April 12, 1976
Page 10506
Mr. MUSKIE. Mr. President, from the point of view of the Budget Committee, the distinguished Senator from Massachusetts has accurately defined the budgetary impact of his amendment. It would add $1.8 billion to the deficit if fully implemented.
But let me make these observations with respect to it. First of all, there are two main issues raised by his amendment. The first is the addition of 300,000 more public service jobs; and, secondly, to reduce by half the proposed savings in medicare and medicaid programs which the committee's budget resolution mandates.
Putting those two issues aside for the moment, let me address the others. With respect to function 450, the amendment proposes another $100 million in rural water and sewer grants both for authority and outlays, and another $100 million in authority and outlays for the Community Services Administration.
These sums are proposed in the amendment to bring water and sewer programs to the current policy level.
I emphasize that the current policy level is assumed and can be accommodated within the committee's mark. So that what the amendment proposes is already reflected in the budget resolution and the additional amounts are not needed.
I would make this additional point, Mr. President, that I made in connection with all of the amendments up to this point. This budget resolution is not a line item budget resolution. We set overall totals and ask committees to live within those totals deciding for themselves how to spend the money within a function. But in this case, function 450, it so happens that the purposes to be served by the amendment were assumed by the Budget Committee in arriving at the totals.
The same can be said for the older Americans funds in function 500. This proposes adding $100 million in budget authority and $100 million in outlays for older American jobs and nutrition programs. Again these were assumed and can be accommodated within the numbers established by the Budget Committee.
Well, getting away from those line item kinds of purposes in the amendment, and getting back to public service jobs and medicare and medicaid, with respect to medicare and medicaid savings I repeat what I had to say last week in a rather extensive debate with Senator LONG, chairman of the Finance Committee, who argued that the savings mandated by the budget resolution could not be achieved. He said they were not realistic, and he could not support them.
What I said to him then I say now that the Budget Committee is impressed that these are savings that need to be achieved with respect to administrative costs and other costs, especially in connection with the medicaid program.
If our targets for savings prove to be unrealistic then the committees are surely in a position to come back and make their case on the basis of a careful examination, scrutiny, and review, and certainly the Senate will respond to any such case.
On the jobs question — and then I am going to yield to some of my colleagues — I am, of course, thoroughly sympathetic with the objective of the Senator from Massachusetts. I supported an amendment in committee to achieve that objective. Tomorrow on the floor of the Senate I will be part of an effort to try to revive the jobs bill which the President vetoed earlier this year. Some of the elements of that bill can be accommodated and are accommodated by the budget resolution. The countercyclical program, which is part of that bill, is accommodated by the budget resolution.
The public works portion of that bill is accommodated by the budget resolution. We may find a way to accommodate the waste treatment element of that bill in the water pollution provisions of the budget resolution. So I am for that objective.
But with respect to the public service jobs, the best we were able to do in committee was a rejection of the President's proposal for a phase out of public service jobs over the next year, and that represented a substantial addition to the proposal.
May I say this to my colleagues finally: What we are establishing here are targets. They are subject to revision as the appropriation bills come through the legislative mill; they are subject to review at the time of the second concurrent resolution, and they surely ought to be reviewed as we get more evidence as to the state of the economy and what is happening to it and to the unemployment rate.
These are targets. They are targets which have been recommended, and we have urged the Senate to honor those targets. But we recognize that the process is not frozen at this point. It is open in conference and later.
Mr. HUMPHREY. Mr. President, will the Senator yield?
Mr. MUSKIE. Yes.
Mr. HUMPHREY. Just for one observation?
Mr. MUSKIE. Yes.
Mr. HUMPHREY. I direct the attention of the Senator from Maine to the legislation that will be with us tomorrow or the next day on the jobs bill.
It is my understanding that in the budget resolution that is before us there is not adequate budget authority to accommodate the full text of that or the full dimensions of that bill; in other words, we ought to add about $1.4 billion to the budget resolution so that the legislation which we hope to pass tomorrow can be within the framework of the budget resolution; am I correct in that?
Mr. MUSKIE. That is right. We would be in better shape with respect to the bill tomorrow if we had that in here.
Mr. HUMPHREY. May I ask the Senator, the proposal advanced by the Senator from Massachusetts, of course, does have funds in it to accommodate that budget authority. But let us assume for a minute that that amendment does not pass.
I urge the Parliamentarian's attention to this: Is it possible for the Senator from Minnesota to offer another amendment in the sum of $1.4 billion in budget authority and about $600 million in outlay authority? I ask the Chair to advise and counsel me on that.
The PRESIDING OFFICER. The Chair inquires of the Senator, did he propose to amend the amendment of the Senator from Massachusetts?
Mr. HUMPHREY. I would like to offer an amendment in my own right.
The PRESIDING OFFICER. In that case, the Senator would have to wait until after the votes ordered on the pending amendment and the previous amendments have been completed under the previous order.
Mr. HUMPHREY. May I ask if I were to offer an amendment to the amendment of the Senator from Massachusetts, is that in order?
The PRESIDING OFFICER. At the expiration of the time on his amendment, Yes.
Mr. HUMPHREY. And how much time would I have on my amendment?
The PRESIDING OFFICER. Until 5 o'clock.
Mr. HUMPHREY. I thank the Chair. I will reserve judgment on this matter.
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. I yield in the order, 3 minutes to my good friend from Oklahoma (Mr. BELLMON), 2 minutes to Mr. DOLE, and how much time would that leave me?
The PRESIDING OFFICER. The Senator has 7 minutes remaining.
Mr. MUSKIE. One to 2 minutes to the Senator from New Mexico.
Mr. HUMPHREY. Will the Senator from Maine yield once more so I can clarify this matter?
Mr. MUSKIE. Yes.
Mr. HUMPHREY. Mr. President, I solicit the attention of the Senator from Oklahoma.
I do want to offer an amendment in my own right. I realize that according to the interpretation of the ruling of the Chair I would have to do that after 5 o'clock, is that correct?
The PRESIDING OFFICER. The Chair advises that an amendment submitted by the Senator would have to be submitted at the conclusion of the votes already scheduled which would not be completed until after 5 o'clock.
Mr. HUMPHREY. They have already been ordered?
The PRESIDING OFFICER. That is correct.
Mr. HUMPHREY. Correct.
Now, is there any time at all for debateon such an amendment?
The PRESIDING OFFICER. Under theprevious order, there would be no time for debate after 5 o'clock.
Mr. HUMPHREY. Mr. President, I am going to offer an amendment, and I ask unanimous consent that we have 5 minutes of debate.
The PRESIDING OFFICER. Is there objection?
The Chair hears none. Without objection, it is so ordered.
Mr. HUMPHREY. I thank the Chair.
Mr. BELLMON. Mr. President, the amendment just introduced proposes to increase outlays by $2.5 billion and the deficit by $1.8 billion. The initial increase in outlays is $3.2 billion, but since some of the new spending is substituted for current spending for income security, the net spending change is less than the $3.2 billion figure.
In addition to assumed decreased income security spending, a further offset is assumed to the initial $3.2 billion spending is greater tax revenues. These greater tax revenues are presumed to occur because when people have a job, they pay social security and income taxes. Also, when people are earning higher income, they spend more and their greater demand results in greater industrial production, profits, from whichthe Treasury receives more revenues.
Mr. President, according to the framework underlying the calculations showing the substantial revenue increase is the notion that the increased Government spending will cause an increase in private spending. Therefore, there is presumed to be a substantial increase in the Nation's income.
The framework upon which the suggested budget impact of the $3.2 billion spending program is based, does not take into account several considerations, all of which serve to make the deficit higher than acknowledged in the amendment.
For one thing, taking people off unemployment compensation and food stamps and providing them public service employment will not increase their consumer spending. When people first lose their jobs and receive unemployment compensation, one way in which they try to maintain their standard of living is by drawing down their savings or by going into debt. Now that they have a higher paying public service job, which by the nature of the program is not permanent, they simply will maintain the same level of consumer spending as when they were living on unemployment, food stamps, and savings. Their higher income simply means that they no longer will have to draw down their savings or add to their debts, in order to maintain their standard of living. In fact, the nonpermanent nature of the higher paying public service job will result in people increasing their savings by paying off the debts they earlier incurred.
Because there is no increase in spending, there will be no tendency for increased production by business firms.
It also means that they now pay social security taxes on their public service income, and these taxes are the principal revenue gains by the Treasury.
The income tax gain will be negligible because the average wage for a public service job is $6,000. After exemptions, credits, and deductions, the taxable income that is left does not result in much revenue for the Treasury.
On balance then, the tax revenue that will accrue to the Treasury is $0.3 billion, and this is principally social security taxes which are paid into the trust fund.
Another element that has to be taken into consideration is the effect on the economy of financing a larger deficit. The fact that capital investment and the housing market will be adversely affected by the increased deficit means that the GNP will be smaller, and as a result there will be a fall off in income and taxes.
The failure to take account of these considerations means that the actual deficit resulting from adopting the amendment will be roughly a half billion dollars higher.
The economy has rebounded from the bottom of the recession a year ago. The recovery has been particularly dramatic. The economy has performed far better than even the most optimistic forecasters believed as late as the beginning of the year. The unemployment rate is declining faster than anticipated. It is at the level that many thought likely only at the end of this year. The number of Americans employed is at an alltime high. Similarly, the inflation rate is moderating, although there is concern unless Congress exercises spending restraint its abatement may only be temporary.
The Congress must not pursue policies that will lead to increasing inflationary pressure. To pursue inflationary policies, however appealing in the short run, would leave the country in a situation akin to that of a few years ago when we had both high inflation and high unemployment. The present budget is based on the view that the continued moderation of inflation and the continued building of confidence in the private sector are necessary conditions for a continued vigorous economic recovery.
To further increase the deficit now would be the wrong policy. It would hurt the jobless more than it would help. I therefore urge that the amendment not be adopted.
Mr. KENNEDY. Mr. President, how much time do I have?
The PRESIDING OFFICER. Five minutes.
Mr. KENNEDY. I yield myself 3 minutes.
With the existence of 300,000 targeted public service jobs, am I correct in understanding from the Budget Committee study that this means approximately $700 million paid in in terms of taxes?
Mr. MUSKIE. That is correct; that is the staff analysis.
Mr. KENNEDY. Furthermore, do I assume correctly that if those targeted public service jobs were not provided, it would, mean $700 million in additional welfare costs, with the unemployment insurance and other costs; is my understanding approximately correct on this?
Mr. MUSKIE. If the jobs are primarily targeted on those already receiving unemployment compensation.
Mr. KENNEDY. Exactly.
Mr. MUSKIE. That is a correct figure.
Mr. KENNEDY. So with 300,000 jobs, it will mean $700 million in additional revenue and approximately $700 million less in terms of welfare costs, at least that is my understanding of the impact on my amendment.
Mr. MUSKIE. That is the analysis I have before me.
Mr. KENNEDY. I thank the floor manager.
That is exactly the analysis that we used with the 300,000 additional public service jobs in our amendment. It means instead of vital programs raising the deficit by $3.2 billion, it will only be $1.8 billion, still $2.4 billion lower than last year.
The PRESIDING OFFICER. The 3 minutes have expired.
Mr. KENNEDY. It would mean there will be $700 million less in terms of income and $700 million more in terms of welfare which is $1.4 billion.
So the real cost, in terms of our amendment, is only $1.8 billion to the deficit and for that we can get 300,000 additional jobs that are done. We can get the work done in terms of the water and sewer programs in rural America. We can provide the Meals on Wheels program for 100,000 elderly, we can provide15,000 elderly with part time jobs and we can prevent a third cutback in community action.
Mr. President, I am hopeful that this amendment is accepted.
Mr. President, I ask unanimous consent to have printed in the RECORD at this time a letter from the National Council of Senior Citizens, Inc. in strong support of this amendment.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
NATIONAL COUNCIL OF SENIOR CITIZENS, INC.,
Washington, D.C.,
April 12, 1976.
Hon. EDWARD M. KENNEDY,
U.S. Senate,
Washington, D.C.
DEAR SENATOR KENNEDY: On behalf of the three million elderly members of clubs and centers affiliated with the National Council of Senior Citizens, I urge your support of the forthcoming Kennedy amendment to the Senate Budget Committee Concurrent Resolution (S. Con. Res. 109).
The budget process is unfairly shifting the burden of constraining the size of the federal deficit to the backs of the elderly, the poor and the ill of the nation. The Kennedy amendment attempts to rectify this injustice by increasing funding levels for jobs, health, aging programs and urban and rural development. The increase in funding levels is not only justified on economic grounds, but is also an important statement of principle: The search for a number representing the size of the deficit must not obscure the priorities which this nation has long upheld.
The National Council of Senior Citizens and all the nation's elderly urge you at this critical moment in the budget process to support fairness to those in need, who must not be made to pay the debts of the entire nation.
Sincerely,
WILLIAM R. HUTTON, Executive Director.
The PRESIDING OFFICER. Who yields time?
Mr. JAVITS. Will the Senator yield me 2 minutes?
Mr. KENNEDY. The time I have remaining, I yield to the Senator.
Mr. JAVITS. Mr. President, today I am cosponsoring with Senators KENNEDY, WILLIAMS, BAYH, RANDOLPH, and CRANSTON, an amendment to the first concurrent budget resolution for fiscal year 1977, to provide budget authority at a level commensurate with the needs of our country in areas which directly relate to the needs of people the Budget Committee has not responded adequately to the urgent problems that still require our attention and which we must answer affirmatively.
We have been receiving good news on the economic front, with economic indicators showing the recession has bottomed out and we are on the road to recovery. The unemployment rate similarly reflects this turnabout. The latest unemployment figure of 7.5 percent is down considerably from the high of 8.9 percent last May, and has caused many economists to revise previous estimates and projections for the coming year. The fact that total employment increased by 375,000 last month, to an all-time high of 86.7 million is further evidence that the recession has ebbed.
On the other hand, it cannot be assumed that all problems have disappeared. Even with the most optimistic estimates, the unemployment rate will remain around 7 percent throughout 1977, and above 6 percent for the rest of the decade. It is for this reason that the budget resolution must reflect our concern for the millions of people who have not and cannot find work. There are still 7 million people who are unemployed, and with the improving economy by the end of fiscal year 1977 there still will be 6 million unemployed. The obligation of our country to provide the jobs and the climate for work continues, and we must provide the means to do the job.
As reported by the committee, the resolution would provide for the continuation of the present public service employment program through 1977, but only as it reflects the abating unemployment rate. When this is translated into numerical terms; the present level of 320,000 jobs will be reduced to approximately 301,000 jobs to correspond to the dropping unemployment rate. This is an unacceptable course for the Senate to take, as it ignores the unemployed millions who will have exhausted their unemployment compensation benefits during the coming year.
This amendment, by increasing by $2.2 billion the outlays for public service jobs will enable the present program to double and thereby provide 600,000 jobs, to provide necessary and essential services to local governments that would not otherwise be performed.
This amendment would provide jobs that would be targeted on those segments of the population that are most in need of relief from the burden of unemployment. The Committee on Labor and Public Welfare has under consideration targeting for the long term unemployed — those unemployed whose attachment to the labor market has been strained or broken. The committee's attention is focused on those who have worked, but who have lost their jobs because of the recession. The alternative they face is the welfare rolls, a prospect that these "workers" find repugnant and disheartening. It is for these exhaustees of unemployment insurance that we must provide more jobs.
The goal of this program is to spread the economic benefits of the 300,000 new jobs over the greatest number, and the neediest, of persons dependent on out-of-work wage earners, and to restore the habit of work by substituting jobs at very modest wages for income maintenance checks. These jobs would be limited to 12 months per person. At least half of the participants would work in projects off the Government payrolls — with nonprofit agencies and organizations, including schools. The program would trigger "off" when national unemployment dropped below 5 percent for 3 consecutive months, and funds would be authorized to be appropriated only for fiscal year 1977.
The cost of providing these jobs will be reduced in the budget by savings in unemployment compensation and welfare payments. The benefit of providing a job for useful and productive services to the community, weighed against the payment of unemployment insurance or a welfare check, is clear.
In considering this increase to the deficit, the offset to other functions in the reduction of outlays, plus the stimulus to the economy and its ripple effect in the private sector reduce the cost of providing a public service job. It would be unconscionable to abandon the battle now that a few victories over the recession have been won. This amendment recognizes that the Government must continue to provide temporary jobs for 1 year duration, until the economy can reabsorb those workers traditionally in the work force.
Another area that must be addressed is our commitment to the poor of this country. By increasing the budget authority to the Community Services Administration $100 million, this amendment would reaffirm the Senate's commitment to the economically disadvantaged. This increase is necessary to prevent a near one-third reduction from last year's funding, under the present resolution. The effect of the recession has been felt most dramatically by the poor, with fiscal cutbacks and reduction in services. Those who have the least political clout are too often the poor and minority groups. We should not be cutting back by turning our backs on those who can afford cuts the least.
The Community Services Administration, the successor to the Office of Economic Opportunity, is the voice of the poor in our Government, and must at least be able to continue its program at the current services level; $100 million may not seem a great sum relative to the budget itself, but it remains the lifeblood for the war on poverty.
These programs are essential for our Nation, and its citizens, and merit the support of the Senate.
The PRESIDING OFFICER. Three minutes remain for the floor manager. Who yields time?
Mr. MUSKIE. I yield to the distinguished Senator from New Mexico.
Mr. DOMENICI. I yield to the Senator from Kansas.