[Congressional Record Volume 144, Number 21 (Thursday, March 5, 1998)]
[Senate]
[Pages S1381-S1385]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         THE PRESIDENT'S BUDGET

  Mr. LOTT. Mr. President, yesterday the Congressional Budget Office 
delivered its preliminary report on the President's budget proposal. 
The news is both astonishing and disappointing. It raises the most 
serious questions about the President's credibility when dealing with 
the budget.
  Five weeks ago, in his State of the Union address, the President made 
a promise to the American people. I want to quote from his speech. The 
President asked and answered a very important question. He said:

       What should we do with this projected surplus? I have a 
     simple, four-word answer: Save Social Security first.
  I thought to myself, that sounded like a pretty good idea. But that's 
not what the President's budget does. The President's budget spends $43 
billion of the projected future surpluses.
  I invite my colleagues to look at the CBO report. It is right on page 
1 of that report:

       The policies outlined in the President's budget will 
     decrease the surplus in each year from 1999 through 2003.

  While the President says he wants to save Social Security first, 
instead, his budget spends the surplus first. Mr. President, what ever 
happened to preserving 100 percent of the surplus for this purpose? To 
me, 100 percent means reserving all of it, not all of it except $43 
billion that you want to spend. What happened to saving ``every penny 
of any surplus until we have taken all the necessary measures to 
strengthen Social Security?'' Does every penny mean every penny except 
$43 billion?
  There is some other bad news in this report as well. I will let the 
chairman of the Budget Committee provide more detail, but I want to 
give just two highlights. The President's budget spends so much money 
that it goes into the red in the year 2000. That's right, after all of 
our hard work last year to balance the budget, and with a lot of help 
from a growing, booming economy, the President now proposes to send us 
back into deficits again that soon. If you are following along in the 
CBO report, that, too, is on page 1 as well. We have not gotten into 
the rest of it. That is really a depressing thought to me. It took us 
almost 30 years to get big Government on the wagon, so to speak, and 
now the President wants us to steer back to the saloon for one more 
round of spending.

[[Page S1382]]

  There is one more point that means a lot to people around here. A 
critical part of last year's bipartisan budget agreement, which the 
Speaker and I forged with the cooperation of Democrats and the 
President, was the creation of caps on discretionary spending. CBO 
tells us that the President's budget will break those caps by $68 
billion over the next 5 years. What good is a budget agreement if the 
President immediately proposes to violate it? What good is balancing 
the budget if the President proposes to spend his way back into 
deficit? And, most important, what good is it to promise that you are 
going to save Social Security first, when the budget you propose 
redirects $43 billion of that goal? The President sent us a budget 6 
days after his promise to save Social Security first. It took only 6 
days for that to fall by the wayside. I have to ask the question, 
what's next, Mr. President?
  I yield the floor and I yield 3 minutes of my leader time to the 
chairman of the Budget Committee.
  Mr. DOMENICI. I will not add much. I ask unanimous consent the 
preliminary report in its entirety--it's not very long--be printed in 
the Record.
  There being no objection, the report was ordered to be printed in the 
Record, as follows:

          [From the Congressional Budget Office, Mar. 4, 1998]

  An Analysis of the President's Budgetary Proposals for Fiscal Year 
                        1999--Preliminary Report

       As requested by the Senate Committee on Appropriations, the 
     Congressional Budget Office (CBO) has estimated the effects 
     of the President's budget proposals for fiscal year 1999 
     using its own economic and technical assumptions. CBO 
     estimates that the President's policies will reduce projected 
     baseline surpluses by $43 billion between 1999 and 2003--and 
     will temporarily dip the budget back into red ink by a small 
     amount in 2000. Nonetheless, the overall picture is one of 
     continuing surpluses through 2003.
       Yet the good news embodied in the projections by both CBO 
     and the Office of Management and Budget could easily be 
     reversed. If revenue growth this year is just one-half of one 
     percent lower than expected the budget could remain in 
     deficit. Alternatively, continued robust economic growth 
     could push up estimated surpluses. In any case, deficits or 
     surpluses over the next several years that differ from 
     current projections by upwards of $100 billion are entirely 
     possible.


                   the president's budgetary policies

       CBO estimates that, compared with its baseline projections, 
     the policies outlined in the President's budget will decrease 
     the surplus in each year from 1999 through 2003. CBO also 
     expects that surpluses under those policies will actually 
     turn out to be lower than projected by the Administration. 
     Nevertheless, the President's budget is estimated to produce 
     a $42 billion surplus in 2003.

          CBO's Estimates of the President's Policy Proposals

       The President's plan would reduce the surpluses projected 
     by CBO under current policies by $43 billion over the 1999-
     2003 period (see Table 1). In 1998, though, the President's 
     proposals would increase the surplus by nearly $1 billion.
       The President's budget was designed to offset increases in 
     spending for some programs with increases in revenues and 
     decreases in spending for other programs. However, CBO 
     estimates that net increases in spending will exceed 
     additional revenues by between $5 billion and $16 billion a 
     year.
       Under the President's proposals, total revenues would 
     exceed the CBO baseline by $12 billion in 1999 and $18 
     billion by 2003. The budget proposes about $24 billion in 
     cumulative tax reductions through 2003 (such as an increase 
     in the child and dependent care tax credit), which are offset 
     by revenue increases of $26 billion (for example, repealing 
     the ability of certain multinational firms to expand their 
     use of foreign tax credits and thereby decrease their federal 
     tax payments). The net boost in revenues stems mostly from 
     assumed new revenues from tobacco companies totaling $65 
     billion through 2003. The budget, however, does not 
     specify the policies that might be implemented to raise 
     that $65 billion. Because there are a number of ways to 
     achieve that end, the Joint Committee on Taxation, which 
     estimates the effects of proposed changes to the tax code, 
     simply accepted the Administration's totals.
       CBO estimates that the increases in spending proposed in 
     the President's budget will outstrip the revenues intended to 
     covert the new programs. In particular, CBO estimates that 
     discretionary spending proposed by the President will 
     increase outlays above CBO's baseline by $90 billion from 
     1999 through 2003, and proposals related to mandatory 
     programs will boost outlays by $28 billion over the same 
     period. In total, the President's proposals would increase 
     spending by $118 billion over five years (not including 
     additional debt-service costs).
       Under the President's policies, discretionary outlays would 
     rise from $558 billion in 1998 to $573 billion in 1999--$12 
     billion above the statutory caps on such spending (see Table 
     2). Such spending would continue to grow in the President's 
     budget, reaching $598 billion in 2003. Total revenues and 
     outlays would each be around $2 trillion by 2003, 
     representing about 19 percent of gross domestic product 
     (GDP).
       Among the Administration's initiatives for mandatory 
     spending are proposals to allow certain groups of people who 
     do not currently have access to employer- or government-
     sponsored health insurance to purchase Medicare coverage. 
     Although CBO makes somewhat different assumptions about 
     participation rates and costs per person than the 
     Administration does, it generally concurs with the 
     Administration's estimate that the provisions would have a 
     small net budgetary impact. Net costs to the federal 
     government would be held down by the high cost of the 
     specified premiums and the stringency of the eligibility 
     criteria, both of which severely limit the number of people 
     who are likely to take advantage of the proposals.
       Although the hike in net spending resulting from the 
     President's proposals reduces projected baseline surpluses, 
     the budget is still expected to remain essentially in surplus 
     through 2003 under the President's policies. From an expected 
     level of $8 billion in 1998; the surplus is projected to rise 
     to $51 billion in 2002 before falling in 2003.

        CBO's Estimate Compared with Those of the Administration

       Although the pattern in the bottom line suggested by CBO's 
     analysis of the President's budget is roughly similar to that 
     estimated by the Administration, the surpluses that CBO 
     projects are smaller. In addition, CBO estimates a small 
     deficit in 2002. The Administration had projected that by 
     2003 the surplus would reach $83 billion, whereas CBO's 
     estimate of the surplus in that year is about half that size 
     (see Table 3).
       Variations between CBO and the Administration in estimating 
     the deficit or surplus arise from baseline differences as 
     well as differences in estimates of the effect of the 
     President's policy proposals. In 1999 and 2000, variations in 
     policy estimates are larger; however, from 2001 through 2003, 
     baseline differences account for the major share of the 
     discrepancy in the two projections.
       Baseline Differences. The greatest differences between the 
     two sets of current-policy projections are on the outlay 
     side. The largest of those differences is in estimates of 
     Medicare spending. The Administration expects that total 
     outlays for Medicare over the next six years (including 
     premiums paid to the government by Medicare beneficiaries) 
     will be $50 billion lower than CBO projects, largely because 
     the Administration believes that policies enacted in last 
     year's Balanced Budget Act will produce more savings than CBO 
     had estimated. Indeed, Medicare alone accounts for around 
     half of each year's difference in projected baseline outlays.
       In addition, higher projections by CBO of inflation 
     compared with those of the Administration push up estimates 
     of spending for programs affected by cost-of-living increases 
     (such as Social Security and Civil Service Retirement). 
     Moreover, higher estimated unemployment and interest rates 
     boost spending on unemployment insurance and net interest 
     on the public debt, respectively. Overall, though, the 
     Administration's assumptions about the performance of the 
     economy over the next six years are not very different 
     from CBO's (see Table 4).
       In 1998, CBO's estimate of revenues is significantly higher 
     than that of the Administration, mostly as a result of 
     technical estimating differences. From 1999 through 2003, 
     however, differences between CBO's and the Administration's 
     revenue estimates under current policies are relatively 
     small.
       Differences in Policy Estimates. Almost all of the 
     differences in policy estimates relate to the outlay side of 
     the budget--and mostly to discretionary spending. CBO 
     estimates that annual outlays for defense spending and 
     subsidized housing, among other discretionary programs, will 
     be higher under the President's proposed levels of funding 
     than the Administration has estimated.
       The major difference in mandatory outlays comes from the 
     savings produced by repealing the recent ruling of the 
     Department of Veterans Affairs that nicotine dependence can 
     be considered a service-related disease for purposes of 
     compensation. The Administration estimates that costs over 
     the 1999-2003 period will be $7 billion higher than CBO 
     projects under current policies and therefore claims $7 
     billion more in savings from repealing the decision.


                         cbo's revised baseline

       In the course of preparing its annual analysis of the 
     President's budget, CBO typically updates its baseline 
     projections to take account of new information from the 
     President's budget and other sources. The revised March 
     projections then usually become the baseline for the budget 
     resolution.
       CBO's new March projections are not materially different 
     from those issued in its January 1998 report, The Economic 
     and Budget Outlook: Fiscal Years 1999-2008. The only major 
     change since January is an increase in revenues from 1998 
     through 2000 to reflect more rapid inflows into the Treasury 
     than either CBO or the Administration had anticipated (see 
     Table 5). That change, however, is enough to shift CBO's 
     projections from small annual deficits to small annual 
     surpluses during those years. CBO expects that the budget 
     surplus for this year will be nearly $8 billion. Assuming 
     that current policies do

[[Page S1383]]

     not change and that the economy stays on the anticipated 
     course, surpluses are projected to rise eventually to $138 
     billion in 2008.
       Both federal spending and revenues are expected to total 
     around $1.7 trillion this year--or approximately 20 percent 
     of GDP. Under CBO's baseline assumptions, projected outlays 
     as a percentage of GDP fall gradually to 18.3 percent by 
     2008. Revenues decline to 19.3 percent of GDP by 2003 and 
     remain at that level through 2008 (see Table 6).

      TABLE 1.--CBO ESTIMATES OF THE EFFECT ON THE SURPLUS OR DEFICIT OF THE PRESIDENT'S BUDGETARY POLICIES     
                                    [By fiscal year, in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                                                          Total 
                                                     1998     1999     2000     2001     2002     2003    1999- 
                                                                                                           2003 
----------------------------------------------------------------------------------------------------------------
CBO Surplus Projections..........................        8        9        1       13       67       53       NA
                                                                                                                
     Effect on the Surplus of the President's                                                                   
                Budgetary Policies                                                                              
                                                                                                                
Revenues:                                                                                                       
    Tobacco-related..............................        0       10       12       13       15       16       65
    Other........................................      (a)        2        3        3        3        2       14
                                                  --------------------------------------------------------------
      Subtotal...................................      (a)       12       15       17       18       18       80
                                                  ==============================================================
Outlays:                                                                                                        
  Discretionary..................................      (a)      -12      -15      -15      -27      -22      -90
                                                  ==============================================================
  Mandatory:                                                                                                    
    Tobacco-related activities...................        0       -3       -4       -5       -5       -5      -22
    Reduce class size in schools.................        0      (a)       -1       -1       -1       -2       -5
    Repeal VA smoking decision...................        0      (a)        1        2        3        4       10
    Other........................................        1       -2       -2       -3       -2       -2      -10
                                                  --------------------------------------------------------------
      Subtotal...................................        1       -5       -6       -6       -6       -5      -28
                                                  ==============================================================
      Total Outlays..............................        1      -17      -20      -21      -32      -27     -118
                                                  ==============================================================
      Total Effect of Policies...................        1       -5       -5       -4      -14       -9      -38
      Debt Service...............................      (a)      (a)      (a)       -1       -1       -2       -4
                                                  --------------------------------------------------------------
      Total Effect on the Surplus................        1       -5       -6       -5      -16      -11      -43
                                                  ==============================================================
Surplus or Deficit (-) Under the President's                                                                    
 Budgetary Policies as Estimated by CBO..........        8        4       -5        8       51       42       NA
----------------------------------------------------------------------------------------------------------------
a Less than $500 million.                                                                                       
Notes: Numbers in the table may not add to totals because of rounding. VA=Department of Veterans Affairs; NA=not
  applicable.                                                                                                   
                                                                                                                
 Sources: Congressional Budget Office; Joint Committee on Taxation.                                             


                          TABLE 2.--CBO ESTIMATES OF THE PRESIDENT'S BUDGETARY POLICIES                         
                                                [By fiscal year]                                                
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      2003  
----------------------------------------------------------------------------------------------------------------
                                                                                                                
(5) In Billions of Dollars                                                                                      
Revenues............................................     1,680     1,751     1,799     1,863     1,948     2,026
                                                     ===========================================================
Outlays:                                                                                                        
  Discretionary:                                                                                                
    Defense.........................................       269       270       273       272       280       290
    Nondefense......................................       288       303       306       307       307       308
                                                     -----------------------------------------------------------
      Subtotal......................................       558       573       580       579       587       598
                                                     ===========================================================
Mandatory:                                                                                                      
  Social Security...................................       376       392       409       428       449       471
  Medicare..........................................       197       208       219       240       246       271
  Medicaid..........................................       101       108       115       122       131       141
  Other.............................................       277       301       325       342       357       374
                                                     -----------------------------------------------------------
    Subtotal........................................       951     1,009     1,067     1,132     1,183     1,257
                                                     -----------------------------------------------------------
Offsetting Receipts.................................       -82       -83       -87       -92      -105       -98
Net Interest........................................       245       247       243       237       231       227
                                                     ===========================================================
    Total...........................................     1,671     1,747     1,803     1,855     1,897     1,983
                                                     ===========================================================
Surplus or Deficit (-)..............................         8         4        -5         8        51        42
                                                                                                                
(5) As a Percentage of Gross Domestic Product                                                                   
Revenues............................................      20.1      20.1      19.8      19.6      19.6      19.5
                                                     ===========================================================
Outlays:                                                                                                        
  Discretionary:                                                                                                
    Defense.........................................       3.2       3.1       3.0       2.9       2.8       2.8
    Nondefense......................................       3.4       3.5       3.4       3.2       3.1       3.0
                                                     -----------------------------------------------------------
      Subtotal......................................       6.7       6.6       6.4       6.1       5.9       5.7
                                                     ===========================================================
Mandatory:                                                                                                      
  Social Security...................................       4.5       4.5       4.5       4.5       4.5       4.5
  Medicare..........................................       2.4       2.4       2.4       2.5       2.5       2.6
  Medicaid..........................................       1.2       1.2       1.3       1.3       1.3       1.4
  Other.............................................       3.3       3.5       3.6       3.6       3.6       3.6
                                                     -----------------------------------------------------------
    Subtotal........................................      11.4      11.6      11.7      11.9      11.9      12.1
                                                     -----------------------------------------------------------
Offsetting Receipts.................................      -1.0      -1.0      -1.0      -1.0      -1.1      -0.9
Net Interest........................................       2.9       2.8       2.7       2.5       2.3       2.3
                                                     ===========================================================
    Total...........................................      20.0      20.0      19.8      19.5      19.1      19.1
                                                     ===========================================================
Surplus or Deficit (-)..............................       0.1       (a)       (a)       0.1       0.5       0.4
                                                     ===========================================================
Memorandum: Gross Domestic Product..................     8,369     8,729     9.097     9,499     9,933   10,405 
----------------------------------------------------------------------------------------------------------------
(a) Less than 0.05 percent.                                                                                     
Source: Congressional Budget Office.                                                                            
Note: Numbers in the table may not add to totals because of rounding.                                           
                                                                                                                


[[Page S1384]]


                         TABLE 3.--CBO REESTIMATES OF THE PRESIDENT'S BUDGETARY POLICIES                        
                                    [By fiscal year, in billions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      2003  
----------------------------------------------------------------------------------------------------------------
Deficit (-) or Surplus Under the President's                                                                    
 Budgetary Policies as Estimated by the                                                                         
 Administration.....................................       -10        10         9        28        90        83
                                                     ===========================================================
                                                                                                                
(5) Baseline Differences                                                                                        
Revenues............................................        22         9         5         1        -1        -2
Outlays:                                                                                                        
  Discretionary.....................................         5       (a)        -1        -1        -1         2
  Mandatory.........................................        -1         6         9        16        23        31
                                                     -----------------------------------------------------------
    Subtotal........................................         4         6         9        15        23        34
    Total Baseline Differences......................        18         3        -4       -15       -24       -36
                                                                                                                
(5) Differences in Estimates of Proposed Policies                                                               
Revenues............................................       (a)        -1       (a)       (a)        -1        -1
Outlays:                                                                                                        
  Discretionary.....................................       (a)         7         7         4        11       (a)
  Mandatory.........................................        -1         1         3         1         4         4
                                                     -----------------------------------------------------------
    Subtotal........................................        -1         8        10         6        15         4
    Total Policy Differences........................         1        -9        -9        -6       -15        -5
                                                                                                                
(5) All Estimating Differences                                                                                  
Total Differences...................................        18        -6       -13       -20       -39       -41
Deficit (-) or Surplus Under the President's                                                                    
 Budgetary Policies as Estimated by CBO.............         8         4        -5         8        51        42
----------------------------------------------------------------------------------------------------------------
(a) Less than $500 million.                                                                                     
Note: Numbers in the table may not add to totals because of rounding.                                           
Source: Congressional Budget Office.                                                                            


          TABLE 4.--COMPARISON OF CBO AND ADMINISTRATION ECONOMIC PROJECTIONS, CALENDAR YEARS 1998-2003         
----------------------------------------------------------------------------------------------------------------
                                                      Forecast                         Projected                
                                               -----------------------------------------------------------------
                                                   1998       1999       2000       2001       2002       2003  
----------------------------------------------------------------------------------------------------------------
Nominal GDP:                                                                                                    
(5) In billions of dollars                                                                                      
  CBO.........................................      8,461      8,818      9,195      9,605     10,046     10,529
  Administration..............................      8,430      8,772      9,142      9,547      9,993     10,454
Nominal GDP:                                                                                                    
(5) Percentage change                                                                                           
  CBO.........................................        4.7        4.2        4.3        4.5        4.6        4.8
  Administration..............................        4.3        4.1        4.2        4.4        4.7        4.6
Real GDP:                                                                                                       
  CBO.........................................        2.7        2.0        1.9        2.0        2.1        2.3
  Administration..............................        2.4        2.0        2.0        2.2        2.4        2.4
Implicit GDP Deflator: a                                                                                        
  CBO.........................................        2.0        2.2        2.3        2.4        2.4        2.5
  Administration..............................        1.9        2.0        2.2        2.2        2.2        2.2
Consumer Price Index: b                                                                                         
  CBO.........................................        2.2        2.5        2.7        2.8        2.8        2.8
  Administration..............................        2.1        2.2        2.3        2.3        2.3        2.3
Unemployment Rate:                                                                                              
(5) Percent                                                                                                     
  CBO.........................................        4.8        5.1        5.4        5.6        5.8        5.9
  Administration..............................        4.9        5.1        5.3        5.4        5.4        5.4
Three-Month Treasury:                                                                                           
(5) Bill Rate (Percent)                                                                                         
  CBO.........................................        5.3        5.2        4.8        4.7        4.7        4.7
  Administration..............................        5.0        4.9        4.8        4.7        4.7        4.7
Ten-Year Treasury:                                                                                              
(5) Note Rate (Percent)                                                                                         
  CBO.........................................        6.0        6.1        6.0        5.9        5.9        5.9
  Administration..............................        5.9        5.8        5.8        5.7        5.7        5.7
Taxable Income: c                                                                                               
(5) In billions of dollars                                                                                      
  CBO.........................................      6,688      6,906      7,147      7,426      7,732      8,080
  Administration..............................      6,670      6,920      7,188      7,474      7,798      8,132
----------------------------------------------------------------------------------------------------------------
a The ratio of nominal GDP to real GDP.                                                                         
b The consumer price index for all urban consumers.                                                             
c Taxable personal income plus corporate profits before tax.                                                    
                                                                                                                
Note: Percentage change is year over year.                                                                      
Sources: Congressional Budget Office; Office of Management and Budget.                                          


                                        TABLE 5.--CHANGES IN CBO BASELINE DEFICITS OR SURPLUSES SINCE JANUARY 1998                                      
                                                        [By fiscal year, in billions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         1998     1999     2000     2001     2002     2003     2004     2005     2006     2007     2008 
--------------------------------------------------------------------------------------------------------------------------------------------------------
January 1998 Baseline Deficit (-) or Surplus.........       -5       -2       -3       14       69       54       71       75      115      129      138
Technical Changes:                                                                                                                                      
  Revenues...........................................       15       10        5      (a)      (a)      (a)      (a)      (a)      (a)      (a)      (a)
  Outlays:                                                                                                                                              
    Discretionary....................................      (a)      (a)      (a)      (a)      (a)      (a)      (a)      (a)      (a)      (a)      (a)
    Mandatory........................................      (a)      (a)        1        2        4        1        2        1      (a)      (a)      (a)
    Net interest.....................................        1      (a)       -1       -1       -1       -1       -1      (a)      (a)      (a)      (a)
                                                      --------------------------------------------------------------------------------------------------
      Subtotal.......................................        2       -1      (a)        1        3        1        1        1      (a)      (a)      (a)
      Total Technical Changes........................       13       11        5       -1       -3       -1       -1       -1      (a)      (a)      (a)
March 1998 Baseline Surplus..........................        8        9        1       13       67       53       70       75      115      130      138
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Less than $500 million.                                                                                                                               
Note: Numbers in the table may not add to totals because of rounding.                                                                                   
                                                                                                                                                        
Source: Congressional Budget Office.                                                                                                                    


                                                       TABLE 6.--CBO REVISED BASELINE PROJECTIONS                                                       
                                                                    [By fiscal year]                                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Actual                                                                                                               
                                    1997      1998      1999      2000      2001      2002      2003      2004      2005      2006      2007      2008  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revenues:                                                                                                                                               
(11)In Billions of Dollars                                                                                                                              
  Individual income.............       737       783       792       810       840       886       922       974     1,027     1,083     1,143     1,207
  Corporate income..............       182       197       200       200       200       203       209       216       224       232       241       250
  Social insurance..............       539       573       600       625       651       679       710       743       781       817       856       892
  Other.........................       120       127       147       149       155       161       167       173       177       181       187       191
                                 -----------------------------------------------------------------------------------------------------------------------
    Total.......................     1,579     1,680     1,738     1,784     1,847     1,930     2,008     2,105     2,208     2,314     2,426     2,540
                                 =======================================================================================================================
Outlays:                                                                                                                                                
  Discretionary a...............       548       558       561       565       564       560       576       592       609       626       643       661
                                 =======================================================================================================================
  Mandatory:                                                                                                                                            
    Social Security.............       362       376       391       409       428       449       471       495       522       551       582       614

[[Page S1385]]

                                                                                                                                                        
    Medicare....................       208       218       231       244       268       277       306       330       367       377       417       448
    Medicaid....................        96       101       108       115       123       131       141       152       165       179       194       210
    Other.......................       231       257       273       293       305       319       332       344       362       370       378       399
                                 -----------------------------------------------------------------------------------------------------------------------
      Subtotal..................       896       951     1,004     1,060     1,123     1,176     1,250     1,322     1,417     1,477     1,570     1,672
Net interest....................       244       245       247       243       237       230       226       221       215       209       202       194
Offsetting receipts.............       -87       -82       -82       -85       -91      -103       -97      -101      -107      -113      -119      -126
                                 =======================================================================================================================
    Total.......................     1,601     1,672     1,730     1,782     1,833     1,863     1,954     2,035     2,134     2,199     2,297     2,402
Deficit (-) or Surplus..........       -22         8         9         1        13        67        53        70        75       115       130       138
                                                                                                                                                        
           Memorandum:                                                                                                                                  
                                                                                                                                                        
On-budget Deficit (-) or Surplus      -103       -92      -104      -121      -117       -72       -94       -88       -96       -64       -59       -59
Debt Held by the Public.........     3,771     3,774     3,781     3,793     3,795     3,743     3,706     3,651     3,591     3,491     3,375     3,251
Revenues:                                                                                                                                               
(11)As a Percentage of Gross                                                                                                                            
 Domestic Product                                                                                                                                       
  Individual income.............       9.3       9.4       9.1       8.9       8.8       8.9       8.9       8.9       9.0       9.0       9.1       9.2
  Corporate income..............       2.3       2.4       2.3       2.2       2.1       2.0       2.0       2.0       2.0       1.9       1.9       1.9
  Social insurance..............       6.8       6.8       6.9       6.9       6.9       6.8       6.8       6.8       6.8       6.8       6.8       6.8
  Other.........................       1.5       1.5       1.7       1.6       1.6       1.6       1.6       1.6       1.5       1.5       1.5       1.5
                                 -----------------------------------------------------------------------------------------------------------------------
    Total.......................      19.8      20.1      19.9      19.6      19.4      19.4      19.3      19.3      19.3      19.3      19.3      19.3
                                 =======================================================================================================================
Outlays:                                                                                                                                                
  Discretionary a...............       6.9       6.7       6.4       6.2       5.9       5.6       5.5       5.4       5.3       5.2       5.1       5.0
                                 =======================================================================================================================
  Mandatory:                                                                                                                                            
    Social Security.............       4.5       4.5       4.5       4.5       4.5       4.5       4.5       4.5       4.6       4.6       4.6       4.7
    Medicare....................       2.6       2.6       2.6       2.7       2.8       2.8       2.9       3.0       3.2       3.1       3.3       3.4
    Medicaid....................       1.2       1.2       1.2       1.3       1.3       1.3       1.4       1.4       1.4       1.5       1.5       1.6
    Other.......................       2.9       3.1       3.1       3.2       3.2       3.2       3.2       3.2       3.2       3.1       3.0       3.0
                                 -----------------------------------------------------------------------------------------------------------------------
      Subtotal..................      11.2      11.4      11.5      11.7      11.8      11.8      12.0      12.1      12.4      12.3      12.5      12.7
Net interest....................       3.1       2.9       2.8       2.7       2.5       2.3       2.2       2.0       1.9       1.7       1.6       1.5
Offsetting receipts.............      -1.1      -1.0      -0.9      -0.9      -1.0      -1.0      -0.9      -0.9      -0.9      -0.9      -0.9      -1.0
                                 =======================================================================================================================
    Total.......................      20.1      20.0      19.8      19.6      19.3      18.8      18.8      18.7      18.7      18.4      18.3      18.3
Deficit (-) or Surplus..........      -0.3       0.1       0.1       (b)       0.1       0.7       0.5       0.6       0.7       1.0       1.0       1.1
                                                                                                                                                        
           Memorandum:                                                                                                                                  
                                                                                                                                                        
On-budget Deficit (-) or Surplus      -1.3      -1.1      -1.2      -1.3      -1.2      -0.7      -0.9      -0.8      -0.8      -0.5      -0.5      -0.5
Debt Held by the Public.........      47.3      45.1      43.3      41.7      39.9      37.7      35.6      33.5      31.4      29.2      26.9      24.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
a The baseline assumes that discretionary spending will equal the statutory caps on discretionary spending in 1999 through 2002 and will increase at the
  rate of inflation in succeeding years.                                                                                                                
b Less than 0.05 percent.                                                                                                                               
                                                                                                                                                        
Note: Numbers in the table may not add to totals because of rounding.                                                                                   
Source: Congressional Budget Office.                                                                                                                    

  Mr. DOMENICI. Mr. President, yesterday, the Congressional Budget 
Office released its preliminary analysis of the President's fiscal year 
1999 Budget.
  Very briefly, according to the CBO analysis, the President's budget 
proposal would spend $43 billion of the federal surplus rather than 
save the money for social security as the President admonished us in 
his State of the Union Address.
  This results from the fact that the CBO analysts found that his new 
proposed spending of nearly $120 billion over the next 5 years exceeds 
his proposed spending cuts and tax increases of $43 billion.
  In other words, if Congress did nothing but abide by the agreement we 
reached last year, the surpluses projected by CBO would be $43 billion 
higher than if we adopted the President's budget proposal.
  But that won't even be possible, because under the Budget Act, the 
President's budget could not even be considered on the floor of the 
Senate, because it would be out of order.
  The President's budget violates the agreement reached last year by 
proposing to break the statutory spending caps by $68 billion, making 
it out of order in the U.S. Senate.
  Further, CBO found that the President's budget dips us back into 
deficit in the year 2000.
  This is disappointing. But even if the administration proposes to 
break our agreement from last year, I do not.
  It is my intent to have the Senate Budget Committee report within the 
next two weeks a budget for fiscal year 1999 that will: (1) abide by 
the spending caps set in law last year, (2) balance the budget and keep 
it in balance, (3) hold any budget surpluses in reserve to protect 
Social Security and provide for any future transition to a modernized 
system.
  Mr. President, let me make it very simple in this regard. If we did 
nothing, in other words if the President had not submitted a budget and 
we just said let's continue with the policies that we have that were 
established in this bipartisan agreement, the Congressional Budget 
Office says the surplus would be $43 billion bigger than it is. That is 
the simple fact which causes them to conclude, and us to concur, that 
in fact the President has spent $43 billion of the surplus in his 
budget. It would be $43 billion higher had he not put a budget before 
the people, which leads you to that one simple conclusion.
  Some may recall when the President announced his budget, there was a 
lot less noise made about it, excepting some profound questions were 
asked. How can you have $120 billion in new programs and not break the 
agreed-upon caps--that is the total amount you can spend for domestic 
discretionary spending--when that cap is a fixed dollar number? It has 
nothing to do with inflation; it is just a fixed dollar number. How can 
you say we will spend $120 billion, more or less, more than we had 
planned yet we will not exceed those agreed-upon totals?
  So, what we have now, in my opinion, is a President's budget that, if 
it were submitted on the floor or in the Budget Committee, would be out 
of order because it breaches the agreed-upon caps by $68 billion. So it 
seems to me that we have to go into our mark-up here with that in mind. 
I am sure the President and his people will explain that they thought 
certain things could be handled differently than CBO handled them, and 
they are entitled to that position. But that is what we have to follow, 
and their rules have to be followed by us. We cannot adopt rules that 
the President establishes. So I believe it is important that the 
Senators understand the situation we are confronted with as we move in 
the Budget Committee and on the floor of the Senate.
  I yield the floor.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Rhode 
Island.

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