[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.

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