[Congressional Record Volume 144, Number 61 (Thursday, May 14, 1998)]
[House]
[Pages H3299-H3302]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            THE CONSERVATION ACTION TEAM BUDGET FOR AMERICA

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Wisconsin (Mr. Neumann) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. NEUMANN. Mr. Speaker, I rise today to talk about a new budget 
that has been introduced out here. There has been a lot of discussion 
recently about the House budget, or the John Kasich budget as it is 
sometimes known in the House Committee on the Budget.
  I am a member of that committee and I think John Kasich has done a 
tremendous job putting together a budget. But some of us don't think we 
have done quite enough in terms of reeling in government spending and 
getting this whole thing under control out here, so that the American 
people can keep more of their own money, so that Social Security can 
again be safe, and again we can start paying down the Federal debt.
  So I rise today to talk about an alternative budget called the CATs 
budget, or Conservation Action Team budget, that promotes a lot of 
visions that are different.
  Washington is truly an amazing place when you start talking about 
budgets and numbers and things, because everything gets twisted 
immediately. It amazes me to listen to people talk about how they are 
cutting spending in Washington, D.C.
  I brought with me a chart today to show what happens in these 
different budget proposals that are being talked about out here. This 
black line on this chart shows inflationary increases in government 
spending. So if we allowed Washington or government spending to 
increase at the rate of inflation, that is what this black line on this 
chart represents.
  The President made a budget proposal, and it is very clear from this 
that it allows government spending to go up much faster than the rate 
of inflation. That is growing government.
  The United States Senate recently passed a budget, and again you can 
see that the Senate budget grows government, it allows government 
spending to increase faster than the rate of inflation.
  The American people have a right to know that on the other side of 
the aisle they are going to call this a spending cut because, you see, 
since the Senate budget did not spend as much as the President's 
proposal, they are going to call this distance from here to here a 
``cut,'' even though the inflationary increase in government spending 
is down here at this black line and the Senate proposal increases 
spending much faster than the rate of inflation.

  Some of us out here thought that government spending should not 
increase faster than the family budget or faster than the rate of 
inflation, so we put together our own budget. Our budget allows 
government spending to increase not quite at the rate of inflation, 
just a little bit slower than the rate of inflation.
  For all of my colleagues out there and all the viewers out there that 
believe that government spending should not be going up at all, let me 
just agree with you. If I got to do this all by myself, this green line 
would be down here, and we would not allow government spending to 
increase at all.
  So let me start by making it clear that this budget that we are 
talking about, the CATs budget, the Conservation Action Team budget, 
allows government spending to increase, but at a rate just slower than 
the rate of inflation.
  So when people talk about this Conservation Action Team's budget and 
draconian cuts, we all ought to understand that what the CATs budget 
actually does is hold the rate of growth of government to approximately 
the rate of inflation. So when you talk about cuts in spending, there 
are no cuts in spending.
  Spending in the first year of the CATs budget, the most conservative 
budget out here, spending in the first year will be approximately 
$1,720 billion. That is a lot of money. In the second year it is going 
to be $1,749 billion. I am not going to read all the numbers. But the 
point is the spending, even in the Conservation Action Team's budget, 
increases each and every year. So when the American people hear about 
draconian budget cuts in Washington, they ought to understand the 
fallacy of that discussion.
  The reality is the most conservative budget proposed out here, that 
is the least government spending, allows government spending to 
increase at approximately the rate of inflation. The Senate proposal, 
well, that lets government spending go up much faster than the rate of 
inflation, and the President's proposal, of course, that increases 
government spending even more yet.
  So I start with this discussion about the CATs budget. It is the only 
budget out here that holds the growth rate of Washington spending or 
government under the rate of inflation.
  There are some other very unique things about the CATs budget I would 
like to talk about. There has been much discussion, and I am going to 
spend part of this hour today talking in more depth about Social 
Security.
  There has been much discussion about the problem with Social 
Security. The President of the United States, Mr. Speaker, Saturday 
right in that chair, and he put his fist on the table and said, Social 
Security first; Social Security must be protected for our senior 
citizens. Well, I brought a chart along to show which budget really 
protects Social Security for our senior citizens.
  The President's proposal has a very limited amount of money set aside 
to protect and preserve Social Security. The Senate did slightly better 
than the President, setting some money aside to preserve and protect 
Social Security. The CATs budget sets more money aside to protect 
Social Security than any other proposal out here.

[[Page H3300]]

  The CATs budget holds the increase in government spending to the rate 
of inflation, and it puts more money aside for Social Security than any 
of the other proposals. Again, the President's proposal puts this much 
money aside for Social Security, the Senate puts this much, and the 
CATs budget, the Conservation Action Team's budget, puts more money 
aside for preserving Social Security than any of the other proposals 
out here.
  The next important feature of the CATs budget that sets it apart from 
all the rest of the budgets. We recognize that the tax burden on 
American citizens is too high. Since the CATs budget spends less money, 
it allows spending to grow only at the rate of inflation, instead of 
faster than the rate of inflation, that allows us to decrease taxes on 
the American workers.
  Today the American workers are paying $37 out of every $100 they earn 
in taxes. A generation ago that number was $25. I would like someone to 
help me understand why it is that the government needs $37 out of every 
$100 that American workers earn to run government at various levels, 
State, local, Federal, property taxes and so on.
  So the CATs budget looks at this and says the tax burden on American 
workers is too high. We want to bring down that tax burden on American 
workers.
  The President's budget proposes very minimal tax reductions. As 
matter of fact, some out here would say it is zero.
  The Senate also proposed very minimal tax reductions on American 
workers. The CATs budget, the Conservation Action Team, provides $150 
billion of tax relief to American workers.
  Now, this should be kept in perspective. We are going to spend over 
9,000 billions of dollars. So when we talk about returning or allowing 
the American people to keep an extra $150 billion of their own, we 
should understand that is 150 out of over 9,000 billions of dollars. It 
is just a tiny little bit of what is being taken from the American 
people in taxes already.
  So the next important feature then that sets the CATs budget aside 
from any other proposal out here right now is the tax relief provided 
to the American people is significantly larger than the President's 
proposal, a lot larger than the Senate proposal; it is the most tax 
relief being proposed out here in Washington, D.C., today. It holds 
government spending increases to the rate of inflation, no draconian 
cuts, sets more money aside for Social Security, and provides more tax 
relief to the American people than any other proposal on the Hill.
  I have a chart with a lot of numbers on it, but rather than talk 
about all of those numbers, I thought I would point out a couple of the 
key numbers.
  The tax relief number is $150 billion being proposed in the CATs 
proposal. Defense is another important area, and I have to tell you 
this proposal is different than any other proposal here in Washington 
as it relates to defense.
  You need to understand Washington language to understand this defense 
discussion. In Washington, when the President proposes cutting defense, 
that is, we are spending $260 billion this year, and he proposes taking 
that number down to $250 next year, and then Congress comes back and 
actually spends 260, so they spent 260 last year, they are spending 260 
this year, but the President proposed cutting that spending to 250, 
that is called in Washington a $10 billion increase.
  Let me walk through that one more time slowly, because it is 
confusing.
  If we spent 260 last year and we spend 260 billion again this year, 
the exact same amount, but the President proposed spending 250 instead 
of 260, that 260 is called a $10 billion increase in defense spending.
  Okay. This has been going on for quite some time, and there are some 
problems, quite frankly, in the defense budget. There are $75 hammers 
that people have heard about. Frankly, there is some waste there. The 
people who bought the $75 hammers ought to be fired, but that is not a 
reason to destroy our ability to defend ourselves as a Nation.

                              {time}  1515

  That is the wrong solution to the problems. Our budget allows 
defensive spending or spending for the Defense Department to increase 
at the rate of inflation. Let me say that once more very slowly. Like 
the rest of the CATs budget, defense spending increases at the rate of 
inflation.
  Now, what is going to happen in this is over the next few weeks there 
will be a lot of people in Washington D.C. saying they are spending 
lots more money on defense. Well, for the last number of years, a lot 
of years, defense spending has been frozen. In fact, we spent less 
money on defense last year than my first year in office back in 1995.
  I think it is time we look around the world and we see what is going 
on. India had nuclear tests. We understand Pakistan may have nuclear 
tests this weekend. China has been given the technology to launch an 
intercontinental missile at the United States and get it to reach the 
United States. It is time we as a Nation wake up to the fact that we 
ought to have a missile defense system prepared to defend our country.
  It is time we wake up to the fact that our defense budget has been 
cut far enough. And we are not suggesting dramatic increases in defense 
spending, we are simply saying we have gone far enough with these cuts 
in defense, let us now level this thing off and allow defense spending 
to increase at the rate of inflation.
  I point that out in our CATs budget, because it is the only budget on 
the Hill, the only proposal in Washington D.C. that allows inflationary 
increases in defense spending. Every other proposal out here either 
freezes it at last year's level or decreases defense spending 
significantly. I think we have reached a point in our defense spending 
where we need to wake up and realize that this is a dangerous world we 
live in and we need to maintain our ability to defend ourselves in this 
country.
  I want to just go on from there and talk a little bit more about the 
Social Security situation.
  The Social Security situation, remember, the CATs budget puts more 
money aside for Social Security than any other proposal on the Hill. I 
want to talk through Social Security in detail so that the viewers 
understand this debate that is going on here about Social Security, 
because in this community, what they talk about here and what they say 
and what it actually means out in the real world are generally two very 
different things. So let me go through Social Security.
  The Social Security system this year is going to collect about $480 
billion in taxes, out of workers' paychecks. They are bringing $480 
billion into this city from Social Security taxes. We are paying out to 
our senior citizens in benefits, we are paying out in benefits about 
$382 billion. Now, if we are collecting $480 billion and paying $382 
out in benefits, that leaves a $98 billion surplus in Social Security.
  So let me be very clear about this. The Social Security system today 
collects more money than what it pays back out to our senior citizens 
in benefits. The reason they are doing that is because the baby boom 
generation, people in my age, and as I look around the people here in 
the House with me today, people in our age group are rapidly racing 
toward retirement, and there are lots of us. They are collecting more 
money than they are paying back out in benefits, and their surplus is 
supposed to be set aside so when us baby boom generation people, lots 
of us, reach retirement and there is too much money going out and not 
enough money coming in, at that point they are supposed to go to the 
savings account. They are supposed to take this $98 billion that is 
supposedly put in a savings account, get the money out of the savings 
account, and be able to make good on Social Security to tomorrow's 
seniors.
  The year that these two numbers turn around is about 2012. So in 
about 2012, if we had this chart up here, the amount of money coming in 
compared to the amount of money going out, the amount of money coming 
in would be less than the amount of money going out, and that is the 
year that they have to go to that savings account to get the money.
  It is important to understand what Washington is doing with that $98 
billion. It comes as no great surprise when I am in town hall meetings 
with my constituents and we talk about this. I always ask them the 
question: Washington got $98 billion more in Social Security than what 
they paid out

[[Page H3301]]

in benefits; what do you suppose they did with the money? And everybody 
says, they spent it. That is exactly right.
  Washington has taken that $98 billion, they put it into, think of the 
second circle as a big government checkbook much like your own 
checkbook in your own home. They take that extra money, put it in the 
big government checkbook, they then spend all of the money out of that 
government checkbook and at the end of the year there is nothing left 
in that government checkbook, so they simply write an IOU. It is simply 
like you are going to have a savings account, but rather than actually 
writing a check, you simply write an IOU to the account at the end of 
the year. Remember, folks, at the year 2012, we need the money out of 
that savings account. We need those IOUs in the year 2012.
  Now, we have reached this point out here where we are running these 
``surpluses.'' It is important the American people understand what this 
surplus actually is. In all fairness, before I go into this, we should 
point out that this is the same definition that has been used since 
1969. That ``surplus'' is in this circle right over here. That 
``surplus'' is after we put the $98 billion in the big government 
checkbook, if they spent all of the money out of the big government 
checkbook and there was no money left at the end of the year, they 
would call that a balanced budget, even though they have not written a 
check down here to the Social Security Trust Fund. So when we talk 
about surpluses, what it means is with that $98 billion in the big 
government checkbook, when they are looking at the book at the end of 
the year, without writing the check to the Social Security Trust Fund 
that there is some money somehow left in this checkbook.
  Well, the bottom line on this thing, folks, is that the surplus is 
real, as defined in Washington terms, but most people in most places 
across America would say we better write a check down here to the 
pension fund or Social Security fund before we really call our 
checkbook balanced.
  For that reason, in our office we wrote a bill called the Social 
Security Preservation Act. It is H.R. 857. We have about 90 cosponsors, 
some Democrats, some Republicans, currently in the House of 
Representatives. The Social Security Preservation Act is pretty 
straightforward. It simply takes the $98 billion extra that has been 
collected for Social Security and puts it right down here in the Social 
Security Trust Fund. It is not exactly Einstein kind of stuff, it is 
just the money coming in from Social Security actually goes into the 
Social Security Trust Fund. The way we do that is instead of putting 
IOUs in there, we put negotiable Treasury bonds, the same kind that any 
citizen in America can walk down to their local bank and get.

  So the Social Security Preservation Act would require that we put 
real dollars into the Social Security Trust Fund so that Social 
Security is safe and secure for today's seniors.
  I see some young people here in the gallery with us today, and my 
colleagues are concerned about the people in those age groups as well. 
My colleagues are concerned that even if we put all of this money into 
the trust fund that is supposed to be there, we still have a problem 
that in the year 2029, all of those surpluses in Social Security would 
be used up. So even if we put all of the money into the trust fund that 
we are supposed to, that solves the problem from 2012 to 2029, but we 
still have that longer term problem out there past the year 2029 that 
needs to be dealt with.
  The first thing we need to do as a Nation when we look at these 
surpluses is we first have to enact a bill, the Social Security 
Preservation Act, that will put the money that is coming in from Social 
Security into the Social Security Trust Fund. We will then be looking 
at true surpluses as opposed to Washington-defined surpluses. Again, I 
do not think we should take anything away from the accomplishments of 
the last 3 years, because before this, it has been 30 years since we 
even got this far in terms of balancing the budget.
  We are now ready to go on to that next step, and put the Social 
Security money into the Social Security Trust Fund and get to a point 
where Social Security is once again solvent, at least from 2012 to 
2018.
  I would like to go on with another part of the CATs budget and just 
talk a little bit more about what the CATs budget does. Again, I would 
reemphasize as it relates to Social Security, as it relates to Social 
Security, it puts more money into the Social Security Trust Fund in 
real dollars, not IOUs. It puts more money into the Social Security 
Trust Fund than any other proposal out here in Washington, D.C.
  I would like to talk about another part of this budget that I think 
is very significant and very important, and that is as it relates to 
education. In the CATs budget, we make the requirement that 95 cents 
out of every dollar that is spent on education actually reaches the 
classroom to help kids.
  Now, that may sound like common sense, but that is not what happens 
today. Today, Washington makes a decision to reach into the pockets of 
the American people and collect tax dollars under the mistaken idea 
that it is going to spend it on education. So Washington reaches into 
the pockets of the American people and brings the money to Washington. 
They then spend 40 cents on every dollar on bureaucracy. Washington 
then attaches strings to it and sends 60 cents back to the classroom 
under the requirements of whatever Washington deems appropriate. That 
is not good.
  What we would like to see instead is we would like to see that money 
back in the pockets of the local parents, the local communities, and we 
would like to see the parents and the schools and the teachers and the 
communities making decisions on how to best spend that money. The 
benefit here, the real benefit, is that instead of 60 cents getting to 
the classroom to help our kids, 95 cents of every dollar gets to them. 
It effectively wipes out the huge bureaucracy that is eating up the 
money that is supposed to be going to help our kids in education.
  I personally think it is disgraceful that America has let our kids 
slip to 21st in the world. I think when we start thinking ahead to 
future years, if we want a goal for the next generation, it should be 
that we should restore our kids to be the best educated kids in the 
entire world. I do not want to get them back in the top 10 or even the 
top 5. Our goal needs to be to get our kids to be the best educated 
kids in the whole world. We have been going about that all wrong.
  What we have been doing so far is we have been saying, if we just 
expand Washington control, Washington can fix it; honest, trust us, 
Washington can fix education. Folks, we have slid down to 21st. 
Washington cannot fix education. Parents need to get actively involved 
in the choice of where their kids go to school, what they are taught in 
those schools, and how it is taught, because when we get parents back 
into the picture of education, we have a lot of side benefits, the most 
important of which is that our kids will rapidly move back to the top 
in terms of being the best educated kids in the world. I believe the 
most important thing we can do is reempower our parents to be actively 
involved in the education process of our kids.
  I would like to just talk briefly about those side benefits, because 
I think when we look at goals for a generation, I think it is real 
important that those benefits get mentioned. When parents get more 
involved with their kids, an interesting thing happens. We looked at 
12,000 teenagers, 12,000, a huge number, and of course, if we look at 
12,000 teenagers, some are going to have crime problems, drug problems, 
teen pregnancy, teen smoking, and some are not going to have any of 
those problems.
  What they did is they started looking at the ones with crime problems 
versus the ones that have not been involved with crime, and then they 
looked at the ones with drug problems and the ones without, and then 
they looked at teen pregnancies and where there is not teen 
pregnancies, and teen smoking and where there is not teen smoking; and 
they started looking at the characteristics in these homes where there 
were no teen pregnancies or teen smoking, teenage crimes or teenage 
drug use, and something became very obvious very quickly. The single 
most important characteristic of the homes where they did not have 
problems with these things versus the homes where they did, the single 
most important characteristic was the involvement of

[[Page H3302]]

the parent with that child's, with that teenager's life. The greater 
the involvement of the parent, the less the likeliness of crime, drugs, 
teen smoking, teen pregnancies, a whole list of social problems.
  So when we start looking at this education situation, if we can 
reempower our parents to be actively involved in what the kids are 
taught, where it is taught and how it is taught, that extra involvement 
in these teenagers' lives is going to have a tremendous side benefit, 
helping us solve crime problems, drug problems, teen pregnancies, teen 
smoking, a whole realm of social issues.
  I do not want to be considered naive in this. I do not want to 
believe that just because we reempower our parents, there is not going 
to be any more crime in America. There are certainly other things that 
we must do. But I do believe that an important first step is improving 
education back to number one in the world and empowering the parents to 
be the number one influence in these kids' lives.
  It leads us right back to the CATs budget. When we think about 
parents being forced to pay $37 out of every $100 they earn instead of 
$26 like it was a generation ago, what is happening in America is 
parents are being forced to take second and third jobs, and when they 
take second and third jobs, it is exactly the opposite result of what 
we want. To earn that extra $12 that government is collecting in taxes, 
that second job and third job, that means that the parents' time to 
spend with their kids is cut back dramatically.
  So when we come back to that CATs budget and we think about relieving 
some of the tax burden on American workers, it is not going to 
automatically mean that the parents are going to go spend more time 
with the kids, but what it is going to mean is that instead of being 
forced to take the second job, at least they will have the opportunity 
to make the decision to spend that extra time with their kids, and that 
is what is going to lead us to solutions to so many of our problems in 
this great Nation that we live in.
  I want to finish very briefly with a very brief discussion about how 
we got to where we are, because there has been a lot of discussion in 
this country, and of course all the Democrats say it was President 
Clinton and all the Republicans say, well, of course it was the 
Republican House and the Republican Senate that did it. I thought that 
rather than have that discussion, I thought we should just lay out some 
statistical facts and let the people draw their own conclusions.

                              {time}  1530

  When I came here in 1995, it was 2 years after that tax increase. A 
lot of people are saying that 1993 tax increase is what has brought us 
this strong economy.
  I would like to bring just a few of the facts here. When I came here 
in 1995, 2 years after the tax increase, this red line shows where the 
deficit was headed the year I came here. Remember, this includes using 
the Social Security money, as we talked about before. This yellow line 
shows where we were 1 year later, 1 year after the House changed 
control. The green line shows what we hope to do. That was our promise 
to the American people. The blue line, now at balance, shows what 
actually happened.
  So when we talk about tax increasess versus controlling Washington 
spending, when we talk about the 1993 group raising taxes, that did not 
get the job done. When we talk about 1995 controlling spending, that 
led to the strong economy and got the job done.
  There are some other very interesting statistics. To me, Americans 
understand that raising taxes is not the right way to solve our 
problems. This chart shows the interest rate fluctuation starting in 
1993, when taxes were raised, and I would point out that from 1993 
virtually right straight through to 1995, interest rates climbed. So in 
the face of higher taxes, the interest rates immediately went up.
  That makes sense, because when they take more tax money out here to 
Washington, that means there is less money available in the private 
sector; less money available in the private sector led to this higher 
interest rates. When there was a change out here in Washington and the 
Republicans took over in 1995, the interest rates started dropping.
  The reason was because we started getting a handle on controlling the 
growth of Washington spending. Remember, keep this in the context of 
what we have been talking about today. Instead of spending growing at 
twice the rate of inflation, spending is now going up at the rate of 
inflation; no draconian cuts, inflationary increases in spending. 
Instead of twice as fast as the rate of inflation, what happened 
immediately is the interest rates started falling.
  It is interesting to look at this point where they reached their low 
level. That was January, 1996. To refresh the memory of anybody who 
does not remember what happened in January of 1996, that is when we 
folded. The American people starting doubting that we would keep our 
commitment to actually balance the budget. The interest rates responded 
immediately with a spike.
  They then thought we were serious again, and Members can see that as 
we have now reached the balanced budget out here in March of 1998, the 
far side of the chart, it is very, very clear what has happened with 
the interest rates. By getting to a balanced budget, we have seen the 
interest rates come down from a high here to where they were today, 
almost a twofold percentage point drop.
  But it is not only the interest rates. An amazing thing happens when 
I am in town hall meetings nowadays. I ask how many people own stocks, 
bonds, mutual funds, et cetera. Almost every hand in the room goes up.
  When the tax increase took place in 1993, the stock market basically 
did not respond. There is virtually no change in that stock market from 
there right straight through to 1995. But in 1995 when the American 
people got to understand that we were serious about stopping this 
growth of Washington spending, and understand the growth of Washington 
spending, when you control that by spending less, by only allowing it 
to increase at the rate of inflation, that means there is more money 
left in the private sector; more money in the private sector, lower 
interest rates; capital available for growth and development, 
expansion, to buy houses, buy cars, then that is job opportunities. 
That means more people working, and of course, more taxes being paid 
in, which makes it all easier to do.
  The stock market responded very quickly then. Basically since that 
1995 takeover and since we got spending, got our arms around spending 
here, and just controlled it to a point where it is only going up at 
the rate of inflation, the stock market has also taken off in a 
corresponding way. I think the statistical facts, looking at this, make 
it pretty clear what has been going on.
  I see my colleague, the gentleman from Minnesota (Mr. Gutknecht) has 
joined me. Mr. Speaker, I yield the balance of my time to the gentleman 
from Minnesota (Mr. Gutknecht).

                          ____________________