Congressional Record, Volume 145 Issue 19 (Wednesday, February 3, 1999)

[Congressional Record Volume 145, Number 19 (Wednesday, February 3, 1999)]
[Senate]
[Pages S1122-S1129]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

THE PRESIDENT'S BUDGET

Mr. COVERDELL. Mr. President, the President has now given us his
budget--quite a remarkable document.
I remember when the President came to speak to the joint session and
said, ``The era of big government is over.'' There was broad applause--
not only in the Chamber but around the country. Now we are confronted--
it is not nearly as spot oriented or media driven--but it is sort of
the statement: ``The era of big government is over'' is over. He has
taken that pronouncement and absolutely quashed it in this new budget--
driven it in the ground never to be seen again. It was a 77-minute
speech,

[[Page S1123]]

and it outlined 77 new Government spending proposals that amounted to
approximately $5 billion in new Government spending per minute. I am
glad the speech wasn't longer.
In the President's budget, according to the New York Times, he
proposed 81 separate tax increases totaling $82 billion over the next 5
years. The effect of that would be to nearly nullify the limited tax
reduction that the last Congress finally fashioned with this
administration for which there was an enormous celebration on the White
House lawn. This would virtually eliminate it.
The administration will describe these as ``user fees.'' That is not
new. Both parties have used that. But when you look down at what that
means, it is quite interesting, Mr. President:
$1.1 billion in airline fees. That means all traveling America is
going to get a tax increase, if you ever get on an airplane.
Or $504 million in food inspection fees. Who is going to pay that?
Anybody who goes into the grocery store and buys a quarter-pound of
ground beef, processed chicken, or milk; in other words, everybody.
Then we have $200 million in new health care fees on providers and
plans and doctors--no, not on providers, health plans, and doctors.
That goes to patients. Patients will pay that.
So if you are buying food in the grocery store, if you are part of
traveling America, if you have to go see your doctor, to a hospital,
you are going to be the recipient of this $1.1 billion in new taxes.
Now, he said there is tax relief in his budget. Well, the only way an
American taxpayer would see one cent of President Clinton's so-called
tax relief is if they agree to buy a solar panel or buy an electric car
or engage in some other sanctioned Government behavior--this in the
face of $800 billion of non-Social Security surpluses that have been
generated by our economy. The direct beneficiary of balanced budgets
and financial discipline and disciplined spending has produced a
vigorous economy which has produced massive surpluses for the first
time in modern history, but this administration could not resist spend,
spend, spend and could not find it in any frame to suggest, well, maybe
some of this should be returned to the working people of America.
Mr. President, I see that we have been joined by Senator Grams of
Minnesota to speak on the subject, and I am going to yield up to 10
minutes to Senator Grams of Minnesota to continue our presentation on
this budget.
Mr. GRAMS. I thank the Senator. I appreciate the Senator from Georgia
putting this effort together. I think it gets the information out about
what this budget really does and does not entail.
Mr. President, I rise today to make a few observations about the
President's millennium budget.
After a brief review, my conclusion is this:
First, in his quest to continue to offer something for everyone, the
President's budget offers a lot of smoke and mirrors and a lot of
accounting gimmicks.
Secondly, this budget is chock full of new spending, earmarks, and
dozens of new ways for Washington to spend the tax dollars earned by
working Americans. It is a blueprint for an even bigger federal
government.
Thirdly, while I agree that the 62 percent of the projected surplus
that belongs to Social Security should be reserved for Social Security,
I do not agree with what the President seeks to do with the 38 percent
of the surplus that represents tax overpayments.
He chooses to spend the vast majority of it and leaves only pennies
on the dollar for very minor, tightly targeted tax relief plan that he
was offered in the budget.
His plan is basically only token tax cuts that sound big, but the
bottom line is it provides little or no tax relief.
Fourth, he proposes new taxes and user fees and takes tobacco
settlement money from the states. Can you believe it--in times of
surplus, he actually proposes to raise taxes even higher, and his
budget spends the Social Security surplus he claims to wall off.
Finally, the President's budget does not save Social Security from
bankruptcy.
Let me be a little more specific.
You don't have to look further than the way in which the President's
budget deals with spending caps to determine if this is an honest
budget.
As you know, President Clinton has repeatedly broken the statutory
spending caps in the past to spend more for new and expanded government
programs. Last year alone, the President and the Congress spent over
$22 billion of the surplus for alleged ``emergency spending'' in the
Omnibus spending legislation.
Nearly $9.3 billion in regular appropriations was shifted into future
budgets. In my judgment, both of these efforts broke the caps, and that
is why I opposed the Omnibus bill.
Also, I wish that Congress and the President could be as creative in
cutting spending and cutting taxes as the President is in finding ways
to spend more money for more programs.
According to the CBO, last year's budget--when alleged emergency
spending is included--exceeded the spending caps by $45 billion. Even
without counting the emergency spending, we still exceeded the spending
caps by $29 billion.
Last year's irresponsible spending has made the spending caps even
tighter for this year. In order to stay within the caps as required by
law, we must cut spending by $28 billion. This would require an
approximately 5-percent across-the-board reduction of this year's
discretionary spending.
Instead of cutting spending to comply with the law, President Clinton
actually proposes significant spending increases to expand many of the
existing programs and create many more new programs. These spending
increases total over $130 billion. Yet the President claims his budget
does not break the spending caps.
How can President Clinton have it both ways? How can he have his cake
and eat it, too? It is simple. He does it by budget gimmicks.
The President imposes new user fees and raises existing ones by $21
billion, and then counts these taxes as ``negative spending'' rather
than as revenues.
He also devotes presumed receipts from the state settlements with the
tobacco companies and a 55 cents-per-pack federal tax on cigarettes to
a variety of programs to avoid the spending caps.
However, it is far from certain these taxes will be accepted by
Congress, so what we have is new spending without reasonable offsets.
The President also reclassifies the increased discretionary spending
for expanded military retirement benefits, again, as mandatory
spending. In addition, President Clinton speeds up the FCC's collection
of spectrum auction payments.
Like last year, the President has again shifted some program
funding--such as the Northeast multispecies fishery--into so-called
``emergency spending'' to further bust the budget. And he has severely
under-funded some major programs such as Medicare, knowing Congress
will restore the funds.
These decisions by the President are troubling. The more I review
this budget, the more questions I have about how the President can
propose so much new spending and claim that he will not break the
budget.
President Clinton proposes to funnel 62 percent of the projected
budget surplus which represents the Social Security surplus to the
Social Security Trust Funds, 15 percent to Medicare, 12 percent to the
so-called Universal Saving Accounts, and another 11 percent to increase
other government spending.
The OMB estimates that we would have a $12 billion on-budget
deficit--that is without. Social Security excess Surpluses--in FY 2000.
This means we don't have any on-budget surplus to spend this year. All
of the $117 billion unified budget surplus is, in fact, Social Security
surplus.
I don't know how I can say this more clearly. Despite the President's
promise to save Social Security first, he is proposing to spend all of
the Social Security surplus.
Moreover, not only has the President manipulated the numbers, but he
has also included enormous increases in existing programs and created
many new programs, including entitlement programs.
Without counting government user fees, the actual size of the
government has reached $2 trillion, not $1.8 trillion, as the President
claimed in his budget.

[[Page S1124]]

I am sure there is much more hidden spending and hidden taxes in this
2,600 page budget.
With all of these spending and tax increases, President Clinton fails
to provide any meaningful tax relief for working Americans. His
targeted tax cuts reward only a few, with too few dollars. And again,
in times of surplus, the President is proposing to raise taxes.
Now, I would like to just show a little cartoon that I brought with
me that I think kind of explains this. As the cartoon suggests,
President Clinton doesn't want to give any of the non-Social Security
surplus to hard-working, overtaxed Americans because he believes he can
spend it better on his own priorities. As the cartoon says: It seems we
have grossly overcharged you, so let me explain how we intend to spend
the money.
When you go to a restaurant and overpay the bill, you expect to get
the change back. Here the taxpayers have overpaid, and I think they can
rightfully expect that they should get the change back and the surplus
should go to the taxpayers and not to the bureaucracies in Washington.
In fact, satisfying the President's spending appetite would squeeze
an additional $80 billion from working Americans as tax increases. So,
in times of surpluses, tax increases.
Mr. President, Americans today are taxed at the highest level in
history, with nearly 40 percent of a typical family budget going to pay
taxes on the Federal, State, and local level.
They tax it when you earn it. Tax it again when you save it. Tax it
again when you spend it. Tax it again when you invest it. And tax it
yet again when you die.
No wonder Americans feel overtaxed!
But under the President's budget, the Government will collect more
taxes from working Americans in the next five years. Total taxes will
reach over $10 trillion. Federal tax revenues will grow faster than
spending, consuming 20.7 percent of GDP, a historic high since World
War II.
This is wrong. More spending and more Government is not the answer.
The answer lies in tax cuts that return power to the taxpayers and
leave a little more of their own money in their pocket at the end of
the day.
That is why I, along with Senator Roth, introduced S. 3, the Tax Cuts
for All Americans Act, the one bill that will do the most to help
America's working families. Our plan will cut the personal tax rate for
each American by ten percent across the board.
The broad-based tax cut is simple and fair. It is pro-family and pro-
growth. If President Clinton wanted to make a strong statement for
working Americans, he should have made this broad-based tax cut the
centerpiece of his budget.
My last point is that despite his claim to have made Social Security
solvent, and despite the fact that he will pour general funds into
Social Security, Mr. Clinton's budget does not and will not save it.
This budget does nothing to address its long-term unfunded liabilities.
In what Chairman Greenspan has called a very ``dangerous'' approach,
it has the Government invest any surpluses in the stock market for
Social Security.
In my home state of Minnesota, taxpayers are already expressing their
frustration with the notion that, in the case of retirement security,
Washington knows best.
Let me quote one thing here. Patrick Garofalo of Apple Valley wrote
the following letter in yesterday's St. Paul Pioneer Press:
I am a big boy. I no longer live with my parents. The
government trusts me to own a gun.
It trusts me to choose my state and congressional elected
officials. It trusts me to make decisions about the welfare
of both of my children. If it trusts me to make these
important decisions, why does not it trust me to decide how I
want to save for my retirement?
Please don't tax me to death while you ``help'' me. Let me
keep my money. I will decide where and with whom to invest my
nest egg.

I could not have said it better myself.
Mr. President, the Administration's budget will not meet the
challenges of a new millennium but rather lead us down the path of
fiscal disaster. Congress can and will do better.
We will produce a budget that preserves and protects the Social
Security surplus; we will give the non-Social Security surplus back to
taxpayers as major tax relief and debt reduction; we will have a
blueprint that leads this nation into the 21st century.
I appreciate the Senator from Georgia yielding me this time.
The PRESIDING OFFICER. The Senator from Georgia.
Mr. COVERDELL. Mr. President, I appreciate the remarks of the Senator
from Minnesota, and I now yield up to 5 minutes of our time to the
Senator from Missouri.
The PRESIDING OFFICER. The Senator from Missouri.
Mr. BOND. Mr. President, I thank my colleague from Georgia. I have
just a few brief thoughts on this budget that has been submitted to us.
The President's budget says we are going to have about a $4 trillion
surplus over the next 15 years. He has said, and we agree, that we
should fix Social Security first. We are going to do that. He believes
that we ought to set 62 percent of the surplus aside for fixing Social
Security. Again, we agree, because that is about what Social Security
receipts are provided.
But when we got his budget message and when we heard his State of the
Union, we didn't see a fix to Social Security. We saw new gimmicks,
financial gimmicks, borrowing more money. And under this plan that he
has presented, while we are supposedly running these surpluses that
will amount to $4 trillion, we are going to have to raise the debt
ceiling within a couple of years because he is issuing more bonds. We
are going to borrow our way into solvency for Social Security. Nobody
has explained yet how that is going to work. But it is clear that he
has not proposed any responsible reform of the Social Security system
to make sure it is there. We in Congress are going to have to develop a
plan. I believe we will. It is going to take some of the surplus, 62
percent. I think that we must do that because we owe that not only to
those who are retired now and those who are about to retire, but to the
baby boomers and others coming along who want to see retirement
security.
So we have 38 percent. What do we do with the remaining 38 percent of
the surplus? I have spent a lot of time. I traveled around the State of
Missouri many, many days listening to and talking with people, telling
them: We finally got that budget deficit monster slain. What should we
do with the surplus we are going to start running? And they had two
very strong ideas. They said, No. 1, pay off the debt. We started to
pay off the debt. If it hadn't been for the President's having invested
some $20-plus billion in spending last year, we would have paid off $20
billion more.
Frankly, around this place there is nothing quite so tempting as an
unspent surplus. If you don't return it to the taxpayers, it is going
to get spent. We already have a historically high tax rate as part of
our gross domestic product, the highest it has been since the end of
World War II. And we are continuing to take more and more money. We
need to have tax relief. That is the other thing that the people of
Missouri say: We want tax relief; lower, simpler, flatter taxes.
Small businesses spend 5 percent of what they take in just figuring
out how much they are going to have to pay in taxes. That is before
they pay taxes. It is too complicated. It is too high. It discourages
economic activity. Those who made fun of the capital gains tax relief
and objected to it now have to admit that reducing capital gains
brought more economic activity and brought a tremendous increase in
capital gains revenue. If we give families and small businesses the
opportunity to keep some of their money, do you know what? They can
spend it better than we can in Washington, and that is what I propose
we do.
But the President is not content with a $4 trillion surplus. He wants
to increase Federal Government revenues by raising taxes. And on top of
that, he is going to spend it all, he is going to spend more of it, he
is going to spend $100 billion in new spending. He busts the cap. He
even raids the tobacco settlements from the States because he has so
many good ideas on how to spend it.

Mr. President, I do not believe the people of America want those good
ideas. It is unbelievable, $4 trillion in

[[Page S1125]]

surplus yet every dollar of it spent, then more taxes are added. This
is a classic example of the Federal ``Father Knows Best,'' requiring
the States, localities, and most of all the families, the working men
and women in America, to play ``Mother May I?''
Let's take a look at education, something I think is a top priority,
and the President says it is a top priority, too. It is about that
point where we diverge 180 degrees. The President wants to be your
local school superintendent. Do you know, we have over 763 Federal
education programs. The system is not working now. We have too much
Federal bureaucracy, too much Federal red tape. Yesterday the President
told the school board members who were in town from school boards all
across the country, he said, ``Listen to what they are saying in the
schools.'' I have. Do you know what they are saying? Do you know what
educators and the administrators and school board members are saying?
``We have too much Federal regulation and dictates. We spend too much
time on misplaced Federal priorities.''
That is why I want, and I think my colleagues want, to return dollars
directly to the classroom. Do not run it through the bureaucracy in
Washington, DC. Don't even run it through the State bureaucracies. It
is the school districts that have to make the decisions. They are the
ones that know the kids' names. They are the ones that know the
strengths of the kids. They are the ones that know the challenges they
face. Let them make the decisions and take the Federal handcuffs off of
local educators.
The PRESIDING OFFICER. The Senator's 5 minutes has expired.
Mr. BOND. I ask for 1 more minute?
Mr. COVERDELL. I yield 1 more minute to the Senator from Missouri.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BOND. One final item I need to get in. Last year, we worked very
hard for a Transportation Equity Act for the 21st century, or TEA 21. I
led the fight with Chairman John Chafee and Chairman John Warner to
make sure we put the trust back in trust fund; that is, we told the
American people that we would send back, for highways, the money in the
trust fund as it increased. In this budget he proposes more boutique
programs. He wants to go back on the promise we made last year. We have
great highway needs and there is absolutely no reason to get more
Federal programs when it is the States who need to build the highways.
We need to start over again on transportation and education and make
some sense out of this budget.
Mr. COVERDELL. Mr. President, I appreciate the remarks of the Senator
from Missouri. I now yield up to 5 minutes to the distinguished Senator
from Michigan.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. ABRAHAM. Thank you, Mr. President. I thank the Senator from
Georgia.
I wish to join my colleagues in expressing our deep concern at this
administration's misleading and potentially damaging budget.
Now that we have finally gotten our fiscal house in order, turning
huge deficits into significant surpluses, I am troubled, as a lot of
our colleagues are, that the administration is seeking to turn the
clock back to the bad old days of tax and spend that got us in
financial trouble in the first place.
I think the Senator from Missouri very effectively outlined some of
the inadequacies of this budget.
This budget includes $1.7 trillion in new Government spending, with
the potential of trillions more, despite the President's agreement to
set budget caps. And despite the President's frequent calls to save
Social Security first, it does nothing to save this crucial program.
Finally, this budget includes no significant tax cut for the hard-
working American families who brought us out of the age of deficits and
into the present age of surplus. With the $4.5 trillion in anticipated
surpluses, this administration could not find--in its budget, or in its
heart--the wherewithal to give anything back to the American people,
and that, Mr. President, is simply shameful.
I know my colleagues and I will be speaking a great deal in the
coming weeks about the need for tax cuts, and I know the Presiding
Officer will be one of those speaking often about this topic. But
today, I want to focus on one particular aspect of the President's
budget that would do great damage to our system of Government and to
our States, my State of Michigan in particular.
Last November, 46 States and the tobacco companies reached a
settlement in their long-running litigation. The Federal Government
neither initiated nor helped the States financially in these suits. Yet
now, the Clinton administration wants to divert $18.9 billion of the
settlement to its own uses.
The Federal Health Care Financing Administration, HCFA, wants to
seize this money under legislation allowing it to recoup Medicaid
overpayments. But no Medicaid moneys were allocated under the tobacco
settlement. This seizure is a raw exercise of Federal power, dangerous
to our liberties and our form of Government.
In addition, the administration's actions promise costly litigation
and first hits those least able to fend for themselves: State Medicaid
patients whose funding would be seized by HCFA.
Of course, the administration claims that it will use the State's
moneys to benefit everybody. Once again, this administration believes
it is better able to spend money than are those actually entitled to
it; in this case, the States.
A number of States already have acted in reliance on the tobacco
settlement, putting forward proposals that will greatly benefit their
constituents. For example, in my State of Michigan, Governor John
Engler has proposed to endow a merit award trust fund with Michigan's
share of the settlement, at least a portion of that settlement.
Under this program, every Michigan high school graduate who masters
reading, writing, math, and science will receive a Michigan merit
award, a $2,500 scholarship that can be used for further study at a
Michigan school of that student's choice. Another $500 would be
available for seventh and eighth grade students who pass their State
tests, bringing the total available for higher education in Michigan to
$3,000 for students who work hard and learn the basic skills needed to
move on to higher education.
We need programs like Michigan's to help kids do well in school and
get ahead in life. The Federal Government should be learning from these
kinds of programs. It should not be taking money out of the pockets of
Michigan's young people to put into the pockets of Washington
bureaucrats.
We must protect the rights and the people of our States by seeing to
it the tobacco settlement money stays where it belongs and where it
will do the most good--in the States.
That, Mr. President, is, in my judgment, one of the many inadequacies
in the President's budget. I certainly intend to work very hard here in
the months ahead to make sure these tobacco settlement dollars go to
the States where the priorities can be set that make the most sense to
the people of the States. They are the ones who fought this litigation
and won it.
Mr. President, I yield the floor.
Mr. COVERDELL addressed the Chair.
The PRESIDING OFFICER (Mr. Grams). The Senator from Georgia.
Mr. COVERDELL. Mr. President, I thank the Senator from Michigan, and
I now yield up to 10 minutes to the Senator from New Hampshire.
The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
Mr. GREGG. Mr. President, I thank the Senator from Georgia for his
time, and I appreciate his organizing this discussion of the
President's budget, because it has some very serious problems, even
though we are in superb fiscal times now and it appears the President
has put forward a budget which will create for us into the future some
fiscal problems of an enormous extent. Many of these relate to his so-
called ``resolution'' of the Social Security issue. Let's talk a few
numbers to begin with.
What the President has proposed in Social Security does virtually
nothing to address the underlying problem of Social Security. The
underlying problem of Social Security, of course, is we have the post-
war baby boom generation that begins retiring in the year 2008, and
that generation is so large in

[[Page S1126]]

physical numbers that it overwhelms the capacity of the younger
generations to support it. Has the President addressed that? No.
What the President has done is put forward a major accounting gimmick
which is, basically, a proposal that has no substantive effect on the
underlying problem, but gives them the capacity, through bookkeeping,
to claim that they have addressed the problem.
The President has proposed that we take the present surplus, which is
projected in the Social Security fund, of about $2.3 trillion and keep
that in the Social Security fund. And then the President has proposed a
brand new commitment from the general fund to the Social Security fund,
a new bookkeeping entry which amounts to new debt of another $2.8
trillion. The practical effect of that, of course, is that nothing
happens. But the political effect of it is that the President can claim
that by making this bookkeeping entry, he is extending the life of the
trust fund for another 8 years or so.
Let me try to explain it through this pie chart, because it is a
complicated little shell game. It is not a little shell game, it is the
biggest shell game ever played in the history of this country,
actually.
This is the spending which is projected relative to the surplus over
the next 15 years. There is $2.3 trillion for Social Security in the
President's proposal: $700 billion for Medicare, $500 billion for new
USA accounts, and $500 billion of new spending items. Notice there is
no tax cut in here for Americans. He decided to skip that for the next
15 years, but that is another issue other Members will talk to.
Essentially, that is how he spends the $4.4 trillion surplus, which is
projected for the next 15 years.
However, in his accounting process, he also spends another $2.8
trillion, which is these new notes that he credits to Social Security.
Why does he do that? He does it essentially because he wants to claim
he has expanded the size of the Social Security trust fund so he can
extend this life expectancy out. But this doesn't exist. This is a
bookkeeping event. What it does do is it creates a huge new debt which
will have to be paid by later generations to the Social Security trust
fund.
The practical effect of that debt is that he will be increasing the
tax obligations necessary to support the Social Security trust fund as
we move into the later years by huge numbers.
Beginning in the year 2025, it will take an extra $360 billion in
order to maintain the trust fund, and this will have to come from the
general fund, which means it will have to come through tax increases.
This is in order to meet the obligations created by this new $2.8
trillion bookkeeping entry.
In the year 2035, that number jumps to $786 billion. That is just 1
year, coming out of the general fund into the Social Security trust
fund. The implications of this are staggering. It moves up to a figure
of $2.07 trillion--that is a 1-year number--in the year 2055. The
implication is staggering, because it does two things.
First, it creates this huge pressure on the general fund which
inevitably leads to a huge tax increase. Secondly, it creates a whole
new dynamic for the Social Security system. The Social Security system
has never gone into the general fund in order to support the Social
Security system. That is not the concept of the Social Security system.
The Social Security system has always been a trust fund. This creates
the Social Security fund as a fund that has a drain basically on the
general fund.

This all comes down to basically, in my opinion, sham accounting. And
you don't have to take my word for it. Ironically, in a spurt of
honesty and truth in accounting, the President's submission to the
Congress of its budget had this language at page 336. I think it is
worth reading.

(The Social Security Trust Fund) balances are available to
finance future benefit payments and other trust fund
expenditures--but only in a bookkeeping sense. . ..

So somebody at least down at OMB had the integrity to acknowledge
what they were actually doing. They were creating a bookkeeping event
for the purposes of claiming an extension of the Social Security trust
fund.

They do not consist of real economic assets that can be
drawn down in the future to fund benefits. Instead, they are
claims on the Treasury that, when redeemed, will have to be
financed by raising taxes--

Which is the item I pointed out here, the trillion dollars in the
year 2045, for example--

borrowing from the public, or reducing benefits or other
expenditures. The existence of large trust fund balances,
therefore, does not, by itself, have any impact on the
Government's ability to pay benefits.

If I had written a critique of what the President proposed, I could
not have done a better job. Somebody on his staff had the integrity to
truly write the critique, and by mistake, I suspect, they slipped it
into the President's budget submission. I am sure they are upset now
that it is in there. But it is an accurate statement of what they have
done. This is a bookkeeping entry, the practical effect of which will
create huge outyear chaos.
Why is that? Common sense tells you why it is. You can't address the
problem of the Social Security issue with mirrors. You can't say that a
problem that is created by having a huge generation retire is going to
be solved by having a bookkeeping event occur in the budgeting
processes of the Federal Government. But that is what this President
would like us to believe.
In fact, if you look at the President's proposal on Social Security,
as he put it forward, it has absolutely no substantive impact on the
underlying problem. He first uses this double-counting event, which
does nothing--in fact, it potentially aggravates the problem
dramatically in the outyears --and, secondly, suggests we should take
the trust fund and invest some portion of it, 15 percent of it, under
Federal management in the marketplace, which will create, potentially,
havoc, basically a nationalization of our stock market, potentially
havoc in our stock portfolios throughout the country, as Chairman
Greenspan has correctly pointed out. And then he proposes two specific
things to do, both of which cost more money. He proposes we raise the
earning limits, which is a good idea; and he proposes we address the
problem of elderly women who are at the low-income levels, which is a
good idea. But neither of those help the Social Security solvency
issue. They actually aggravate the Social Security solvency issue.
So his proposal on Social Security is the largest shell game ever put
forward in the history of the world and does absolutely nothing to
substantively improve the problems which we have with Social Security
as we go into the next 20 to 30 years. And those problems are huge.
A number of us on our side of the aisle--and I notice Senator
Domenici is here--have put forward proposals which are substantive,
which are legitimate, which address the fact that this is a
demographic-driven event and which must be addressed. But we can't move
forward with our proposals if the President is going to be so
irresponsible with his proposal. The fact is his proposal is used
primarily for the purposes of pushing another political agenda. Trying
to lower the ability of this Congress to address tax cuts is the
primary political agenda behind this proposal, in my opinion. It does
nothing as a constructive voice on the issue of Social Security and
Social Security reform; and thus it is a great disappointment. And I
think the White House is going to go back to its drawing board and come
back with another idea, another proposal, if it expects the legacy of
this President to be a correction of the most significant fiscal policy
which faces this country, which is the Social Security crisis in which
we are headed.
I thank the Senator from Georgia for his courtesy.
Mr. COVERDELL. Mr. President, I thank my colleague from New
Hampshire, not only for his presentation today but for all of his work
on this great question before the country embraced in Social Security.
I now yield up to 7 minutes to our distinguished colleague, the
Senator from Idaho.
The PRESIDING OFFICER (Mr. Gregg). The Senator from Idaho is
recognized for 7 minutes.
Mr. CRAIG. Mr. President, thank you. And let me thank Senator
Coverdell for chairing the special order today to talk about a very
important debate which this country is now just beginning to engage in;
and that is, the debate over the Federal budget for the

[[Page S1127]]

next fiscal year and for the near future of the next 10 years.
The reason I say it is an important debate--and I associate myself
with the remarks of the Senator from New Hampshire--if not the most
important debate we will become involved in in this decade is that it
is long term. What we do in this budget sets a trend line, clearly
establishes a standard of performance for how Government operates and
how taxpayers are treated in our country.
So for the next few moments I am going to dwell on that, because I
can't deal with the specifics of this budget yet, not in the detail
that the Senator from New Mexico, who is the chairman of the Budget
Committee, is going to in a few moments. He is the expert. He teaches
me what is in this budget. And I listen very closely.
But let me tell you, there are some fundamentals that I hope the
public will come to recognize as this debate goes on, that within the
budget surplus there are two surpluses. About 62 percent of that
surplus is generated by Social Security tax, Social Security tax
revenue. And that 62 percent the President of the United States and the
Congress of the United States agree ought to be dedicated to reforming
and strengthening the Social Security system. So if you will, that is
surplus I.
There is a second surplus, and that is a surplus that is generated by
other taxes, including the taxpayers' income tax. And that represents
about 38 percent of the Federal budget. It is on that percentage that
this Republican Senate at this moment is proposing, amongst other
things, a significant tax cut for the taxpayers of the country.
I am very proud to stand on the floor, along with a lot of my
colleagues, and say that a decade and a half ago we began an argument
to force our Government to balance its budget. We were told at that
time, in the early 1980s, that wasn't going to happen, just wasn't
going to happen in my lifetime. In fact, I had an elder statesman in
the House--I was serving in the House --after I delivered this House
speech on balancing the budget on the floor, tap me on the shoulder,
and he said, ``Kid, you ain't gonna live long enough to see a federally
balanced budget.'' And then he went on to say, ``Why would you want to
do it? Look what you can do with Government spending to expand the
economy, to create all these neat things.'' And I looked at him and
smiled and said, ``To reassure your reelection.''
Well, that was less than 20 years ago. In fact, that was about 14
years ago when that statement was made. And today the budget is
balanced. Today we are now arguing over how to spend the potential
trillions of dollars of surplus that will be generated by that budget.
When I was arguing the balanced budget idea in the early 1980s, along
with a lot of my colleagues, there were some fundamental reasons why we
were doing it: No. 1, to control Government. Because we saw an all-
increasingly expanding, powerful Federal Government as a damper on the
rights and freedoms of the citizens of our country. More Government,
less freedom; more programs, less control, less opportunity on the part
of the average citizen. So that was one of the reasons. The other
reason was to turn this economy on.
In all fairness, Mr. President, I don't think any of us ever knew how
much you could turn the economy of this country on if you did just two
things: If you balanced the Federal budget, that is called fiscal
policy, and if you kept monetary policy in line with it; and if you
rewarded the workers by allowing them to keep more of their own money
called taxes.
We have been able to do all of those things in combination. And what
happened? We turned this economy on. We fueled it in a way that was
really beyond our imagination.
In fact, a lot of us are looking at this strong economy today and
saying, how can it last? Why is it so strong even in light of all the
things that are going on around us in a world economy that is dragging
it down to some extent.
The reason it is strong is because the Federal budget is balanced,
because monetary policy is in line with the Federal Reserve. Now the
next step is to keep it strong and even stronger and to take overtaxed
American taxpayers and make sure that they keep an ever larger part of
their hard-earned money. That is the real difference between what the
President proposes and what we are talking about.
Oh, yes, we have the fundamental disagreements on Social Security
reform that the Senator from New Hampshire, who is now presiding, has
just talked about, and those are fundamental differences. But with that
38 percent that is left, the President plans to spend it all in one
form or another. In fact, if you listened to his State of the Union in
his budget message, he was like somebody handing out gifts in the form
of government programs. A little here and a little there, going to
benefit this, going to benefit that, going to expand here, and in the
end, the world is going to be a happier place, and the President is
going to be a more popular guy. Or so it went.
What he didn't say was that he actually was growing the potential of
a Federal debt and deficit in combination again and that he was not
offering substantive reform in the long term that would really benefit
Social Security recipients, and most importantly, the young people of
our country.
There is another premise with Social Security: No matter what we do
we are going to protect the elderly. But what we have to do is assure
that the young people of our country have a good investment in the
future because Social Security today for a young person entering the
work force is a lousy investment. There is very little returned for
their money. So those are some of the dynamics of the debate at hand.
Mr. President, let me close with this thought--and I believe it
sincerely, as somebody who has fought for a balanced budget, as
somebody who is proud to see a balanced budget gained, and as somebody
who has been very surprised over the strength of an economy that can be
generated by the balanced budget and good, sound, monetary policy. It
is simply this: I believe the President squanders the reward of a
balanced budget. I believe the President squanders the hard work that
we have done here to assure that the taxpayers of our country can have
back even more of their hard-earned money. He not only squanders it in
bad ideas, he squanders it by simply creating a greater liability on
future earnings of our government or future taxes by our citizens.
We are standing at the threshold of a unique time in our Nation's
history, a true opportunity to fix Social Security, to reform it, and
to change it into a positive investment for the young people of our
country while still continuing to hold safe and reward the elderly of
our country for their hard-earned days, but also to assure long-term
economic growth in our country that keeps our work forces working, that
keeps our taxpayers happy, and that strengthens our country among other
nations in the world.
That is an opportunity that can be accomplished with this budget.
That is why I think what we are standing for today is the right
direction and course for this country to take.
I yield the floor.
Mr. COVERDELL. Mr. President, I thank my colleague from Idaho. I
yield up to 10 minutes to the distinguished chairman of the Budget
Committee, Senator Domenici of New Mexico.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. I thank Senator Coverdell very much. I hope I will not
use 10 minutes because there are other Senators here.
Let me say to the distinguished occupant of the Chair, Senator Gregg,
I was here when he made his remarks. I think the most salient aspect of
those remarks--while I agree with almost all of it--the most salient
area can be formulated into a question.
My question is this: For at least 10 years we have been struggling in
this land with commission after commission, study group after study
group trying to tell us how we could repair Social Security so that it
will be available in the next millennium, because of the terrible
impact on that Social Security fund, of the actual demographics of
America, and the baby boomers hitting pension time. Now, does it seem
logical that after all of that discussion that essentially we don't
have to do anything to save Social Security?
I asked the question so I can answer it because I believe everybody
that is working so hard at it would say the answer is, no; you can't
fix Social Security by doing nothing for or to or in any way reform or
change it.

[[Page S1128]]

Now the only thing the President of the United States did in this
budget is make a proposal that will never pass the Congress, that a
tiny piece of this so-called surplus that belongs to Social Security be
invested in the equities market of America by a government-controlled
board, who would be subject to all kinds of pressures that would
distort the market of America. I don't say that singularly. The
Chairman of the Federal Reserve Board has used far stronger words than
these: that it won't work, that it will be detrimental. So in a sense,
that is the only thing proposed.
Now, I am going to lower my voice and say, on the other hand, the
President is going to say that he transfers some of the surplus of
America to the Social Security fund and it is there and thereby it
extends the life. But the Senator has so adequately stated, What is
being transferred? In the end, what is being transferred is going to
result in debts that have to be paid by somebody, some time, because we
have neither enhanced Social Security by investing a significant
portion in the equities market, nor have we, in any way, if one seeks
to reform it otherwise, made any changes to it except to add to it.
Frankly, that is a missed opportunity. I think I might say it is a
missed opportunity, perhaps, because of the clamor that we are in today
politically.
I think last year the President was on the right track. He had
meetings and bipartisan seminars and everybody went. They held one in
Albuquerque, NM. And forthrightly, the President used to say to people
who opposed investing it in the equities market, in as safe a way as
possible, Why should the Social Security trust fund yield so much less
to the Social Security recipients than investing in other pension
plans? He used to ask that question when people were against investing
it. What happened, however, as this budget came rolling through under
the political turmoil that exists, the President sent us nothing but
some words that say we hope we can work together.
I hope we can, too, because I think if we did it would be a far
different proposal than what is in this budget, which is borderline
nothing with reference to Social Security.
There are so many other things to talk about, but I am only going to
talk about three and do it very quickly. Fellow Republicans,
conservatives and moderate conservatives in America, this budget
presents the best opportunity for those who think conservatively and
Republican and moderately conservative, to present a basic issue that
disagrees with the President and those who follow him in the Democratic
Party.
My friend from Idaho, it is basically this: When you have a very
large overpayment by the taxpayers of America, an unexpected tax burden
that yields billions of dollars that were unexpected, that we don't
need, that are now building up a surplus, what do you do with it? And
one approach is to save it. The President says he is being conservative
and saving it. But I add to that, saving it so it can be spent. And in
some instances, spending it under the President's budget or give it
back to the American taxpayers in proportion to how they paid it to us.
That falls simply under the rubric of a tax cut. I have explained it
as well as I could as to why the time has arrived. Why is this an
opportunity to debate a difference? Because if you don't give it back
to the taxpayer, no matter what contortions you go through about
transferring it to trust accounts with new IOUs and the like, it is
available to be spent, and I am not going to be anymore positive about
that, other than to ask another question: Does anyone think that that
kind of surplus sitting around is going to really stay sitting around,
or is it going to do something else? I submit that the President is on
a path to showing us already that it is going to be spent.

My last one--I will do one additional one--is this: Anybody in this
Chamber or across this land who has heard the President speak and has
heard his budget presented, answer this question for me: Did the
President propose spending some of the surplus which he is going to put
into Medicare? Did he propose spending it for prescription drugs?
Frankly, I surmise that already, among those who are interested, 95
percent would answer that question that he proposed spending it for
prescription drugs. But that would be inconsistent with saving it,
right? So, as a matter of fact, if you read his speech attentively and
listen to two of his witnesses--OMB and Treasury--it is now obvious
that he does not propose to spend any of it for prescription drugs.
But isn't it interesting? You put it in the trust fund to make the
trust fund more solvent, but then you don't propose that any of it gets
spent. That is what is going to happen to the surplus. That is one
example--the big surplus, over and above the Social Security surplus.
It is going to find niches in this country, special interest groups of
all types, small and large, and it is going to be spent.
Now, are we undertaxed? Of course not. We would not have this kind of
surplus if we were undertaxed. This surplus indicates what a surplus of
this size should indicate, which is that tax receipts are very high. In
fact, the total tax receipts of the Federal Government are the highest
percentage of the gross domestic product that they have been in 50
years. You can pick pieces of the taxpayers and draw different
conclusions for different groups. But essentially it is true that the
total tax take is going up as a percentage of our gross domestic
product, and that sends a signal: It is time to take a look and make
sure you don't spend at that level, because then you move America into
a high tax country. Our success is not as a high tax country; our
success is as a low tax country. That is why we are succeeding over and
above other countries in the world.
I yield the floor.
Mr. COVERDELL. Mr. President, I thank the chairman of the Budget
Committee for his presentation this afternoon.
I yield up to 3 minutes to the Senator from Wyoming, Senator Thomas.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. THOMAS. Mr. President, I have been listening with great attention
to what we are talking about. Certainly, there is nothing more
important before us now than the budget. We have heard all kinds of
explanations, and we will hear many more. We will argue about the
allocation over time. But it seems to me, as I think about it, that the
idea of a budget is where we really set our priorities.
There is more to a budget than simply the question of where we spend
every dollar. What we do with the budget is, we put into reality the
things we would like to see in our Government. What size Government
would you like to have? What do we do with respect to our working with
the State and local governments? How does that fit? What do we do about
taxes? Is there something we want to do there? I look at it as really
an opportunity for us to, philosophically and from an ideal standpoint,
look at why we are here and what it is we want to accomplish.

For those who want a simpler and smaller Government, does this budget
do that? I don't think so. This is an increase in size. This is more
Government. This is larger.
What if your goal was really to move more and more of the choices and
more and more of the responsibility closer to people and State and
local governments? Does this budget do that? No, I don't think so.
What if you want to really feel strongly about spending caps and say
that this is the way you control spending? Does this budget stay with
the caps that we argued so much about just 2 years ago? No, it doesn't
do that.
If you had an idea that you would really like to take care of paying
down this debt on a dependable program over a period of time, a little
bit like, I suppose, a mortgage, and you wanted to do that, does this
do that? No, it doesn't.
So I hope that as we go through this whole process--and it will be,
unfortunately, almost all of the year--I hope we start with the
principles that we would like to see enunciated when we are through. We
will have different views. Some people want more Government, more
spending and more taxes--a legitimate idea, but not one that I share. I
think we do much of that in the budget.
So I hope, Mr. President, that we really take a look at measuring
this budget in terms of our values, the reason we came here, the reason
we have given to our constituents as to why we

[[Page S1129]]

are here. Much of it will be reflected in this budget.
I yield the floor.
Mr. COVERDELL. Mr. President, that is going to close the discussion
on our side on the President's budget. I am going to yield the
remainder of our time at this point to the distinguished Senator from
Texas on another matter.
How much time remains?
The PRESIDING OFFICER. The Senator has 4 minutes remaining.
Mr. COVERDELL. I yield the remainder of our time to the distinguished
Senator from Texas.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mrs. HUTCHISON. Mr. President, I ask unanimous consent that I be
permitted to speak as in morning business for up to 30 minutes
thereafter, and I further ask that following my remarks Senator Gorton
be recognized, followed by Senator Graham of Florida and then followed
by Senator Brownback.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
(The remarks of Mrs. Hutchison, Mr. Graham, and Mr. Gorton pertaining
to the introduction of S. 346 are located in today's Record under
``Statements on Introduced Bills and Joint Resolutions.'')
Mr. GRAHAM. I thank the Chair.
Mr. BROWNBACK addressed the Chair.
The PRESIDING OFFICER. Who seeks recognition?
The Senator from Kansas.
Mr. BROWNBACK. Mr. President, I ask unanimous consent to speak as if
in morning business for up to 12 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered. The
Senator has that right.
Mr. BROWNBACK. I thank the Chair.

____________________