Page S8330]]

We want Republicans and Democrats to cooperate, to work on major
problems together, to address the major problems in a way that gives
them and gives us hope that there is a better future, a stronger
future. They recognize, as we do, that the deficit is a major problem
and has been a major problem. I think this agreement--as spelled out in
both the spending and tax reduction bills--is clear evidence that we
understood that message and have responded as consequentially and as
sincerely as we possibly can.
This agreement is the final downpayment on a budget process that has
now been underway for several years. In fact, it goes back to the vote
of 1993, as some of my colleagues have already articulated.
This chart, Mr. President, very clearly illustrates from where we
have come and what we have left to do. The projected deficits prior to
the enactment of the 1993 economic package are represented in the top
line.
In 1993, we made the tough choices, the very critical decisions in
1993. As a result, we have been able to reduce the actual and projected
deficits by $2.4 trillion over the period from 1993 to 2002. Were we to
stop at this point and do nothing, annual deficits for the next 5 years
are currently projected to remain in the range of $100 billion. If, as
I expect, we pass this bill by week's end, we will have completely
eliminated the deficit no later than the year 2002. In other words, the
net savings over the next 5 years that will be generated by enacting
this budget agreement will total over $200 billion.
So we will achieve our goal of a balanced Federal budget by the year
2002, if not sooner, as a result, first, of adoption of the 1993 budget
agreement, and, second, enactment of the 1997 budget agreement. Passage
of these two pieces of legislation will bring us to a balanced Federal
budget for the first time since 1969.
There were many fears expressed about what would happen to our
economy and the deficit if we were to enact the spending and tax
policies contained in the budget agreement of 1993. I will not belabor
the point or go over those fears at this time. Instead, I will simply
concentrate on what has been said about the economy since the passage
of the 1993 package by people outside of the Senate, in particular the
Chairman of the Federal Reserve Board, Alan Greenspan.
Here's what he says about the state of our economy since the adoption
of our 1993 budget plan: we are ``now in the 7th consecutive year of
expansion, making it the third longest post-World War II cyclical
upswing to date.''
In addition, he said:

This strong expansion has produced a remarkable increase in
work opportunities for Americans. . . . Our whole economy
will benefit from their greater productivity.

Finally, he said:

Consumers are also enjoying low inflation . . . financial
markets have been buoyant . . . in a relatively stable, low-
inflation environment.

That is about as optimistic a series of statements as I have ever
heard the Chairman of the Federal Reserve make. He has a reason for
making them--the economy is strong, we have been able to reduce the
deficit, and we have an optimistic outlook about our future. And it is
universally held. Whether we turn to the Chairman of the Federal
Reserve Board, or Members of Congress, or the business community, or
members of labor, the response is the same: Our country is stronger
today.
There can be no doubt that we are strong.
Unemployment and inflation right now are at a combined rate of 8.7
percent. That is the best since Lyndon Johnson was President of the
United States.
Inflation is at a 2.8 annual percentage rate. That is the best since
John Kennedy was President.
The employment picture, with 12 million new jobs, is the best
employment situation our country has faced in its history. Construction
jobs are stronger now than at any time since I was born, since Harry
Truman was President.
Consumer confidence has increased 14 percent in the last 4 years,
which is the best we have seen since President Eisenhower.
Deficit reduction has been reduced to under 1 percent of gross
domestic product in 1997. That is the best we have seen in all the
years that I have lived. One would have to go back to Harry Truman's
Presidency to find a time when it was this good.
Home ownership has increased from 63 percent to 65 percent, the best
ever. Never in our Nation's history have two-thirds of all Americans
lived in their own homes.

The stock market has gone from 3,500 to more than 8,000, a growth
record that has been matched only once, and that was during World War
II.
Median family income is up $1,600 since 1993, the best since Lyndon
Johnson was President of the United States.
So, Mr. President, we feel very good about the circumstances and
about the economic progress and performance of the last 4 years.
At the same time, we have said repeatedly over the last several
months that there are four categories by which we would judge any
agreement that would attempt to make further progress on the deficit:
fairness, fiscal responsibility, education, and how we target the
investments that we will make as a result of this legislation. Those
are the four criteria. How fair is it? How responsible is it fiscally?
How good an educational program can we achieve? And how well are we
going to be able to target our investments?
Let us take the first category. How do Americans do under this
agreement on the issue of fairness? Many of us talked for some time
about how important it was that we benefit all income categories, not
just the top income category, but those working families in the $20,000
to $30,000 income categories, people who pay a portion of their income
to income taxes but an even greater portion to payroll taxes. Are we
going to be able to provide tax relief to families such as those?
We will provide a child tax credit to 27 million working families.
Families who pay thousands of dollars in payroll taxes, families who
pay income taxes, families who try to make ends meet, each and every
week, each and every month, those families are going to benefit very
directly as a result of what we were able to do with the child tax
credit.
And $24 billion has been committed in the first 5 years for a
children's health program, which is the largest single investment in
health care since the passage of Medicaid in 1965. That is just the
beginning, because we have also committed another $24 billion in the
second 5 years. For the first time in history, thousands of South
Dakotans and millions of Americans are going to benefit from a Federal
health program that for the first time will provide meaningful health
care to children who are not getting it today.
And $1.5 billion is going to be committed to low-income seniors to
help pay for Medicare premiums.
So, Mr. President, from a fairness point of view, there can be no
doubt, when it comes to health, when it comes to the array of
opportunities that we present working families, this bill deserves our
support.
Mr. President, we also, as I indicated, made a very important point
of arguing the need for targeted investment. Indeed, this legislation
provides opportunities for targeted investment in environmental
cleanup, in enterprise communities, and targeted job tax credits,
ensuring that family farms and family businesses are going to be
protected as one generation transfers its property to the next.
Employer tax deductions are going to be made available for employee
education and training.
In a number of ways, we say we are going to take the resources
available to us and target them to where they can be used to the
greatest advantage--on environment, on communities, on jobs, on farms
and small businesses. We provide an array of opportunities in that
regard to do what Democrats said was very critical: provide the kind of
targeted investment that is so essential to ensuring that all aspects
and all elements of our American society benefit from what we are doing
today.
The third criteri we spelled out was fiscal responsibility. How well
do we do in that regard? We said at the very beginning, we do not want
to see an explosion of deficit in the outyears. We wanted to be
absolutely certain that, regardless of what else we do, we did not want
to pass a tax cut we cannot afford and place ourselves back in the same
box we created for this country in

[[Page S8331]]

the 1980's. We did not want to relive the bad old days of those
extraordinarily high deficits. Instead, we now recognize that achieving
a balanced budget in 2002 is only the first step in maintaining a
balanced budget in the years beyond 2002.
So we do not index capital gains. We put income limits on individual
retirement accounts. We do not index the estate tax exemptions, simply
because we were afraid of the extraordinary explosion in outyear
deficits that these changes would trigger.
I recognize the fact that we did not go as far as some of us would
have liked to ensure fiscal responsibility, to ensure with a high
degree of confidence that we will be able to maintain a balanced
budget. However, I also believe we took a number of steps that allow
for some confidence that once we have balance the Federal budget, it
will stay balanced in the years 2003, 2004, 2005, and beyond.
Mr. President, the last category is one that is probably of greatest
importance to many working families because they are trying to make
ends meet and still send their children to college. In this information
age, it is important that we do all we can to make available to working
families the tools and the resources necessary to allow every child who
graduates from high school the opportunity to get more education. So
this bill provides the single largest investment in higher education
since Harry Truman passed the GI bill almost 50 years ago.
We provide a $1,500 HOPE credit in the first 2 years of college and a
20 percent tuition credit for college juniors and seniors and lifelong
learning opportunities. There are families of all ages with many
different sets of circumstances involving children who want to go to
college, involving a spouse who may want to get additional education.
An array of different challenges confront all working families as they
attempt to cope with the circumstances we are facing in this
information age. We provide that mechanism and those tools to working
families in ways that we have not done in more than four decades.
So, Mr. President, as a result of this President's advocacy, we are
committing resources to education that we have not done in the period I
have served in the Congress.
There are no Pell grant reductions. There are opportunities for
people to use other tools as well and not be penalized for using the
credits that we now make available.
In the end, Mr. President, it all comes down to real names and real
families, people that are truly going to be affected. While there are
many families who have come before us over the course of the last
several weeks to describe their situation, and talk about their
circumstances, I think the Richards family in Sioux Falls, SD, who
talked to us via television camera just a couple of days ago, is a
clear example of what this legislation means for a typical American
family.
Charlie Richards is a teacher. He is not only a teacher; he has two
extra part-time jobs. There are many people in South Dakota who work
not just one job, but two and three jobs in order to make ends meet.
Charlie Richards is that kind of an individual, hard working. He
believes that his family must have the very best that he can provide
them, and he is willing to commit the extra time and effort and hours
to see that provides his family with a quality of life that he now only
dreams of.
His wife Karen is pregnant with their second child. Their income is
about $24,000 a year. As a result of what we are doing this afternoon
and what we will do this week, Charlie and Karen will get a $975 child
tax credit. This figure was zero under the legislation originally
drafted and passed by the House. Both children, once the second child
is born, will get health care coverage, perhaps for the first time.
Both children will be eligible for HOPE credits when they are ready for
college. Both children will be eligible for KidSave and other
individual retirement accounts when savings increase.
For the first time, Charlie and Karen will be able to perhaps set a
little money aside for savings, maybe to buy a home, maybe to improve
the home they are living in now, maybe to give their family just a
little bit more hope that they are going to be able to make ends meet
and do the kinds of things that every family dreams of doing, not just
with the one child they have now, but with two.
So to Charlie and Karen, and to families just like them across the
country, let us say today that we give them hope of a better future, a
brighter and more realistic opportunity of achieving their goals.
We heard our constituents last year when they told us we have got to
work together to solve problems, when they told us it is important that
they have the kind of economic strength and security that they want so
badly, when they told us we have got to continue to work and put our
best effort forward to reduce the debt. We heard them on all these
fronts. As a result of the extraordinary leadership and work done on
both sides of the aisle, we are responding today in a way that makes me
very proud.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. MOYNIHAN. 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.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, this conference report comes before the
Senate in an atmosphere of near euphoria. While I have signed the
conference report--I was a Democratic conferee from the Finance
Committee on these matters--and while I will vote for each of the
bills, I cannot share the elation. I say this with the greatest respect
for the Senators who managed this through the Budget Committee and, of
course, for our own revered chairman of the Finance Committee--Senator
Roth--and others who have worked so very hard on the legislation.
Surely, there is much to applaud in both bills. But the agreement does
little to address, in a serious way, either short run or long-run
budget problems.
In the short-run, the Federal budget is already on the verge of
balance. This is due to a strong 7-year economic expansion. The
expansion is attributable, in part--very probably in large part--to the
budget decisions made by the President and this side of the aisle in
the Senate in 1993. Indeed, my respected colleague, Bob Kerrey,
suggests that the Omnibus Budget Reconciliation Act of 1993 be renamed
the Balanced Budget Act of 1993. The deficit reduction brought about by
OBRA 93, as our usage has it, is expected to reduce the deficit by a
cumulative $924 billion through 1998. That is almost a trillion
dollars.
I stood on the floor at this desk, with my great and good friend,
Senator Sasser, as the chairman of the Budget Committee at that desk. I
was chairman of the Finance Committee. In the end, we enacted that
measure by one vote, which has brought us to where we are today. I
don't know that the Nation, having heard so much for so long about
deficits, had been properly concerned about them so much and for so
long. It is not easy to grasp the possibility that the deficit for this
fiscal year, which will end September 30, will come in under $30
billion. That is about one-third of 1 percent of gross domestic
product--an insignificant number. If the present trends continue, we
could well be in a surplus in a year's time--the first such surplus, if
I rightly recall, since 1969.
And then having reached the point where we have free resources, we
would be in a very proper position to turn to questions of, do we want
to cut taxes, which clearly we might do? I would much prefer to see tax
rates reduced--and I will talk about that tomorrow--or to provide new
benefit programs of the kind that we are providing, but not before we
have done what we said we would do first, which was to balance the
budget.
Over the long run, too, this legislation does less than many of us on
the Finance Committee would have liked. Indeed, I can say, sir, that
all of us on the Finance Committee would have liked, as the measure I
am referring to, passed unanimously in the Finance Committee, 20 to 0,
on June 18. In particular, we chose to confront the long-run issues in
Medicare. We are told that our two major retirement programs--Social
Security and Medicare--

[[Page S8332]]

are in grave difficulties. That is not so clear in the case of Social
Security.
Four rather simple steps would bring us into actuarial balance for a
full 75 years--the usual way solvency is measured for the Social
Security program. It could be done by four simple measures.
Construct an accurate cost of living index--rather than a consumer
price index--in the manner that has been proposed by the chairman of
the Federal Reserve Board, the previous director of the Office of
Management and Budget, Dr. Rivlin, and the Boskin Commission
established by the Finance Committee when Senator Packwood was
chairman--he and I jointly did that.
Tax Social Security retirement benefits in the way that all other
pensions are now taxed.
Include all workers in the Social Security system. To this day, in a
kind of exasperating holdover from the 1930's, there are several
million State and local government employees who are not in the Social
Security system as government employees, but who acquire the benefits,
in any event, through part-time work outside.
Increase the computation period from 35 to 38 years.
Just take those four measures, and a few other odd things, and we put
Social Security in fine fiscal condition into the second half of the
next century.
This is not the case with Medicare. Medicare is a health program, and
it provides health care to a population that grows older and does so in
the setting where medical science grows ever more successful in the
treatment of the diseases associated with aging. But those treatments
are, of necessity, ever more expensive. There is a true problem in
Medicare. We have made many changes in the present program, so as to
provide another 10 years of trust fund solvency. But in fact, sir,
since 1992, the revenues from the Medicare payroll taxes have not
equaled the outlays. And we have used general revenues to fund the
shortfall, and since the Federal budget has been in a deficit
situation, we have had to borrow money to do it. We can say, if you
like, that we have 10 years of solvency. There is not now and there
won't be until we do very important things.
We began that effort in the Finance Committee on June 18. We took the
decision to increase the age of eligibility for Medicare from 65 years
to 67, in very gradual steps over the next quarter century, and
bringing it into line with the increased age of eligibility for Social
Security benefits, provisions adopted in 1983 in the aftermath of a
commission, headed by Dr. Greenspan, on which Senator Dole and I
served, among others. That measure just responds to the age profile,
the demographic profile of the American people. We are living longer.
And I would say, Mr. President, also, while we are living longer, we
are retiring earlier. The majority of Americans now retire at age 62,
when a reduced benefit on Social Security is available, and some 70
percent have retired by age 65. It is not entirely clear why. Some have
sufficient resources and they simply want to stop working, and others
have not gotten work, or others find the work no longer possible for
them. But the fact is that most people now are retired before age 65,
and on actuarially reduced benefits, so the trust funds are left
unaffected. We proposed to do that with Medicare.
If there is a problem of interim insurance from the time you leave
employment to the time you are retired, well, we can resolve that
problem. We could be thinking about it right now, in terms of those who
retire early on Social Security. The problem of health care insurance
does not deter, so far as we can tell, persons from doing that. It is
not an admirable fact; it is a distressful fact that the last time the
Social Security Administration did a survey asking persons the reasons
why they retired early was about 15 years ago. The Social Security
Administration is very slow in providing the kind of information we
would like to have to make these decisions.
We also, in the Finance Committee, unanimously agreed to increase the
part B premiums for upper-income beneficiaries. That is to say, to
reduce the part of the Medicare Program paid for by general revenues.
When the program was begun--and I was involved if not peripherally, but
with some measure of consequence as an Assistant Secretary of Labor for
Policy Planning and Research in the Johnson administration--we provided
that this program, Part B, should be paid for half by premiums paid by
beneficiaries and half by general revenues. Over the years, as a
technical result of having constrained the increase in premiums to the
same percentage increase in Social Security benefits, while the cost of
medical care increased faster than the consumer price index--which
itself was an inadequate measure of the cost of living--that 50/50
share dropped to 25 percent for beneficiaries and 75 percent for the
Government.
We would simply provide that persons with higher incomes would pay
more than the simple 25 percent that the great majority of persons
would pay. We are talking about a very small number of people--about 6
percent of all beneficiaries--but the principle is that if you have the
income, you don't need the subsidy. Indeed, the overall subsidy would
still be much greater than it was originally envisaged in 1965--with
the Federal Government financing 72 percent of program costs out of
general revenues. The time has come to do that.
Equally, the time has come to provide some measure of copayment for
home health care, which has been growing at extraordinary rates, and
which is evidently subject to serious abuse. This was widely reported
in the press just this week. These items have come to be known as the
big three Medicare changes. They were adopted on June 25 here on the
Senate floor by a vote of 73 to 27. However, they are not included in
the conference agreement. The House was not willing to do this, and I
can only regret that we have not done so. I stand here and say,
however, that the Senate has led the way and has shown you can do it.
The response in public opinion has been quite moderate. The comment in
the press has been almost unvaryingly supportive.

These are necessary, sensible things to do. And it is time we set
about doing them. There is an opportunity that we will not miss,
particularly if the Finance Committee--under the leadership of Chairman
Roth--continues to work in a bipartisan manner.
About 80 percent of the savings in mandatory programs in this bill
before us, this extraordinary large bill--I would hate to see it
dropped on anyone's foot--about 80 percent of those savings came from
actions by the Finance Committee. The 5-year savings for Medicare are
$115 billion. That is a decrease in the increase, in a manner we have
come to be familiar with, and, as I have said, the trust fund will be
in technical balance for about 10 years.
This does buy us time for an important provision in the bill, the
provision for the creation of a national bipartisan commission on the
future of Medicare--time for such commission to do its work. The
statute provides that it issue its report by March 1, 1999, a year and
a half from now.
The commission is required, in the first instance, to review and
analyze the long-term financial condition of the Medicare Program,
which is not an easy matter because we are talking about the long-term
progress of medicine in an age of discovery that has proved
extraordinarily creative and fruitful but equally and not
unsurprisingly costly, and to identify the problems that threaten the
financial integrity of Medicare, including the extent to which Medicare
update indexes do not accurately reflect inflation.
If I could say parenthetically, Mr. President, we have had a great
deal of talk about the accuracy, or inaccuracy, or sufficiency, or
insufficiency of the Consumer Price Index. The fact is, we have at
least four distinct price indexes in our present statutes and in our
practices. They are spread all over the Government. One of them indexes
Medicare expenses in ways that it seems to me probably overstate
inflation.
Next the commission is asked to make recommendations regarding the
financing of graduate medical education, including consideration of
alternative broad-based sources of funding for medical education. This
could not be a more important matter. The question of medical schools
and medical education is absolutely essential as we begin the process
of economic rationalization in the provision of health

[[Page S8333]]

care, as we do in this measure making a wide range of HMO's available
to Medicare beneficiaries and Medicaid recipients.
In this regard, Mr. President, might I just go back to 1994 when the
Finance Committee was taking up the health care proposal sent to us by
the administration in the last days of the first session of the 103d
Congress. I was in New York City and asked the distinguished head of
the Memorial Sloan-Kettering Cancer Center in New York--Dr. Paul
Marks--if he would arrange a seminar to bring me up to date on the
thinking of medical deans and medical academic researchers in the area
of health care generally. We met one morning in a conference room in
January at 10 o'clock. And at about 10:20, one of the deans, who comes
from another part of the country, said, ``You know, the University of
Minnesota may have to close its medical school.'' That was said to me
and I knew I had heard something important. Minnesota is the kind of
State where they open medical schools. They don't close them. I asked,
``How could that be?'' They said, ``Well, managed care is making its
way from the west coast to the east coast. It has reached the high
plains, and is now widely used in Minnesota.''
Persons enrolled in managed care plans are not sent to teaching
hospitals because they are, by definition, more expensive. If you do
not have a teaching hospital, you can't have a medical school. And,
indeed, the teaching hospital at the University of Minnesota has since
merged with another health care institution.
We are dealing with something profoundly important. An ancient
practice of medicine goes all the way back to the Greeks. The
establishment of medicine doesn't go back just to the Greeks, but the
idea of a profession of medicine with a code of ethics, a Hippocratic
oath, certain responsibilities, certain immutabilities in medicine--
something of a mystery, something of a guide. In my youth, doctors
would prescribe medicines taken from drugstores in a handwriting that
was illegible to the laymen. Only the pharmacist could read it. All of
that is disappearing.
In our hearings in the Finance Committee, Msgr. Charles J. Fahey, a
professor at Fordham University said to us, ``What you are seeing is a
`commodification' of medicine.'' There is a striking image here on the
Senate floor. For generations, we have argued the issue of whether
labor is a commodity. Finally, in the Clayton Antitrust Act of 1914, we
said labor is not a commodity. Well, medicine is becoming one.
The next week, Dr. Raymond G. Schultze, at the time the head of the
UCLA Medical Center volunteered, and said, ``Can I give you an example
of that?'' We were discussing it with our witnesses, saying that is a
new idea. He said, ``In southern California, we now have a spot market
of bone marrow transplants.'' Well, when you get into that, that is
good. It keeps control on prices. It brings rational decisionmaking
into this market. But it doesn't provide for the public good. Markets
won't provide for the public good that a teaching hospital and a
medical school constitute.
So our commission must pay special attention to these institutions.
Finally, we ask the commission to make recommendations on modifying
the age of eligibility for Medicare so that it corresponds to the
changes in the age of eligibility for Social Security. I would simply
suggest that this provision--the instruction to the forthcoming
commission to deal with this matter of age of eligibility--obviously
reflects the decision in the Finance Committee and the Senate that it
ought to be increased to be in harmony with that of Social Security.
The Medicaid changes in this legislation will save about $10 billion
over 5 years by providing greater flexibility to the States, and at the
same time, as I have remarked earlier, the Medicaid recipients will be
encouraged to participate in HMO's just as Medicare recipients do. When
we began Medicaid and Medicare, there were very few arrangements which
we now call health maintenance organizations. Fee-for-service medicine
was almost the universal experience. So, naturally, when people
retired, they continued it, and Medicaid recipients took it up. That
has changed with the general population and ought to change with this
population as well.
To the one bit of really strikingly good news in this measure, we
have taken action to provide health coverage for uninsured children,
$24 billion over 5 years. This will be the largest expansion in
Government health insurance since the enactment of Medicare and
Medicaid in 1965. We have done something that has not been done in a
generation, and something that is needed. It will be financed by an
increase in the cigarette tax that will eventually reach 15 cents per
pack. Both of these measures were also an initiative of the Senate
Finance Committee.
I would also note that the conference committee, even prior to our
commission, includes provisions to ensure an adequate stream of Federal
funding for teaching hospitals. Financing of health care continues to
undergo dramatic change. We will have a more comprehensive proposal
from our commission. But we have done some things in this bill.
Medicare payments to HMO's now reflect the higher cost of providing
care in teaching hospitals. Under the legislation before us, these
payments will be carved out, as we say, and sent directly to the
teaching hospitals, thereby ensuring that the money will go where it is
intended.
In addition, while payments for medical education have been reduced
as part of the overall reduction in payments to hospitals and
physicians that are inevitable in a deficit reduction bill, the
conference report includes the Senate language which limits the cuts to
about $5.5 billion rather than $6.5 billion recommended by the House.
Again, sir, I would say that had we not decided to go for a large tax
increase, which we will talk about tomorrow, we wouldn't have had to
make some of these reductions which I think we will find difficult, if
not indeed painful.
Finally, it should be noted that this bill sensibly increases the
statutory debt limit from $5.5 trillion to $5.95 trillion, which will
be sufficient to take us through December 1999--a much smaller increase
would be required if we decided simply to stay the course that we set
in 1993.
So, Mr. President, I will support this conference report. It is the
product of a long and difficult effort to reach compromise between the
Congress and the President. It was characterized by extraordinary
unanimity in the Finance Committee, where 80 percent of the mandatory
program reductions are to be found, and by very large majorities here
on the Senate floor.
I think that speaks to the sincerity of the participants and, I hope,
to our knowledge. If I consult my hopes in this matter, there is no
real alternative. And, in the meantime, we have done some things that
we surely can be proud of.
I see my friend, the Senator from West Virginia, is on the floor. I
know what particular pleasure he will take in the provision of $24
billion in health insurance for children, the largest such increase in
health care in a generation since the enactment of Medicare and
Medicaid was done.
With that, Mr. President, and seeing that there are other Senators
present, I yield the floor.
I thank the Chair.
The PRESIDING OFFICER. Who seeks recognition?
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DOMENICI. Mr. President, I do not know who is controlling time,
but certainly the Senator can take as much time as he desires. There is
nobody here on your side. I give it to you off my side.
The PRESIDING OFFICER. The Senator from North Dakota is recognized
under the time under the control of the Senator from New Jersey.
Mr. DORGAN. Mr. President, I thank very much the Senator from New
Mexico for his courtesy, and I will take the time under the control of
the Senator from New Jersey.
Mr. President, I will make a couple of general comments first, and
then I want to speak specifically about a provision in the conference
report which is before us that is enormously troubling.
First let me explain that I intend to vote for this legislation. The
Senator from New Jersey and the Senator from

[[Page S8334]]

New Mexico and others have, I think, done a remarkable job of crafting
a bill that represents a compromise with the White House, with the
Republicans and the Democrats, putting together a piece of legislation
that tackles this budget deficit, and is the second step of several
steps that we have taken, first in 1993 and then now in 1997, which
will lead to a fiscal policy that is under control in this country--not
only tackling the deficit but doing so in a way that makes a great deal
of sense, cutting spending in some areas and increasing investment yet
in other areas.
This builds on accomplishments that we began earlier by tackling the
budget deficit effectively but also by saying there are several other
things in this country that are enormously important. One is children's
health, what to do about children's health care in this country. The
fact is this piece of legislation and the accompanying piece of
legislation will make available a substantial amount of money to
provide health insurance for children who are not now covered with
health insurance. The question of whether a sick child gets health
treatment or gets treatment in the medical care industry when that
child is sick ought not ever be a function of whether that child has a
parent with money in their checkbook. This piece of legislation will
provide substantial additional coverage to provide health care to
children, especially those who come from impoverished families.
This piece of legislation also says education matters, education is a
priority in this country. This bill puts on track 1 million additional
kids to be enrolled in Head Start by the year 2000. Head Start matters
and Head Start works. Anybody who has been to a Head Start center and
seen those bright little eyes of children who are getting a head start,
coming from circumstances of difficulty getting a head start,
understands this program works. This program saves money. And this
program invests in the young lives of young people who otherwise would
not have had an opportunity.
Mr. President, 300,000 more eligible college students will get
additional help in Pell grants. This agreement places a priority on
education, and that is exactly where the priority in this country ought
to be. And finally this agreement solves a problem that caused me to
vote against this legislation when it left the Senate. When the
legislation left the Senate, it had two things that I did not support.
One, increasing the eligible age of Medicare from 65 to 67 and, two,
means testing Medicare.
Let me explain quickly I am willing to support means testing of
Medicare. I am not willing to support providing a means test for
Medicare for any purpose other than making Medicare solvent --certainly
not for the purpose in a reconciliation bill of making room for some
tax cut somewhere else. We will have to and we must find a way to deal
with the ticking time bomb, the demographic time bomb that is going to
cause us problems both in Medicare and also in Social Security because
of the aging of our population. I understand that. In the construction
of solving these problems, I am willing to cast hard votes on the issue
of Medicare with respect to means testing. I am unwilling to do so in
the construct of a reconciliation bill. This is not where that sort of
thing should have been done, and I did not support it when it left the
Senate. That has been solved. Those provisions are out of this
legislation. This legislation is better because of it.
Let me mention one additional point. Senator Rockefeller, from the
State of West Virginia, is here to discuss another subject with me, but
the point about health care and Medicare especially is one that all of
us ought to understand. Even though it is a challenge, we ought to
understand that this is born of success. Mr. President, 100 years ago,
the average life expectancy in America was 48 years of age. Nearly a
century later it is 78 years of age. Why? A lot of things. Better
nutrition, better lifestyle, breathtaking changes in health care, new
knees, new hips, cataract surgery, open up the heart muscle when it has
been plugged, give people additional life, breathtaking medical
advances, and therefore a 30-year increase in life expectancy in our
country in one century. It is wonderful. It is born of enormous
success. It is also very expensive, and that is also causing part of
our strain with respect to the Medicare Program, and we must make that
program solvent for the long-term because it is too valuable a program
for us not to fix it for the long-term.

So I wanted to make a few comments. I intended to make more, but I
will abbreviate them because we have another subject that is critically
important. I want to make a few comments about the job that I think was
done by the Senator from New Mexico, the Senator from New Jersey, the
President and many, many others. It is nice for a change to be talking
about something that is bipartisan. The American people tend to
believe, and in many cases rightly so, that instead of getting the best
of what both political sides have to offer we often end up with the
worst. At least in this circumstance we have engaged in a bipartisan
agreement that I am going to vote for, I am going to support.
Is everything here the way I would like or the way I would write it?
No. But we have advanced in the area of education and health care and
tackling the deficit and a number of other areas in a way that is
significant and in a way that will be beneficial to this country's
future, and I am going to vote for it.
Now, having said that in laudatory terms, let me say there are a
couple things that give me enormous heartache here, and one of them is
a problem the Senator from West Virginia and I want to talk about for a
couple of minutes. And at the end of this I intend to make a point of
order under the Byrd rule against the universal service provisions in
this conference report.
Let me describe it very briefly and then yield to the Senator from
West Virginia. There is, in my judgment, a fundamental mistake being
made in the conference report in this reconciliation process. And that
mistake is this: This conference report will use universal service
funds in the Telecommunications Act for the purpose of plugging a hole
in the budget process.
In my judgment, that is totally and completely inappropriate and
without foundation. Those who were involved in it were repeatedly told
this is inappropriate and yet somehow through the mechanisms of the
Congressional Budget Office and the Office of Management and Budget and
a range of other interests it got stuck into this piece of legislation.
Let me describe it very briefly. We have in this country something
called the universal service provision in the Telecommunications Act.
What does that mean? It means that in this country, even if you are in
an area where it is very expensive to provide telephone service, we
want to make sure you have good telephone service at an affordable
price. If you happen to live in an area where it is very expensive to
provide telephone service, we have a universal service fund that
collects resources from all of the users in the country and uses it to
drive down the cost to those in the highest cost areas of the country
so that everyone in this country has affordable telephone service.
That is what universal means. It has been around forever and for a
good purpose. Every telephone in this country is more valuable because
there is a telephone in the smallest highest cost area of this country
and we have decided to drive down those costs so that telephone service
is universally affordable.
Now, the universal service fund produces the money to do that. It is
not a fund that comes into the Federal Government. It is not Federal
money. It is not a fund that has money that the Federal Government
spends. It is completely apart and separate from the Federal coffers.
Two years ago, we passed something called a Telecommunications Act
and now we are told by the Congressional Budget Office and by some
others that the way the universal service fund is worded in the
Telecommunications Act there is justification for the Congressional
Budget Office and the Office of Management and Budget to rule that the
universal service fund can be used in the construct of a Federal budget
as both revenues and outlays.
That is pure nonsense. This has nothing to do with the Federal
budget--nothing. And those who believe it does have either misread the
law or don't

[[Page S8335]]

know the foggiest thing about what they are reading.
Now, we have tried very hard to pull this out of this conference
report because it is a couple, I guess it is a $3 billion plug they
stuck in, just like a cork in a big hole. They walk around with corks
in their pocket down at OMB or CBO, and say, well, here is a big hole
we can't explain; we will stick a cork in there. This cork is the
universal service fund. And the minute you start using that as a cork
the cork will get bigger every year they manipulate it. This is a
misuse of the fund. And the Congressional Budget Office and the Office
of Management and Budget had no business and no capability of
suggesting that this is a part of the Federal Treasury.
Now, I would like to yield for purposes of discussion. At the end of
the process, I am going to make a point of order, a Byrd rule point of
order. And let me, as I yield to the Senator from West Virginia, say
that the Presiding Officer, who is on the Senate Commerce Committee and
was integrally involved in the issue of the construction of the
Telecommunications Act and the universal service fund, has been
involved in signing letters and discussions with other Members of
Congress about this very subject. The Senator from Arizona, the current
chairman of the Senate Commerce Committee, feels the same way I do. It
is inappropriate to have it in this conference report in this manner.
The Senate minority leader feels the same way. A good number of us feel
the same way. And yet we seem powerless at this point to pull it out of
this conference report. I expect that my challenge on the Byrd rule is
probably not going to survive for reasons that I will understand, but I
think it is critically important that we raise this issue now so it
will not become habit forming; this will happen once and only once. And
between now and the next time someone has an urge to do this with the
universal service fund, I hope we have the law changed to disabuse
anybody that they can interpret any language in the Telecommunications
Act with the universal service fund in any way which suggests it is
part of the Federal Treasury assets receipts or outlays.
Mr. President, the Senator from Arizona I notice is in the Chamber. I
just mentioned him. He is the distinguished chairman of the Senate
Commerce Committee. I know the Senator from West Virginia also wishes
to be recognized. I would be happy to yield the floor so the Senator
from Arizona may speak.
The PRESIDING OFFICER. Who yields time?
Mr. DOMENICI. How much time would the Senator like--10 minutes?
Mr. McCAIN. Three minutes.
Mr. DOMENICI. I yield 5 minutes to the Senator from Arizona.
The PRESIDING OFFICER. The Senator from Arizona is yielded 5 minutes
from the time under the control of the Senator from New Mexico. The
Senator from Arizona.
Mr. McCAIN. Mr. President, I understand and appreciate Senator
Dorgan's concerns. I would disagree with the action of challenging it.
The Senator from North Dakota is quite correct in one sense; Federal
finagling with the universal service fund ought to raise concerns over
any potential impact on the provision of essential phone service to
rural and high-cost areas and low-income consumers.
Mr. President, I think it is important to put its genesis and its
likely real life effect into perspective.
I reluctantly concurred with the last-minute--I emphasize
reluctantly--inclusion of this provision in the bill. I am sure I am
telling the worst-kept secret in town when I tell you this provision
was dreamed up by the Clinton administration and essentially imposed on
the Commerce Committee conferees by OMB. It is not a provision we liked
and not a provision we wanted, but it was made very clear to us that
our failure to include it would likely result in our losing control of
the bill. And if this were to occur, the probability was that not only
this provision but numerous others that would be worse, such as
spectrum fees, would get added to the bill if that happened.
So including this provision was by far the lesser of two evils. This
is particularly so because it is hard to see how this provision is
likely to have any real life effect on maintaining essential telephone
service. Basically, what this provision does is shift $3 billion in
funds between the Treasury and the universal service fund in
alternating fiscal years in an attempt to cover a residual $3 billion
savings shortfall in the outyears.
Because industry universal service fund subsidies today total over $6
billion and are projected to soar as high as $12 billion to $20
billion, there can be no doubt that the telephone industry will be
financially able to sustain a $3 billion loan for the limited time
period prescribed. Similarly, if we really think that the Treasury will
not be in a position to repay a $3 billion loan, we have far worse
deficit problems than this bill can ever hope to cure. And because the
bill explicitly provides that telephone companies may not raise their
rates to recover this $3 billion, it attempts to assure that telephone
rates will not increase, at least for this reason.
So, I believe it extremely unlikely that essential telephone service
is likely to be hurt in any way by the enactment of this provision. In
saying this, however, I do not wish to trivialize the validity of
concerns over the Federal Government reaching into private,
nongovernmental pockets to help plug a budget hole. That's a terrible
precedent to set, regardless of whether it is the universal service
fund or the airline safety funds, and I have consistently voted against
such schemes in the past.
I suggest the better remedy is to pass this bill today, then enact
new legislation that will prevent this kind of action in the future. We
should not risk bringing down this historic agreement because of one
such scheme that, however objectionable in concept, will have no
practical impact on the public.
Let me emphasize again, this administration provision is designed to
have no adverse effect on the consumer. For the information of my
colleagues, I have already stated I will hold conference committee
hearings early next year to make sure that we need do nothing more
legislatively or in terms of FCC oversight to further assure that the
universal service provision before us will not, in fact, cause any loss
in essential service or raise telephone rates.
I want to tell my colleague from North Dakota, we will have hearings.
We will take action to make sure that this provision does not raise
phone rates nor impair the ability of people to have universal service.
I want to point out that the Presiding Officer in the chair, the
distinguished chairman of the Appropriations Committee, also a member
of the Commerce Committee, has pledged to do exactly the same. I don't
like it. You don't like it. He doesn't like it. In fact, in a rather
unusual move, the chairman of the Appropriations Committee was more
vociferous in his opposition to this provision than I was.
So I want to point out I think it is important the Senator from North
Dakota raised this concern. I know the Senator from West Virginia has
the same concern and will articulate it. But I want to say that we will
have hearings. We will do whatever is necessary to make sure this does
not impair--either raise phone rates or impair the ability of people to
obtain universal service. I also want to reiterate, as did the Senator
from North Dakota, it's a lousy way to do business, Mr. President. It's
not a good way to do business. But I also, with some sympathy to my
dear friend from New Mexico, realize that he was in a position where
they were $3 billion short and they had to make it in order to make
this budget work.
So I want to thank my colleague from North Dakota. I want to thank
the Senator from Alaska as well, for his commitment to fix this
situation. There is, quite simply, no reason to endorse this provision
or the kind of tactic it employs. But neither is there any reason to
vote against this balanced budget bill because of it. I urge my
colleagues to take that into consideration.
I yield the floor.
Mr. DOMENICI. Mr. President, I thank my good friend from Arizona. I
am sorry if we waited until the last minute to notify you. We had
plenty of time. You could have come down slowly and taken your time.
Mr. President, I yield myself 5 minutes, and then I will yield to
Senator Rockefeller.

[[Page S8336]]

The PRESIDING OFFICER. The Senator from New Mexico is recognized for
5 minutes.
Mr. DOMENICI. I surmise the distinguished Senator from West Virginia
is going to stand up and agree with what has been said. I just ask him
if he would consider seriously, with me, what the miner protection fund
looks like. It is exactly like this, and it is on budget. The Federal
Government orders mining companies to pay into a fund, but the Federal
Government does not disburse the money. That is your bill. You are
famous for it, Senator. That is on budget. It has been on budget from
the beginning.
Now, let's look at this. It's exactly the same. We order companies to
pay into this fund so that we can get universal service out of the
fund. Who disburses the fund? The companies; not the Government. That
resonates very well with a mining bill, miners' protection, the same
way it has been on budget for 4 years. Frankly, it doesn't matter to
this Senator.
But the point of it is, we are bound by an interpretation that
essentially was this. The reason I didn't cite this is because it never
became law. But you might recall, I say to the Senator, when we had the
universal health plan from the White House, noted by some as the
Hillary health plan, the distinguished chairman, then, of the
Congressional Budget Office--not this one; one that you-all had
appointed from the other side--ruled one morning, to the amazement of
everyone, that the bill had a tax in it because the procedure was that
we were ordering money to be paid by somebody, and then, in the various
States, we would disburse the money. The Federal Government was not
disbursing the money.
So the White House thought they would have a bill that was without
taxation in it. And what did he rule? He ruled that if the Government
orders payment of money into a fund, then the fund is on budget, even
if the Government doesn't control the fund.

I know my friend in the chair does not agree. I might not agree. But
I am merely explaining what the facts are. I understand that you would
like to make a point of order. I will be here and we can talk a little
more about it, Senator. I do believe we have just reason to ask the
Senate not to impose that point of order under the circumstances
surrounding it, but I understand you, and I will speak to that later.
I yield the floor at this point.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. ROCKEFELLER. Mr. President, I yield myself, off the time of the
Senator from New Jersey, 10 minutes.
The PRESIDING OFFICER. As the Senator present and in charge of the
bill he has that right. The Senator is recognized for 10 minutes.
Mr. ROCKEFELLER. Mr. President, I appreciate that very much. I also
appreciate very much, as I always do, what my good friend, the Senator
from New Mexico, said. I would draw one small point, however of
difference. That is, in the miners' health retirement bill there has
never been any thought, any action, any suggestion that any of that
money should be used for anything but the health care of miners,
period. It doesn't go anywhere else. In the case of what we are now
talking about, the universal service fund, it is something which was
set up for one purpose and which is being used for an entirely
different purpose. The Senator may wish to come back--
Mr. DOMENICI. Will the Senator yield?
Mr. ROCKEFELLER. Of course.
Mr. DOMENICI. Senator, when we first proposed this, we could find no
way to do this without doing exactly what you said. But the White House
came along, and they are a little more ingenious than are we. They
offered us a proposal that is now in this bill. It does not change
universal service, nor does it use that fund in any way other than what
it was originally intended to do. All we have is, those who were paying
into it get a 1-year reprieve, to the tune of $3 billion. Then they pay
it in the next year. I think they are delighted. They get a reprieve
because we lend them the money for the year and everything is exactly
as you want it, and in the following year the companies that would have
been paying it pay into it the next year. That happens to give us the
$3 billion credit on the budget. That was dreamed up by the White
House. We said, ``It's extremely ingenious and it fits all the tests,''
and that is why we are here.
Thank you for yielding.
Mr. ROCKEFELLER. I thank my friend and ask unanimous consent the time
used by my friend from New Mexico be used on his side and not from the
time of the Senator from New Jersey.
The PRESIDING OFFICER. It has been so accounted.
Mr. ROCKEFELLER. Mr. President, I strongly agree with what Senator
Dorgan of North Dakota has said. I expect that, if the Presiding
Officer were in a position to take the floor, he might say something
not that dissimilar.
There is an enormous amount of anger among those of us who worry
about rural America, that for the first time in its history --hopefully
for the last time in its history--the universal service fund is
literally being raided for the purpose of a gimmick. The Senator from
New Mexico is correct, I think, in the way he describes the process of
what will happen. He is incorrect in one small matter, which doesn't
really make that much difference but happens to make some difference to
me as a Democrat, and that is that the idea came first from the
Congressional Budget Office, not from the White House. It came from the
Congressional Budget Office, this so-called gimmick fix. Then it was
upheld by, so to speak, the Office of Management and Budget, which is
something that I am very angry about, as a Democrat, because that
happened on the President's watch.
I think the problem with this is that universal service is sacred.
When the Senator from North Dakota described equal phone calls--as he
sometimes says, Donald Trump can call into Minot, ND, and that is good
for Donald Trump in New York City and that's good for Minot, ND, and
the possessor of that phone. But the purpose of universal service is,
in fact, that rural areas are able to be sustained in part of their
rate-paying because some States have to be more generous than others.
That is what universal service is about. That is what the money is
there for. It is not there for black lung, it's not there for retired
miners, it's not there for environmental purposes. It's there for one
purpose, and that is to guarantee that universal service on the
telephones is available and affordable by people no matter where they
live, and people particularly in rural areas.
Part of my objection to all of this, of course, is that this whole
process of working out this reconciliation bill--which I do support. I
am not jumping up and down, but I do support it. That will be another
speech at another time. But basically there were a lot of meetings held
in a lot of rooms in which a lot of us were not allowed to be. I have a
feeling that this decision was made at the last moment by OMB. Their
people tried vainly to convince Senator Dorgan and his folks and myself
and my folks that this was all really nothing but just a shifting of
money here and there. But that is not the case. If you look at the
historic proportions of raiding the universal service fund, no matter
for what purpose--it's not for telephone service, it's not for making
it possible in rural New Mexico or rural West Virginia or rural North
Dakota for people who have telephones not to have to pay exorbitant
rates.

So here we have this one very unfortunate example. It's a budget
gimmick. It's lousy policy. It's using the service fund as a piggy
bank. There is no excuse for it. It's in the bill. I understand that we
are probably not going to be able to do very much about it, but it is
wrong. It is not only wrong because of what it does to universal
service, but it's also very wrong because of what it does to libraries
and schools and health care center telemedicine programs, which I will
talk about in a moment.
I will say the fact that Senator McCain was on the floor, that
Senator Stevens has strong feelings about this, and Senator Hollings
has strong feelings about this, Senator Daschle has strong feelings
about this, Senator Dorgan, myself, many others, Senator Snowe--many
others--this is a problem that we are going to come back to and fix. As
the Senator from Arizona indicated, he's going to hold hearings. But we
are going to come back on this until we can fix this problem. We can't
fix it today, but we will be back, we will be

[[Page S8337]]

back again, until we get this eliminated--eliminated and changed.
Because it is wrong.
I recognize the universal service fund isn't recognized by most
people. They don't know what it means. But it's something of such
incredible importance to affordable phone rates for rural citizens that
it is something people better understand very, very thoroughly. When a
group of us passed and fought hard for something called the Snowe-
Rockefeller-Exon-Kerrey amendment, we extended the promise and the idea
of universal service to something which fits in that category; that is,
schools, libraries and rural health care facilities that use
telemedicine. There are 116,000 schools in this country, Mr. President,
and we are going to make every classroom applicable and every one of
those classrooms, every one of those schools, we are going to make them
fully wired up, ready for Internet, so there won't be any first- and
second-class society in our country.
I never, ever thought during the battle that we had to get to pass
that Snowe-Rockefeller-Exon-Kerrey amendment, I never ever for a moment
thought that we would be dealing with budget negotiators, but much more
significantly I think, in this case, the Office of Management and
Budget and their intransigence in trying to work out some kind of a
Federal budget worked out that was not--I was shocked when I heard
about that.
Unfortunately, the budget has a neat trick, and as the Senator from
New Mexico points out, it will work. It will loan universal service
funds in the year 2001 and it will repay that in the year 2002, solely
to have enough money appear on the books to make it possible to say
that the Federal budget was balanced in that particular year, 2002. It
violates the promise made to telecommunications providers that the
universal service money was for telecommunications only. They are
offended by it.
I ask unanimous consent to have printed in the Record a letter from
Bell Atlantic and Nynex expressing exactly that view.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

Bell Atlantic,

Washington, DC.

Nynex,

Washington, DC, July 25, 1997.
Hon. Jay Rockefeller,
Hart Senate Office Building,
Washington, DC.
Dear Senator Rockefeller: We urgently request that you
delete the universal service ``tax'' from the budget
reconciliation legislation. This proposed ``tax'' is a direct
assault on the policy of universal, affordable telephone
service for all Americans.
Section 3006 of the Budget Reconciliation Bill is bad
public policy and it should be deleted from the Budget
Reconciliation legislation. This budget gimmick borrows money
from a fund established to ensure universal telephone service
in order to ``balance'' the federal budget.
Because this fund is privately administered and not funded
through the federal budget, it is questionable whether the
federal treasury can ``borrow'' from this fund. If passed,
this provision would surely be the target of litigation.
This section sets a dangerous precedent of using funds
intended to support affordable phone service as a ``trust
fund'' or ``piggy bank'' to balance the federal budget each
cycle. As a result, this proposal raises serious concerns for
the future viability of universal telephone service.
We urge you, in the strongest terms, to delete the
universal service section from the budget reconciliation
legislation.
Sincerely,
Aubrey L. Sarvis,
Vice President, Federal Relations, Bell Atlantic.

Thomas J. Tauke,
Executive Vice President, Government Affairs, Nynex.

(Mr. ABRAHAM assumed the chair.)
Mr. ROCKEFELLER. The provision that will probably become law, in this
gigantic stack of papers, is opposed by telecommunications companies.
It is opposed by education groups. It is going to be opposed by a lot
more groups before this process is finished.
The universal service fund is private money. It comes from telephone
companies. We don't own the telephone companies. They are their own
property. It is managed by nonprofit NECA, the National Exchange
Carriers Association. This is private money--private money--that should
not be used for budget gimmicks.
At this point, we are caught between a rock and a hard place. The
bill is before us. It is a good bill on balance. It is a bill that I am
going to vote for. It is something that all of us have worked hard for
since 1993, and probably before that. It is going to have to be
changed, I fear, in the future. I tried to reach Franklin Raines this
afternoon. I could not do so. I have spoken to the Vice President about
it. I have spoken to everybody I possibly could, because it is terribly
bad public policy.
I am committed to protecting the integrity of universal service, and
I intend to work with Senator Dorgan, Republican colleagues, industry
leaders, and advocates to protect universal service and its promise of
affordable access to rural America.
I urge interested parties to join me in this fight. Universal service
is not just about putting computers in classrooms. It is about fairness
to rural Americans. It is a sacred trust. The universal service fund
has been briefly violated. One can hope that this will be the only
time, and one can hope that even this time, it will only last for about
a year before we clear it up.
Mr. President, I thank the Presiding Officer and yield the floor.
Mr. STEVENS addressed the Chair.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. STEVENS. Will the Senator from New Mexico yield me 10 minutes?
Mr. DOMENICI. I yield as much time as the Senator from Alaska
desires.

Privilege of the Floor

Mr. STEVENS. Mr. President, I send to the desk a request for
privilege of the floor for my staff for today through August 1:
Antonette Advincula; Kai Binkley; Larissa Sommer; Matt Hopper;
Melissa Kassier; James Hayes; Kate Williams; Bronwyn Rick; Jay McAlpin;
and Jessica Huddleston.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. STEVENS. Mr. President, first, let me thank the distinguished
occupant of the chair. I was fearing that this issue might come up for
a ruling while I had the privilege of sitting in that chair and was
fearful what I might do, because I can tell the Senate that if one
examines the signatures sheets for reporting this bill, you will find
that I excepted from my approval of the bill as a conferee on the
Commerce Committee side this provision on the universal service fund.
Mr. President, I am not going to raise a proper point of order, and
there is a proper point of order, but it would bring down the whole
bill, and it is not timely. I would raise it if this went into effect
next year. It will not go into effect until October 1 in the year 2000.
So we have time to work this out and find a way to make peace on this
subject.
I intend to pursue that after the hearings that the Senator from
Arizona has announced, as chairman of the Commerce Committee, he will
hold.
I don't think anyone really realizes what this does. I will say, and
I know the Senator from New Mexico was trying to get it to me, the
first time I saw this was today, although it had been described to me,
and that is why I would not approve the Commerce Committee portion of
the bill pertaining to the service fund. As a matter of fact, this is
the old interstate rate pool, Mr. President. People in the business
still refer to that in many ways. It became the universal service fund.
I was the one who dreamed this up about 5 years ago when we first
introduced the bill to modify the old Communications Act of 1934, and
really that was carried through in the Telecommunications Act that
passed.
I am pleased to have been part of that, because what this does is it
gives us a fund which the industry itself can use to equalize the costs
of assuring service anywhere in the United States so that our
telecommunications will, in fact, be capable of being delivered
wherever there is a person seeking to send or receive communications as
defined by our act.
This money is kept by the National Exchange Carriers Association,
[NECA]. It is not Federal money. It is not subject to Federal control.
As a matter of fact, it is not even enforced by the Federal Government
in terms of payment into the fund. It cannot be a tax.

[[Page S8338]]

With due respect to my friend from New Mexico, I think we have a
Supreme Court of the United States that will determine eventually what
is on budget and what is not. The Director of the Congressional Budget
Office, in my judgment, has made a serious mistake, and we are pursuing
that mistake here. But there is more than just his mistake. The basic
mistake has been made by the White House itself, when it conjured up
this new approach to using this fund which is not Federal money, it is
not taxpayer's money. It is paid by the ratepayers, not the Federal
Government. You might have dipped into the Postal Service surplus in
the bank right now under this theory. That is ratepayer money, too.

It is not on budget, but, as a matter of fact, this money is not
subject to Federal control. But this bill says there is appropriated $3
billion to put into this fund that NECA manages for the
telecommunications world, and it sits there for a year, Mr. President.
Of course, it is going to earn interest, right? At the end of the year,
it is paid back by the fund, and the fund can keep the interest it
earned during that period.
Once more, the people who would have paid into the fund don't have to
make a payment for a year. They keep that money that they would have
paid the fund in their own banks and they pay it to NECA the following
year, and guess what? They make money off it, too. So this is one of
the greatest shell games I have ever seen with Federal money. The
Federal money being fooled with is the $3 billion from the Treasury
that goes into the fund before the game begins, and these guys get to
play poker with this for a year, and then after a year, they can keep
whatever they earned with it and pay back $3 billion to Treasury. It is
a win-win thing for everybody but the people who should be served,
because the earnings for the fund ought to accrue to the fund, the
people who are the recipients of universal service, and this is just
too cute. This, in my opinion, is the worst gimmick since the Budget
Act was enacted, and I am glad the Senator from New Mexico has
indicated he really didn't dream this one up, because I think he is
smarter than that, and I think he is embarrassed to have to carry it,
as I would be.
The proper point of order, Mr. President, is a constitutional point
of order. I will not raise it because it will pull the whole bill down,
and we have to have this to bring about a balanced budget. It will take
place in the year 2000, as I said. But I warn the Senate, before 2000
gets here, we will raise a constitutional point of order to take this
out of here unless it is straightened out, because it is nothing but
smoke and mirrors. It is the worse case of smoke and mirrors that ever
came out of the White House.
Somehow or another, someone has to understand that it is not right to
play with money, that $3 billion of taxpayer's money goes into this
fund, managed by a private association; it stays there for a year, the
interest on it accrues to private associations, and at the end of the
year, they pay back $3 billion. Meanwhile the people who should have
been paying in for a year have earned their own money, and guess what?
It is not a wash in the sense of everybody who keeps their own
checkbook and everyone who pays bills and the people who need this
service, this universal service; it is a wash under the Budget Act,
which I thought was a stupid act to begin with, and now I know it is a
stupid act, if it can conjure up something like this. It is not in the
public interest.
So, Mr. President, I am now satisfied that I was right. I signed this
bill and approved it, except for this provision. I urge everyone to
read it, section 3006. If there is anything that demonstrates we need a
new Budget Act, this is it, if people can sit in the basement of the
White House and dream up a charade like this and say that it balances
the budget. This is why people don't believe us. They really don't
believe us, because they think we play funny games with their money,
and this demonstrates they are right, Mr. President, unfortunately.
I will swear to you--I am glad you came, Mr. President, because I
would be hard pressed not to approve the point of order that is raised
by the Senator from North Dakota, and I would have hated to be in that
chair and to have said what I don't believe. I am not saying you have
to believe it either, Mr. President, just follow what the
Parliamentarian tells you and we will pass this bill, and we will live
to the year 2000.
Meanwhile, someone has to put down a marker on these people. They
have to stop using smoke and mirrors. That is why we don't have a
balanced budget now, because people play games with money, and those of
us who don't have much money don't understand it.
It took me a little time to find out what they were trying to do, I
say to the Senator from New Mexico. I see him smiling a little bit. He
is my great friend, and I know he is embarrassed to have to carry
someone else's brainchild like this. I hope we will find some way to
stop this business, to give us a chance to deal with straight up-and-
down money, and straight up-and-down provisions and not more smoke and
mirrors.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, I just say to my good friend--who is my
good friend, perhaps one of the best here--there are plenty of smoke
and mirrors in the appropriations bills, and I am not here saying we
should abolish the appropriations process. If you would like a debate
someday, we will go through 20 bills, and I will find you more smoke
and mirrors than $3 billion in any given year in the appropriations
process. I yield the floor.
Mr. STEVENS. Mr. President, if the Senator will let me have a couple
minutes, it would be nice to have this discussion. There are no smoke
and mirrors in the appropriations bills. We sometimes have devices in
order to enable us to meet the objectives of the Budget Act, but we
never end up by appropriating money to an account that is not
controlled by the Federal Government, nor do we give up interest on
that $3 billion for a year and expect just to get the straight $3
billion back. If there is something like that going on in an
appropriations bill, I don't know about it.
He is right, we have our devices for making sure that we have control
on spending money, and sometimes that is subject to criticism, similar
to what I have just given him.
Mr. DOMENICI. I appreciate that. That is plenty for me. I appreciate
it very much.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. Mr. President, I thank the distinguished Senator from
North Dakota, the Senator from West Virginia, and the distinguished
chairman from the Appropriations Committee, the Senator from Alaska, as
to the point being made relative to the universal service fund.
In the 4-year tour of work of trying to reconcile and bring up into
the modern technological age communications law, there was one thing
that was sacrosanct and generally agreed upon by everyone--and there
really are no exceptions to it, because it was sort of a private
endeavor. I know the distinguished occupant of the chair believes very
strongly in the private market and the forces of private industry vis-
a-vis those within the Government. But those within the
telecommunications industry, years back, by way of the entities in
which they belong, determined the volume of business, and with that
volume of business and the costs, they then factored in each month
through this private universal service fund the amount to be
contributed thereto. And it is operated that way. From time to time the
FCC has rules and regulations about it, but, generally speaking, it is
a well-administered fund, not participated in, really, by Government
law. The Government does not say or the 1996 Telecommunications Act
does not require this.

So it came with some amazement that, in all the machinations in
trying to work for the Balanced Budget Act of 1997, we were hearing
that they were going into the universal service fund. We raised the
point in discussions. We had resolutions about it. We put amendments
up. And we thought we had gotten the clear, crystal word through to the
negotiators and conferees. Now it appears that that has been
disregarded.
For one, we can see what was really bringing it about. They came in
with the spectrum auctions, which this Senator and the Senator from
Alaska

[[Page S8339]]

joined in in the original instance, tried to raise money and factor in
the market forces. But we have found in the more recent auctions that
we sort of are scraping the cupboard dry or bare, as the expression is,
whereby on an auction of last year, agreed upon in October to bring in
$3.9 billion, only factored in or received $13.1 million instead of
billions up there--few millions. So when they came with the factored-in
$26.1 billion in spectrum auctions, they realized that the
Congressional Budget Office, and anyone else estimating it, was going
to have to downgrade it, so they put in a catchall, the universal
service fund with a blank amount, until now, I guess. It is marked at
the desk.
I understand from the debate it is $3 billion. This cannot happen.
You do not want to take what is really working and turn it into a slush
fund for budgeteers or for conferees or for any other kind of nonsense
that is going on along here--smoke and mirrors, as they call it.
So I am glad the point is being made here in a most eloquent fashion
by the distinguished Senator from North Dakota, Senator Rockefeller of
West Virginia, and now Senator Stevens, who was the ranking member on
our Commerce and Communications Subcommittee for many, many years. We
worked in this field. We fashioned out some funds that would be
available for the schools, for the libraries, the hospitals, and
otherwise.
We really have, I would say, one of the finest elements of the 1996
Telecommunications Act, passed by a vote of 95 Senators here in this
body, that the outstanding innovative feature was the agreed-upon
embellishment of the universal service fund in order to bring in the
libraries and schools and hospitals and otherwise of America, to bring
to all of America communications services in the Internet and
otherwise.
Now, we just passed that early on, and we turned our backs, and,
heavens above, budgeteers have turned it into a slush fund. I hope that
does not occur. I hope the point is made. I do appreciate the
leadership of our colleagues who pointed it out this afternoon.
I yield the floor.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. I appreciate very much the comments made by the Senator
from West Virginia, the Senator from South Carolina, the Senator from
Alaska, the Senator from Arizona, and others. I say that the Senate
minority leader, Senator Daschle, feels very strongly in opposition to
this particular provision.
I was very careful when I began this discussion. I was not critical
of the distinguished chairman of the Budget Committee. I said that I
thought they had brought a product to the floor that is a compromise
which represents the best of public service.
There is much in here to commend this. I am going to vote for this.
This is what we are going to vote on. It is a pretty good piece of
work. This page is what I am talking about, coming right out of the
middle of this provision, ``Universal Service Fund Payment Schedule.''
There was a story once about a fellow--I do not have backwoods in
North Dakota. In fact, we rank 50th in America in the amount of our
native forest lands. So we do not have any backwoods stories. But down
in your part of the country, we hear all these backwoods stories.
There was a story I heard once about a fellow that came over a hill
in the backwoods, and he found a couple of old codgers there sitting
over a pot that was hanging over a fire, and they were making
something. He said, ``What are you fellows making?''
They said, ``Stew.''
``What kind of stew?''
``Horseradish stew,'' they said.
``How on Earth do you make horseradish stew,'' they asked.
``Well,'' one said, ``You take one horse and one radish.''
That is the menu here--``horse'' and ``radish.''
You have to look through this whole thing to find out what has been
brewed, what has been cooked. And I like a lot of this. I think a lot
of this advances this country's interests. The provision I brought to
the floor today to talk about is a terrible provision. It is a terrible
provision and ought not be here.
Mr. President, I heard discussion earlier by the chairman of the
Senate Commerce Committee, chairman of the Senate Appropriations
Committee, and others, that there will be legislation--first a hearing,
and then legislation to deal with this. We may never again be back at
this intersection, an intersection where we are having to come to the
floor to say, ``You can't use money, you can't count money that never
comes to the Federal Treasury as part of a calculation to balance the
budget.'' Why, in my hometown of 300 people, you would be laughed out
of the cafe in 2 seconds. You can't count money that does not come to
the Federal Government.
So, despite the fact that I am going to offer a point of order under
the Byrd rule--and my understanding is that I will probably not
prevail--I do not intend to ask then for a vote to appeal the ruling of
the Chair. I will accept the ruling of the Chair as a ruling, and will
disagree with it, I suspect, if the ruling is what I expect it to be.
But I will say this: I expect us never to be back to this intersection
because I expect that those of us on the authorizing committee who know
what the fund is and what it is for and what it is about, we will never
again allow a discussion to go on somewhere in the bowels of this
building in which OMB and CBO bring to the table a menu of items that
say, ``By the way, here is a way to count money to make things look
different than they really are.''
I say, the Senator from New Mexico talked about this being a White
House creation. My understanding is that, indeed, the Office of
Management and Budget and the White House have agreed that this
provision is part of this budget process. In fact, the latest
provision, which is, I think, the third provision of this type, this
was, in fact, brought to the table by the White House. Originally, I
understand it came from the Congressional Budget Office, agreed to by
the Office of Management and Budget. But notwithstanding what its
conception was, I think it is terrible, terrible public policy, and I
hope that we never again are at this point.
I think the discussion we have had is a useful discussion, which has
served notice to every Member of Congress that while we cannot get at
this provision at this point, there will be a time when we will no
longer debate this because we will have changed Federal law to prevent
this sort of thing from happening.
Mr. BURNS. Mr. President, the Federal Government should not
manipulate the universal service fund to balance the Federal budget. I
believe this for several reasons.
The provision in the conference reconciliation package which
manipulates the Federal universal service fund and allows the Federal
Government to use this fund to balance the Federal budget is
outrageously bad policy, and is, I believe, an unconstitutional
takings.
In States like Montana, the universal service fund is absolutely
critical to the provision of basic telephone service at reasonable and
affordable rates. However, lately it seems that this fund is becoming
the ``ox that gets gored'' to resolve a variety of high profile
problems or issues. Universal telephone service is a privately funded
support system that works without Federal monetary aid. Unfortunately,
due to its present on-budget status, this privately financed program is
subject to the whims of the budgeteers. A couple of months ago, the
FCC, at the urging of the Vice President, decided to add a further
burden of $2.25 billion a year on the contributions to the fund to pay
for linking schools, libraries, and rural health care facilities to the
Internet. Now the Congress, by this reconciliation package, is seeking
to balance the budget at the cost of universal telephone service. This
will have extremely negative impacts upon basic telephone service in
rural and remote areas of the country which depend upon the fund to
keep prices for telephone service reasonable; consequently, here we
are, in the name of balancing the Federal budget, effectively raising
rates for telephone service for all customers who happen to live in
states like mine. This effectively targets the rural customers and is
simply unacceptable. Sound telecommunications policy must not be
manipulated to comport with fleeting budgetary concerns. Rural
Americans--and those others who receive affordable

[[Page S8340]]

service as a result of universal telephone service--must not be
subjected to the uncertainty of this process.
Furthermore, I believe that, even if this provision were not such
outrageously bad policy, we should not adopt it because it will likely
be struck down by the courts as an unconstitutional taking of private
property. Contributions to the Federal universal service fund are made
by telephone companies and wireless telephone providers and, as such,
are not the property of the Federal Government. The Telecommunications
Act clearly establishes the manner in which universal telephone service
funds are to be collected and disbursed. Pursuant to the act, universal
telephone service moneys logically should not be classified as either
Federal receipts or Federal disbursements and thus should not be
associated with the Federal budget, as the administration has insisted,
and as some in Congress have allowed. Clearly these are not Federal
funds.
Thus, the Federal Government's use of these funds interest free is,
in effect, a governmental taking of that interest. Consequently, I
believe that a constitutional challenge to this provision will likely
be successful. Regardless, there is one thing of which we can be
absolutely certain: this provision will end up in the court system,
thus wasting phone company, and by extension phone company customer,
and taxpayer money. Folks, this provision is a bad idea for any of a
number of reasons, and I urge my colleagues to join me in opposing any
efforts by either the administration or Congress to use the universal
service fund to balance the Federal budget.
Additionally, this ill-advised raiding of the universal service fund
sets an absolutely terrible precedent. While I am confident that the
budget agreement is based on sound numbers, what will happen if the
economy takes a turn for the worse and the economic assumptions on
which the balanced budget plan is based come up short? Will the
budgeteers not look to increase the amount of money that is borrowed
from the universal service fund? Even if that's not the case, and even
if the money borrowed from the fund will be repaid, this amounts to a
back-door tax increase levied on every American through his or her
telephone bill. I don't believe that we need to raise taxes in order to
balance the budget--that's why I joined every other Republicans member
of Congress in voting against the ill-conceived Omnibus Budget
Reconciliation Act of 1993--but if we're going to raise taxes, we ought
to be forthright about it. This scheme to raid the universal service
fund is anything but forthright.

universal service

Mr. KERREY. Mr. President, I support the Dorgan point of order
against the provisions in the reconciliation bill which manipulate the
universal service support system to create a book-keeping gimmick which
is disguised to look like deficit reduction.
Universal service support is the complex system of intercompany
payments between phone companies designed to ensure that telephone
rates are reasonable and affordable. The universal service support
system assures that phone rates and services are comparable in rural
and urban areas. This system of payments and shared costs does not
touch the U.S. Treasury.
For the first time, the reconciliation conference agreement would
manipulate the universal service support system for budgetary gains.
This is a terrible precedent which if abused will drive up phone rates,
especially for rural Americans.
The idea of universal service is profound. It is one of the most
fundamental principles of telecommunications law and economics. The
concept was introduced in the original Communications Act of 1934 which
promised ``to make available to all Americans a rapid, efficient,
nationwide and world-wide wire and radio communications service * * *''
From 1934 to 1996, regulation and monopoly were the primary means of
ensuring telephone services to all Americans. In 1996, the Congress
embraced the idea that competition would best deliver
telecommunications services to all Americans at affordable rates.
The Congress also recognized that there were some markets which
competitive companies would not serve and some areas where costs are so
high that rates would drive citizens off of the phone network. In those
markets, universal service support would keep rates affordable and
comparable to urban areas.
The principle of universal service is that all Americans should have
modern, efficient, and affordable communications services available to
them regardless of where they live.
Universal service support is not a subsidy, and it is not a tax. It
is a shared cost of a national telecommunications network.
What makes the American phone network valuable is that almost anyone
can be reached. Affordable phone service is not just important to the
citizens of Valentine, NE or Regent, ND, it is of value to the citizens
who live in New York, Chicago, and other urban areas who need to reach
Americans in all 50 states.
The basic bargain of the Telecommunications Act of 1996 was that the
gates of competition would open, provided all telecommunications
carriers contribute to the support of universal service. Under the act,
support would be sufficient, predictable, and the burdens would be
shared in a nondiscriminatory manner.
To assure that all Americans shared in the benefits of the
information revolution, the Congress also adopted the Snowe-
Rockefeller-Exon-Kerrey amendment which provided for discounts to
schools, libraries, and rural health care facilities. The bottom line
was that no American would be left behind.
The precedent that the reconciliation conferees have set is
dangerous. It threatens to undermine the promise of sufficient and
predictable support for universal service. It does so to gain a smoke
and mirrors bookkeeping advantage in the budget.
If the universal service support system is manipulated for this
purpose, consumers will lose.
The very system which assures affordability should not be jeopardized
by an attempt to avoid the real choices necessary to produce a balanced
budget.
Mr. DOMENICI. I ask the Senator, are you ready to at least make your
statement about this? I understand your points. I hope everybody
knows--I should have gotten recognition. Are you through?
Mr. DORGAN. I ask the Senator from New Mexico if he could hold for a
moment. I will be happy to yield the floor and take a moment.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. DOMENICI. I would like to ask the Senators, we have now been on
this bill since 12 o'clock, which has been for 5 hours, 25 minutes, all
of which I believe is counted against the 10 hours. I very much wonder
what Senators would like to do with reference to the bill.
Are there more Senators who would like to speak? The bill is not
subject to amendment. There is a list of Byrd rule violations that is
around. It is not hidden. I just am wondering what the pleasure of the
Members is. I think that most of the Byrd rule violations have been
clearly worked by Democrats and Republicans and are consistent with the
bill and should be waived. But we cannot do that without conferring
with a number of Senators, including the distinguished Senator Byrd, in
due course.
There is a conference going on, so I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DORGAN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DORGAN. Mr. President, I appreciate the indulgence of the
chairman of the Budget Committee. I was prepared to make a point of
order, a Byrd rule point of order, on this universal service provision.
I am persuaded that making a point of order, in which the
Parliamentarian would likely rule that this provision is not violative
of the Byrd rule, would put us in the position of having a ruling by
the Chair blessing an approach that I think deserves not a blessing but
condemnation. So I am not going to proceed to make the point of order.
I am persuaded to decide that by the fact that the Senator from
Arizona, the

[[Page S8341]]

chairman of the authorizing committee, of which I am a member,
indicates, first of all, a determination to hold hearings in support of
changing the law to prevent this from occurring again and statements by
the Senator from Alaska, Senator Stevens, and Senator Rockefeller and
others, including Senator Hollings.
It is clear to me that we will not likely come to this point again.
We will likely see a law change that says universal service funds
cannot be used for this purpose. For that reason, I will not require
the Chair to rule on a Byrd rule point of order on the universal
service provision because I simply don't want anybody to believe there
was any blessing applied to this approach in this piece of legislation.
Let me make one additional point. The Senator from New Mexico made a
point some while ago, and I suspect he thinks that we are here in some
ways jabbing away, and so he made a point that, gee, this isn't the
only place this stuff goes on. Everybody in the Chamber would agree
with that assessment. We understand that there are games and there are
games. We also understand that this piece of legislation, the
reconciliation bill, this year provides significant traction toward the
goals we all want for this country: getting our fiscal house in order,
making the right investments, cutting spending, and doing other things.
I understand all that.
My point was--and I was not critical of the Senator from New Mexico--
there is a provision right in the middle of this, which is a tiny
provision, that is fundamentally wrong and ought to never be put in a
piece of legislation like this. I am now believing from this discussion
this afternoon that we will not likely be forced to discuss this again
on the floor of the Senate, because those of us who are involved in
describing what a universal service fund was in the Telecommunications
Act will join and conspire, in a thoughtful way, to change the law, so
no one--OMB, or CBO, or anyone--can misinterpret whether those revenues
touch the Federal Government. They do not and they cannot, therefore,
be used to plug some kind of a hole in the budget process.
Mr. President, I yield the floor.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, I yield myself 5 minutes. First, while
Senator Stevens is on the floor, he has made some very good points,
and, certainly, the distinguish Senators on the Democrat side have made
some good points. The Senator from New Mexico wants to do nothing in
this budget bill that will adversely affect our movement toward
universal service. There is no intention in this budget reconciliation
bill, which I ended up agreeing to--and I have already explained why--
but there is nothing in it that is going to deny the march toward
universal service that is prescribed and was your thoughtful, visionary
idea, Senator Stevens. I just ask you, so we have the record straight,
is that your interpretation, also?
Mr. STEVENS. Mr. President, I say to the Senator from New Mexico that
we have studied this and there is no impact on any universal service
provider or universal service beneficiary that is adverse. There may
actually be a beneficial effect, in terms of some of the providers. But
it is not a provision that harms universal service. It is a provision
that tinkers with the funding of universal service, but not adversely
to the system. I will agree with that.
Mr. DOMENICI. Now, Mr. President, might I say while a number of
Senators are present--and hopefully others have access to what we are
saying--we have now been on this bill on the floor for 6 hours, or we
will be in 15 minutes. As everybody knows, there are 10 hours on
reconciliation. Frankly, there are no amendments in order, and,
clearly, the Senator from New Mexico will stay here if there are other
speeches or other comments that people want to make. But I very much
think we ought to be able to vote at a time certain tomorrow morning.
Now, I am just wondering if there is anybody who--Senator Byrd?
Mr. BYRD. Mr. President, I thank the distinguished Senator. I have a
question. Under the rule with respect to extraneous material, I read an
excerpt therefrom:

The Committee on the Budget of the Senate shall submit for
the Record a list of material considered to be extraneous
under subsections b(1)(A), b(1)(B), and b(1)(E) of this
section to the instructions of the committee as provided in
this section.

Is that list available?
Mr. DOMENICI. Senator Byrd, that list is not only available, it has
been sent to the desk in accordance with the statute.
Mr. BYRD. May I see a copy of it?
Mr. DOMENICI. Yes, indeed. This is the list that we submitted.
Mr. BYRD. I thank the distinguished Senator. Now, I have been
supplied by the minority with a list of extraneous provisions, and it
appears that, on a cursory examination, they are not the same; the two
lists are not in agreement on all fours.
Mr. DOMENICI. Senator, we don't know what might be different, but we
are certainly willing to look and see what is different. We have been
in contact with them and working together, as you might suspect.
Mr. BYRD. Mr. President, I think if there is going to be a list, it
should be a complete list, and I am only raising the question because I
have been supplied with two different lists--one list by the minority
and one by the majority--and there may be some of the same things on
both lists, but I am not sure. It appears to me that some of the items
on the minority list are not on the majority and perhaps vice versa.
Could we have a clarification of this matter?
Mr. DOMENICI. Staff for the minority is approaching. I will ask him
the question.
Could I get a quorum call?
Mr. BYRD. Absolutely.
Mr. DOMENICI. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DOMENICI. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Mr. President, I yield to the other side.
Mr. REED addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
Mr. REED. Mr. President, I request such time as I may consume from
the Senator from New Jersey.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Could the Senator kind of guess? How much; 15 minutes?
Mr. REED. No. Close to 5 minutes.
Mr. DOMENICI. Why doesn't the Senator ask for up to 10?
Mr. REED. I ask for 10 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REED. Thank you, Mr. President.
Mr. President, I rise to speak in favor of this bill. As one who
voted against the Senate version of this legislation, I am especially
pleased today to be able to support this initiative--an initiative
that, among other things, provides 10 years of solvency to the Medicare
Program, and makes a substantial investment in the health care of our
children. I would like to remind my colleagues that we were able to
craft this agreement because of the tough vote that I and others cast
in 1993 for President Clinton's deficit reduction plan--a plan that has
reduced the deficit from almost $300 billion to approximately $40
billion or perhaps lower.
I am particularly pleased that this bill makes a remarkable
investment in the health care of our children by providing $24 billion
to States to spend for children's health care. This new program
represents the most significant and far-reaching expansion in our
social programs since the passage of Medicaid and Medicare in the mid-
1960's. These children's health provisions will give our children the
healthy start that they deserve, and the healthy start that is
necessary to help young people become effective students and help these
students become effective workers, and help all of us raise a
generation of American citizens who will serve this country and lead
the world.
Congress is committing significant resources to children's needs. And
now we must turn our attention to the days ahead to ensure that these
resources are used wisely. I remain cautious about this new initiative.
As with any investment of our taxpayer's dollars,

[[Page S8342]]

the Federal Government needs to ensure that the investment is well
spent. The plan which is being offered today provides a wide array of
options and benefit plans with a high degree of flexibility. And it is
crafted in a such a way that it could perhaps be gamed--not for the
benefit of the children but for the benefit of those who will be
enriching themselves from the system. As this program is implemented,
we need to provide adequate oversight to ensure that the children are
the beneficiaries of this program, and that they receive the benefits
they need, that their health care is protected, and that we as a Nation
can prosper. The Secretary of the Department of Health and Human
Services, along with the Congress, has her work cut out for her. And
together we must ensure that this program is implemented wisely and
benefits the children that we so desperately and appropriately want to
serve.
In addition, this conference agreement makes significant changes in
the Medicare Program. Most importantly, this bill brings 10 years of
solvency to the Medicare Program--a program that more than 30 million
Americans depend upon, and that more than 170,000 Rhode Islanders
depend upon.
Like the amendment I offered during the debate on the Senate version
of this bill, this legislation does not include the provisions which I
believe take the wrong approach to solving our Medicare problems--
provisions like raising the eligibility age, means testing for the part
B premiums, and a home health copayment for home health services. This
legislation strikes those provisions, as my previous amendment struck
those provisions.
A home health care copayment would have negatively impacted the
sickest and poorest of Medicare beneficiaries. And an increase in
Medicare's eligibility age is a step in the wrong direction. Simply
put, raising the eligibility age for Medicare increases the ranks of
the uninsured. Already, 13 percent of the 21 million people age 55 to
64 lack health insurance. It makes no sense at all for Congress to
eliminate Medicare as an option for seniors who have nowhere else to
turn. These and other issues will be debated in the context of long-
term Medicare reform as we address the problems faced by Medicare for
the next generation.
During the Senate debate on this bill, as I indicated, I offered an
amendment to strike these provisions. My amendment failed. But I am
glad to see that today we have reached an agreement which protects
Medicare, extends the life of the program for at least 10 years and
does not attempt an ad hoc approach to structural reform.
This bill includes many improvements to Medicare. For example, it has
expanded preventive health care benefits for mammography, pap smears,
diabetes, prostate, and colorectal cancer screening, bone density
measurements, and vaccines. This bill also requires the Medicare
Program and managed care plans to give more information to
beneficiaries about their choices and their coverage, and the quality
of that coverage. All of these are welcome developments.
I am also pleased that this bill contains $1.5 billion for protecting
low-income Medicare beneficiaries against an increase in Medicare
premiums. However, I am disappointed that this comes in the form of a
block grant to the States that ends after 2002. This approach has the
potential to fall short of providing real protection for low-income
Medicare beneficiaries. Any increase in Medicare premiums can result in
significant hardships for low-income seniors, and these individuals
deserve a permanent guarantee of protection.
This bill also includes numerous changes in Medicare reimbursement
policies--changes that will have a great impact on those individuals
and institutions that provide health care to Medicare beneficiaries. I
will keep a vigilant eye on the implementation of these changes, paying
particular attention to their impact on the access to and quality of
care provided to Medicare beneficiaries.
This legislation also establishes a bipartisan national commission to
examine the long-term solvency of the Medicare Program. The creation of
this commission lays an important foundation to work on long-term
reforms and solutions, and to tackle those issues that are not suitable
for the narrow confines of a budget debate. Such reform is needed to
address the challenges that the Medicare Program will face as members
of the baby-boom generation become recipients of Medicare. This
commission provides that framework, and I am encouraged that the
commission is established by this legislation.
I am prepared to vote in favor of this bill. As with any piece of
legislation, it is not perfect. Indeed, many individuals will benefit
from various provisions of the bill. Medicare beneficiaries will have
the security of an additional 10 years of solvency in the program. The
families of uninsured children will now have new State programs to turn
to. Medicare beneficiaries will have new choices and increased
preventive health care benefits.
But this is no time to rest on our laurels. To ensure that Medicare
beneficiaries continue to have access to high-quality care in the face
of constrained payments to providers, to ensure that the $24 billion
for children's health care is well spent, and to ensure the long-term
viability of the Medicare Program, we will need continued vigilance on
the part of many, including the Congress, the Secretary of Health and
Human Services, and those persons served by the Medicare and Medicaid
Programs.
We also must recognize that within this budget, as we continue to
draw down discretionary spending over the next several years, harder
and harder choices will ensue. We have to ensure that we make the right
choices. We have to ensure that the spirit today--a spirit that reaches
out to help our children, a spirit that reaches out to help and
maintain our seniors--will be the spirit that dominates our future
budget deliberations as it has ennobled our past efforts to strengthen
America.
I yield the remainder of my time.
Mr. COATS addressed the Chair.
The PRESIDING OFFICER. The Senator from Indiana.
Mr. COATS. Mr. President, on behalf of Senator Domenici, I yield
myself up to 15 minutes. I don't believe I will take that long.
But I also ask that the Senator from Montana be allowed to take a
minute to introduce legislation.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BURNS. I thank my friend from Indiana.
(The remarks of Mr. Burns pertaining to the introduction of S. 1090
are located in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
The PRESIDING OFFICER (Ms. Collins). The Senator from Indiana.
Mr. COATS. Madam President, I don't believe I will take all 15
minutes.
I want to express, however, the reason I am voting against this
budget agreement. When the budget resolution came before the floor of
the Senate initially, I voted against it because it did not contain the
entitlement reforms--the structural reforms that I felt were absolutely
necessary if we are ever going to have a sustained, consistent effort
at balancing our budget. Clearly, we all know that the entitlements--
the mandatory spending--have not been structurally reformed for a long,
long time, and we are on a collision course with their ability to meet
the demands on those funds in the future. Some changes were made in
this bill. I want to talk about those in a minute. But they were not
the structural reforms.
Then when the budget reconciliation bill came before the Senate, I
supported the budget reconciliation bill because the Senate had the
courage to stand up to the plate and address the need for entitlement
reforms. I doubt that there is a Member of this Congress, House or
Senate, or anyone else who has paid attention to this issue, that
doesn't recognize that this is something that we have to do. We are on
a collision course with bankruptcy for Medicare.
We hear all of this wonderful talk about preserving Medicare for the
benefit of our elderly. Yet, the quality of Medicare services continue
to decline because we continue to impose restraints and restrictions on
the providers, and it squeezes the quality of care. And we fail to have
the will to step up to the plate and deliver any kind of structural
reform in the program--even reform that takes place well into the next
century. The Senate addressed that issue. The Senate by a fairly
substantial vote passed legislation which

[[Page S8343]]

would begin that process of structural reform. So I supported the bill
on that basis, hoping that it would survive conference. Due to a number
of factors which I will talk about, it didn't survive. And it is back
here now without those reforms.
All the wonderful promises and rhetoric about addressing the Medicare
problem is more of the same that we have been promising for the last
several budget resolutions, most of which has not come to fruition.
So I approach this conference spending bill with a sense of sadness
and feeling of resignation--a sense of sadness because I know that the
Senator from New Mexico and others who have been involved in this
process have worked very, very hard to put together a bill which moves
us toward a balanced budget. They have incorporated a number of
provisions in here which I believe are important provisions, and
provisions which I support; but a sense of sadness because we have
dropped in the negotiations what I think were the most important parts
of this budget reconciliation bill--the structural reforms and
entitlements.
It is entitlements that are eating up our revenues. It is the
entitlements, were it not for a booming economy which is pouring
revenues into our coffers for the present time--it is the entitlements
which would be squeezing other aspects of the budget, whether you are
for education, or roads or safe water, or environmental issues, or a
whole number of other things. Those are being squeezed because we don't
have the political will and courage to address the entitlements.
It is resignation that I feel because lasting structural reform of
Government spending seems to be beyond the ability of the Congress and
the executive branch.
The measure before us today is significant not for what it contains
but for what it does not contain--commitment to fundamental
institutional change. And that failure is most obvious, as I have said,
when we look at the entitlement parts of this bill.
Here, for whatever reason--probably a lack of political will--we have
dropped the three measures which maybe signaled the best hope of future
ability to contain entitlement growth. Instead, we have what is
estimated as a $115 billion reduction in Medicare spending, but this is
an evasion, not a reform, because these projected savings are achieved
by the typical way we have done this: decreasing payments to providers.
It has been tried over and over again, and it has failed. Costs have
continued to rise under reduced payment schemes while the quality of
care has decreased.
The plan also shifts the home health care program, the fastest
growing part of Medicare, from Medicare part A to part B. That is a
shift, at taxpayer expense, by the way, that simply delays the overall
failure of this program by not reforming its faults but simply making
it sustainable. In addition, the measure drops the Senate provisions
that would have set the stage for future reforms, measures that, as I
said, were adopted as a result of the leadership of Senator Gramm, who
offered the amendment, and support on a bipartisan basis--Senator
Kerrey of Nebraska and others--for these reforms. The Senate bit the
bullet. The Senate exercised the political will. The Senate put itself
out on a limb only to see all of these reforms dropped in these
negotiations.
Means testing provision dropped, the increase, very gradual increase
in eligibility from 65 to 67 that would not affect anybody 46 years of
age and older, and the increase in copayments for home health care
service dropped, all killed, and along with that any hope for
meaningful reform.
The President bears some of this responsibility, a lot of this
responsibility, because we all know that we cannot accomplish this
without Presidential leadership, and that leadership was tepid at best.
There was no sustained active involvement on the part of the executive
branch and the President to bring about these reforms. And support from
the House, not this body, but support from the House was weak, and I
regret that. It falls on the shoulders of both parties.
Left unchecked, CBO projects that Medicare spending will explode to
$470 billion a year by the year 2007, representing an average annual
increase of 8 percent over the next 10 years. This is a growth rate of
nearly double the estimated growth of the overall economy for the same
period. In the period from 2010 to 2030, when 80 million baby boomers
move into retirement, Medicare's expenses are expected to surge to 14
percent of our gross domestic product as compared with 2.5 today. This
cannot be sustained. This is a train coming down the track headed for a
wreck, and yet time after time after time, as we are faced with the
prospect of that train wreck, we blink. We pass it off to the next
Congress and the next Congress, and we defer and pass that debt off to
future generations.
The $115 billion in promised reduced payments does nothing to avert
this long-term disaster. By dropping the reforms passed by the Senate,
budget negotiators have brought the looming crisis one step closer to
reality. And just yesterday in the Washington Post, there was an
article entitled, in fact, ``Billions Wasted, Medicare Audit Says.''
The article opens by stating that nearly 40 percent of the home health
care services provided to frail elderly Americans under the Medicare
Program are unjustified either because the service is not necessary or
the agency administering the care is not sanctioned to do so or the
person is not covered--40 percent. I think the figure was $23 billion a
year in fraud and waste and abuse of one part of the Medicare system.
We had a provision in the bill that began to address the problem, and
we passed on it. We could not even turn to seniors and say that the
program which benefits you, home health care--and I used that for my
father when he was home in need of that health care--the program that
benefits you is so fraught with waste and abuse it is jeopardizing the
entire Medicare system. And yet, the Congress refuses to even impose
the most minimal of corrections to try to address that problem.
So what do we offer our seniors? A so-called bipartisan commission to
study the problem. Madam President, there is nothing left to study. We
have studied this thing to death. The problem is not a lack of
knowledge. It is a lack of political will. Confronting the Medicare
crisis will take political courage and it will take sacrifice. But
these values, which should come easier in a time of economic growth and
prosperity, are absent in the spending plan. That is to say nothing
about Social Security. That is another problem that we don't even touch
here and we also need to address.
All of this, as I said, is deeply disturbing, but then when you add
to that a new entitlement program, a $24 billion health care
entitlement, paid for with a tax hike on cigarettes and tobacco, you
compound the problem--not because we do not need a health care program
for children; we do, but because this one was designed with no rational
basis. It was created without an assessment of the need. The level of
funding was arbitrary. We were throwing figures around here--how much
can we add? How much can we subtract? Pulling figures out of thin air
in a mindless bidding war rather than having an adult policy debate.
We are creating in this measure future entitlement problems that we
cannot even imagine because we have not taken the pains to consider
those problems.
I am not speaking against the need for health care for children. I am
saying let us determine what the need is and tailor a program that
addresses the specific need without just throwing a new entitlement
program in place that will probably go the way of all other entitlement
programs and that will grow beyond our means to check it, and we will
not be able to put reforms in that either.
What is absent from this agreement is any type of fundamental,
lasting structural reform in our Government and its spending. That
reform is now possible because of the strength of our economy. This is
when we ought to be putting these reforms in place.
We always hear that we cannot make structural reforms during times of
economic slowdown, because that would have too much negative impact on
our economy. And now we hear the argument that we cannot make reforms
during economic prosperity because it is too difficult, because a
strong economy signals to us that we do not need to make reforms. We
will just reap the benefits of the new revenues that are

[[Page S8344]]

coming in. And so when the economy is down, we cannot do it because it
hurts the economy, and when the economy is doing well, we say we do not
need to do it; there is no sense of urgency anymore.
Our entitlement crisis is lurking around the corner, just below the
surface of this strong economy. The same irrational and bloated
bureaucracies that choke our economy in hard times hide in the shadows
of economic boom because this legislation does nothing to reform and
limit the Federal Government.
Sooner or later the economy is going to slow. I wish it would not,
but it will. And when it does, the reckoning will be even more severe.
We have squandered a unique opportunity--a President who is not running
again, a Congress led by Republicans who are willing to walk out on a
limb again for entitlement reform, who will support a President if he
would just provide leadership on entitlement reform, a prosperous
economy where people are at work, revenues coming in.
Is there ever going to be a better time to bring entitlement reform
to our budget process? I doubt it. And yet we are squandering this
marvelous opportunity to make changes now that will be incremental and
small in nature but will provide great dividends and great benefits for
the future. Instead, in the interest of political expediency, we
postpone those tough decisions to a future Congress, to future
generations, and we look myopically at the immediate election
consequences, what we perceive them to be. I do not believe they are
there. I think people are looking for politicians who will exercise
political will, make the tough decision, step up and do what is right,
and I think they will be rewarded in the polls. Instead, we say let us
pass on this one more time.
We will never have a better moment. We will never have a better
opportunity. We will never be in a position where we are 3 years out
from a general election, more than a year out from the next off-term
election, with an Executive who does not ever have to stand for
election again in his life, with a Senate that has already made the
decision to go out on the limb. We will never be in a better position,
and yet we have squandered this moment.
For that reason, for all of the hard work that the Senator from New
Mexico and others have put in this agreement, for all of the benefits
in this agreement and the positive things in this agreement, I cannot
support this resolution, because my litmus test, as I stated when I
voted against the budget resolution and for the budget reconciliation,
included entitlement reforms. But now, because they have been drawn
out, that litmus test was not met.
That is a minimal litmus test. I was willing to accept minimal
reforms, anything, anything that moved us in a path of structural
reform, addressing a problem that we know is going to impact negatively
on the people of this country and the economy of this country. We know
it passes on debt to future generations. We know it places our elderly
people in a precarious position for the future of Medicare. And yet at
this golden time, which may not come again, for political expediency or
whatever reason--I wasn't in the budget negotiations--we once again
pass, we once again take a powder on this and say we will do it another
time; let's form a commission; let's study it some more; let's have
some more recommendations.
How many studies, recommendations and conditions do we have to put in
place to keep telling us what we already know?
So, Madam President, I know I am a skunk at the party here, the
celebration for the passage of this so-called balanced budget
agreement, and I hope it does balance the budget, and it may, mostly, I
think, not because of new spending we put in place but because the
economy is roaring along and pouring money into the coffers of the
Government. I wish we could get more of that money back to the people
who have earned that money. Instead, we are creating new entitlements.
We passed on the opportunity to reform existing entitlements, and I
just regret that very much.
So I may be a lonely voice in this vote, but I cannot for the reasons
I have stated support this resolution.
I yield back whatever time I have remaining.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina is recognized.
Mr. HOLLINGS. Madam President, I have spoken with the distinguished
chairman of our Budget Committee. He has allocated 20 minutes. I think
I will take far less.
Madam President, when Alice in Wonderland asked the cat where they
were headed, the cat replied, ``before you decide where you are going,
you must first decide where you are.''
And as we look at this so-called Balanced Budget Act of 1997, we
should look to see, before anything is enacted, exactly where we are.
At this very minute, we have a pretty good estimate from the
Congressional Budget Office.
We know, Madam President, that as of May 19, CBO estimated the
deficit for this year, 1997, to be $180 billion. We also know that both
the CBO and the Office of Management and Budget have agreed that this
year's revenues are now exceeding their original estimates by as much
as $40 billion. So, the August estimate for 1997 will be revised to
show a deficit of about $140 billion.

The idea is to balance the budget and remove the deficit. If you are
going to remove your deficit, you have to do it one of two ways--or
both ways; namely, you have to cut back on your spending and you have
to increase your revenues or do both. The present Balanced Budget Act
of 1997 proposed increases in spending, rather than cuts in spending.
And, instead of increasing the revenues, it reduces revenues by some
$90 billion.
So, Madam President, I have studied this document, and I have to
stand here as a matter of conscience, because I have been the chairman
of the Budget Committee. I have been in the committee itself since its
institution in 1974. I cannot mislead the people with a vote that would
approve what this budget resolution is all about. I could go at length
as to the various smoke and mirrors, backloading, excessive spectrum
auctions and other deceptions contained in this bill, but let me go to
one that is not just a simple smoke or a simple mirror. The fact of the
matter is, it is an illegal smoke and an illegal mirror. Why do I say
that? We had some struggle during the original enactment of the
Greenspan Commission report in 1983. Social Security was about to go
broke, but its bankruptcy was avoided by the National Commission on
Social Security Reform. I hold a section of the report, dated January
1983, in my hand.
Section 21 of the Greenspan Commission report recommended taking
Social Security off budget. That is the core of the misunderstanding--
or the understanding. We stated categorically, in accordance with the
Greenspan Commission, that when we were calculating deficits, whether
or not we were in the red or in the black, that we would not include
Social Security trust funds.
I ask unanimous consent at this point to have printed in the Record a
table of the various pension fund moneys that have been expended and,
so there will be no misunderstanding, I would also like to include the
``Budget Reality'' table that I referred to earlier which contains the
CBO figure of a $180 billion actual deficit this year.
There being no objection, the tables were ordered to be printed in
the Record, as follows:

TRUST FUNDS LOOTED TO BALANCE BUDGET
[By fiscal year, in billions of dollars]
------------------------------------------------------------------------
1996 1997 2002
------------------------------------------------------------------------
Social Security.............................. 550 629 1,095
Medicare:
HI......................................... 126 116 -58
SMI........................................ 27 22 34
Military Retirement........................ 117 126 173
Civilian Retirement........................ 394 422 561
Unemployment............................... 54 61 77
Highway.................................... 21 23 40
Airport.................................... 8 5 -28
Railroad Retirement........................ 17 18 20
Other...................................... 60 62 78
--------------------------
Total.................................. 1,374 1,484 1,992
------------------------------------------------------------------------

[[Page S8345]]

HOLLINGS' BUDGET REALITIES
[In billions of dollars]
----------------------------------------------------------------------------------------------------------------
Annual
Unified Actual increases
President and year U.S. Budget Borrowed deficit deficit National in spending
trust funds with trust without debt for
funds trust funds interest
----------------------------------------------------------------------------------------------------------------
Truman:
1945.......................... 92.7 5.4 -47.6 ........... 260.1 ...........
1946.......................... 55.2 -5.0 -15.9 -10.9 271.0 ...........
1947.......................... 34.5 -9.9 4.0 +13.9 257.1 ...........
1948.......................... 29.8 6.7 11.8 +5.1 252.0 ...........
1949.......................... 38.8 1.2 0.6 -0.6 252.6 ...........
1950.......................... 42.6 1.2 -3.1 -4.3 256.9 ...........
1951.......................... 45.5 4.5 6.1 +1.6 255.3 ...........
1952.......................... 67.7 2.3 -1.5 -3.8 259.1 ...........
1953.......................... 76.1 0.4 -6.5 -6.9 266.0 ...........
Eisenhower:
1954.......................... 70.9 3.6 -1.2 -4.8 270.8 ...........
1955.......................... 68.4 0.6 -3.0 -3.6 274.4 ...........
1956.......................... 70.6 2.2 3.9 +1.7 272.7 ...........
1957.......................... 76.6 3.0 3.4 +0.4 272.3 ...........
1958.......................... 82.4 4.6 -2.8 -7.4 279.7 ...........
1959.......................... 92.1 -5.0 -12.8 -7.8 287.5 ...........
1960.......................... 92.2 3.3 0.3 -3.0 290.5 ...........
1961.......................... 97.7 -1.2 -3.3 -2.1 292.6 ...........
Kennedy:
1962.......................... 106.8 3.2 -7.1 -10.3 302.9 9.1
1963.......................... 111.3 2.6 -4.8 -7.4 310.3 9.9
Johnson:
1964.......................... 118.5 -0.1 -5.9 -5.8 316.1 10.7
1965.......................... 118.2 4.8 -1.4 -6.2 322.3 11.3
1966.......................... 134.5 2.5 -3.7 -6.2 328.5 12.0
1967.......................... 157.5 3.3 -8.6 -11.9 340.4 13.4
1968.......................... 178.1 3.1 -25.2 -28.3 368.7 14.6
1969.......................... 183.6 0.3 3.2 +2.9 365.8 16.6
Nixon:
1970.......................... 195.6 12.3 -2.8 -15.1 380.9 19.3
1971.......................... 210.2 4.3 -23.0 -27.3 408.2 21.0
1972.......................... 230.7 4.3 -23.4 -27.7 435.9 21.8
1973.......................... 245.7 15.5 -14.9 -30.4 466.3 24.2
1974.......................... 269.4 11.5 -6.1 -17.6 483.9 29.3
Ford:
1975.......................... 332.2 4.8 -53.2 -58.0 541.9 32.7
1976.......................... 371.8 13.4 -73.7 -87.1 629.0 37.1
Carter:
1977.......................... 409.2 23.7 -53.7 -77.4 706.4 41.9
1978.......................... 458.7 11.0 -59.2 -70.2 776.6 48.7
1979.......................... 503.5 12.2 -40.7 -52.9 829.5 59.9
1980.......................... 590.9 5.8 -73.8 -79.6 909.1 74.8
Reagan:
1981.......................... 678.2 6.7 -79.0 -85.7 994.8 95.5
1982.......................... 745.8 14.5 -128.0 -142.5 1,137.3 117.2
1983.......................... 808.4 26.6 -207.8 -234.4 1,371.7 128.7
1984.......................... 851.8 7.6 -185.4 -193.0 1,564.7 153.9
1985.......................... 946.4 40.5 -212.3 -252.8 1,817.5 178.9
1986.......................... 990.3 81.9 -221.2 -303.1 2,120.6 190.3
1987.......................... 1,003.9 75.7 -149.8 -225.5 2,346.1 195.3
1988.......................... 1,064.1 100.0 -155.2 -255.2 2,601.3 214.1
Bush:
1989.......................... 1,143.2 114.2 -152.5 -266.7 2,868.3 240.9
1990.......................... 1,252.7 117.4 -221.2 -338.6 3,206.6 264.7
1991.......................... 1,323.8 122.5 -269.4 -391.9 3,598.5 285.5
1992.......................... 1,380.9 113.2 -290.4 -403.6 4,002.1 292.3
Clinton:
1993.......................... 1,408.2 94.3 -255.0 -349.3 4,351.4 292.5
1994.......................... 1,460.6 89.2 -203.1 -292.3 4,643.7 296.3
1995.......................... 1,514.6 113.4 -163.9 -277.3 4,921.0 332.4
1996.......................... 1,560.0 154.0 -107.0 -261.0 5,182.0 344.0
1997.......................... 1,622.0 110.0 -70.0 -180.0 5,362.0 359.0
----------------------------------------------------------------------------------------------------------------
Historical Tables, Budget of the US Government FY 1998; Beginning in 1962 CBO's 1997 Economic and Budget
Outlook, May 19, 1997.

Mr. HOLLINGS. Fortunately--and we are all enthused about it--the
deficit is going to come down to about $140 billion this year. It may
come down to $135 billion, but I doubt that. I have talked to the
authorities. But we know we are spending over $100 billion more than we
are taking in. We cannot, under the law, use Social Security trust fund
surpluses to mask this deficit. The Senate voted on October 18, 1990,
by a vote of 98-2, to take Social Security off budget. It took us quite
a while in the Budget Committee, but we finally got it done. That is a
law, section 13301, signed by President Bush, to take Social Security
off budget.
So, this was a very deliberate act. I am not just trying to impassion
senior citizens or any of that nonsense. I am trying to inflame the
intellects and the consciences of the Senators. Because every Senator
present here today who was here in 1990, voted and said, I believe in
that particular policy. No Senator since 1990 has tried to change that;
there has been no amendment or bill or otherwise. We had the policy
itself reaffirmed in the Retirement Protection Act of 1994 which barred
businesses from using the pension moneys to pay the debt.
Then, the Senate passed an amendment in the budget bill, barring
corporations from pension misuse, known as the Pension Reform Act of
1994.
Madam President, when I look at this particular budget, I say how in
the world, if you are spending over $100 billion more than you are
taking in, can you remove the deficit by increasing spending and
decreasing revenues? It is quite obvious it cannot be done, except
under subterfuge, misuse, misappropriation or other fraudulent acts.
Because the Balanced Budget Act of 1997 --and we have examined the
document now--uses $465 billion of Social Security trust funds to make
it appear balanced.
There is no gimmickry here about Government moneys and buying bonds.
When you spend the money out of the fund--and that is what we are doing
because we don't have it--then it has to be replaced. Under the chart I
included earlier, you can see that over $600 billion from the Social
Security trust fund has already been expended, and now they will spend
an additional $465 billion in this bill. This means that by the year
2002 we will owe Social Security over $1 trillion.
They say, ``Oh, it's the baby boomers in the next generation that are
going to bankrupt Social Security.'' No, not at all, my colleagues. It
is the senior citizens, the adults on the floor of the U.S. Congress
that are decimating Social Security. It is going on. It continues to go
on. It is absolutely fraudulent. It is absolutely illegal.
I ask unanimous consent to have section 13301 printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

SEC. 13301. OFF-BUDGET STATUS OASDI TRUST FUNDS.

(a) Exclusion of Social Security from All Budgets.--
Notwithstanding any other

[[Page S8346]]

provision of law, the receipts and disbursements of the
Federal Old-Age and Survivors Insurance Trust Fund and the
Federal Disability Insurance Trust Fund shall not be counted
as new budget authority, outlays, receipts, or deficit or
surplus for purposes of--
(1) the budget of the United States Government as submitted
by the President,
(2) the congressional budget or
(3) the Balanced Budget and Emergency Deficit Control Act
of 1985.
(b) Exclusion of Social Security From Congressional
Budget.--Section 301(a) of the Congressional Budget Act of
1974 is amended by adding at the end the following: ``The
concurrent resolution shall not include the outlays and
revenue totals of the old age, survivors, and disability
insurance program established under title II of the Social
Security Act or the related provisions of the Internal
Revenue Code of 1986 in the surplus or deficit totals
required by this subsection or in any other surplus or
deficit totals required by this title.''.

Mr. HOLLINGS. Then, Madam President, I refer to the document itself.
They do not have to list in this reconciliation bill the annual
deficits, the outlays, budget authority, and the debt itself. But the
document of last month, the conference report, does--and I refer to Mr.
Kasich's bill: ``From the committee of conference submitted on the
conference report on the concurrent resolution on the budget for fiscal
year 1998.''
If you turn to page 4--and I am going to ask the first 15 lines, just
those 15 lines, be printed in the Record at this particular point. I
ask unanimous consent to have that printed.
There being no objection, the material was ordered to be printed in
the Record, as follows:

(4) Deficits.--For purposes of the enforcement of this
resolution, the amounts of the deficits are as follows:
Fiscal year 1998: $--173,000,000,000.
Fiscal year 1999: $--182,200,000,000.
Fiscal year 2000: $--183,200,000,000.
Fiscal year 2001: $--157,100,000,000.
Fiscal year 2002: $--108,300,000,000.
(5) Public Debt.--The appropriate levels of the public debt
are as follows:
Fiscal year 1998: $5,593,500,000,000.
Fiscal year 1999: $5,841,000,000,000.
Fiscal year 2000: $6,088,600,000,000.
Fiscal year 2001: $6,307,300,000,000.
Fiscal year 2002: $6,481,200,000,000.

Mr. HOLLINGS. Madam President, on line 1 it says, ``fiscal year
2002''; line 2, subsection 4, it says ``deficit.''
Then you look down on line 8 at ``fiscal year 2002,'' and you will
not see a balance, but a deficit of $108,300,000,000.
The reason it shows this deficit is because of section 13301, which
says you cannot include Social Security trust fund surpluses.
But, if you go down to line 15 and see that the fiscal year debt,
from year 2001 to 2002, goes up, not into balance. The debt doesn't go
into balance from the year 2001 to 2002. Instead, the debt increases
$173.9 billion. This is not a balanced budget.
It's a tragic thing that you can't get this reported. It is a matter
of fact. It is a matter of law. It is a matter of conscience. We should
all come together and say we won't use pension funds to pay off our
debt. We passed a formal rule here some time ago for all corporate
America which made this illegal. Denny McLain, the Cy Young Award
winning pitcher for the Detroit Tigers, when he got out of baseball,
became the head of a corporation, and, unfortunately, used the
corporate pension fund to pay off the debt. He was sentenced to 8 years
in prison. Tell our friend Denny, if you can catch him in whatever
prison, to please run for the U.S. Senate because, rather than sending
us off to prison here when we use the pension funds to make the debt
look smaller, we get the Good Government Award. Everybody is standing
up with the President and the Speaker and the majority leader and
saying, ``How wonderful, boys. It is Christmas in July.'' It is a total
fraud, absolute farce, and everybody ought to know it. Because what we
are doing is breaking into the airport trust fund, the highway trust
fund, the military retirees' pensions, the Civil Service retirees'
pensions, and everything else I have included in the record. There it
is. I have had it typed up.
As a matter of conscience I cannot engage in this deception. I was
always taught, some 50 years ago when I got into public service, in
1948--that public office was a public trust. I believe Social Security
is a public trust. I think the consummate 98 Senators said we ought to
make it a public trust. They said, not only for us but for corporate
America, we ought to make certain that some fast-moving merger artist
can't come in on a takeover and abscond with the pension funds to pay
the debt and pay himself a good bonus and leave everybody else hanging.
So we have it in formal law, we have it in formal policy. But, when
it comes to us, we run around and say ``unified, unified.'' There is
nothing unified. It is expended moneys in violation of the formal
statutory law of the United States of America, section 13301 of the
Budget Act.
I can't vote to violate that law and, therefore, will have to oppose
the bill.
I yield the floor.
The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
Mr. CHAFEE. Mr. President, I would like to offer my congratulations
to the leaders on both sides of the aisle, the chairmen and ranking
minority members of the Finance and Budget Committees, for all of their
hard work in consummating this very significant, bipartisan budget
agreement. While this bill is not everything I had hoped for, it is an
important step toward getting our fiscal house in order.
Moreover, it is grounded in a philosophy that I strongly believe in--
that bipartisanship is the key to making government work. On difficult
national problems, such as balancing the budget, neither party alone
can get the job done, nor garner the public consensus needed for such
action.
Indeed, this was the genesis behind establishing the so-called
Chafee-Breaux centrist budget coalition, which I believe deserves
considerable credit for advancing the terms of debate on the issue of
long-term Medicare reform. Regrettably means-testing of the part B
premium, increasing the age of eligibility from 65 to 67, and the $5
home health copayment were dropped from the final package. However, the
credit for getting them into the Senate version of this bill belongs to
the centrist budget coalition. Each of these provisions was added to
the Senate bill with a big, courageous bipartisan vote--something which
would have been unthinkable just a few years ago.
As a result of these pioneering Senate votes and the growing national
consensus on the need for long-term reform, President Clinton has now
pledged to stand with those Members of Congress who vote for means-
testing of the part B premium, an important step toward creating the
political environment which will be needed to secure this program for
future generations of retirees.
I would further urge the President, as well as Democratic party
leaders, to disavow and distance themselves from candidates who resort
to mediscare demagoguery in their future political campaigns. The
American people deserve a responsible debate on this difficult subject,
and the centrist coalition will be working to see that this happens.
This bill does include a number of helpful changes for Medicare
beneficiaries, low-income children, and legal immigrants which I would
like to briefly highlight.
Medigap provisions included in this bill, which I was pleased to
author earlier this year, will do for Medicare beneficiaries much of
what the Kassebaum-Kennedy health insurance bill did for working
Americans: It vastly improves portability and bans preexisting
condition limitations for Medigap policy holders.
This bill also improves access to emergency services for Medicare
beneficiaries enrolled in managed care plans, which is derived from
legislation Senator Graham authored and I was glad to cosponsor earlier
this year. This provision establishes a prudent layperson definition of
emergency medical conditions to ensure that emergency services are
properly covered.
This legislation also includes expanded preventive health care
benefits for Medicare enrollees, including mammography, colorectal and
prostate cancer screening; testing for osteoporosis; and improved
coverage for diabetes and other important prevention measures. These
enhanced services will be helpful to the more than 174,000 Medicare
beneficiaries in Rhode Island.
One of my most important priorities, that of expanding access to
health insurance for low-income children, is also addressed in this
bill. I am especially pleased that we are providing $24 billion for
this purpose. This is a critical step forward for Rhode Island's

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children, 19 percent of whom live in poverty. Many of these poor
children--38 percent--live in families where at least one parent is
working, yet they are still poor. These funds are targeted to help
these families especially.
While I would have preferred greater specificity in terms of the
benefits to be provided to children under this program, the final
package is a significant improvement over some of the earlier
proposals. I want to thank and acknowledge Senator Rockefeller for his
leadership and expertise in working to advance the cause for children's
health insurance. He was a strong partner in helping to make this a
stronger and better program than it otherwise would have been.
I also want to thank Senator Roth for helping me to ensure that Rhode
Island can take full advantage of the funding provided under this
program to continue its children's health initiatives. The Finance
Committee chairman was very responsive to the problems this legislation
posed for States, like Rhode Island, that have already expanded
coverage. We were able to work together to ensure that Rhode Island
will not be penalized for choosing to expand coverage on its own.
This bill also gives States critical new flexibility by allowing them
to enroll Medicaid beneficiaries into managed care without obtaining a
waiver from the Department of Health and Human Services. At the same
time, the legislation includes important safeguards for these
beneficiaries, many of which were contained in legislation I introduced
earlier this year. For example, disabled children, children in foster
care and special needs children who have been adopted are protected
from mandatory enrollment in managed care. Women enrolled in Medicaid
managed care programs will continue to have the freedom to choose their
family planning provider, even if that provider is not part of their
managed care plan.
This bill also restores Medicaid coverage to thousands of children
who were removed from the SSI rolls as a result of eligibility changes
made in the 1996 welfare reform law. This will be enormously helpful to
many low-income families whose children may no longer be considered
statutorily disabled but who nevertheless have significant special
health care needs.
Let me take a moment to describe the provisions of this bill dealing
with legal immigrants. As my colleagues know, the 1996 welfare reform
law placed severe restrictions on the Federal benefits that legal
immigrants may receive. Among these restrictions was a complete and
immediate cut-off of supplemental security income [SSI] and food stamp
benefits, not only for future immigrants but for those already in this
country legally.
For the elderly and disabled legal immigrants who last August were in
the United States--including nearly 4,000 in my own State of Rhode
Island--the new SSI ban represented nothing short of a crisis. For
many, the loss of this critical Federal aid would mean losing the
ability to live independently. In turn, this would present a serious
community and fiscal challenge to State and local governments, as
immigrants who had lost benefits and faced destitution turned to
nursing homes or other costly facilities for support.
I was sorely troubled by these restrictions on immigrants, and
pledged to do what I could to mitigate the most harsh of these during
this Congress. I am delighted to say that in this regard, we have been
successful. The conference report before us now is identical to the
Senate-passed bill on which I and others of my colleagues worked very
hard.
It restores benefits to those legal immigrants who were receiving SSI
as of last August. It also allows immigrants who were in the United
States last August and who may become disabled in the future to receive
SSI. For my State, this means that 3,753 currently elderly and disabled
Rhode Island residents--and many others who may become disabled in the
future--will be able to receive basic SSI assistance to allow them to
live with dignity.
Now, the immigrant provisions of this bill are not perfect. And I am
disappointed that it does not contain the Chafee-Graham amendment on
legal immigrant children and Medicaid, or the provision dealing with
SSI for those too disabled to naturalize. But the bill before us goes a
long way toward restoring fair treatment for the thousands of legal,
tax-paying immigrants who were in the country and playing by the rules
when welfare reform was enacted.
I want to commend Senators D'Amato, Feinstein, DeWine, and Graham for
all of their hard work in helping to solve this problem. Since the
introduction of our Fairness for Legal Immigrants Act in April, we have
been working as a united team toward fair treatment for legal
immigrants. With passage of this bill, our efforts will have met with
success.
In closing, I am hopeful that we can build upon the bipartisanship
that was necessary to make this bill a reality when we turn to the more
challenging task of advancing long-term budget and entitlement reforms
in the future.
I particularly want to address the entitlement reforms I strongly
believe are necessary for Medicare. Although the provisions we worked
hard on--means testing the part B premium, increasing the age of
eligibility from 65 to 67, the $5 home health care copayment--were
dropped in the final package, nonetheless, I think it behooves all of
us to continue our work on each of these measures, and certainly I will
do everything I can to advance them. I thank the Chair.
Mr. GRASSLEY addressed the Chair.
The PRESIDING OFFICER. The Senator from Idaho is recognized.
Mr. GRASSLEY. I yield myself such time as I might consume.
The PRESIDING OFFICER. The Senator is recognized.
Mr. GRASSLEY. Madam President, I rise to address the Balanced Budget
Act of 1997.
This is an important moment. This bill represents the triumph of the
idea that we must get our national accounts in order. This is an idea
that Republicans, with the help of many Democrats, have labored for
years to put at the top of the national agenda.
Finally, it is close to being done.
As a member of the Finance and Budget Committees, and as a Budget
Committee delegate to the conference, I have been deeply involved in
the consideration of this bill. And I have been in a position to
witness the dedication Senator Roth, Senator Domenici, and Senator Lott
hve brought to the difficult task of giving birth to this balanced
budget legislation. I want to congratulate them on the success of their
efforts.
I would particularly like to thank Chairman Domenici, Chairman Roth,
Senator Lott and the other Senate conferees for protecting a number of
excellent Senate provisions in the conference committee. Believe me,
Madam President, it wasn't easy.
The Medicare portions of the bill will bring about very positive
changes in the program.
The bill calls for necessary savings in Medicare, and thereby will
help put Medicare, and particularly the Medicare hospital trust fund,
on a sounder financial footing. The bill also contains a number of
innovations that I think will improve the Medicare Program.
First and foremost is the new Medicare Plus Choice Program, reforming
Medicare managed care.
From my perspective, representing the State of Iowa, the inclusion in
this bill of a 50-50 local/national blended rate for Medicare managed
care reimbursement is extremely important. Also critical is the bill's
inclusion of a minimum payment of $367 in 1998, with annual updates
thereafter.
The opportunity for additional types of health plans, other than
HMO's, to participate in the Medicare Choice Program will open
additional opportunities to Medicare beneficiaries. Based upon what I
have been hearing from Iowa, I think the reformed payment system and
the additional types of plans should truly broaden choice for Medicare
beneficiaries in Iowa.
These provisions together should go a long way toward giving Iowans
the same kinds of choices Medicare beneficiaries in other parts of the
country have.
I also want to thank the chairman and my colleagues on the Senate
Finance Committee and the House and Senate conference committees for
including many provisions contained in S. 701, legislation I introduced
earlier this year regarding Medicare managed care standards. I am
especially pleased to see that, beginning in 1998 and annually
thereafter, beneficiaries will receive comparative user-friendly charts

[[Page S8348]]

listing health plan options in their area. The only way to foster
consumer choice and competition is by informing Medicare beneficiaries
of their options and their rights under the Medicare Choice Program.
The lack of information currently distributed to Medicare beneficiaries
is astonishing.
The Medicare conference agreement will ensure that beneficiaries have
the information they require to make the right health plan choice for
their individual health care needs.
Another important protection for Medicare beneficiaries is a fair
appeals process. I have been advocating for an objective review of
health plans' decisions to deny care.
I am pleased that the Medicare conference agreement adopted my
provisions to provide Medicare beneficiaries increased protections
during the appeals process. Now, all Medicare beneficiaries will have
the assurance that the Medicare program will provide an independent
review of all denials of care by health plans prior to beneficiaries
appealing to the Department of Health and Human Services.
This increased protection will hold health plans more accountable in
their decision making process regarding medically necessary care and
will give beneficiaries greater confidence in Medicare managed care, if
they choose this option.
Madam President, I am also very pleased that we have preserved in the
conference agreement rural health provisions that I have been working
on for several years.
These provisions include:
My Medicare dependent hospitals bill, which will help a large number
of rural hospitals in Iowa suffering from negative Medicare margins;
Senator Baucus' bill on critical access rural hospitals, on which
Senator Rockefeller and I have been close collaborators;
Reform of the Medicare disproportionate share hospital program, so
that deserving hospitals will be treated fairly whether they are
located in urban or rural areas----
Mr. DOMENICI. Would the Senator yield on that point?
Mr. GRASSLEY. Yes.
Mr. DOMENICI. I say to the Senator, I have been listening to your
remarks and analysis.
I want to tell the Senate, and anybody interested, if not for Charles
Grassley, the Senator who has been speaking, we would not have gotten
that provision. That is a fair provision because those parts of
America--your State, my State, and others--that have done a good job of
keeping costs way down, can't make it if we build the program on
keeping them down while the very expensive States do not come down. And
this is a formula we did not get exactly what we wanted, but thanks to
your efforts we came very close to something that you can say is fair
and much better for your people.
Mr. GRASSLEY. Yes. I thank the Senator from New Mexico for his kind
remarks. And he has spoken better than I can on that issue. But
basically what his constituents do not realize and my constituents do
not realize, is that we have a very cost-effective delivery of medicine
in rural America, very high quality by the way, but because of the
historical basis for the reimbursement of Medicare, based upon that
cost-effective medicine, we are at a very low level, and the options
that metropolitan areas have will not come to rural America; but the
provisions of the legislation he just described will make that possible
now.
And so I can say this, that in 1995, it would not have been included
in the legislation without the intervention of the Senator from New
Mexico, even though it was my basic legislation. And he helped us this
time at a very, very critical time in the negotiations between the
House and the Senate. So I may have authored this legislation, but the
fact that it is in the final package is a tribute to the leadership of
Senator Domenici.
I will continue on and say that we have also for rural areas
the provisions for:

Expanding the existing telemedicine demonstration project, in order
to improve the delivery of health care to underserved areas;
Reform of the eligibility requirements for rural health clinics,
enabling this vital program to operate as originally intended; and
My legislation assisting rural referral centers.
I am also pleased to finally see my legislation to provide direct
reimbursement at 85 percent of the physician fee schedule to nurse
practitioners, clinical nurse specialists, any physician assistants is
finally going to become law. Similar measures were included in the
President's Medicare proposal and in the House Ways and Means Medicare
bill and were part of the Balanced Budget Act of 1995.
Senator Conrad and I introduced these bills in the last three
Congresses. We reintroduced them again in this Congress and were
successful in getting them included in the Senate Finance Committee
bill. This legislation will reform Medicare policies which, under
certain circumstances, restrict reimbursement for services delivered by
these providers.
Direct reimbursement to these nonphysician providers will improve
access to primary care services for Medicare beneficiaries,
particularly in rural and under served areas.
There has been much deliberation in this Congress over proposals to
address the problem of uninsured children in our Nation.
I am very pleased that the bill before us today includes a strong
bipartisan package addressing this matter. This bill includes a total
of $24 billion to be spent on children's health insurance initiatives
for those who are not currently enrolled in Medicaid or who do not have
access to adequate and affordable health care coverage. This is $10
billion more than the President's original proposal.
We should view this achievement not only as an important piece of
health care policy, but also as a giant step toward improving the
quality of life for our Nation's children. I commend the Senate
leadership, particularly Chairman Roth and Chairman Domenici, for their
leadership and commitment to this important matter.
These funds will be provided to States in the form of block grants.
States are allowed considerable flexibility in designing health
insurance programs, yet States must meet important Federal guidelines
in their efforts to provide quality health care coverage.
I am confident that this proposal will be successful in meeting our
goals to cover our Nation's uninsured children.
Yet, it is important that Congress remain committed to this goal and
we must closely monitor the developments of the proposal set forth in
this legislation.
This budget bill includes a number of improvements to the Medicaid
Program to ensure that high-quality of care is provided to our Nation's
most vulnerable population. And, this bill reforms Medicaid to give
States much more flexibility in managing their programs.
In recent years, States have undertaken numerous initiatives to
control spending in Medicaid. As a result, Medicaid spending has slowed
significantly. This budget saves a total of $13.6 billion in the
Medicaid Program over 5 years. Most savings are achieved through new
policies for payments to disproportionate share hospitals. Funds have
been retargeted to hospitals that serve large numbers of Medicaid and
low-income patients.
Other improvements made to the Medicaid Program include changes to
last year's welfare reform law so that benefits are restored to legal
immigrants needing long-term care services. Also, a number of important
reforms were made to managed care policies for Medicaid programs
serving children, people with disabilities, and other Americans.
Of course, I do have a number of concerns, Madam President. Does this
bill represent a long-term solution to the problems facing the
entitlement programs? No, it most certainly does not. But I note that
the proposal of Senators Roth and Moynihan to establish a Medicare
Reform Commission is included in the conference agreement. We will look
to the work of this commission to make proposals for reform and to help
us produce the consensus we need to act to put the Medicare Program on
a sound footing for the retirement of the baby-boom generation. Make no
mistake: we will need to do more. But on balance, I believe that we
have made a good start.
I want to conclude by again thanking Senators Roth and Domenici and
their

[[Page S8349]]

hard-working staffs for the efforts they have made, for several years
now, to bring us to this point.

Restoring Benefits for Legal Immigrants

Mr. KENNEDY. Mr. President, the balanced budget agreement represents
major progress in restoring benefits to legal immigrants. The harsh
welfare law passed last year wrongfully denied access by legal
immigrants to most Federal assistance programs. It permanently banned
them from SSI benefits and food stamps. It banned them for 5 years from
AFDC, Medicaid, and other programs. And it gave the States the option
of permanently banning them from these programs.
Americans across the country were rightly concerned about these
unfair provisions, and Congress soon agreed that the legislation had
gone too far.
If the provisions of last year's welfare law remain in effect, many
elderly legal immigrants would be forced out of nursing homes. Legal
immigrants injured on the job and those with disabled children would
lose assistance. Some 500,000 legal immigrants who were already living
in the United States would have been affected. In Massachusetts, 15,000
elderly and disabled legal immigrants would have lost their SSI
benefits.
Some said in last year's welfare debate, ``Let the immigrant's
sponsor support them.'' But, Congress now realizes that legal
immigrants often do not have sponsors. Refugees, for example, do not
have sponsors. In cases of many older immigrants, their sponsor has
died or is no longer able to provide support.
Immigrants affected by last year's harsh cuts are individuals who
came to this country legally. Many are close family members of American
citizens. They play by the rules, pay their taxes, and serve in our
Armed Forces. They are future citizens trying to make their way in this
country.
The $12 billion restored for legal immigrant assistance over the next
5 years in this bill is urgently needed. It will allow most legal
immigrants who currently receive SSI benefits to stay on the rolls. In
addition, legal immigrants who were in the United States at this time
last year's welfare bill was enacted in August 1996 can receive SSI in
the future if they become disabled. These changes will help a very
large number of people hurt by the welfare law.
Unfortunately, those who are too disabled to go through the process
of naturalization to become citizens are left out of the final bill. I
proposed an amendment, which was accepted by the Senate, to receive SSI
benefits after their first 5 years in the United States, and I hope we
can revisit this important issue in the near future.
I had also hoped the final budget agreement would allow legal
immigrant children to continue to receive Medicaid. Currently, they are
banned from Medicaid for 5 years. Some States may even act to ban legal
immigrant children from Medicaid forever. The Senate bill included a
Chafee-Graham amendment to enable these children to receive Medicaid
benefits, and I regret that it was dropped from the first bill.
There is still much more to be done to correct the problems created
for legal immigrants by last year's welfare bill. The Senate version of
this bill restored less than 50 percent of the cuts made last year in
their benefits. We are making worthwhile progress in this legislation,
and I intend to do all I can to see that additional progress is made in
future legislation.
I yield the floor.
The PRESIDING OFFICER. Who seeks recognition?
Mr. CRAIG addressed the Chair.
The PRESIDING OFFICER. The Senator from Idaho.
Mr. DOMENICI. How much time does the Senator desire? Fifteen minutes?
Mr. CRAIG. Yes.
Mr. DOMENICI. I yield 15 minutes to the Senator.
The PRESIDING OFFICER. The Senator from Idaho.
Mr. CRAIG. Madam President, let me thank the chairman of the Budget
Committee for yielding, and let me also recognize him this evening and
the chairman of the Finance Committee, Senator Roth, for the work that
both Senators have done with their ranking members over the last good
many months to craft the legislation that is before us today, tomorrow,
and through the balance of the week dealing both with the budget and
with tax cuts.
I rise in support of H.R. 2015, the Balanced Budget Act of 1997.
Madam President, in 1993 and 1994, we had a President who said
balancing the budget probably was a bad thing to do. We had a high
administration official who actually had written a book that said it
was a loophole whenever children could inherit some of their parents'
money. Congress had increased spending and joined with the President in
the passing of the biggest tax increase in the history of our country.
That was not a decade ago. That was just a few years ago.
Then came November 1994. And what a difference an election makes.
What a great transformation of the mind and the political thought can
occur when the American people have spoken and said, ``We've had
enough.''
We asked the Congress to change their thinking. And we changed the
Congress to think differently. And the first Republican Congress in 40
years began in 1995, with promises to do several very important,
necessary things--to reform welfare, to cut back bureaucracy, to
balance the budget, and to provide some tax relief for American
taxpayers who work hard, have families, and create jobs.
In 1996, the voters rewarded a Congress and President who
accomplished the first two of these items and who promised to bring
about the rest.
This week, the Republican majority in Congress, joined by now many
reform Democrats in a bipartisan majority, will deliver on those
promises.
Madam President, this week, as we consider the Balanced Budget Act,
and especially the Tax Relief Act of 1997, we are talking about more
freedom for more of America's people.
Freedom is not something that the Government gives the people. Our
Nation's founders knew that the people's freedom is, in the words of
the Declaration of Independence, ``self-evident,'' ``unalienable,'' and
``endowed by their Creator.''
Freedom comes from limiting Government to its necessary functions.
Freedom is what remains when Government is not excessively burdensome
or coercive.
This week, we take modest but very significant steps toward restoring
freedom to the American people--freedom from the most severe tax burden
on families in our Nation's history, freedom from an oppressive
national debt, freedom from the growth of an ever-larger, ever-more
intrusive Federal Government.
A couple from Idaho and their four daughters visited my office just
this week and we discussed taxes, and particularly death and
inheritance taxes. They told to me they run a small farm in Idaho that
their great-grandparents had established in 1882. And they reminded me
that people turned to Government to take care of them when the
Government, usually through taxes, takes away their ability to take
care of themselves.
And as Ronald Reagan said: A Government big enough to promise you
everything you need is a Government big enough to take away everything
you have.
The Tax Relief Act that we will begin debating tomorrow, combined
with balancing the budget, will help more families take care of
themselves the way they want, by keeping more of their own hard-earned
money; by bringing about the ability to save more for their retirement,
their children's education, and other priorities they have; by making
it easier to own your own family farm or small business or home; by
making it easier to do the kinds of things that Americans like to do,
without having to think twice or three times whether they can afford
to, or worry whether the Government will take more of their money; by
creating, in other words, the economic atmosphere that will allow
Americans to invest in creating more and better jobs for themselves,
their children, and the future of our country.

The bills we will pass this week mark the triumph of the principle
that the Federal budget should be balanced and should stay balanced.
In 1994, when the American people spoke so clearly about changing the
political thought in this country and the political attitudes, the Dow
Jones was hovering at about 3000. Today, it is at 8000. We have, by
these efforts to balance the budget and provide tax relief,

[[Page S8350]]

unleashed a dynamic of this economy that is, without question,
historic.
We are now seeing the reverse of what happened about 40 years ago,
when an elite group of liberal economists sold liberal politicians on
the idea that you could promise your voters a free lunch. Their
intellectual justification was the so-called enlightened discovery that
unlimited borrowing could pay for unlimited social spending without
much consequence.
It's easy to understand the political appeal of this proposition.
What is incredible is that anyone really believed it, or that they
would follow it for nearly 40 years and create a $5 trillion borrowed
debt--almost beyond understanding.
But that is where we are today. That is clearly why the American
people have spoken, and that is why this Congress and this Senate
finally said we have to change the way we do business.
You can't borrow your way to prosperity over the long term. We tried
and we saw our economy grow even more sluggish. We saw people become
even more dependent on Government largess. Thank goodness, Americans,
enlightened as they always are, recognizing that they are the
Government, took charge and said, ``No more.''
A huge national debt means our Government has spent the last
generation mortgaging the future for the next generation.
That is not a matter of green-eyeshades accounting; it really is an
immoral assault on the well-being of our children and their ability to
produce for themselves and their prodigies.
Balancing the budget is not about numbers, it is about people.
Balancing the budget means more and better jobs, making it more
affordable to buy a home, and more families affording a good education
for their children without having to come to the Government and say,
please help me. They can do more of it for themselves. Balancing the
budget means that essential Federal programs like Social Security and
Medicare will be there for those who need it and not become a liability
and a burden on future generations.
There will be more freedom because of a balanced budget, because
people will get no more Government than they are willing to pay for.
Balancing the budget means Americans--all Americans--win. And we have
the actions of the last 3 years now--an economy responding to spending
restraint and real efforts to balance the budget and cut taxes--to
demonstrate that what I am talking about tonight has a very strong
foundation of truth.
I want to pause for a moment and review one critical reason why we
are here this week passing legislation that promises to balance the
budget by fiscal year 2002. This die was cast when Congress, by the
narrowest of margins, defeated the balanced budget amendment to the
Constitution.
Only the threat of the ultimate legal sanction--a constitutional
amendment--and the overwhelming public support for that amendment
finally convinced Congress, most important, some of my colleagues and
some in the administration, that we had to quit talking the talk and
start walking the walk.
In other words, I have heard so many on the other side throw up their
hands and say, we do not need a constitutional amendment to make us
balance the budget; all we have to do is do it; all we have to do is
exert fiscal responsibility. But we also have to have this program and
we have to have that program, and we have to spend here and there. And
2 years running, by one vote, the people almost began to take control
of their Government again. It frightened the Congress.
A President who once said a balanced budget is a bad idea is now out
strutting around talking about his balanced budget and all of the
wonderful things that will be reaped by it. Well, it is always
surprising to me that people like our President think the American
public has such a short memory. They don't. His record suggests he
doesn't believe it is a good idea. He also knows politically that he
has to do it. And there are some in Congress who sometimes choose to do
something differently than we otherwise may like to do, but who know
what they have to do because the American people expect it. Balancing
the budget has always been the right thing to do. We are here tonight
because it is now also, at last, the politically correct thing to do,
and I suggest that that vote occur.
Mr. LAUTENBERG. Will the Senator yield?
Mr. CRAIG. No, not at this time. I'd like to finish my thoughts. I
know that 2 years running, with the House having passed a balanced
budget amendment and this Senate missing by just one vote--finally, it
is recognized by all in a bipartisan gesture that, the closer the
people come to changing their Constitution and exerting that control
over Congress, the more motivated Congress becomes in doing it, doing
it ourselves, and that is exactly what is occurring here. I believe
that, without the constitutional discipline, we will always risk the
return to more spending and more borrowing. Ultimately, to safeguard
the future, the balanced budget amendment to the Constitution must come
into place.
Some may suggest that passage of this year's balanced budget
agreement means we no longer need the constitutional amendment. I
suggest that is not true. One balanced budget in 30 years hardly means
that we have fixed the system or that we have systemically changed the
attitude of some who serve here. It will never be easier than it is
right now to balance the budget.
In the past, the temptation always was to put off the hard choices;
Members have thought, it will be easier in the future than it is now.
But in fact, it will never again be as easy as it is right now to begin
that long march to arrest the growth of a $5 trillion national debt.
That is what the long-term economic and demographic trends tell us.
This year's budget discipline and hard choices are nothing compared to
what Congress must wrestle with in just the next few years.
For what we have committed ourselves to tonight and for the balance
of this decade will not be easy choices. It was difficult enough to
arrive at the agreement that we now have, and I will say, even though I
differ sometimes with the President and others, that this is now a
bipartisan effort, and I accept that and I honor them in their
recognition that, finally, they are willing to offer to the American
people what the American people have asked for.
When we finally pass this balanced budget and then the balanced
budget amendment and send it out to the States for ratification--and I
believe that will occur in my lifetime and probably within the decade--
we will show we understand, as the American people clearly understand,
that a nation so indebted ultimately cannot survive, and that to clean
up our debt, to balance our budget was ultimately the necessary thing
to do.
The Balanced Budget Act of 1997 is a mixed bag. I don't support every
portion of it. I have reservations about some of it.
It creates new social spending; it locks in, in the form of
entitlements, that social spending. It could use stronger enforcement
provisions. For example, I continue to support the idea that caps on
spending should extend to spending overall and not only to annual
appropriations. It does not address the long-term economic and
demographic trends that drive entitlement spending and cry out for
reform.
The chairmen of our committees and some Senators tried hard to get
those reforms. That was bipartisan. Some partisans on my side, too,
could not accept that. But, ultimately, we will get there. We have to
get there. I don't want my grandchildren turning to me and saying,
Grandpa, we love you dearly, but we can't afford you and afford to
provide for ourselves. We want to buy our own home, educate our
children, and we cannot afford the amount of money that would come from
our paycheck to go to the Federal Government because that government
promised to provide for everyone's future. I don't want that to happen,
and the chairman doesn't want that to happen. The future demands that
we address it, that we help people prepare themselves for it, and that
we will try to do.
Today, annual discretionary appropriations make up only one-third of
the total budget, and that share will continue to shrink. The Kerrey-
Danforth entitlement commission of a couple of years ago estimated that
in just 14 years, 2011, entitlement spending and interest payments will
consume all

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available tax revenue. That means we will either have to borrow
incredible amounts for deficit spending; or go without defense,
highways, law enforcement, parks, forestry, education, science, and
medical research; or raise taxes to ruinous levels.
We are not going to do that. We are smarter than that. More
important, we wouldn't be here to do it if we tried, because the
American people won't tolerate it. They will demand reform before we
get to that point, and if we can't give it to them, they will find the
candidate willing to do so.
While this bill before us today does establish another commission to
address the need for long-term entitlement reforms, we have already had
that kind of commission, chaired by Senator Kerrey of Nebraska. We
already know what the current trends are and have some idea of what
needs to be done.
But there is also considerable good in this bill. It does accomplish
more in the way of spending control and entitlement reform than many
thought possible even a year ago. There are significant repairs to the
Medicare System. Medicare will be solvent for at least another decade
and will continue to be there for seniors who need it.
Last, we will begin the process of injecting consumer choice into the
system. Why should our seniors not have some of that? The Medicare
System, based on market principles, means better care and more economic
care. I am always amazed when the bureaucracy thinks it can outperform
the marketplace. We know it can't, we know it never has, and, in this
instance, we finally recognize that by putting some market principles
in.
The fundamental reforms in last year's historic welfare reform bill
will remain in place. We continue to move toward a system that rewards
work and allows the States the freedom to develop new and better
approaches.
Enforceable caps on discretionary appropriations spending--virtually
the only thing out of the 1990 budget agreement that worked--will
continue through the year 2002.
Overall, the growth in spending will slow by $270 billion over the
next 5 years and $1 trillion over the next 10 years, a saving that will
be locked in by permanent law and not be subject to year-to-year
political whims.
New spending will be accomplished with a minimum of bureaucracy and a
maximum of State flexibility.
This is far from the ideal balanced budget bill. But it takes the
first major step away from demagoguery and toward genuine entitlement
reform. It delivers on and locks in the promise of a balanced budget,
something I have demanded and worked for my entire time here serving
the State of Idaho.
Why do I demand that? Because the citizens of my State know that a
government that continually spends beyond its means, a government that
mounts a $5 trillion debt, a government that allows interest on debt to
rapidly move toward becoming the largest single item in its budget, is
a government that cannot sustain itself. That we recognize. The
chairman of our Budget Committee and the chairman of our Finance
Committee recognize that. We all recognize that. That is what our party
has stood for. That is what the majority here in Congress has demanded
because the citizens of our country have said it is a requirement of
government.
I must say that the Balanced Budget Act of this year and the
Taxpayers' Relief Act of this year are responses to demands of the
American people. I am proud to have been a part of helping craft them.
I look forward to the opportunity to vote for them, to cause them to
become law, and to see this economy remain dynamic, create jobs, and
provide opportunities for this generation and generations to come.
I yield the floor.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER (Mr. Allard). The Senator from New Mexico.
Mr. DOMENICI. Mr. President, let me say to my friend, Senator Craig,
perhaps if we had adopted what he has been recommending for many
years--a constitutional amendment to balance the budget--we wouldn't be
here with the kind of circumstances that confront us.
I don't think the Senator from Idaho has to stand up here, or with
his people, and talk about where he stands in terms of overspending by
our National Government because his record is excellent in that regard.
I think his remarks today indicate that, when you have a Democrat
President, a Republican Congress, and a strong Democratic minority in
both Houses, you can't get everything that you want. As a matter of
fact, the Democrats differ from their President, and the President
differs from us.
What we have done, I think, is borderline on being a miracle. The
only thing that keeps me from saying that is that I don't know whether
the product deserves being labeled a miracle. But in terms of getting
it put together, coming here today and getting it finished and voted on
tomorrow--I am sure we are going to get in excess of 75 votes
tomorrow--that is pretty good.
As I said this morning when I opened up, even the Washington Post
finally said, ``That Is a Big Deal.'' I think it is.
I am very glad that the Senator from Idaho is going to support it and
that he has been helping us as much as he has. I thank him for that.
Mr. CRAIG. Mr. President, I thank the Senator from New Mexico. I
recognize the bipartisan nature in which this was created, and I
support that. I hope that we can sustain that in years to come to truly
get our budget in balance and to do so in a way that remains or creates
or participates in a vibrant economy.
There is no question that this effort was accomplished not by us
alone but in a bipartisan effort. Certainly the ranking member, who
stands here this evening, was a major contributor. And I recognize
that.
I am always a bit surprised when for the 17 years that I have been
here I have always heard, ``Oh, we don't need to worry about that. We
can balance the budget. We have the will to do it.'' Well, we didn't
have the will until the American people demanded it of us. Now we do
have that will. It will only come by a bipartisan effort. I recognize
that this evening. I appreciate it. I think it is a great
accomplishment, and the Senator from New Mexico is to be congratulated
for it.
I thank both Senators.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, I mentioned that this was a ``big
deal.'' Every time I say that I want to make sure that I say, ``and a
good deal for all Americans'' because that is what is important--not
that it is big, not that people think it is a big deal, but that it is
good for our people. And that it is.
I yield the floor. Senator Lautenberg wants to speak.
Mr. LAUTENBERG. Just for a few minutes, Mr. President.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. Mr. President, in the almost afterglow of feeling
pretty good about things, we worked hard, everybody together. There
were no fingers pointed.
I chided the chairman of the committee this morning when he excerpted
from the headline of the Washington Post. He said that the headline in
five words said, ``This is a Big Deal.'' I asked a question. Was the
intonation properly affixed, or did it say, ``This is a good deal?'' It
is quite a different meaning.

Mr. DOMENICI. We read the story. They were saying it is a ``big
deal.''
Mr. LAUTENBERG. It is a big deal; a giant deal. I think, without
breaking our arms or patting ourselves on the back, there was a lot of
goodwill that was injected into the discussion and into the debate.
My colleague from Idaho, who is a man who has a way with words, kind
of laid it on us and included the President in there as someone who did
buy into the balanced budget notion but was dragged kicking and
screaming.
Mr. President, I wish it was 1 o'clock in the afternoon and we were
all energized and we had a chance to talk a little bit. But I will not
prolong the process except for a minute or two to say, since it took
what I thought was a slight partisan turn--it makes me unhappy when
things have gone this well this way to say that I have been here long
enough to remember Presidents Reagan and Bush. I like them both. They
are nice people. But people on their watch, as we say, who managed to
have this deficit of ours skyrocket

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right up into the air--turn up the tax cuts and let the deficits run.
That is what they did.
When our President and the Democratic Party took over in 1992, 1993,
he inherited a deficit that year of $290 billion without a balanced
budget amendment but with the interest that was generated. Yes, we were
profligates, and we spent too much money, and perhaps we did a few
things wrong. But it was an honest try all the way. And the assertion
or the insinuation that these guys didn't care or those guys didn't
care, it is not a way to do business. I don't care if we never get a
balanced budget amendment. I want to tell you right now. As a matter of
fact, I hope you don't. I love the Constitution, and the Constitution
loves America, and it is the best document ever written. The fact that
we have altered it so few times is a testimony to the strength and the
wisdom of the Founders and those who have written amendments.
The only time we wrote an amendment that kind of restricted our
activity was prohibition, and it was soon canceled. It is a wonderful
prescription for how a society should function, preserving individual
rights and making sure that the freedoms as much as possible are
extended to every citizen in our country.
So I just felt like I had to respond. No one worked harder than the
man on my right, the distinguished chairman of the Budget Committee,
Senator Domenici. I didn't always agree with him, but nobody worked
harder, and no one assembled a more honest attempt to do it in a
bipartisan fashion. There were things that he wanted that we on my side
of the aisle didn't want. But he was willing to explain them and
willing to take a deep breath when necessary not to fight them. I have
gained great respect for him, as well as personal affection, honestly.
Mr. President, I just want to change the tone for a minute, and let
off a little steam and say that I hope we will move on to pass this
document into law and make sure that everybody understands there was a
good attempt by everybody working in this place to get it done with, to
get on with the task that we have a very good start on because of the
shape of the deficit that we see now.
So, Mr. President, I yield the floor. I know the Senator from New
Mexico has a UC that he would like to propose. I hope that we will have
a chance to hear that.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, I note the presence on the floor of the
junior Senator from Oregon. Might I ask, did he desire to speak on the
budget?
Mr. WYDEN. On the budget.
Mr. DOMENICI. I wonder if I could propose a UC regarding the budget.
When I am finished I will try to work in an exception for him.
How long does the Senator desire to speak?
Mr. WYDEN. Fifteen or twenty or minutes would be plenty.

Unanimous-Consent Agreement

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Senate
resume the pending conference report at 9:15 a.m., Thursday, and that
the remaining hour be equally divided between the chairman and the
ranking minority member of the Budget Committee; and that, at 10:15
a.m., the Senate proceed to vote on adoption of the conference report
without any intervening action. I further ask consent that this evening
Senator Wyden of the State of Oregon be allowed 15 or 20 minutes on the
bill after which we will be finished for the evening.
Is that satisfactory with the Senator?
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Mr. DOMENICI. Mr. President, there will be no further votes tonight.
I yield the floor.
The PRESIDING OFFICER. The Senator from Oregon is recognized.
Mr. WYDEN. Thank you, Mr. President.
Mr. President, first, let me say to my good friend, Senator Domenici,
the chairman of the Budget Committee, I just want him to know how much
I have appreciated the chance to be a member of his committee. I think
this is a historic occasion and a chance to work very closely with him
on a variety of issues. Coming to the Senate has been a special
pleasure.
I also want to commend our good friend, Senator Lautenberg of New
Jersey, who in my view has done yeomen work in terms of keeping this
whole effort together and keeping it bipartisan.
Mr. President, the balanced budget agreement that will be passed this
week has been a long time in coming. I think our challenge is to now
make sure that actually getting a balanced budget takes a shorter
period of time.
I do believe that we are finally on the right track because this
budget provides an opportunity for the Federal Government to get its
fiscal house in order while still making a handful of extremely needed
investments in the people of our country and in U.S. productivity.
Most importantly, I am of the view that this is a historic moment
because it has been achieved by working together. If ever there was an
issue that required bipartisan cooperation, this is it. It seems to me
that this is an example of what can happen when you put down for just a
few moments the political cudgel and focus on the needs of our country
first.
Let me also say that I would like to make a special effort in the
days ahead to address the Medicare provision of this legislation. In my
view, in the 21st century, Medicare is not just going to be a part of
the Federal budget; it is going to be the Federal budget. There is no
program in America growing at the rate of Medicare. I think it is well
understood that in the 21st century our country will be faced with a
demographic tsunami. We are going to have upwards of 50 million baby
boomers retiring, and it is quite clear that efforts must be made now
to modernize Medicare and get this program ready for the 21st century.
I sought to begin those efforts by introducing S. 386, the Medicare
Modernization and Patient Protection Act, in the spring. And the
fundamental principle of that legislation was to make sure that
Medicare began to introduce the kind of competition and choice and
emphasis on quality for older people that is available in private
sector health care.
What we are seeing in our country today is that Medicare has
essentially been engaging in purchasing practices and management
practices that the private sector threw in the attic years and years
ago. In much of the United States, Medicare has been rewarding waste
and penalizing efficiency, and we all saw that emphasized again this
week when the Inspector General of the United States indicated that
more than $20 billion is lost each year in the Medicare Program due to
fraud and waste.
The issue of inefficiency and the rewards for waste that you see in
the Medicare Program are particularly important to those I represent at
home in Oregon. We have gone a long way to reinventing the health care
system in our State, particularly in the metropolitan areas. We have
competition. We have extensive choice for older people. We do not have
the gag clauses in the managed care plans where physicians are
restricted from telling older people about their options. We have done
a lot to come up with a health plan for seniors that will be good for
older people and taxpayers in the 21st century.
The reward to Oregon for doing the heavy lifting to reform Medicare
over the last few years has been lower reimbursement collection. In
effect, what the Federal Government told the people of Oregon over the
last 10 years is you would have gotten higher reimbursement, you would
have received higher payments, if you had gone about the process of
offering wasteful, inefficient health care. And so what happens in much
of my State, an older person, say, in the Klamath Valley will call
their cousin or their sister in another part of the United States and
ask them about their Medicare. And a senior in another part of the
country where health care isn't provided so efficiently will say to the
Oregonian, you know, my Medicare is great; I get prescription drugs for
free; I get eyeglasses at a discount; I get all these extras that are
not covered by Medicare.
Seniors in Oregon and other States where health services have been
efficient say, I pay the same into Medicare as seniors in those States.
Why don't I get the same benefits?
Medicare is a national program. Why shouldn't the senior in Oregon
get the

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same benefits as the senior in another State, which on top of
everything else is offering care that is more costly and inefficient?
The reason for this bizarre situation is a very technical
reimbursement system, an eye-glazing concept known as the average
adjusted per capita cost. And the long and short of it is that it
rewards waste, penalizes efficiency and in parts of the country like
mine has meant that many of the health programs have difficulty even
providing the basic benefits to older people let alone some of the
additional benefits such as prescription drugs.
Under this legislation, because of exceptional bipartisan work--and
here I want to particularly commend Senator Grassley of Iowa, the
chairman of our Aging Committee, who has worked very closely with me,
for his perseverance in correcting this inequity. As a result of the
work of our bipartisan coalition, this reimbursement system is going to
change. We will see all counties in our country get a minimum payment
for these health care plans that are holding costs down while giving
good quality, and over a period of time there will be a blending of
reimbursement rates to consider both local reimbursement patterns and
national patterns.
What this means is that areas like Oregon that have held costs down
while giving good quality will get higher reimbursement, and my
constituents, older people, are pleased because they will be in a
position to get better benefits. But what is especially important is
this is the kind of reimbursement change that is essential to save this
program in the 21st century.
I would submit that what will happen as a result of the bipartisan
work to change the Medicare reimbursement process--Senator Grassley,
myself, and others have spent so much time--is we will start seeing
competition and choice come to health care programs in parts of the
country where there is no competition and there is no choice. So we are
talking about a change that, in my view, is going to really pay off for
our country and pay off greatly in the years ahead.
Mr. President, I want to turn very briefly to the question of the
other changes in Medicare that the Senate has debated and we are going
to have to tackle in the days ahead. Particularly now I turn to the
question of raising the age of eligibility for the Medicare Program and
the question of a means test or some sort of ability-to-pay test being
incorporated into Medicare.
I have long felt that Lee Iacocca ought to be paying more for his
Medicare than should an older woman who is 75 and has Alzheimer's and
has an income of $10,000 a year. So I think it is clear there is going
to have to be an ability-to-pay feature added to the Medicare Program.
But it is extraordinarily important that this be done right and that
this be done carefully. I and other Members of the Senate felt that to
try to do this over just a few months with so many questions about how
this would be administered was precipitous action. But it must be done.
Let us make no mistake about it. That change is going to have to be a
part of 21st century Medicare. It has to be done fairly. My
constituents were concerned that at a time when already they did not
get a fair shake under the Medicare reimbursement formula, they were
going to be asked to pay more immediately under Medicare.

So there are some real questions about how to do this and do it
fairly. But I want it understood I am of the view that there will have
to be an essential change, and I am very hopeful the Senate will not
wait for a bipartisan commission to make recommendations but with the
completion of this legislation will start on that issue as well.
With respect to the question of the age of eligibility for the
program, here, too, there are very important technical questions of how
it is done and how it is done fairly. There have been a number of
analyses of late that have shown there is a significant increase in the
number of uninsured Americans between the age of 55 to 64. So if that
group of uninsured individuals is growing, to then add more, those
between the ages of 65 and 67, would cause a hardship. So what I and
others hope will be done as this effort to examine the age of
eligibility is addressed is that there will be a buy-in opportunity, an
opportunity for those individuals without insurance in that age group
to be able to buy into the Medicare Program on a sliding scale.
Again, I think this is an opportunity the Senate ought to examine
carefully, ought to look at in a bipartisan way, and not wait for a
commission to make recommendations as to how it ought to be done.
Finally, Mr. President, let me say that as these significant changes
in Medicare are made, beginning with the reimbursement formula changes
that are being made now, changes that will bring fairness and
competition and choice to the program, at every step of the way we have
to keep the focus on protecting the rights of the patient. In this body
Senators Akaka, Kennedy, and myself have led the push to ban gag
clauses from managed care health plans. Health care is a complicated
issue, we could all agree. But one issue we all should agree on is that
patients have a right to know all the information about the kind of
medical services and options that would be made available to them.
Under this legislation, that significant protection for patients is
in place and I think it is just the beginning of the kind of new focus
that should be placed on patients' rights and the protection of quality
health care which older people deserve. At a time when the health care
system and Medicare specifically are in transition, protection for the
rights of the patients is even more important than ever. At a time when
there is a focus on more competition and choice, it ought to be met
with an equal emphasis of protecting the rights of the patients, and
that has begun in this legislation as well.
Mr. President, I come from a part of the country that is proud to
have led the Nation in the cause of health care reform and efficiency.
Under the leadership of our Governor, Gov. John Kitzhaber, we have
reinvented the Medicaid Program with the Oregon Health Plan.
For more than a decade, as a result of work done by Democrats and
Republicans and older people and health care professionals, we have
reinvented the Medicare Program in much of our State. So there is a new
emphasis on choice and quality. What this legislation does is it
removes the penalties against those programs that have been creative,
those programs that have led the Nation in reforming Medicare and
Medicaid. It is high time that those changes are made.
Mr. President, I think those changes lay the foundation for the other
critical changes that are going to be needed to strengthen health care
services in the days ahead. I look forward to working with our
colleagues on a bipartisan basis to achieve those changes.
Mr. President, I yield the floor.
Mr. SANTORUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I ask unanimous consent I may speak for
10 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SANTORUM. I thank the Chair.
Mr. President, I wanted to make a couple of comments also on the
budget bill that we have before us here this evening and that we will
be voting on, I guess, tomorrow morning.
I come here excited in a sense that we are finally doing something
that when I first ran for office back in 1990 I pledged to do, which
was to come here and try to balance the Federal budget. Not to put
schemes out there that say, well, we will target this and we will
adjust to this number when we get there, but actually pass a law that
will get us there without Congress having to do one more thing.
I think that is what we have accomplished here in this legislation.
We will pass the changes, the needed reforms, in the entitlement
programs that will get us to a balanced budget, that will save an
estimated $270 billion over the next 5 years, will require no further
Federal action other than just passing our appropriations bills under
the limits we have set, and we do a pretty good job at that. If there
is anything I can say Congress has done in the past few years it is
that we have kept to the budget caps. I do not anticipate that being a
problem. In fact, I think many of us would advocate trying to come in
below those caps. So I think this bill

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will accomplish what we set out to do, balance the budget by 2002. And
hopefully, if we do not have any kind of major recession, we will be
able to balance it sooner than 2002.
So, I am very excited about that. We have been able to face that
problem, and we have been able to deal with it in a responsible
fashion.
I must admit, though, that I am somewhat disappointed at some of the
things we did not accomplish here that we, in fact, passed in the
Senate bill. We took, I think, some courageous political stances here
in the U.S. Senate in dealing with the issue of Medicare. The Senator
from Oregon was talking about that just a few minutes ago, some of the
changes that were not made that he believed in. In fact, some of them,
even though I notice he didn't support them, need to be made.
Senator Gramm, during the debate here on the budget last month,
talked about the demographic cliff that we are going to fall off in the
year 2011. I share that with you again this evening. In the year 1995,
in fact for the years pretty much throughout the 1990's, roughly
200,000 people will turn 65 per year--200,000 people. In the year 2011,
1.6 million people will turn 65. That is just a cliff. That is 1.6
million people going into a system, no longer paying into that system,
into a system that today cannot absorb 200,000 a year. It is going
bankrupt absorbing 200,000. We are asking that same system, that same
program, to now absorb eight times the number, and that is not just a
blip. It is not 1.6 million in the year 2011 and then back down to
200,000. No; it's 1.6 million and then it levels off to about 1.5
million a year throughout the years of the baby boom generation and
their retirement.
It has been estimated that if we don't change Medicare and Social
Security in the next few years, the payroll tax will double within a
generation. That is from 15 percent of every dollar that is earned in
America up to $60,000 for Social Security tax and 1.45--actually 3
percent if you take the employee and employer share for every other
dollar, irrespective of income. We are going to have to double that
payroll tax. That's an optimistic projection. Pessimistically, we will
have to triple the tax if we keep Medicare and Social Security just the
way they are.
So, to the people who run around and say, ``We don't need to fix
Medicare now, we don't need to fix Social Security now, everything is
fine; those people who want to change Medicare and Social Security are
just out to get the elderly,'' I would just suggest this: Anybody who
is not talking about long-term structural changes to those two programs
is out to get the elderly who are yet to be elderly, who are waiting to
be elderly, because those are the folks who are going to pay--and big.
I think it is only fair that we spread this out a little bit and we
begin to make changes now.
The two major things I wanted to see done that were not done were,
No. 1, as the Senator from Oregon talked about, means testing part B
benefits. This is a chip shot. I mean, this is a layup. I can't think
of any other term. This is an easy one. This affected about 4 percent
of the population of seniors in this country who were the highest
income-earning seniors. What were we going to do? For Medicare, part A,
part B--there are two parts to Medicare. Part A is hospitalization,
major medical; part B covers some of the other things. It is a
voluntary program. It covers some outpatient, labs, doctors, things
like that. It's a voluntary insurance program. You don't pay one penny
into Medicare part B over the course of your earnings before you turn
65. But when you turn 65 you can opt into this, in a sense, public
insurance program. It is voluntary. If you choose to get into part B,
you pay a premium. It is about $45 a month.
That $45 only covers 25 percent of the cost of the program. Who picks
up the other 75 percent? Mr. and Mrs. Taxpayer. That's fine if you are
a senior who needs subsidies from the Federal Government to be able to
afford insurance, but in my mind it's not fine to give a subsidy to
people who don't need a subsidy. I am not someone who comes to the
floor on many occasions and talks about class warfare. I don't believe
in that. I don't believe in a lot of the arguments that the rich don't
pay their fair share. I think a lot of it is just hooey, and in fact
class warfare.
What we are talking about here is we are talking about subsidizing
people at a higher income. I am not for that. I am not for taxing them
more, but I am not for subsidizing them, either. So, to the extent that
we subsidize, we said, ``Look, if you are earning over $70,000 as a
couple, you are going to pay a little bit more for your Medicare part B
premium.'' It's still a good deal. It's a pretty big group, and you get
a nice group rate.
We should have done that in this bill. I can tell you, I have been to
senior center after senior center after senior center, and I have
gotten up and I talked about this. I have never heard an objection. No
one has ever objected to this. They thought that's pretty reasonable.
We should not be subsidizing Ross Perot in his Medicare part B premium.
It's crazy. He doesn't need it. Most of these people don't need it, and
they probably wouldn't want it if they realized what it was costing the
Federal Government to do it and what it was costing their children and
grandchildren. So that's one of the things we missed, in my opinion.
It's unfortunate.
The second--I know this is a tougher issue--and that is raising the
eligibility age for Social Security. I know this is not a very popular
issue, but I can tell you we got 62 votes here in the U.S. Senate, I
will say very proudly, in a bipartisan vote. The eligibility age for
Social Security, to be able to qualify for full Social Security
benefits, is going up. Most people in this country don't know that, but
it is. It is going up. In 1983, when they passed the Social Security
reform, they did a couple of things. They raised taxes and they raised
the eligibility age from 65 to 67. They didn't start doing it, though,
for 20 years. The first people who turn 65 who are going to be affected
by this raise in the eligibility age are people who retire in the year
2003, 20 years after the bill passed.
You will hear the people who were here in the Congress who said, ``We
waited 20 years to enact this so people could prepare for this time.''
It is funny, because I talked to a lot of people who are planning to
retire who are about that age, in their fifties right now, who are
going to be retiring, late fifties, retiring in 2003. Most of them
don't know the retirement age is being moved back. I talked to most
younger people, and they have no idea the retirement age is being moved
back. These people, as far as I am concerned, who passed this thing in
1983 and put it off 20 years, put it off 20 years because they will be
gone in 20 years, most of them, and so they won't have to take the
wrath of the American public, if there is going to be some. I hope
there will not be, once they understand the problem of having to deal
with the issue. I think we should deal with the issue now.
We should tie the Medicare eligibility age to Social Security, which
phases up over a 20-year period. It doesn't hit 67 as a retirement age
until the year 2025. We should tie the two together, because most
people, most lower and middle income people, are not going to be able
to retire prior to being eligible for Social Security, so there should
not be much of a problem with tying in Medicare because they are going
to retire when they hit the retirement age for Social Security. That
will also be the retirement age, in a sense eligibility age, for
Medicare.
For those who can afford to retire sooner, they probably are more
well off, by and large, or they may have a disability. But in that case
they qualify for Government benefits through disability. But, for those
who are more well off, then we should create an option for them to buy
in at age 65, they can buy into Medicare if they can't continue their
private insurance.
There was a way to work this out that I think would have been, again,
the right thing to do for the long term for Medicare. If you really
care about providing a health safety net for the future, those were two
things that were really missed opportunities. It is unfortunate we
missed them.
I will say, overall, we have taken a positive step here. I think we
missed an opportunity to do something really lasting, really
significant. We stood up and made a courageous vote, a vote that,
frankly--if Members would go out and take the time to talk to people
and explain the demographic problems that we have, the fact that people
are living substantially longer and they are substantially healthier,
that these kinds

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of changes only make sense to make sure that future generations have
these retirement security programs like Medicare and Social Security to
rely on for the future.
So, I am disappointed that we blinked, the White House was not
supportive, and frankly our colleagues in the House were not
supportive. I think that is unfortunate for both of those entities. I
stand with particular pride at the U.S. Senate, that it had the courage
to look ahead, to not make decisions just based on short-term fixes.
Frankly, the Medicare provision here is a short-term fix. We had long-
term fixes in the Senate bill and we didn't follow through, and I think
that is unfortunate.
We did do a lot of other positive things in this bill, and I will
support it as a result of that. But I think this piece of legislation,
given what the Senate did in their courageous action by going out on
Medicare and setting the course, missed a tremendous opportunity.
One final comment. There is an additional concern I have about a
provision in the welfare bill. There is welfare reform--or, in my
opinion some of it is a backtracking on reform from the last bill. We
have some positive things in this bill with respect to work, but we
also have a provision in there that is very worrisome for me, as far as
the ability for work programs, workfare, to work in the States. This
gives the President and the Department of Labor the opportunity to
designate people on workfare in an employment setting as workers
covered by the Fair Labor Standards Act, the minimum wage laws, and all
the other laws that apply to all other employees. The problem with that
is that you get into a whole host of complex things that drive up
significantly the cost of providing a work slot for someone on welfare.
If you believe, as I do, that the most important thing for most of
the people on welfare today is to get them into the workplace, to teach
them the value of work, to give them the sense of pride which so many
millions of Americans for the first time are feeling now, to get off
the welfare rolls and get them into the workplace where they are doing
positive works, where they are getting positive reinforcement for the
things that they are accomplishing, where they are learning the ability
to get up, get their children off to school or to day care or to a
relative and get to work, keep those hours, work hard and come back
home and manage their life--those are important life skills. If we put
the barrier too high for the States, we are going to limit the number
of work spots available for, really, millions of people and, I think,
destroy a lot of the tremendous progress that we have made in creating
an environment under this welfare reform bill that we passed last year
for people to rise out of poverty, to get the kind of experience
necessary to get the sense of accomplishment and self-pride that is
necessary to rise out of poverty.
I am very concerned about that. I hope the administration does not
pull the trigger. They are getting immense pressure from the unions to
do so because the unions want to protect their piece of the pie when it
comes, particularly to the public sector spots that will be filled in
some cases by welfare recipients.
So, I hope the President does not bow to the unions at the expense of
millions of people who want to get out of welfare and who need these
work opportunities to be able to do so.

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