[Congressional Record Volume 144, Number 134 (Wednesday, September 30, 1998)]
[Senate]
[Pages S11150-S11152]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             BUDGET SURPLUS

  Mr. JOHNSON. Mr. President, we have reached an extraordinary point in 
our Nation's contemporary history with the finding of the Office of 
Management and Budget that we will, in fact, at the end of this fiscal 
year, be running a significant budget surplus.
  I think there are a great number of causes for that, a great number 
of people who could be commended for that, but I think to put this in 
some perspective, it is worthwhile to note that some 6 years ago when 
President Clinton took office, the annual deficit each year by the U.S. 
Government was running in the range of $292 billion each year. We were 
spending $292 billion more revenue than we had coming in. The size of 
the Federal deficit had exploded through the 1980s, and we had reached, 
finally, this terrible point in 1992.
  Since that time, we have had 6 years of successive declines in the 
Federal budget deficit until, finally, this year for the first time in 
30 years we are now at least in a unified budget in surplus.
  What an extraordinary accomplishment. At a time when other nations' 
economies are suffering, this country

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has reduced its debt relative to its gross domestic product to a lower 
level than any other industrialized nation on Earth. Again there are a 
great many people who can take some credit for this. But I think that 
the leadership of this White House has been a key part of it.
  Now, the Senator who preceded me had a chart showing one of President 
Clinton's plans. It did not show the plan that actually was acted upon 
which has led to this decline in the deficit. It did show the 
alternative competing Republican plan that was offered in 1992 which, 
as many of us recall, was premised on plundering the Medicare fund, 
education, and the environment. One of the constructive steps that this 
President took was to lead the way, ultimately with a budget plan which 
brought us to a balanced budget--in fact, to a surplus--and showed, in 
fact, we did not need to plunder education, Medicare, and health care 
in order to get to this point.
  So we have had 6 years of declining deficits. That is the good news. 
However, there is a point of great concern that I have as a member of 
the Senate Budget Committee. That is, we reached this point because 
there was an agreement between Congress and the President that we would 
put our country on a pay-as-you-go basis. That is, no tax cuts unless 
it is simultaneously explained who is going to pay more taxes or whose 
programs will be cut to pay for those tax cuts, and no spending 
increases unless it is simultaneously explained who is going to pay 
more taxes or have their programs cut to pay for those increases. Every 
step had to be budget neutral, scored over a 5-year period by the 
Office of Management and Budget and by the Congressional Budget Office, 
the CBO.
  After years of wandering in the wilderness of faulty and unsuccessful 
mechanisms that go back over a decade, we finally reached a formula 
that put this country on a commonsense, pay-as-you-go basis, something 
we should have been doing for 200 years but which we have been doing 
now for about 6 years.
  Because we now have this unified budget surplus, we find there are 
those in Congress who grow giddy about this projected surplus. By some 
projections it could run as high as $1.6 trillion over the next decade. 
Keep in mind that those projections are not money in hand, they are 
simply projections, and they are premised on the notion that our 
country will continue to have economic growth in the range of 2.2 GDP 
growth annually from here to the horizon, and that we will never 
stumble into a recession and that our economy will never slow down 
again.

  Well, while we have had a remarkable run of good fortune over the 
years of the Clinton Presidency, with record low unemployment, low 
inflation and high economic growth, I think it would be foolhardy for 
any of us to assume that somehow business cycles have been abolished, 
that we are on an upward plain and that economic growth will never end. 
So I think we need to approach these projections with a great deal of 
caution and some skepticism, given what is going on today with the 
economies in Asia, Russia, and increasingly in Latin America.
  Secondly, the other point of caution that I think needs to be stated 
with great emphasis is that the budget surplus that we have today, as 
noteworthy as it is, and as worthy of applause as it is, is a unified 
budget surplus; that is, our operating budget is still in the deficit. 
That is, the surplus that we have is only a surplus if you count 
revenue flowing into the Social Security trust fund. I think the chart 
that I have with me here graphically shows the circumstances we face 
today.
  The Federal surpluses--and it is simply amazing that we are even 
talking about surpluses, given where we have been over the last 
decade--the Federal surpluses are projected to grow steadily all the 
way out through the year 2008, and that is the farthest out anyone has 
dared make a projection. That is a positive thing.
  Before we get carried away about how to spend the surplus, whether 
for tax cuts or for new programs, the red line represents where we are 
without counting Social Security money. If you look at that, we will 
not be in the black until the year 2002. That is even assuming 
continued economic growth. We are not in the black--we have nobody's 
money to spend other than the Social Security revenue until the year 
2002. We will dip back into deficit, in fact, briefly, under current 
projections, in 2003. It is approximately 2005 before we will be 
consistently in the black, without counting Social Security surplus 
dollars and the interest earnings that are attributable to Social 
Security. Finally, in about 2005, if we behave ourselves and continue 
to go on pay-as-you-go, if the economy continues to grow, we will be in 
the black, without counting the money that needs to be reserved for 
Social Security.
  So the President was exactly right as he talked to both the House and 
the Senate this year, saying, ``do not be thinking about how to spend 
this surplus this year when we have not yet decided what we are going 
to do about our long-term reform for Social Security.'' That issue will 
be up next year in the 106th Congress. It is not for certain it will be 
resolved in 1 year, either. We have some reforms that no doubt will 
have to be made for the long-term viability of Social Security. If we 
do nothing, the Social Security trust fund will eventually be drawn 
down and today's baby boomers will receive only about 75 percent of 
today's buying value of Social Security. It is not as if Social 
Security will go away. It is not as though the system will collapse, 
but as you get far out into the 2032 range, today's boomers and today's 
younger people, who are also relying on Social Security, will find that 
the buying power of that program has been reduced by about one-fourth. 
So there is a need to make changes, and the sooner they are made to 
preserve the full 100-percent buying power of Social Security for those 
outyears, the better off we are. But in the meantime, to use money that 
has been raised and collected from the American taxpayers for the 
purposes of a strong Social Security system, and to use it for another 
purpose, is simply wrong.

  If we approach this with the kind of responsibility that I think is 
needed, and with the kind of bipartisanship I believe is needed, we 
will reject the tax proposal coming to this body from the House of 
Representatives, which calls for a tax cut paid for out of Social 
Security revenue.
  Now, the Senator who preceded me was making reference to a $6.6 
billion tax cut. That is only the cost to the Treasury next year. It is 
an $80 billion tax cut over 5 years, $170 billion over 10, and it goes 
into perpetuity, forever, constantly taking more and more money out of 
the Social Security surplus fund--all the more reason to nip that in 
the bud, stop now and take a deep breath, albeit an election year and 
there is a temptation on the part of our friends in the other body to 
offer what looks like a free giveaway.
  There is a need in this body, I think, to respond responsibly to that 
kind of proposal coming to us from the House. There may be room for 
some tax relief this year. I applaud the leadership of Senator Daschle, 
the Democratic leader, and others who have worked with him, including 
those from the White House, in suggesting that we could find in the 
range of a $25 billion tax relief package, which could be focused on 
the needs of the middle class and working families, and it could be 
done through savings in the existing budget, through new efficiencies 
in the existing budget, from the closure of loopholes in the existing 
Tax Code. That could free up in the range of $25 billion to be utilized 
for tax relief for middle class and working families. So it is not a 
question of are you for tax relief or not; I think there is room for 
some tax relief. But it has to be financed out of the existing budget, 
rather than going the easy route and that is raiding the Social 
Security trust fund.
  I think something needs to be said as well about the requests for 
emergency funds. Much has been said about the requests from the 
President for emergency funding. I think there is a possibility that 
some of those requests could be offset from within the existing budget, 
but I think it also needs to be clear that the needs being presented to 
the Congress by the White House were not foreseen either by the White 
House or by the Congress in either political party. It was not foreseen 
that we would have expenses at the scope that they are for dealing now 
with the year 2000 computer problem, and the delay of addressing that 
problem will only cost the taxpayers and the economy

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potentially enormous sums later down the road. Congress did not 
foresee, nor did the White House, when the original budget was 
presented last year, the full cost of our Bosnia role, or the need to 
upgrade security at our embassies, or the scope of the farm crisis 
today.
  Again, it is my hope that perhaps some of this could be offset by 
reductions elsewhere in the budget. But the fact is that the budget 
agreement that was agreed to, which led us on the track toward the 
reduction of that $292 billion deficit to a surplus today, was premised 
on the assumption that we would, from time to time, have emergency 
needs that would have to be funded outside of the budget. There is no 
surprise to that. I think we need to use discipline so we don't wind up 
denominating everything that comes along that we would like to do as an 
emergency. But it is in the nature of emergency funding, and it is one 
time only that it could not be reasonably foreseen, as these were not 
either by the White House or by the Congress, and that they have some 
extraordinary level of urgency about them.
  The budget agreement that led to this elimination of the budget 
deficit did foresee that we would have these emergencies come up from 
time to time. So nobody should be surprised today that we do, in fact, 
have a need to address some issues that may have to be outside the pay-
as-you-go framework that has, overall, led us to the budget deficit. 
But what we cannot afford to do is to use Social Security surpluses as 
a source of funding for nonemergency, in perpetuity-type expenditures, 
whether it be domestic spending programs or for tax relief that could 
not otherwise be funded. I, for one, think that the next priority, 
after preserving Social Security, probably ought to be to begin to pay 
down the existing accumulated debt that this country has in the $5 
trillion range, or more. To the extent that we do that, we are, in 
fact, hoping that every taxpayer in this country--to the extent that 
the U.S. Government is not competing for credit dollars and that we 
bring down interest rates--buying a car, buying a home, sending a kid 
to college, or expanding a business and creating jobs, is made easier 
and all the more affordable for the private sector of our economy to 
do.

  If we act with budget responsibility here, keep our Federal budget in 
equilibrium with the pay-as-you-go mechanism that was passed initially 
in the 1993 budget agreement--legislation which has passed and has 
contributed more than any other single legislative policy step taken in 
Congress, passed without a vote of a single Republican Member, passed 
exclusively with Democratic votes in both the House and the Senate. And 
there were many Members of Congress, many Democrats, frankly, who lost 
their seats in Congress, in the House and the Senate, over the 
controversy, over the contention, that the passage of that landmark 
legislation caused because it was a bold step. It was a courageous 
step. It reduced our Federal budget deficit from $292 billion to a 
surplus today. But as is often said in politics, no good deed goes 
unpunished. And that was certainly the case of many of our colleagues 
who are no longer here; who did the right thing and paid a dear price 
for it. But here we are with positive consequences of that legislation 
which has led us now to a surplus with a unified budget. The great 
danger we have is to abandon the discipline which that budget 
legislation set in place.
  I am hopeful as we finish up these closing weeks that we will reject 
this shortsighted and I believe somewhat demagogic, frankly, effort 
coming out of the other body to raid the Social Security trust fund.
  I hear people saying, ``Well, the President wants to address 
emergency crises. So we ought to just pile on and spend more money out 
of the Social Security trust fund.'' That is the logic that is not 
worthy of a third grader, in my view. We have some emergency crises of 
one time only that we will face, and we will decide how to finance 
that, whether it is out of the ordinary budget, or whether it is 
through an offset, or some combination of both. But to set us on track 
down the road in perpetuity for nonemergency, long-term expenditures 
out of the Social Security trust fund makes no sense whatever.
  Of the $1.6 trillion surplus projected over the next decade, 
virtually the entire sum is attributable to Social Security and the 
interest earnings due to Social Security.
  So let's resolve one problem at a time: Maintain the discipline that 
has made this much progress over the last half dozen years of the 
Clinton administration; preserve Social Security so we can make some 
difficult policy choices in the coming years about what we need to do 
further to maintain its viability on into the next generation. When we 
have done that, then we may be in a position ultimately, if we have 
surpluses at that point, to decide what combination of investments in 
our schools, in child care, in health care, in medical research and, 
yes, possibly in tax relief for American taxpayers might be able to 
come out of that surplus. But don't get put the cart before the horse. 
Do not be demagogic in an election year about this kind of issue. We 
need some statesmanship. We need some bipartisan responsibility as we 
deal with what I believe is one of the most fundamental most 
challenging responsibilities that our Congress has; that is, how do we 
sustain our economic growth? How do we sustain the pay-as-you-go 
discipline that has brought us to this good point after so many years--
after 30 years--of budget deficits?
  Mr. President, I conclude by saying that it is certainly my hope that 
statesmanship will rise to the top; that we will abide with the 
President's recommendation; that we not raid the Social Security trust 
fund during these closing days of this Congress; that we go home and 
tell our constituents that we did the right thing; we did the right 
thing by them; we did the right thing by our government; we did the 
right thing by our Nation by retaining fiscal responsibility; and by 
preserving the opportunity to have a strong Social Security program on 
into the future years, at least until we decide what future changes are 
needed. By doing that we will keep the cost of money down for the 
private sector, and we will do as much as possibly can be done to put 
us on track to sustain what has been record economic growth, low 
inflation, low unemployment, and increased opportunity for all of our 
citizens.
  I yield the floor.
  Mr. THOMAS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, what is the status of the floor at the 
moment?
  The PRESIDING OFFICER. Under the previous order, we are in a period 
of morning business.
  Mr. THOMAS. I ask unanimous consent that I be allowed 10 minutes in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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