[Congressional Record Volume 144, Number 11 (Thursday, February 12, 1998)]
[Extensions of Remarks]
[Pages E182-E183]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            THE 1999 BUDGET

                                 ______
                                 

                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Thursday, February 12, 1998

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, February 11, 1998 into the Congressional Record.

                      The President's 1999 Budget

       Last week President Clinton submitted to Congress his 368-
     page 1999 budget. In it he proposes to balance the federal 
     budget next year--four years ahead of the target set in last 
     year's historic budget agreement. If successful, the budget 
     would be balanced for the first time in thirty years.
       The annual budget is the most important government 
     document. It is a plan for how the government spends your 
     money, and a plan for how the government pays for its 
     activities. It affects the nation's economy, and it is 
     affected by that economy. If the economy is doing well, 
     people earn more, unemployment is down, revenues increase, 
     and the deficit shrinks. The President's budget is typically 
     a master plan to focus the nation's attention on a 
     President's priorities.
       A few years ago it was nearly impossible to think that an 
     American president would submit a balanced budget this soon. 
     It marks an end to decades of deficits that have paralyzed 
     our politics, shackled the economy, and held the American 
     people back. A balanced budget would mark the beginning of a 
     new era of opportunity for Americans.
       The President projects revenues of $1.74 trillion, spending 
     of 1.73 trillion, and a surplus of $10 billion. For each tax 
     dollar taken in the President would spend 53 cents on 
     benefits such as Social Security and Medicare,

[[Page E183]]

     15 cents on defense, and 16 cents on other domestic programs 
     (education, transportation, law enforcement, etc.). 
     International programs take 1 cent, and interest on the debt 
     consumes 14 cents. The President would reserve 1 cent of each 
     dollar for Social Security reforms, reducing the publicly-
     held federal debt in the process.
       The economic assumptions used by the President seem sound. 
     The President estimates that the economy will slow from 3.7% 
     growth last year to 2% in 1998 and 1999, and that inflation 
     will remain low. This is reasonable, even conservative, 
     compared to most economists' forecasts. However, a 
     recession would put great strains on the federal budget.
       Major Themes: As in past years, the largest spending 
     increases come in Social Security and health benefits. In the 
     remainder of the budget, only research, education, and law 
     enforcement rise faster than inflation. Spending in other 
     areas is cut back to make room for these increases.
       The major initiatives of the President's budget include a 
     voluntary expansion of Medicare to persons age 62 to 64, 
     provided they pay for their benefits; reducing elementary 
     school class size with 100,000 new teachers; expanding child 
     care tax credits for employers and families; and tax credits 
     and research funding to reduce and protect against global 
     warming.
       Research: The President proposes unprecedented increases in 
     research funding for science and technology. The budget 
     requests almost $80 billion for military and civilian 
     research programs combined. The National Institute of Health, 
     the Department of Energy, and the National Science Foundation 
     have sizable increases in their budgets for medical research, 
     energy efficiency, climate studies, and science education. I 
     support investment in research as an investment in future 
     economic growth.
       Social Security: The President proposes to ``Save Social 
     Security first'' by placing any budget surpluses in a reserve 
     to help reform Social Security. I agree that Social Security 
     should take priority over calls to finance additional 
     spending or tax cuts. I do not think we should squander a 
     surplus that has yet to appear when we have a large national 
     debt and long-term problems with Social Security.
       There will be a heated discussion in Congress about the use 
     of possible budget surpluses. Reducing the debt and 
     protecting Social Security would reduce interest payments and 
     raise private investment in the economy. The President's plan 
     puts an obstacle in the way of others who want to give away 
     the surpluses in a sweeping tax cut.
       Tobacco: The President proposes to take $13 billion a year 
     from a proposed tobacco settlement to fund a number of 
     education and health initiatives. The exact source of funds 
     in a settlement is not clear--the original settlement 
     suggested that tobacco companies pay the government large 
     yearly sums, but others have proposed a substantial increase 
     in cigarette taxes. These revenues are highly speculative and 
     uncertain because payment would only come from an overall 
     settlement approved by Congress. If the tobacco settlement 
     does not come through the President has indicated he will 
     find other sources to support his domestic initiatives, or 
     will drop them all together. This adds pressure to approve a 
     settlement.
       Next Steps: Congress will begin work on the budget as the 
     House and Senate budget committees form a template budget 
     resolution to lay the groundwork for additional congressional 
     action. Congress will vote on the budget resolution in late 
     spring, and the detailed spending and tax bills will be 
     finalized over the summer. A final budget reconciliation bill 
     is supposed to be completed by the end of the fiscal year 
     September 30. If Congress and the President fail to work out 
     their differences by this date, they must pass a ``continuing 
     resolution'' or see the government shut down.
       Conclusion: The President's budget is artfully crafted. It 
     carefully balances increases in popular programs with fiscal 
     discipline elsewhere. The booming economy, aided by tough 
     deficit reduction packages in 1993 and 1997, has enabled the 
     President to make a strong statement of policy and politics. 
     The opponents of the President's budget have not rejected his 
     proposals out of hand. They offer alternatives to meet the 
     nation's problems, such as school vouchers, larger tax 
     credits, business incentives, and other devices. Although 
     there is some sweeping rhetoric about differences with the 
     President, there is strong bipartisan support for action on 
     child care, education, and tobacco. The stage has been set 
     for a dynamic and important debate about the future of the 
     country.

     

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