[Congressional Record (Bound Edition), Volume 145 (1999), Part 5]
[Senate]
[Pages 7104-7106]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             BUDGET REFORM

  Mr. GRAHAM. Mr. President, I prepared these remarks yesterday in 
anticipation that we would be debating the budget reform bill today. It 
is my understanding that subsequent to yesterday's offering of an 
amendment, which was referred to as the lockbox amendment, in lieu of 
the budget reform bill, that now the budget reform bill has been 
withdrawn.
  But anticipating that that is a relatively temporary step, because we 
cannot avoid having to deal with the issues of budget reform if we are 
serious about our goal of preserving the momentum that is currently 
underway towards a surplus in the Federal Government fiscal accounts, I 
offer some comments today which I hope will be useful as we prepare for 
that return to the budget reform discussion.
  I am very pleased that we are focusing on this issue, because it is 
an indication of our commitment to retain the fiscal discipline that 
has gotten us to the point where we have the opportunity to talk about 
a Federal budget surplus and how it should be appropriately used.
  I want to discuss two interrelated issues. One I will call the issue 
of the ``vault'': How will we protect the surplus that we have once it 
has been attained? But the even more significant

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predicate issue is, How do we achieve the surplus?
  I am concerned by some of the actions that were taken in 1998 which 
indicate a lack of resolve to protect the surplus. It is no good to 
have the securest vault in the bank possible if we fritter away the 
money we would like to place in that vault. If we do not address the 
underlying issues of fiscal discipline, responsibility, the Social 
Security trust fund will be endangered no matter how strong our lockbox 
is to protect it.
  This Congress is in a unique position to reaffirm the stated 
commitment to fiscal discipline and to cure the previous willingness of 
Congresses to undermine that discipline through budget trickery.
  As recently as 1993, the Federal budget deficit was at a record high 
of $290 billion. Last year, we learned that 5 years of effort, fiscal 
austerity, and a strong economy had transformed that staggering deficit 
into the first budget surplus in more than a generation. While we 
celebrated that success--it was a cause for celebration--it did not 
give Congress carte blanche authority to return to its spendthrift ways 
of the past. Especially daunting was the reality that 100 percent of 
the surplus was the result of surpluses in the Social Security trust 
fund.
  We have a responsibility to our current generation, as well as to 
their children and grandchildren, to save that extra money until Social 
Security's long-term solvency is assured. Unfortunately, the 105th 
Congress stumbled in its commitment to that goal. Though it resisted a 
proposal to spend surplus funds on a catch-all omnibus list of tax 
cuts, and it similarly rejected suggestions that the surplus could be 
used for increased spending, it did not exercise similar good judgment 
during the end-of-the-year rush to adjourn. The same Congress that 
claimed to be saving the surplus for Social Security participated in 
raids on that same surplus through the back door.
  In the waning hours of last year's budget negotiations, we passed a 
$532 billion omnibus appropriations bill. Inserted in that $532 billion 
spending bill was $21.4 billion of so-called emergency spending. As we 
know, the fact that that $21.4 billion was designated as an emergency 
meant that it did not have to be offset by spending reductions 
elsewhere in the budget or by additional revenue. Rather, it was funded 
by reducing the surplus, that 100-percent Social Security-derived 
surplus.
  Let me illustrate with these charts what has been happening.
  In 1998, the stated Social Security surplus, that is the amount of 
revenue into the Social Security trust fund in excess of the checks 
that were written to the beneficiaries of Social Security, was $99 
billion. But before that $99 billion could be realized, there was a 
predicate called for in it, and that was for $27 billion in order to 
offset the deficit that the Federal Government was running in its non-
Social Security accounts. And then we added to that $27 billion an 
additional $3 billion in the fiscal year 1998 expenditures through that 
emergency appropriation that did not have to be offset by reductions in 
spending or additional revenue but came directly out of the surplus 
fund. So instead of having a surplus of $99 billion, we ended up with a 
surplus of $69 billion.
  What is the projection for fiscal year 1999? This year, the Social 
Security surplus has grown to $127 billion, but, again, the first call 
is going to be to offset the deficit which will be projected for the 
non-Social Security portion of the budget, which is $3 billion, the 
next $13 billion, which is this year's component of last year's 
emergency spending bill, and in addition to that, we are now discussing 
the possibility of additional funding for the Kosovo emergency of $6 
billion. That is the most modest number which has been suggested thus 
far. Others are suggesting that number might be doubled or tripled in 
terms of its cost.
  Instead of a Social Security surplus of $127 billion, we are now at 
$105 billion in Social Security surplus, with that number itself being 
subject to further dilution if there are additional emergency outlays 
allocated.
  For fiscal year 2000, we are looking at a Social Security surplus of 
$138 billion, minus $5 billion to pay for deficits other than Social 
Security in the Federal budget, $5 billion, which is the final 
installment on that 1998 emergency appropriation bill, and, again, the 
possibility of additional emergency spending for Kosovo or other 
purposes.
  Mr. President, it is critical that we exercise constraint in terms of 
how we use the emergency spending power available to Congress, or we 
will substantially dilute the funds that are going to be locked up in 
this lockbox vault protected for Social Security beneficiaries. I think 
there are several steps we need to take.
  The first is that Congress needs to commit itself to reexamining that 
$21.4 billion we spent last year and determine what portions of that 
$21.4 billion did not meet the standards for an emergency 
appropriation. With that commitment, we should restore those funds to 
the Social Security surplus during this year's budget consideration. I 
am pleased that the Senate adopted an amendment to our budget 
resolution which committed us to that objective. That should be a 
commitment in which we should be joined by the House and the President.
  Over the long haul, it is critical that we institute some additional 
spending procedures which will allow us to respond to true emergencies 
without, as we did in 1998, opening the door to misuse.
  Senator Snowe of Maine, Senator Voinovich of Ohio, and I have 
introduced legislation to permanently close these loopholes in our 
current budget procedure. These procedures would basically provide for 
a 60-vote supermajority of the Senate to be required in the event there 
was a challenge that items which were listed as emergencies in an 
emergency spending bill were not true emergencies and did not meet the 
statutory definition; also, a 60-vote supermajority for the passage of 
any bill which contained emergency spending so we could not have a 
repetition of what happened last year in that emergency spending was 
inserted into a large omnibus spending bill and, therefore, not 
effectively subject to removal.
  Those are some of the procedural steps that should be taken in order 
to assure we do not have a continued repetition of a dilution of the 
Social Security surplus before it has a chance to get into the lockbox.
  Now let me make a few points about the lockbox itself, the vault into 
which we intend to place these surpluses that, hopefully, we have 
protected with greater vigilance than we did in the fall of 1998.
  I strongly support developing measures which will create a 
financially solvent Social Security system for current and future 
beneficiaries. This is not only a fiscal goal, but it is a moral 
responsibility, a moral responsibility to carry out the contract that 
exists between the American people and the American Government for 
their financial security in retirement. I am pleased the Senate is 
debating this issue, since the trustees of the Social Security system 
are predicting that in the year 2034 the current Social Security system 
will not be solvent. It is critical that we take steps now to protect 
long-term solvency.
  However, the proposed lockbox, which was a part of the budget reform 
legislation, in my opinion, is not sufficient to accomplish this 
objective.
  What are its deficiencies?
  First, it allows the Social Security surplus, in addition to paying 
down the national debt, to be used for unspecified ``Social Security 
reform.''
  Now, Social Security reform can mean different things, but not all of 
those things are related to achieving solvency in the Social Security 
system. Would Social Security reform include increasing the benefits 
which would make the program potentially even more subject to 
insolvency at an earlier date? Would it mean reducing revenue into the 
system, including such proposals as returning to a pay-as-you-go system 
or diverting a portion of the current revenue out of the Social 
Security system into some individual retirement accounts? All of those 
ideas may or may not have merit, but they

[[Page 7106]]

should not be accomplished at the expense of our commitment to solvency 
in the current Social Security system.
  I propose to offer an amendment at such time as it is appropriate 
that would have the Social Security surplus used solely to pay off 
national debt, specifically that component of the debt which is held by 
the public. Only this action will ensure the Social Security surplus is 
used for its intended purpose of meeting our obligations to the 
American people and, in so doing, contribute to a stronger American 
economy, which is the fundamental basis upon which the Federal 
Government will be able to meet its future obligations to Social 
Security beneficiaries.
  There will be a cascading series of positive effects on the economy 
if we commit the Social Security surplus to paying down the national 
debt. Paying down the debt will lower long-term interest rates. These 
lower rates will make it less expensive for Americans to borrow money, 
and this lower cost of borrowing will encourage business ventures to 
expand, to increase their productivity, to increase their hiring.
  It will encourage increased investment in long-term fundamental areas 
such as education. The new economic activity and increased labor 
productivity will lead to increased economic growth. This growth will 
lead to the strengthened capacity of the National Government to meet 
its Social Security obligations.
  These points were best expressed by the chairman of the Federal 
Reserve System, Mr. Alan Greenspan, when he said,

       . . . in light of these inexorable demographic trends, I 
     have always emphasized that we should be aiming budgetary 
     surpluses and using the proceeds to retire outstanding 
     Federal debt. This would put further downward pressure on 
     long-term interest rates, which would enhance private capital 
     investment, labor productivity, and economic growth.

  If I were allowed, I would also have offered a second amendment that 
would not tie the Government's ability to borrow debt from the public 
to a 10-year budget projection. In the legislation that was before us, 
there was a proposal to use future estimates of our national debt as 
the benchmark for determining whether we had protected the Social 
Security surplus. I think there is merit in that approach, but I 
believe this legislation had carried that merit beyond its reasonable 
limits.
  I would provide, through the amendment I had intended to offer, for a 
more reasonable and credible debt ceiling target. It also would have 
provided enhanced flexibility to accommodate unanticipated events, both 
domestic and foreign. I would suggest that it is an impossible task for 
any person to estimate the budget and to estimate the national debt on 
a 10-year basis. I would offer as my basis for that statement a look-
back just 5 years, not 10 years, which this legislation proposed.
  In January of 1993, the Congressional Budget Office estimated what 
the national debt would be 5 years hence, in the fiscal year 1998, 
which ended September 30, 1998. Their projection was that the national 
debt on that date would be $4.863 trillion. At the same time, in 
January of 1993, the administration made an estimate of what they 
thought the national debt would be 5 years hence. Their projection was 
$4.576 trillion. The actual number was $3.720 trillion. So the CBO was 
off by over a trillion dollars. The administration was off by $856 
billion. That was a 5-year projection.
  What we are proposing in this legislation is to use 10-year 
projections and to give those the sanctity of almost biblical 
correctness, because they would become the basis upon which our future 
budgets would be predicated.
  Mr. President, seeing my time is about to expire, I offer these 
amendments as an indication of the direction which I think we should be 
proceeding in as we strive together to achieve a very important goal, 
which is to protect the Social Security surplus for its intended 
purpose of meeting the obligations that we have for this and future 
generations of Americans. I believe the amendments I will offer will 
help both assure that the money is protected before it goes into the 
vault, and that the vault itself is a reasonable and secure place in 
which we can place those funds.
  Protecting Social Security for our children and grandchildren is one 
of the highest goals of the Federal Government. We can make the lockbox 
stronger, and we can and should control emergency spending so there 
will be money to put in the lockbox for future generations.
  Thank you, Mr. President.
  Mr. BREAUX addressed the Chair.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.

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