May 1, 1975
Page 12655
Mr. MUSKIE. Mr. President, I yield myself 5 minutes.
Mr. President, I regret that I was not here when the distinguished Senator from Virginia began his remarks, and I rise not so much to challenge a point of view and a conviction which the distinguished Senator has held for all the years that I have known him, as to put the present budget resolution in the context in which I see it.
I am not going to be able to persuade the distinguished Senator from Virginia that his economic philosophy does not fit the times. His convictions are too solidly fixed for me to presume to do that. But I think it is important to put the budget resolution and the numbers that it contains in the context of our present economic difficulties.
We can still disagree as to what the numbers ought to be but I suspect that we agree that we face some serious economic difficulties.
The first issue has to do with the question of a deficit. The deficit number contained in the resolution in its present form is $67.2 billion. I emphasize that this is not a number that we carefully contrived and manufactured as a committee to present to the Congress of the United States or to the Senate. This number is the result of the economic circumstances in which we find ourselves. It was made up of two principal elements: One, the shrinkage in Federal revenues which are directly related to the reduction in gross national product. That reduction, according to the committee report, is $200 billion, and the result of that has been to deprive the Federal Government of revenues on the order of $53 billion.
Now the Budget Committee did not create that condition. That condition was created by the economy.
Second, the growing unemployment rate, from last year's 5.5 percent to last month's 8.7 percent, is a tax on the Federal budget and on State and local budgets. With respect to the Federal budget, that cost is now on the order of $15 to $20 billion. Now those two elements, taken together, are roughly the total of the budget deficit that is contained in the budget resolution.
So the deficit was created by conditions beyond the control of the Budget Committee or beyond the control of the Senate or the Congress.
Now what, if anything, can we do about it? Well, we have had considerable discussion in this debate on whether or not a deficit created in that way is avoidable. Well, let me read for the Senate the judgments of witnesses who appeared before us. Every witness who appeared before the committee agreed that a sizeable deficit was inevitable in fiscal 1976. The Secretary of the Treasury, the Chairman of the Council of Economic Advisers, and the Director of the Office of Management and Budget testified before the committee that a deficit of $53 billion could not be avoided. President Ford later adjusted his deficit ceiling to $60 billion and, in response to a question put by me, Secretary Simon said this on March 17:
Mr. Chairman, budget deficits this year are unavoidable. We must take care of the unemployed in this country. We have to get the economy moving again through tax stimulus. That creates a deficit.
I submit that Secretary Simon is not exactly a flaming liberal when it comes to economic philosophy.
Many witnesses also testified that both the fiscal 1975 and the anticipated fiscal 1976 deficits will be entirely the product of the recession.
Now, if we consider the elimination of the deficit, what are the courses open to us? Well, one is to raise taxes instead of cutting them. Simply eliminating the tax cut already enacted by the Congress would not be sufficient. We would have to add additional billions of dollars in taxes as a burden on the economy, on the taxpayers and the American people. The question that arises is: Is that a politically viable option? Is it an economically sensible one?
There is no testimony before the committee to suggest that it is an economically sensible one.
Indeed, the testimony suggests that it would be an economically disastrous course of action for us to take, forgetting the impact upon the lives of those people, of our people, who would be forced to pay additional taxes of that magnitude.
So the other alternative is to cut ongoing Federal programs and ongoing services. What would we cut? The biggest single chunk of the Federal budget is income security, including social security, unemployment compensation, and food stamps. Should we bite into them by $67 billion? What would happen to old people already struggling on inadequate incomes to get by in the face of the ravages of inflation and the erosion of jobs? What would we do as people are laid off? Tell them that the unemployment compensation program is ended because the Federal Government faces a deficit? Are we then to ask them not only to give up their jobs but to give up the income necessary to provide their families with the very essentials of life? Because when you are talking about cutting $67 billion out of the Federal Budget you are not talking about savings you can get from small change.
Where do you get that kind of cut in the Federal budget unless you bite and bite deeply into the very incomes of the people who are hurt the hardest and have the least to respond with as the result of recession and inflation? Or would you cut $67 billion from defense spending?
We have already cut, and there are those in the committee who would have cut more. There are those in the Senate who will probably vote to cut more. But no one proposes cutting anything like $67 billion, or a major portion of it or a substantial portion of it, from the defense budget.
Do you cut it from the interest we pay on the debt? Is that a real choice? That is about $38 million. So you go through the big chunks in the budget that you would have to get at to eliminate $67 billion of spending. The notion that there is an alternative to a budget deficit is very unreal.
Now, I understand the concern of the Senator from Virginia that over time we have been too undisciplined with respect to the budget, and I respect and honor that concern. Indeed that is one of the reasons why I supported the budget reform legislation last year, one of the reasons I sought the responsibility of the chairmanship of this committee, and one of the reasons that, with Senator BELLMON, my distinguished colleague on the other side of the aisle, I have undertaken to assume some responsibility for making this discipline work and giving it some bite.
But that is not to say that we regard a balanced budget – that is what the Senator from Virginia is urging – in this year, in these times, as realistic. I can understand his argument when he says, "Well, year after year there is always an argument for a deficit and some year we have got to call a halt."
Well, this year is not that year. I recognize the argument, but this year is not that year. If we could somehow persuade the majority of both houses to cut $67 from this budget in order to achieve what the Senator from Virginia seeks, not only would we impose indescribable hardship on millions of American citizens, but we would make a tragic economic mistake.
Now, that is what the committee believes and that is why the committee proposes this.
The PRESIDING OFFICER. The Senator has 2 minutes remaining.
Mr. MUSKIE. We do not propose a $67.2 billion deficit because we think it is a good thing. We would like to avoid it if we saw a way to do it, but we did so for the reasons I have tried to describe.
Mr. President, how much time is remaining?
The PRESIDING OFFICER. The Senator from Maine has 1 minute, the Senator from Oklahoma has 12 minutes, and the Senator from Virginia has 5 minutes,
Mr. MUSKIE. I reserve the minute I have remaining.
May I have another 3 minutes?
Mr. BELLMON. Mr. President, I yield the Senator 5 minutes.
Mr. MUSKIE. Five minutes, because I do want to address myself to another subject.
I hold in my hand, Mr. President, a press release from the White House, a statement by the President in which he reaffirms a commitment to a $60 billion budget deficit.
I regret very much that he issued a statement because, frankly, his $60 billion number on the deficit is not an honest number, and his experts know that, and he must know that. I can only assume that he asserts this in order to gain some political advantage over the Congress at a time when the Congress is laboring to establish budgetary discipline and is entitled to the full cooperation and understanding of the executive branch.
I do not think I need to belabor the problems with the President's $60 billion figure. We have gone over them, but let me go over them again.
The President's April 4 estimate on outlays was $355.6 billion. The first adjustment we made in that was the estimated receipts from the sale of oil leases on the Outer Continental Shelf.
No testimony has been offered before the committee by the administration to justify the administration's estimate of $8 billion. Indeed, the evidence indicates that it probably will not be more than $1 billion, and OMB and the administration have stubbornly refused to adjust that figure. We did by $4 billion. The President gives us no credit for candor in doing so.
So if the $4 billion is more nearly accurate than the President's, the President's April 4 estimate ought to be increased by $4 billion to accord with ours.
The cost of unemployment compensation is an uncontrollable number. It is dictated by unemployment, which is rising. Our people worked on these numbers, and to understand them they say we should add $1.9 billion to the President's April 4 figure because unemployment has grown and the larger figure is clearly indicated by the facts.
So if that $1.9 billion affects our total, it affects the President's total. If we eliminate it from the President’s total, we eliminate it from ours. It is as simple as that.
The same thing is true with respect to food stamps and other assistance programs. We added $600 million, not because we want to spend $600 million more, but because this is the inevitable impact of the recession on the program. If it does not impact on the President's numbers, it does not impact on ours.
The same thing is true with medicaid, the same thing is true with interest on the public debt.
Now these numbers when added together total $7.6 billion, and if the President chooses not to add them to his deficit, then we have the right to subtract them from ours. If we subtract them from ours, we are under $60 billion, which is his number.
So I repeat, Mr. President, I am sorry the President chose to issue that statement. It is gratuitous, adds nothing to this process, does nothing to eliminate the potential for confrontation between the Executive and the Congress in this important area, and it is a sad political mistake on the part of the President.
I thought the Record ought to be made clear at between the President's budget and ours.
Now, under the ceilings, there are other differences between the President's budget and our budget which we have gone into to some degree in this debate, and those differences will continue, but we ought to at least start with honest numbers.
We could have put that $8 billion in on receipts from sale of oil leases on the outer Continental Shelf, reduced our deficit number and looked better, but that would not have been an honest number, and I emphasize that point.
I thank my good friend from Oklahoma for yielding to me out of his time and I now yield back whatever I did not use of that time to Senator BELLMON with my thanks.
Mr. BELLMON. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator has 7 minutes.
Mr. BELLMON. Mr. President, I yield myself 5 minutes.
Mr. President, I would like to begin by expressing my great respect for the distinguished senior Senator from Maine and for the outstanding job he has done in not only leading the committee to the adoption of the resolution, but also the job he has done in explaining and defending the committee's position here on the floor.
Without his leadership, I doubt that the Senate would now be approaching final passage of this resolution.
I realize full well, having sat in the committee hearings with him, that he is not in total personal agreement with everything in the resolution. But he realizes, as I do, that it is only by acting in concert that we are ever going to get this budget process to work.
That, really, is the basic objective that every member of the committee has. None of us got everything we wanted, but we realize that we have to work together to get anything at all, that is, I think, the major contribution that the chairman has made.
I would like to say that I agree with the chairman of the committee that the $60 billion figure that was sent to this Senate yesterday and made public by the White House is phony. As a member of the President's party, I genuinely regret this lack of candor on the part of the Office of Management and Budget and the President.
The element that is most needed right now in this country's Government is honesty and straightforwardness. I believe the American people expect and deserve to have reliable and truthful information from the highest office in the land.
I feel that our committee was correct in being forthright and by using figures that can be understood and explained and defended. The President has made a serious error in trying to hide or cloud these facts because ultimately they will be known and at that time I am afraid that the standing of the President's Office is going to be hurt rather badly because he is using figures that will not be borne out by events.
Mr. President, as has been said, a sizable deficit is inevitable for fiscal year 1976. The problem the Budget Committee had was how to go about stimulating the economy and ending or reducing unemployment without rekindling inflation which would return the Nation to the same boom and bust cycle we have suffered through during the past couple of years.
Also, the committee was concerned with getting our economy in a sufficiently healthy state that we could return to a position of living within our income and providing the services that people of this Nation have a right to expect.
The conclusion reached by the Budget Committee in Senate Concurrent Resolution 32 was made after considering both higher and lower figures. It has been a source of a great deal of satisfaction to me during the last 2 days while we have debated and voted on figures higher and lower, that the majority of the Senate has agreed with the position that the committee took.
It is interesting that there are just about as many Members of the Senate who seem to feel we are too high as there are those who feel we are to low. Apparently the work of the committee is being sustained by the Senate since they have agreed, by those votes, that we have come out with figures which seem to meet the desires of most of the Members.
The amounts recommended represent a consensus of the committee based upon the very best available information that we could get in an area that we admit and know is not precise. There are certainly many places where judgments have to be relied upon.
We have ahead of us, obviously, the opportunities to adjust these figures, if economic conditions dictate. I will be one of those ready to make new appraisals continuously and to accept and to recommend changes if those changes seem to be necessary.
Mr. President, the Senate by debating and passing this concurrent resolution has during the past 3 days implemented a new and what I believe has been and will continue to be an extremely constructive method of evaluating and managing the fiscal affairs of the Federal Government. This process of evaluation is one that cannot help but significantly improve our budgetary process.
In implementing this method we have been forced to take a hard look at aggregate Federal spending and revenues and we have debated thoroughly the stimulative and potentially inflationary aspects of the historically large budget deficit with which we are now faced. This has been good because for the first time we can no longer rely on the piecemeal approach to the budget as a reason for disclaiming knowledge and responsibility for the seemingly endless string of budget deficits in the last two decades.
Further, we have had to look beyond the budget itself in attempting to assess its macroeconomic impact. We have examined the probability of and the extent to which "crowding out" will occur in our capital markets, and we have carefully debated the growth in the money supply that will be required to finance this deficit. As a corollary to these problems we have reviewed the effects on interest rates and the rate of unemployment and of inflation that will in all likelihood ensue if we go overboard in trying to stimulate the economy and end the recession.
Literally countless manhours were spent in arriving at the Budget Committee's recommendation. We on the committee went through an even more in depth analysis of the various proposals for the budget than did the Senate as a whole.
The result was the recommendation which includes a deficit that many Members were at first unable to accept but, as they went on, as the educational process showed the necessity for this policy, they were able to justify it because they were not able to see any other solution to our problem.
On the other hand, several members of the committee and of the Senate would prefer that the deficit were larger. However, I think the votes cast by the Senate on the various amendments both to lower and to raise the deficit indicate that the committee's recommendation contained a deficit large enough to please those Members of the Senate who believe our economy needs more stimulus, and it contained a deficit that was as low as those Members of the Senate, myself included, who are more concerned with the risk of reigniting inflation could have reasonably expected.
Mr. President, as I mentioned in my opening remarks on this concurrent resolution, I think the most important phase of this entire process is the discipline it has and will continue to enforce on management of this Nation's fiscal affairs.
We now have in the budget process the mechanism to engage in reasonable and more long-range review and worked out more long-range policies to keep us out of the kind of economic crisis we are now facing.
This is a tremendously important step and it cannot help but to greatly improve the quality of Government that we have in this country, and improve the ability of the Congress to cope with situations before they become crises.
I strongly urge the Senate to adopt the resolution. I believe sincerely that in doing so we will have set a historic precedent that in time will prove to be one of the finest developments that has ever taken place in our Government.
Mr. CURTIS. Will the Senator yield?
Mr. MUSKIE. May I take 30 seconds?
Mr. BELLMON. I yield 30 seconds to the chairman.
Mr. MUSKIE. I just want to take a moment to express my appreciation to Senator BELLMON and the staff of the committee. I know I did it once before, but at this point when the result of our work is in the process of being supported and justified by the Senate, I wanted to make the point that all of the staff are new at this new job. They have worked very long hours over the months, facing the frustration of trying to make a new process work. They have helped educate the members of the committee, a very important function. There has been close and outstanding cooperation among the majority and minority staffs and the core and task force staffs. As a result, what we present we think reflects the high order of accomplishment of the staff, not only the report but the successful inauguration of a new institution. I wanted to pay my tribute.