[Congressional Record Volume 144, Number 134 (Wednesday, September 30, 1998)]
[Senate]
[Pages S11148-S11150]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE BALANCED BUDGET

  Mr. GRAMM. Mr. President, I don't know to what extent it will run in 
headlines in the papers tomorrow or to what extent it will be a feature 
on the news tonight, but today is a very important day because today, 
for the first time since 1969, the Federal Government has balanced its 
budget. Today, for the first time since 1969, the Federal Government 
has done what every family and every business in America has to do 
every year, and that is balance their books. And it is a very big deal. 
It is a very big deal because it gives direct benefits to every citizen 
because we are not going to borrow any money next year. What it means 
is that the Federal Government, with all of its borrowing power, will 
not be crowding out small businesses, will not be competing against 
homeowners, and, as a result, rather than the Federal Government 
running a $200 billion deficit, which would be $200 billion we would 
borrow, taking it away from small businesses that would have created 
jobs and new economic opportunity, taking it away from families that 
would build new homes, new farms, and invest in building new factories, 
now that money will go in the private sector.
  I noticed on Saturday that there was a headline in the Real Estate 
section that said, ``Loan Rates Fall to 30-year Low.'' It is not a 
coincidence that we have balanced the budget for the first time in 30 
years. If we had a deficit today at the same level that we had 5 years 
ago, mortgage rates, rather than being 7 percent, would probably be 
9.5.
  What that would mean is that millions of Americans who today can 
build and buy their own homes would not be able to build and buy those 
homes. People would be paying hundreds of dollars a month in interest 
payments that they are not now paying. We have literally created 
millions of jobs. We have seen the largest growth in equity values in 
the history of the country. Today, the average American family has more 
money in financial assets than it does in the equity of its home. That 
has never happened before in American history, and it is probably true 
that last year the average white-collar worker saw the value of their 
financial assets in their 401(k)s and their IRAs grow more than their 
income.
  So the American people are happy. The approval rating for the 
President is at a record high. The approval rating for Congress is at 
the highest ever recorded for any Congress in history. And I think the 
basic reason is because we have balanced the Federal budget, the 
economy is strong, and, despite all the economic problems in the world, 
there is one economic oasis of prosperity, and that economic oasis is 
America. It is the product of a Government which has been willing to 
say no when no is the right answer.
  What I would like to do today is the following. I would like to try 
to address this sort of age-old question of who did it. I don't want to 
spend a lot of time on that because I am willing personally to give 
credit to lots of different people and institutions, but I want to make 
an important point about the role of the American people. I then want 
to talk about a threat that I see on the horizon, and that threat is 
that I see growing signs in the waning days of this session that 
Congress is poised, at the prodding of the President, to initiate 
another spending spree that could endanger the surplus, that could 
drive up interest rates, and that could reverse everything that we have 
done.
  So let me begin with a question. I have a chart here. It is about 
balancing the budget, and it really poses the questions: Who led? Who 
followed? And who got out of the way? My guess is, to the extent that 
anybody in the country is interested, there is going to be a lot of 
effort today for people to try to claim credit, so I thought it would 
be instructive to go back to 1995.
  In 1995, we have a new Congress, a Republican majority for the first 
time since 1954. We have had a dramatic election which has changed the 
political landscape of the country. And President Clinton, in January 
of 1995, submits a budget that has a deficit of approximately $200 
billion. That $200 billion deficit rises for a couple of years and then 
basically comes back to a $200 billion level. In fact, the President in 
that budget that he submitted showed for the fiscal year 1998 an on-
budget deficit of $274.8 billion, with an off-budget surplus with 
Social Security of $78 billion. So roughly a $200 billion deficit. That 
was the budget the President submitted in 1995.

  The new Republican Congress submitted a budget that sought to 
implement this document which was much discussed in 1995--is largely 
forgotten today; unfairly forgotten, in my opinion--and this document 
is the Contract With America: A Bold Plan to Change America.
  The budget that flowed from this plan--this plan principally being a 
plan developed by Newt Gingrich and Dick Armey in the House--produced a 
budget submission that, for the first time since 1969, proposed to 
balance the budget, in this case over a 7-year period, with a practical 
program to achieve that result.
  What actually happened? You can look at the red to see what Clinton 
proposed, and that is $200 billion deficits as far as you can see. You 
can see what the new Republican Congress proposed, and that is a 
proposal to gradually, consistently lower the deficit to balance the 
budget in the year 2002.
  Finally, you can see in yellow and black what actually happened. What 
actually happened was, with the election of a Republican majority in 
both Houses of Congress, interest rates started to fall immediately, 
equity values started to rise almost immediately, and the net result 
is, the American people started to believe that something might have 
actually changed because they went to the polls in 1994 and voted for a 
change. The net result is, we have a balanced budget today.
  The point I want to make is, if you want to know who led, the 
American people led. Those who should be given credit here--and I think 
the lion's share of the credit--are basically the people who came out 
and voted for a change in 1994. Elections have consequences. Elections 
make a difference. They rarely live up to their billing. We did reform 
welfare. The House did vote on every item they committed to in the 
Contract With America. But, as you know, the President vetoed the 
spending cuts and the substantial tax cut contained in the Contract 
With America. So Republicans advertised more than they were actually 
able to deliver.
  The point is, by changing the political environment in Washington, 
DC, the American people did the rest. The economy performed, and we 
have a balanced budget today.
  Who led? The American people led. Who followed? Republicans followed. 
And who got out of the way, and reluctantly got out of the way? Bill 
Clinton.
  Today, we are facing a new crisis. I guess it was predictable. With a 
surplus, the first surplus in many of our adult lives, we are seeing an 
intensifying debate about what to do about it.

[[Page S11149]]

  Everybody will remember the President in the State of the Union 
Address stood up and said:

       But whether the issue is tax cuts or spending, I ask all of 
     you to meet this test: Approve only those priorities that can 
     actually be accomplished without adding a dime to the 
     deficit.
       Now, if we balance the budget for next year, it is 
     projected that we'll then have a sizable surplus in the years 
     that immediately follow. What should we do with this 
     projected surplus? I have a simple . . . answer: save Social 
     Security first.
       Tonight, I propose that we reserve 100 percent of the 
     surplus . . . every penny of [it going to Social Security].

  That is what the President said on January 27.
  Then he said it even more clearly on February 9. This was in a speech 
on Social Security at Georgetown University. He said:

       I think it should be the driving principle of this year's 
     work in the U.S. Congress: Do not have a tax cut; do not have 
     a spending program that deals with that surplus; save Social 
     Security first.

  Interestingly enough, this clear rhetoric by President Clinton has 
started to change. If you follow the evolution of it, it has changed in 
one fundamental way, and that is, he has stopped talking about 
spending. All he is talking about now is tax cuts.
  I read from the Washington Times on September 27. The President says:

       The Republican tax plan drains billions of dollars from the 
     surplus before we have done the hard work of strengthening 
     Social Security. It is dead wrong to return a portion of the 
     surplus to the American people via tax cuts.

  But for the last month, the President has not mentioned spending.
  The President started out in January saying, ``Don't spend it, and 
don't give it back in tax cuts.'' When the President stood up and said 
those things, since I and many others have been working on trying to 
develop a plan to rebuild the financial foundations of Social Security, 
I applauded.
  What has happened--and it has been a subtle change which I am sure 
has not been recognized by many people--is the President has gone from 
saying, ``Don't spend it, and don't give it back in tax cuts, save it 
for Social Security,'' to, ``It's dead wrong to return a portion of the 
surplus to the American people via tax breaks.''
  What is left out is a discussion of spending.
  The minority leader, Senator Daschle, says:

       We're not opposed to tax cuts, we're just opposed to using 
     the Social Security trust fund to pay for those tax cuts.

  Where is the rhetoric about using the Social Security trust fund to 
pay for new spending?
  Let me tell you why the President and his supporters have stopped 
talking about spending. They have stopped talking about spending 
because they have started spending.
  Under the President's proposals, those that have already been adopted 
and those that are pending before the Congress and those that are being 
dealt with day and night now in the last 2 weeks of this session, the 
President has proposed busting the budget by up to $20 billion.
  The tax cut in the House, which the President has committed to veto 
because it takes money away from Social Security, costs, according to 
the Congressional Budget Office, $6.6 billion in fiscal year 1999. The 
President has said, ``Don't give that $6.6 billion back to the American 
people; save it for Social Security.'' But the President has proposed, 
and Congress has either adopted or is in the process of adopting, up to 
$20 billion of new spending.
  I ask the question: If it hurts Social Security to give $6.6 billion 
back to working families, to repeal the marriage penalty and to get rid 
of the earnings test which prevents people who are retired from being 
able to work to supplement their income without losing their Social 
Security--both of those provisions I strongly support, but both those 
provisions I am willing to defer if the money is going to Social 
Security. What I don't understand is, if it is wrong to give $6.6 
billion back in tax cuts, how can it be right to spend $20 billion--
over three times as much--on new Government programs?
  So the President's first speech was right in January. He told the 
whole story: ``Don't spend it. Don't give it back in tax cuts. Use it 
to save Social Security.'' But for the last month, the President never 
mentions spending anymore. You read quote after quote from the 
President's allies, and over and over and over again you find the same 
thing: They are against cutting taxes, but they never mention spending.
  Congressman Bonior, who is the House Democrat Whip, said in the 
debate on the tax cut, ``This tax bill is a raid on the Social Security 
trust fund. It is nothing less.'' Where is his speech about $20 billion 
worth of new Government programs now pending before this Congress?
  Are we concerned about raiding the trust fund only when the money is 
going back to working Americans, or do we have any concern when the 
money is going to spend money on the same old Government programs? 
Obviously, for some people it is only a problem if it is going back to 
the taxpayer; if Government is spending it, it is not a problem.
  Some might ask, how is this happening, given that we have a budget 
and that we have committed to a balanced budget? Well, how it is 
happening is a loophole in that agreement that allows the President to 
declare spending an emergency. And by declaring it as an emergency, it 
can become law in violation of the budget.
  I want to, in the brief time I have left--and let me ask, Mr. 
President, how much time do I have left?
  The PRESIDING OFFICER. The Senator has 2 minutes 40 seconds 
remaining.
  Mr. GRAMM. I ask unanimous consent that I have 10 additional minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAMM. Let me review for you the emergencies the President wants 
to spend money on. Let me remind you of the Daschle quote. And the 
Daschle quote was, he was not against tax cuts, he was simply against 
taking the money away from Social Security.
  I am not going to argue that any of these things are bad uses of 
money, but what I am going to argue is, they are not emergencies, most 
of them are ongoing problems. We are spending $1.7 trillion in the 
Federal budget this year. Any one of these things could have been 
funded had the President chosen to make them a priority. But back when 
he submitted his budget, they were not even a priority, they did not 
exist as a priority. Today they are an emergency. Why? Because the 
President wants to bust the budget and spend $20 billion.
  The first problem is the problem related to the fact that we are 
about to enter a new millennium. It seems that we have suddenly 
discovered that the year 2000 is only 2 years away--in fact, a year and 
3 months away.
  Does this come as a shock to anyone? And I thought I would look back 
at: How long have we known there was going to be a year 2000? Some 
might find it instructive that we started using the term ``in the Year 
of Our Lord,'' AD, in the calendars in the year 525--an abbot in Rome 
started in the year 525 to measure dates in the modern era from the 
birth of Christ--``in the Year of Our Lord.'' It came into common usage 
and then was officially adopted by papal decree in the Gregorian 
calendar in 1582. In short, we have known for 1,470 years that the year 
2000 was coming, and yet all of a sudden it is an emergency.
  If we have a problem with computers about the year 2000, why did 
those problems not exist when the President submitted his budget? Why 
all of a sudden is this an emergency? Well, my point is, it is clearly 
not a surprise. For 1,470 years we have known the year 2000 was coming, 
and for at least the last decade we have known that some computers 
would have difficulty in making the transition. We have an 
administration that claims to be a high-tech, computer-literate 
administration. Our Vice President pled in vain for the Government to 
take over and create an information superhighway where the Government 
would run the Internet. We rejected it. And now the Internet continues 
to flourish as basically a private system.
  But the point is, the President is asking between $3.25 billion and 
$5.4 billion as an emergency for something we have known about for 
1,470 years and something he could have asked money for and did not 
when he submitted his budget.
  The second emergency is, we are going to have to do a census in the

[[Page S11150]]

year 2000. That hardly comes as a surprise. The Constitution, in 
article I, requires that there be a census every 10 years. We have done 
a census every 10 years in the history of the Republic. It is hardly a 
surprise that we are going to do a census this year. But everybody who 
is familiar with it knows that this administration has consistently 
underfunded the census, and now they are on the verge of declaring it 
an emergency, when they created the emergency.
  Embassy security. Everybody knows the terrible tragedy of where we 
had two Embassies bombed in Africa. Both of those Embassies had asked 
for enhanced security, and in both cases the administration had 
rejected it, to spend money on other things. But the important point 
is, the $1.6 billion being requested will be spent over the next 10 
years.
  I could understand if you said, ``Well, we want to begin it now, and 
until we can write a new budget and make it part of our budget, would 
you designate that as an emergency?'' I could understand that. But the 
President is asking us to designate as emergency spending an item which 
we have been debating and looking at for a decade and an item which in 
many cases the money will not actually be spent, and the construction 
will not occur, for 4 or 5 or 6 years.
  Then there is defense readiness. All of a sudden, this administration 
has discovered that we have been cutting defense spending every day 
that President Clinton has been in office. And these dramatic 
reductions in defense spending are beginning to affect retention, they 
are beginning to affect recruitment, they are beginning to affect 
modernization.
  This is hardly a surprise. Many Members of the Senate, both Democrats 
and Republicans, have stood up and denounced these cuts in defense. But 
yet they have been made so that money could be spent on programs that 
were deemed by this administration to be of higher priority. Now that 
the Joint Chiefs of Staff have gone public for something they clearly 
must have known for years, but remained silent about because the 
process has become politicized, in my opinion. Now the President is 
saying we have an emergency in defense.
  My point is, this emergency was created by an administration that 
would not support defense, and now they want to bust the budget to try 
to correct problems that they produced. My alternative is, let the 
President, in next year's budget, propose a permanent change in defense 
spending within the overall cap in spending that he agreed to last 
year. And I will support it. But let's not raid Social Security to try 
to correct a problem that, in fact, has been created by our own budget 
decisions.
  The next emergency is Bosnia. There is an emergency because we have 
discovered that we have troops in Bosnia.
  That sounds almost comical.
  We sent troops to Bosnia in December of 1995 and they were supposed 
to be there until December of 1996. Then we expanded the mission in 
October of 1996 and they were supposed to be there until March 1997. 
Again in November 1996 we extended the deployment of troops to Bosnia 
until June 1998. Finally, in December of 1997 the President announced 
that troops would be deployed to Bosnia indefinitely.
  Now, how can it be an emergency to fund troops in Bosnia when they 
have been there since 1995 and the President has told us they are going 
to be there indefinitely? Why didn't the President put money in his 
budget to pay for troops in Bosnia? You know why he didn't. He didn't 
because he wanted to take the money out of Social Security.
  So here is where we are and this is the concern that I want to raise. 
The President has said--and rightly so, in my opinion--we have a big 
job to do next year in fixing Social Security. Don't cut taxes, don't 
increase spending, and let's take this surplus and fix Social Security 
first and then we will decide what to do if any is left. That is what 
he said on January 27 of 1998. Since then, the President has said less 
and less about spending, more and more about taxes, and now the 
President is saying, ``Don't cut taxes with a Social Security 
surplus;'' but, at the same time, the President is pushing $20 billion 
worth of new spending. The tax cut passed in the House would cost $6.6 
billion; the President is talking about increasing spending by $20 
billion.
  Now, my point is a very simple point. If it hurts our ability to save 
Social Security to cut taxes by $6.6 billion, and that is wrong, how 
can it be the right thing to do to increase spending by $20 billion--
more than three times as much?
  The bargain I would like to strike so that I and others could support 
the President on a bipartisan basis: we won't do our tax cut, you don't 
do your spending. Let's just say no. Then next year, let's fix Social 
Security. I believe we will have money left for a substantial tax cut 
next year, but let's not start a spending spree this year that would 
endanger our ability to save Social Security next year.
  Now, I know that as people get ready to go home it is always hard to 
not say yes to every spending interest in the country. But I believe 
the President took the right position in January. He has changed that 
position now.
  My proposal is straightforward and simple: Don't cut taxes this year 
and don't increase spending this year. Save the $6.6 billion that we 
would have used on tax cuts for Social Security next year; save the $20 
billion or as much of it that we can that we would have spent this year 
for Social Security next year. And once we have fixed Social Security, 
then let's look at cutting taxes for the American people.
  That is the challenge. We are going to see this debate in the next 
few weeks. I intend to be here saying no on spending--not because I 
don't want to build up defense. I voted against many of the defense 
cuts of the last 5 years. But nobody can say that this is an emergency 
when we created it and the President created it through his budget 
problems or policy. Nobody can say it is a shock that the year 2000 is 
coming and the President didn't know about it when he sent us his 
budget in January. Nobody can say they didn't know we were going to do 
a census. Nobody can say they didn't know we were going to be in 
Bosnia. These are not emergencies as the law was intended to apply to 
emergencies.
  I urge my colleagues to stand up for the President's position and 
call on the President to do it. The President said on January 27th, 
don't cut taxes and don't increase spending. I say yes, don't cut 
taxes, don't increase spending.
  The only problem is the President continues to say don't cut taxes, 
but the President is the driving force behind an effort to increase 
spending by $20 billion this year. And that spending, every penny of 
it, will come out of Social Security, and it will diminish our ability 
to rebuild the financial foundations of Social Security. I say no.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Burns). The Senator from South Dakota is 
recognized.


                         Privilege of the Floor

  Mr. JOHNSON. Mr. President, I ask unanimous consent that Susan Hansen 
of my staff have floor privileges during my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________