[Congressional Record (Bound Edition), Volume 146 (2000), Part 2]
[Senate]
[Pages 1497-1499]
[From the U.S. Government Publishing Office, www.gpo.gov]



                            THE BUDGET PLAN

  Mr. DOMENICI. Mr. President, I want to spend a little time talking 
about what has transpired with the U.S. budget over the last 35 years, 
and I will focus mostly on the last 5 years.
  I think everyone knows that next month we begin the process of 
producing a congressional budget plan for the fiscal year that begins 
this coming October. The Senate Budget Committee, which I have been 
honored to chair, will complete its hearings next week on the 
President's budget which was submitted to Congress earlier this month. 
Before we begin the task of producing that budget blueprint, I thought 
it might be of interest to some of my colleagues and some of those who 
might be watching to briefly review some facts surrounding the Federal 
budget.
  One can provide different interpretations of numbers, but a number is 
a very stubborn thing. It is what it is. Using the help of some charts, 
I will provide a very brief historical overview of the Federal budget 
today.
  Chart No. 1 is the total budget surplus and deficit over the last 30 
years. After nearly 30 years of Federal deficit spending--and my 
colleagues can see the surplus/deficit excluding Social Security is in 
green and the total budget surplus is in red. The green, as one can 
see, starting back in 1965 and going all the way to 1998, is constantly 
below the line, meaning we have been in deficit for that whole period 
of time.
  We finally reported a balanced budget, under the unified budget 
process in 1998, of nearly $70 billion. Last year, in 1999, we once 
again successfully achieved a unified budget surplus of $125 billion. 
But more importantly--noting the green line on this chart--we will be 
able to balance the budget not counting the Social Security surplus. 
The red line is the total budget surplus and the green is Social 
Security balances.
  Here is the way the budget goes. We now have a surplus above zero in 
both the Social Security and in the non-Social Security accounts of our 
Government. Last year, we actually achieved a surplus--not very much--
of $1 billion, and certainly that is substantially better than when we 
were approaching $300 billion in deficits.
  For the current fiscal year, we expect a surplus of $176 billion, 
and, of that, nearly $23 billion excludes the Social Security moneys, 
meaning we have some money left over in surplus after we put all the 
money in the Social Security trust fund that is required by law.
  Projections for the near future remain positive. Of course, depending 
on what policies we enact relating to taxes or spending, the Social 
Security surpluses will continue to accumulate over the next decade, 
and the rest of Government also is expected and projected to see 
surpluses as far as the eye can see.
  By the year 2005, the Congressional Budget Office expects the surplus 
to be between $270 billion and $300 billion. One thing that this job 
has taught me is to be very careful in statements about the long term. 
I could spend some time suggesting that these long-term surpluses are 
very reliable and credible, but I will do that at another time. Today, 
instead of statements about the long term, what I want to do is talk 
about--rather than pontificating about the future and what we might 
expect--about what has passed, just so there will be an understanding 
of whether or not Congress and the Senate and the Budget Committee and 
the appropriators and everybody in this body ought to be proud of what 
we have accomplished in terms of controlling the spending of our 
National Government.
  So here is chart No. 2. It has a lot of things on it. I just put it 
up because it shows, in five intervals over the last 30 years, the 
major components of the budget. We can clearly see that total Federal 
spending has increased, to where this year the Federal Government is 
likely to spend $1.8 trillion.
  In terms of the totality of the budget--in all of its components: 
Military, entitlements, the 13 appropriations bills--it has been going 
up every year. Now we are at about $1.8 trillion. That is an 
interesting number because if there is a $4 trillion surplus--just to 
compare--that means we will have more than 2 full years of the Federal 
budget in surplus during the next decade. That is a rather profound and 
major change in things over the past 35 years.
  The country has grown over the last 30 years, and it has grown faster 
than Government spending. So while we reached a peak of nearly 23 
percent of our gross domestic product in 1985, today it has declined 
almost 5 full percent; that is, we are now at 18.5 percent of our gross 
domestic product in the total spending of the American Government, 
including interest on the debt, entitlements, Social Security, and 13 
appropriations bills--and, obviously, one of those is the defense bill.
  This bar chart points out a phenomenon of which I think we are all 
aware. Let's just look at it for 1 minute. Entitlement spending today 
represents 55 percent of all Federal spending. If we add paying the 
interest on our national debt as another entitlement--and it might be 
that, so let's add it in--then 77 percent of what we spend every year 
is either mandatory spending or an entitlement.
  I did not go back in history to equate the percentages under other 
Presidents, but suffice it to say, not too long ago, in the era of, 
let's say, President Kennedy's tenure, clearly, about 40 percent of the 
entire Federal budget was entitlements; and now we are up to 77 
percent.
  Let's look at the third chart: Growth in Total Outlays. This is very 
important. For those who wonder about how poorly we do or how well we 
do when we finally finish all our work--it might not look pretty; it 
may take too long; there may be a lot of scuffling on the 
appropriations bills--I would like very much to make sure we all take a 
good, careful look at this chart and see what we have really been doing 
that has contributed to the great fiscal policy of this country and to 
our position today of low interest rates and sustained economic growth.
  This is a very dramatic chart. It is very simple but very dramatic. 
The blue on the chart is what is called nominal growth, and the red is 
real growth. The nominal growth includes inflation, plus the growth 
beyond inflation. It is very interesting what we have done. Because we 
think it makes the most sense, we have gone back to 1965 and done this 
on 5-year intervals. So we have taken 5-year intervals and then taken 
the average for that 5-year interval.
  It is rather dramatic to see what is shown on the chart, without any 
explanation--the dramatic reduction in the percentage of growth in 
actual total outlays year after year. It was not long ago we were 
talking about deficits as far as the eye could see. Now, as this chart 
shows, as the reality of the years 1995 through 2000 has become true, 
we are beginning to see rather large surpluses.
  I might add, by way of taxes--with which I do not think we did much 
in

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these charts--even though taxes, for certain Americans, may be lower 
than 15 or 20 years ago, but the percent of our gross domestic product 
that goes to taxes is the highest since the end of the Second World 
War. So it is obvious, if your taxes are the highest and your growth in 
Government is the lowest, you begin to develop a rather good surplus. 
It is kind of easy to see that much of that surplus is because we are 
taxing the American people at a higher percent of our total production 
than we ever have since the Second World War when we had all kinds of 
taxes.
  Let's just look at this chart and take a couple of years. Growing at 
an annual rate of nearly 12.2 percent in the late 1970s, the total 
Government spending right now that we can tell you already occurred--as 
I said in my opening remarks, we are not predicting. Numbers that are 
behind us are hard to throw away.
  For the years 1995 to 2000, the total amount of growth in our 
Government, including appropriated accounts, is 3.1 percent; and of 
that, the real growth--that is, noninflationary growth--is 1.3 percent.
  Just compare that quickly with other periods of time shown on the 
chart. Pick any interval you like. From 1980 to 1985, the nominal 
growth was 9.9 percent, the real growth was 3.6 percent--almost three 
times as much in real growth as it was from 1995 to the year 2000.
  If today I sound as if I am trying to convince somebody of something, 
I address this to a number of Senators because there are some who say 
we are overspending everywhere and some who say the appropriated 
accounts are out of control. My friend, if they are out of control when 
they are part of a Government growth that is 1.3 percent in real 
growth, what were they when it was 5.8 percent? It was unexplainable. 
There is no word for it.
  If we are out of control now--and for those who are interested, the 
years 1990 to 1995 were not too shabby either. In fact, from 1990 to 
1995, it was 1 percent real growth and 3.9 percent for a combination of 
real growth and inflation. That is just slightly higher in its totality 
than the period from 1995 to 2000.
  I remind Senators that for the period 1995 to 2000--the occupant of 
the Chair knows this; Senator Hollings knows this--we had a lot of 
emergency money we put in. We had an agricultural emergency 3 years in 
a row. We had some military emergencies where we got into wars, and we 
had not funded them, so we put them in as emergencies. They can be 
whatever you want, but when the year is finished they are part of the 
total outlays. If, in fact, you allocated the money, and put it in an 
appropriations bill, it would eventually be spent, whether it was an 
emergency or whatever, and that is the reason we talk about total 
outlays.
  The fourth chart only shows the red, which depicts real growth. For 
some people--not me at this point; I am not sure everything should 
increase by the rate of inflation every year--but some people think 
that should be the policy of our Government.
  What we are looking at here in each of these years is: What was the 
real outlay growth, on average, over the 5-year intervals, meaning 
without inflation? It is pretty simple. If we took the 35-year average, 
and we drew a line--looking at the years 1965 to 1970, it was almost 6 
percent--but the average for the 35 years is 3.1 percent. Looking at 
the last decade, real growth for the years 1990 to 1995 was 1 percent; 
from 1995 to 2000, it was 1.3 percent.
  Frankly, somebody did something right. If we are talking about 
restraining expenditures of Government so as to produce a fiscal policy 
that puts us in balance and ultimately creates a surplus--I know my 
dear friend, Senator Hollings, is here and his and my definition of 
``surplus'' may differ, but I think anybody who looked at this would 
say we are surely moving in a direction different from what we did for 
most of the last 35 years.
  In terms of how much we are letting Government grow, the fifth chart 
shows major components of the entitlements and other mandatory 
programs. The 35-year average annual rate of growth of Government 
spending has been about 3.1 percent.
  The PRESIDING OFFICER. The Senator's 15 minutes have expired.
  Mr. DOMENICI. I ask unanimous consent for an additional 5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. This chart shows the various entitlement spendings. It 
is over 55 percent of all Federal spending today. Three-quarters of it 
is just three programs: Social Security, Medicare, and Medicaid.
  Let's move on to the Growth in Entitlements and Mandatories. Many of 
us are of the impression that it is the entitlement programs that are 
out of control. I admit, looking at this chart, one would see where it 
wasn't too long ago when they were out of control. Let's take 1970-75. 
The growth was 18.5 percent nominal growth. In 1980-85, it was 9, and 
in 1985-90, it was 6.9. In 1990-95, it was 5.5. Here we are in 1995-
2000, in entitlement programs, 4.5 percent nominal and, without 
inflation, the growth was 2.6 percent. If we can continue growth in 
this manner, which is principally predicated upon controlling the costs 
of health care, which the Government pays for partially or totally, we 
can keep our government under control and the costs can continue to 
come down.
  National defense is something we ought to be concerned about because 
we have thrown some numbers around and some percentages. The facts are 
before us, and they don't look too good. The truth is, since the 1985-
90 era, everything since that time has been no growth in defense rather 
than growth. If you are looking at the chart turned upside down, when 
it comes to the last decade, defense spending starts to come out on the 
negative side, meaning year after year the outlays for defense have 
gone down rather than up, and these are the numbers. We are doing a 
little better in the 5 years of 1995-2000 than we did in 1990-95, but 
it is clear that if, in fact, we think we have been really increasing 
defense in terms of outlays, as we finally get them accounted for, it 
is obvious we have a long way to go if we are going to say we have 
increased defense spending. I am not saying we must. I am merely giving 
some facts as they show up here.
  In summary, the data suggests to me that we have been successful in 
controlling the rate of Federal spending. And while we must continue to 
be vigilant and very careful, in this time of projected budget 
surpluses, to avoid returning to an era of expansive Government 
spending, I do not think we should dismiss what these charts show. We 
have been successful in controlling Government spending, and we have 
been most successful in the last decade, very successful in the last 5 
years. There are many institutions, entities, and people who can take 
some credit for what has happened to the American economy, but I 
believe it is fair to say that the Budget Committee of the Senate, not 
always under my chairmanship but under the chairmanship of others, has 
been part of a decade of tremendous pressure to reduce the expenditures 
of Government and thus create a surplus.
  If the surplus is good--and, frankly, it looks as if the American 
people have understood loud and clear that the debt is not good. I 
would assume if the debt is not good, they must think surpluses are 
good. Indeed, we do. Much of the surplus is going to that accumulated 
debt. As a matter of fact, I close by saying, while the two parties and 
the President disagree on many things, it is good for America that we 
have agreed on one thing; that is, the Social Security surplus is going 
to the Social Security trust fund, not into the general coffers of 
Government to be spent. That alone will dramatically reduce the debt we 
owe to the public.
  As a matter of fact, if we continue for the next decade to apply the 
Social Security surpluses, which I am rather confident will continue to 
occur, then we will have in a decade reduced the debt of the American 
people by somewhere around 70 percent, which is not very shabby, if you 
talk about one decade, one group of people reducing the debt that much.
  I thank the Senate for permitting me to speak. I will come to the 
floor at a later time and express why I am convinced the surpluses are 
for real and

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that, as a matter of fact, they are apt to be more rather than less 
over the next decade because of what is happening in the American 
economy.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.
  Mr. HOLLINGS. Mr. President, I ask unanimous consent for an 
additional 5 minutes on my allotted time.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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