June 21, 1976
Page 19393
Mr. MUSKIE. Mr. President, I ask for recognition so that I might address myself to the amendment. I have listened with interest to this colloquy which has taken place under my auspices, and I am sure that all of the points are very interesting. I would like to address myself to the amendment of the Senator from Louisiana. Undoubtedly, that will bring forth further discussion.
First, I tried to get an understanding of what the Senator had in mind by his amendment. It is not suggested by the language of the amendment, which is technical. I have listened to the Senator and I think I understand what it is he has in mind.
To put it simply, what he is offering is an amendment to my amendment. The effect of his amendment would be this: the tax reduction would be extended until the end of fiscal year 1977, provided that in the course of its consideration of the Finance Committee bill, the Senate finds a total of $2 billion in tax expenditure reform. If it were $1.95 billion, that would not be sufficient; it would have to be $2 billion on the button or more. And if we do raise that $2 billion on the button, then the tax reduction would be extended for 3 months until the end of the fiscal year.
But who is to make the decision? Under the Long amendment, the Secretary of the Treasury is to make the decision. After the enactment of the bill, whatever our own guesses might be here in the Senate or in Congress as to whether or not we had met the condition of Senator Long's amendment, only the Secretary of the Treasury's opinion would matter. Economic conditions might well change between now and then to make our estimates irrelevant, and if they are irrelevant, then we might well have acted finally on the bill making one set of assumptions about whether or not we had met the $2 billion condition, only to find we had failed by $50 million, and that the tax reduction was not extended after all.
This kind of delegation of taxing authority I do not think is something Congress is interested in.
Mr. LONG. Mr. President, will the Senator yield to me at that point?
Mr. MUSKIE. I yield to the Senator from Louisiana, provided the Senator limits himself to comment on what I have said, and lets me continue with the thrust of the rest of my observations.
Mr. LONG. Mr. President, I think we ought to understand what the amendment is. The amendment would say, 30 days after the date of enactment, the Secretary of the Treasury would have to determine whether what we do here comes within the $15.3 billion that the Budget Committee has suggested.
Mr. MUSKIE. Is that something different than what I just said?
Mr. LONG. Well, it does not leave him a long time to make the decision.
Mr. MUSKIE. Up to this point, the Senator has not disagreed with my description of the amendment. Within 30 days after the enactment of the bill, the Secretary of the Treasury would make estimates as to whether or not Congress had complied with the conditions of the Senator's amendment. Any estimates we made could be irrelevant because they might be changed by changes in economic conditions or they might be changed by provisions in the finally enacted bill which we had not taken into account. After all, this is a pretty long bill, and it is pretty tough to try to make estimates, during the course of a hectic Senate debate, of the revenue consequences of all the changes we might enact.
Before the Senate finally wraps it up, I think all of us would like to know whether or not we have enacted an extension of the tax cut for the full fiscal year. We are going to be left in doubt under the Senator's amendment until the Secretary of the Treasury tells us. And if the Secretary of the Treasury gives us an estimate with which we honestly disagree on the basis of information available to us from other sources, we will be helpless. If it turns out that we have raised only $1.95 billion, even though we believe we have raised $2.1 billion, it is the Secretary's opinion which will count. His opinion may well cut out the tax extension which we thought we were enacting into law.
That is the Senator's amendment; I have discussed it with his staff assistants here and, if I understand it, that is the machinery. Is that wrong?
Mr. LONG. Mr. President, I would be willing to have the effect of it determined by the best judgment of the staff of the Senator's committee, after consulting with the joint committee staff. I would be willing to trust the judgment of the Senator's staff to do that, after they have both looked at the same figures. If that would make the Senator happy, we will do it that way.
Mr. MUSKIE. The Senator knows what would make me happy. What I would like is a clear cut decision, affirming or rejecting a policy decision the Senate has already made.
The Senator delights in referring to my amendment as a new tax proposal, a Muskie budget buster that the Senator from Maine has pulled out of his bag of goodies to offer to Senators, a proposal that they would traditionally find it hard to reject.
The Senator repeatedly refers to it in that fashion, when what he knows, I am sure, is that the Senate and Congress as a whole have already voted for this tax extension through fiscal year 1977.
Now let me get to my second point about the Senator's amendment. The Senator's amendment is built on the assumption that our revenue numbers are somehow related to tax expenditure reform.
First, and only first, our recommendation for an extension of the tax cut was made in terms of the economic requirements of the country. To make those requirements hostage, amendment by amendment by amendment, to the tax bill is to make a shambles of the budget process.
You make a decision as to what stimulus the economy requires before you consider amendments to a tax bill or amendments to appropriations. If it is appropriate to do what the Senator is proposing with his amendment in tax legislation, why not do it with every spending bill, and adjust the functional totals up or down depending upon what the mood of the Senate may be at any given moment with respect to any spending bill?
There are 13 or 14 appropriation bills and 17 budget functions. So the budget is going to be 17 yo-yos with each functional total going up and down. Because certainly, if the Senator's amendment is taken as a pattern, everyone who wants a new spending proposal considered when an appropriation bill comes before the Senate will say, "This causes no harm; we will take this decision now, and then, at the end of action on the spending bills, we will direct someone, the Director of the Budget or someone else, to take action to put it all together."
What in the world does the Senator think the Budget Committee was created to do?
Mr. BENTSEN. Mr. President, will the Senator yield?
Mr. MUSKIE. There is a reconciliation process. What the Senator wants to do is write a reconciliation process in this bill that is heavily weighted in one direction, the direction of no tax extension.
Mr. BENTSEN. Mr. President, will the Senator yield for a question?
Mr. MUSKIE. If I may finish, then I will yield.
Section 310 of the Budget Reform Act provides for the kind of reconciliation the Senator is talking about, but at the end of all the decision making on spending bills and revenue measures.
What does it say?
The Committee on the Budget of each House shall report to its House a concurrent resolution on the budget which reaffirms or revises the concurrent resolution on the budget most recently agreed to with respect to the fiscal year beginning on October 1 of such year. Any such concurrent resolution on the budget shall also, to the extent necessary—
(1) specify the total amount by which—
(A) new budget authority for such fiscal year;
(B) budget authority initially provided for prior fiscal years; and
(C) new spending authority described in section 401(c) (2) (C) which is to become effective during such fiscal year, contained in laws, bills, and resolutions within the jurisdiction of a committee, is to be changed and direct that committee to determine and recommend changes to accomplish a change of such total amount.
And this is directly relevant to the Senator's amendment:
(2) specify total amount by which revenues are to be changed and direct the committees having jurisdiction to determine and recommend changes in the revenue laws, bills, and resolutions to accomplish a change of such total amount;
So that the purpose to be served by the Senator's amendment is already served by the procedures and processes established in the Budget Reform Act, which we adopted a year and a half ago, we do not need to include it in every revenue bill and every spending measure. Indeed, if we are going to do it that way, we would be back to the kind of budgetary anarchy that we knew before we adopted the Budget Reform Act in the first instance. That is my third point.
So, to summarize, first, as I understand the scheme of the Senator's amendment, it is to leave the Senate, and Congress if the House goes along with it, in doubt as to whether or not an extension of the tax cuts through fiscal 1977 has been enacted until the Secretary of the Treasury tells us. If at that point we disagree with him as to whether or not the conditions of the Long amendment have been met, there will not be a thing we can do about it unless we want to go through the torture of enacting another revenue measure.
Second, there is a reconciliation process of the kind that is spelled out in the Senator's amendment which insures that we consider, in an orderly fashion, all of the spending and revenue decisions that have been made between the first target resolution in May and the second concurrent resolution in September. If we are to ditch all of that with this kind of ad hoc reconciliation on each bill, then indeed the budget process has gone down the drain.
Mr. LONG. Mr. President, will the Senator yield at that point?
Mr. MUSKIE. Now I yield.
Mr. LONG. Let me put this to the Senator.
When his committee provides us with a target of $15.3 billion in tax reductions and we confine ourselves to that $15.3 billion, should not the committee cooperate with those who are trying to abide by the target set by the Budget Committee and try to stay within that target? If the legislative committee is trying to do that, should not the Budget Committee cooperate in trying to stay with the targets set by the Budget Committee?
Mr. MUSKIE. May I say to the Senator that question takes us back to last Thursday, I guess, when it was first raised, and the Senator continues to persist in seeing the congressional budget consisting only of numbers on the face of the first concurrent budget resolution. He refuses to see that underlying those numbers is a rational economic policy, and fiscal policy, which cannot be expressed on the face of the resolution, but which by law is required to be stated in the committee report. That is not to say that every word in the committee report is law, as the Senator tried once to distort my description of his process.
It is to say that as to those, as a description of the policy which underlies the number that has to be taken into account and the extension, the revenue number of $17.3 billion quite clearly is based on the assumption of tax cuts through fiscal year 1977, and it was never challenged in the Chamber. Clearly it was based upon an extension of the tax cuts through fiscal 1977. Why?
First, because all of the projections we received of unemployment and the growth of the economy that we took into account dictated that at least through fiscal 1977 this kind of tax stimulus was needed. Second, we were not prejudging what would be needed beyond that but having this tax extension in place at the end of fiscal 1977 makes it available for continuance into the next fiscal year or any other part thereof if the economy so required. But it is all there. The policy was stated again clearly in the conference report on the first concurrent resolution agreed to by the House of Representatives and the Senate as the underlying policy of the first concurrent resolution. I ask unanimous consent that the section of the report concerning revenues be printed in the RECORD.
There being no objection, the section of the report was ordered to be printed in the RECORD, as follows:
Revenues.—The House resolution provided for Federal revenues in the amount of $363.000 billion; and to achieve that level it provided that revenues should be decreased by $14.800 billion. The Senate resolution provided for Federal revenues in the amount of$362.4 billion; and to achieve that level it provided that revenues should be decreasedby $15.3 billion.
The conference substitute provides for Federal revenues in the amount of $362.5 billion; and to achieve that level it provides that revenues should be decreased by $15.3 billion. This revenue level does not assume increased unemployment insurance taxes, but does not preclude enactment by the Congress of a possible increase in the unemployment insurance tax rate, which would
result in an increase in revenues during the fiscal year. The conference substitute assumes, as did both Houses, realization of a net $2 billion increase in revenues through tax reform.
Mr. MUSKIE. So the Senator and I simply disagree about what it is that is the budget. He says that all it is from his point of view is one number, $15.3 billion, and I am telling him it is more than that. There is only one way we can resolve—
Mr. LONG. Let us simply look at some of this. The Senator from Florida wants to do something for the aged with regard to the tax consideration provided for those people. From his point of view, and I think from mine, if we provide some help to those old people with the retired income credit, that results in the same type benefit in stimulating spending which helps to stimulate the economy that it does whether we give them $35 a head tax credit or provide some other tax revision. The effect is likewise as far as the poor is concerned. If we raise the minimum standard deduction, the money we put in the hands of the poor serves exactly the same principle if we give it to them that way — and it does so even more if we give them more by doing it a different way — than it would if we provided $35 a head tax credit.
Now the Senator is arguing that the legislative committee, whether he is talking about the Appropriations Committee on expenditures, I would assume, or the Finance Committee dealing with taxes, must do it precisely the way that the Budget Committee had in mind when it proposed its resolution to the Senate, even though after we conduct the hearing, study it, and consult all the best experts we can find, including those available from his committee staff, we conclude it might be more effectively done some other way.
I do not know the purpose or the point in having these other legislative committees if the assumption is that the Budget Committee, without a hearing, going into details, and without the months of study that the legislative committee would give to the same item, that it could be more effectively done in the public interest by doing it in a different fashion.
I am not saying that one is necessarily right and the other is wrong. All I am saying is: Assume he does have superior judgment. Assume his staff is more competent than ours. And so far I have not seen it demonstrated. Finally, assume that he has all the knowledge, superior expertise, and superior knowledge. Should not those who have the duty of making the study, conducting the hearings, and making the detailed recommendations have some discretion in the matter?
Mr. MUSKIE. I repeated this over and over again in the Chamber in the consideration of the first concurrent resolution a year ago last spring. I did it last spring. I did it in the fall each time. The Senator knows that I make no such assumption to the effect that the Budget Committee shall tell each committee precisely how to do its job. The word "precisely" is what the Senator used.
With respect to appropriations, I have made it clear over and over and over again that all we set is the overall numbers, the totals, and that the first measures to come along that reach those totals are the measures that claim the amount available, and I do not decide the order in which these measures come along. The Appropriations Committee does that.
With respect to this bill, is the Senator telling me that he thinks I am trying to tell him what to put into a document that size? The Senator knows that is not true. But it pleases him to argue as he thinks if he can frighten enough committees into believing that we are interested in moving in on them and taking over all their jurisdiction that they will support his argument.
That is not the budget process. I have never claimed that kind of jurisdiction. I do not want that kind of jurisdiction; because if one were to try to impose a budget process that rigid upon the Senate and Congress, Congress would throw it out the window in 6 months. Perhaps that is what the Senator has in mind, that if he can persuade Congress that this kind of monster was created in the budget process, he somehow can get rid of it. Perhaps that is what is in the Senator's mind, because he has resisted this process from the first day we reported the first concurrent resolution to the floor. He made it clear in the debate in the spring.
Let me make this suggestion to the Senator: If the Senator did not like the $2 billion in tax expenditures, why did he not offer an amendment to the budget resolution to change it from $15.3 billion? He was not hesitant to offer an amendment on another subject. That option was available to him.
He argued it and said it was a mistake. How could it be a mistake if it was meaningless, if the policy was meaningless? If, in fact, the budget process, after both Houses acted upon it, had not mandated extension of the tax cuts through fiscal 1977, why bother to refer to it as a mistake last spring? Why not just ignore it, as the Senator is trying to do now?
Mr. LONG. How could I offer an amendment to amend the Senator's committee report? The committee report was not legislation, to be acted upon by the Senate.
Mr. MUSKIE. I did not suggest that. I suggested changing a number on the face of the resolution, the 15.3. The 15.3 was arrived at by assuming $2 billion in tax expenditure reforms as against the $17.3 billion in revenue reductions from tax cut extensions, so if the Senator did not like the $2 billion, he could have offered an amendment to change it.
Mr. LONG. I do not know why I should offer an amendment to change it. I was happy to live with it. So far as I am concerned, $15.3 billion for tax cuts is all right. It does not say $17.3 billion; it says $15.3 billion.
Mr. MUSKIE Did the Senator read the committee report?
Mr. LONG. The Senator asked me a question. Let me answer it.
When the Budget Committee adds $2 billion of tax increases, that is going to be hard to do. The Senator from Maine made a record, himself. He said on the floor of the Senate that if we could not propose $2 billion, we could propose a lesser amount of a tax increase.
Mr. MUSKIE. Let me comment on that. That is another myth I have listened to so often that I would like to answer it.
In that exchange, what I was affirming was the jurisdiction of the Senator from Louisiana's committee, which he now accuses me of trying to take away from him. I said then, and I say now, that the Senator can report any bill he pleases, but that does not mean he can unilaterally change the budget, any more than I can. So just because I reaffirmed the Senator's right and the jurisdiction of his committee to report a bill that did not conform, the Senator interprets that to mean that I gave him a unilateral right to amend the congressional budget. But he does not have that right. I did not have the right to give it to him.
Mr. LONG. Let us see what the Senator did say.
Mr. MUSKIE. I know what I said, and the Senator can take any sentence out of context. He has put it in the record and it is there, and I challenge his interpretation again.
Mr. LONG. Let us read what the Senator said about this issue, about the right to recommend a lesser tax cut.
Mr. MUSKIE. Just a moment, until I drag out my threadbare copy of it, so I can finish what the Senator leaves out.
Mr. LONG. The Senator will have difficulty, but that is all right. This is what was said:
Mr. PACKWOOD. If in the Finance Committee's judgment, at the end of the 2 weeks of hearings
— actually, it was 4 weeks of hearings and 5 weeks of executive sessions and markups—
they found it impossible to close $2 billion of loopholes, and they chose to fit within the mandate of the Budget Committee by simply reducing the tax reductions from $17 billion to $15 billion and pick up $2 billion that way?
Mr. MUSKIE. That is right. What we ask is a recommended level of Federal revenues of $362.4 billion in revenues, and we arrived at that number by assuming $2 billion possible additional revenues on tax expenditures. By the time the committee acts, the revenue picture changes. We may come up with $362.4 billion in some other fashion.
Mr. MUSKIE. May I just refer the Senator to the form of the question that was put? He has just read it. Senator PACKWOOD asked me if we found it impossible — if we found it impossible.
I can remember what I said to others who asked me about appropriations functions. As a matter of fact, I had the same kind of exchange with the Senator from Louisiana on his amendment on the income security function. I said to the Senator from Louisiana—
If you can't meet this target after trying, come back to the Senate and tell us you can't; and if you make a case why you can't, then of course it is the Senate's prerogative to listen to your report and to agree with you that it is impossible.
But the fact that it is impossible is not a judgment the Senator makes in advance. I told the Senator then, and I can remember the words :
Senator, what this budget process says to each of us is that we try.
If it does not work, then the Senate and the House are the sovereign bodies, and they take into account the recommendations and the facts and the analysis of the committees and change their minds. This whole reconciliation process that I read to the Senator is designed to meet that and to give that flexibility. If the Senator tries and he cannot do it, or if unexpected circumstances arise or things change, it is flexible enough to take it into account. So if it is impossible, and even if it is possible, the Finance Committee has the jurisdiction to report any bill it chooses. But what the Senator seems to object to on one hand and then agree to on the other is that the budgetary consequences of what he is recommending are pointed out. I am sorry if that is the case. I am not here to grab the Senator's jurisdiction. I could not do so if I tried.
However, I say to the Senator that I am going to tell the Senate what I believe Congress has said in the budget resolution and what the implications are of this legislation in terms of what it then said. If the Senate wants to change its mind, in the words of the Senator from Oregon the other day, why cannot the Senate change its mind? Of course, it can. This piece of legislation says it can. But until it does change its mind, our targets still are an extension of the tax cut through 1977. If the Senator thinks the budget does not say that, if it was none of our business to say that, he should make his case and let us vote.
Mr. LONG. Let us look at what the committee did. The committee did not find it impossible to raise $2 billion. The committee reported a bill that proposed $2.5 billion of additional taxes.
In addition, they thought we should give some consideration to the need to do something about the energy problem in this country. Some folks say inflation caused the recession. I think it was the energy crisis that contributed to the recession, and that is what most economists have reported caused the recession.
The House sent us an energy bill more than a year ago. They sent that one before they sent the tax bill. We suggested that something should be done about the energy problem, and we have some provisions in there about it. We also suggested that something should be done in other areas.
The business community has made a case — the administration agrees with them and so does the Finance Committee — that something needs to be done to help the business people to accumulate capital to build more plants, to obtain more equipment, to put people to work, and to give them some incentive to do it, in order to create more jobs and more payrolls.
The Committee on Finance so recommended. The Committee on the Budget did not buy it, I admit. The Committee on the Budget recommended, far from supporting that we held onto the $2 billion which we hoped to plow back in to stimulate business, that we reduce theamount of business tax credit of $2 billion by taking the tax increases with little or nothing to offset that. So the recommendations of the Committee on the Budget in that respect is $4 billion different from what the Committee on Finance would have suggested.
Now, there are also some provisions in there that we hoped would help to stimulate business, to help business to accumulate some capital to expand their activities, and so we recommended it.
Now, suppose we have the other provisions which the Senator was clear the Committee on the Budget did not have in mind. One of them, by the way, was the type of thing the Senator from Florida was suggesting, another the type of thing the Senator from Massachusetts (Mr. BROOKE) was suggesting, to help people insulate their homes to help solve the energy problem.
It is because we had some of those things in mind that, although we raised the $2.5 billion, we still need to cut somewhere else in this overall package in order to stay within that target figure.
Now, after we have worked so hard to stay within the target figure, I hope the Senator will not destroy that figure that his own committee set.
Mr. MUSKIE. The Senator has referred to a lot of details to which the Committee on the Budget did not address itself. On the one hand, the Senator insists that the Committee on the Budget is not entitled to act as a line item committee. I tell him that we have not. Then he proceeds to stuff details down my throat which he says we have decided, which we have not. Frankly, sometimes when I get through talking with the Senator, my head spins, because he takes me from one assumption to another and gets it all confused — the way he has in this amendment, incidentally.
Mr. LONG. Would the Senator mind explaining to me, assuming we raise the $2 billion — we did better than that, we raised $2.5 billion of taxes — how are we going to take care of anything other than these items that the Committee on the Budget had in mind, which is just an extension of the existing tax cut? How can we take care of anything to meet these other priority needs, like the needs of the aged or the need for home insulation or the need for energy conservation or the need for recycling material to save energy? How can we do anything about any of that if we are going to have to say, "All right, the $17.3 billion of existing tax cuts are sacred, we cannot do anything about that?"
Mr. MUSKIE. Let me ask the Senator a question. All the committees of the Senate together asked us to approve $440 billion in spending for fiscal 1977, cumulative — $440 billion. That included an awful lot of worthy items.
The President said, we ought to be able to get by on $395 billion. The Senator remembers that very well, because he tried to force that on us last December.
What did we recommend? We recommended $412 billion. That is $28 billion of committee recommendations that are not permitted under the ceilings we adopted.
What the Senator is saying is that it is much better to go back to the old practice, that we vote on these goodies as they come along so we do not overlook any of them. There is no point in trying in advance to set a limit on what we can afford for fear that we leave out some goodies, leave out some room for some goodies that the Senator would like to have.
Well, maybe that is the road we started to travel here with this bill. I am not going to go down that road. We have got to say no somewhere.
Let us look at how we treated appropriations and tax expenditures in the Committee on the Budget. Current policy appropriations would have been $423.4 billion. We cut that to $412 billion. That is roughly 2 to 3 percent that we cut appropriations below current levels.
Tax expenditures are $105 billion. We cut those $2 billion, which is something under 2 percent — under 2 percent. Now, tax expenditures can be viewed as the equivalent of a simultaneous collection of revenue and a direct budget outlay of an equal amount, just as are appropriations. So we treated them alike. We treated them roughly alike in terms of reducing them.
The Senator says there are a lot of other goodies he would like to buy. So could every committee chairman in the Senate come to us and say, "Senator, there are a lot of goodies we would like to buy." They can say it on every appropriations bill that comes here, and when they try that, I am going to have to stand up here and say, "Sorry, the budget resolution did not provide for it."
Mr. LONG. This committee is willing to live with that $15.3 billion. What I tried to say to the Senator and his committee, even before he decided to take action such as he thinks he should, is just assign us a figure; I do not care what the figure is.
Mr. MUSKIE. We assigned the Senator a policy.
Mr. LONG. Assign us a figure. I do not care whether it is $15.3 billion or $1 billion. Give us a figure and we will live with that. And we have. We reported in below that figure.
Now, if the Committee on Finance has its way, the Senator from Maine is not going to have to reconcile for us. We are not going to come in and ask him to do us any favors. We will pay for anything we ask to do. We will provide the funds to pay for it or we will cut down, within our area of jurisdiction, in order to pay for it. The Senator will not need to reconcile for us. That is how it has been historically with Finance Committee bills. When we report out a program, we report out the taxes to pay for it. Not only do we pay for that, we also find the money to pay for the other guy's programs, too. That is all right with us. But when the Senator assigns us a figure, and we live with the figure and he then proceeds to make war on us because we do precisely what that resolution requires us to do, which is to confine ourselves to $15.3 billion, and we did it with $300 million to spare, we should be allowed a little discretion to decide how we are goingto do that and look at all the needs that fall within our responsibility, rather than just look at some particular things the Senator might have had in mind when he assigned us a figure.
Mr. MUSKIE. We assigned the Senator from Louisiana a figure and we assigned him an economic policy. The Senator keeps referring to this as my personal property. He keeps referring to this process as though it were my personal property. It is not. This is a congressional budget adopted by both Houses. That budget includes not only a number or a series of numbers, but an economic policy.
Talking about committee jurisdictions, I heard the Senator argue, I think, or someone on his side of the issue, that one of the reasons he chopped off this tax reduction extension on July 1 was because he took a look at economic conditions and he decided he was going to change the economic policy. Well, under this budget process, the economic policy is set by the Congress as a whole, through the procedures established here. If every committee is going to write its own economic policy to justify its case for spending or revenue measures, then, again, the foundation of the budget processes is undermined.
Sure, all the Senator keeps talking about is that number.
Mr. LONG. I say to the Senator, I would like to get one thing straight, just for the record. As I understand it, the Senator's committee put in its report something we could not amend; we could not do anything about it. We are satisfied with that figure, willing to live with it. He also put in his report an assumption that we would continue the existing tax cuts, which are estimated to cost, as I recall, $17.3 billion, and that we would raise $2 billion in additional taxes to give a figure, bottom line figure, of $15.3 billion.
Now, suppose we found anything, just anything — I do not care whether it is a matter of insulating homes or a matter of trying to make energy more efficient, a matter for encouraging people to hire folks off the welfare, a matter of helping mothers to put their children in a day care center. Suppose we just found anything that we thought was more desirable than the continuation of that $17.3 billion of tax cuts of existing law. Unless we could find more than that $2 billion in tax cuts, would that mean that we should not recommend what our judgment would dictate?
Unless we could find more than $2 billion in tax cuts, would that mean then that we should not recommend what our judgment would indicate to be a better way to spend some of that money?
Mr. MUSKIE. May I say to the Senator — I have said several times this afternoon, and I have said it many times in the course of the day — any time a committee finds that it cannot live with what the budget resolution provides, any time a Senate committee reaches a conclusion, reaches a judgment, you know, that there have been changes or new problems arise that need to be brought to the attention of the Senate and Congress as a whole, they do not fit into the budget, it is the duty of that committee to come to Congress, the House or the Senate, depending upon which body it is,and report with its recommendations.
What the Senator is saying to me is that what I am talking about is not in the budget. The Senator says he could not amend it. I ask at this point—
Mr. LONG. How will I go about amending the Senator's committee report?
Mr. MUSKIE. Let me answer.
Mr. LONG. I assume the Senator is making a point of order.
Mr. MUSKIE. Let me answer. Who has the floor, Mr. President?
The PRESIDING OFFICER. The Senator from Maine has the floor.
Mr. MUSKIE. I ask unanimous consent that the text of the first concurrent resolution be printed in the RECORD at this point. All Senators might profit by this.
There being no objection, the concurrent resolution was ordered to be printed in the RECORD, as follows :
Resolved by the Senate (the House of Representatives concurring), That the Congress hereby determines and declares, pursuant to section 301(a) of the Congressional Budget Act of 1974, thatfor the fiscal year beginning on October 1, 1976
(1) the recommended level of Federal revenues is $362,500,000,000, and the amount by which the aggregate level of Federal revenues should be decreased is $15,300,000,000;
(2) the appropriate level of total new budget authority is $454,200,00,00;
(3) the appropriate level of total budget outlays is $413,300,000,000;
(4) the amount of the deficit in the budget which is appropriate in the light of economic conditions and all other relevant factors is $50,800,000,000; and
(5) the appropriate level of the public debt is $713,100,000,000, and the amount by which the temporary statutory limit on such debt should accordingly be increased (over amounts specified in section 3(5) for the transition quarter) is $65,900,00,000.
Sec. 2. Based on allocations of the appropriate level of total new budget authority and of total budget outlays as set forth in paragraphs (2) and (3) of the first section of this resolution, the Congress hereby determines and declares pursuant to section 301 (a) (2) of the Congressional Budget Act of 1974 that, for the fiscal year beginning on October 1, 1976, the appropriate level of new budget authority and the estimated budget outlays for each major functional category are as follows:
(1) National Defense (050):
(A) New budget authority, $112,500,000,000.
(B) Outlays, $100,800,000,000.
(2) International Affairs (150) :
(A) New budget authority, $9,100,000,000.
(B) Outlays, $6,600,000,000.
(3) General Science, Space, and Technology (250):
(A) New budget authority, $4,600,000,000.
(B) Outlays, $4,500,000,000.
(4) Natural Resources, Environment, and Energy (300):
(A) New budget authority, $17,000,000,000.
(B) Outlays, $15,700,000,000.
(5) Agriculture (350) :(A) New budget authority, $2,300,000,000.
(B) Outlays, $2,000,000,000.
(6) Commerce and Transportation (400) :
(A) New budget authority, $18,200,000,000.
(B) Outlays, $17,700,000,000.
(7) Community and Regional Development (450):
(A) New budget authority, $7,400,000,000.
(B) Outlays, $7,800,000,000.
(8) Education, Training, Employment, and Social Services (500):
(A) New budget authority, $24,600,000,000.
(B) Outlays, $23,000,000,000.
(9) Health (550) :
(A) New budget authority, $39,300,000,000.
(B) Outlays, $37,900,000,000.
(10) Income Security (600) :
(A) New budget authority, $158,900,000,000.
(B) Outlays, $139,300,000,000.
(11) Veterans Benefits and Services (700):
(A) New budget authority, $20,100,000,000.
(B) Outlays, $19,500,000,000.
(12) Law Enforcement and Justice (750):
(A) New budget authority, $3,400,000,000.
(B) Outlays, $3,500,000,000.
(13 General Government (800) :
(A) New budget authority, $3,600,000,000.
(B) Outlays, $3,500,000,000.
(14) Revenue Sharing and General Purpose Fiscal Assistance (850) :
(A) New budget authority, $7,350,000,000.
(B) Outlays, $7,350,000,000.
(15) Interest (900):
(A) New budget authority, $40,400,000,000.
(B) Outlays, $40,400,000,000.
(16) Allowances:
(A) New budget authority, $2,850,000,000.
(B) Outlays, $1,150,000,000.
(17) Undistributed Offsetting Receipts (950):
(A) New budget authority, –$17,400,000,000.
(B) Outlays, –$17,400,000,000.
SEC. 3. The Congress hereby determines and declares, in the manner provided in section 310(a) of the Congressional Budget Act of 1974, that for the transition quarter beginning on July 1, 1976
(1) the recommended level of Federal revenues is $86,000,000,000;
(2) the appropriate level of total new budget authority is $96,300,000,000;
(3) the appropriate level of total budget outlays is $102,200,000,000;
(4) the amount of the deficit in the budget which is appropriate in the light of economic conditions and all other relevant factors is $16,200,000,000; and
(5) the appropriate level of the public debt is $647,200,000,000 and the amount by which the temporary statutory limit on such debt should accordingly be increased is $20,200,000,000.
Mr. MUSKIE. Among other things, it provides that:
The amount of the deficit in the budget which is appropriate in the light of economic conditions and all other relevant factors is $50,800,000,000;
Now, you could change that number.
The recommended level of Federal revenues is $362,500,000,000, and the amount by which the aggregate level of Federal revenues should be decreased is $15,300,000,000;
If you go to the report, you will find out how we arrive at those figures. If you do not like the $15.3 billion because it reflects a $2 billion gain in tax expenditures, any Senator can move to change that to $16.3 billion; $16.3 billion would have been more consistent with the bill that the Finance Committee reported on the floor than the $15.3 billion.
So throughout you have got just numbers, but you have every implication that what you are talking about is a budget that has an economic philosophy, an economic policy underlying it. Everything in it depends on it, social security payments, medicare payments, veterans benefits, food stamps, unemploymentcompensation; all of these big spending programs depend upon the economic condition of the country.
Last year in the second concurrent resolution we had to increase spending targets by over $8 billion — by over $8 billion over the first because economic conditions were such that expenditures for the purposes I just referred to were higher than we anticipated in the spring.
So the state of the economy and what the economy requires and the burdens the economy imposes on the budget are very much a part of those numbers which seem to be the total focus of the Senator's concern in the budget resolution. I mean without an economic policy we could not write a budget.
Mr. LONG. Just let us understand this: As far as the Finance Committee is concerned, we are not asking the Senator to reconcile anything for us. We are not asking the Senator to put any more money in the bill; in fact, we are asking the Senator to leave his money out of it, because as far as we are concerned we are completely content to live with the Senator's figure, and we are completely content to live with the Senator's resolution.
All we would plead for with the Senate is that if our committee or any Senator can find a better way to spend any of that money, the first dollar or the last dollar, that his amendment be considered on its merits just like the Senator's, and I do not know why it should not.
There was scant consideration given to that $17.3 billion that the Senator seems to think is sacred. Now, we suggested to the Senator that it should be in there. But when we did suggest it to the Senator, we just thought that it was something that ought to be looked at. We knew we might want to make some changes in it, and if we did that, we would make them. When the $17.3 billion found its way in there, we felt, I know I did, that if anybody could find a better way to make use of that same amount of money, he ought to offer his amendment, and we ought to do it that way rather than the way it is being done at that time. That is why you have Congresses, that is why you have legislatures,to try to improve on what you are doing.
Then we proceed to look at all the possibilities of ways that the revenue could be used most effectively in the public interest, and we recommend something at variance with something that we ourselves suggested to the Senator, by the way. We suggested the $17.3 billion. I think that is how it found its way into the Senator's committee report. So having done that we then find here is one item where you can do something more effectively. For example, if somebody would give some poor welfare mother a job and take her off the welfare rolls, and take her family out of poverty and help her improve her condition, it would be better than to give money to some rich person at $35 a head. Between the two that, getting her to work, would be more worthwhile. It would help that person, and help the country more.
So I cannot, for the life of me, understand why the Senator would object if we can suggest better ways to use money within the area of our competence, our responsibility and our expertise.
Mr. MUSKIE. I do not challenge that at all, and I never have.
Mr. LONG. That is great. Now we are together.
Mr. MUSKIE. That is not the issue.
Mr. LONG. The argument has been solved. There is nothing more to argue about.
Mr. MUSKIE. All the Senator focuses on is that one little number — that $15.3 billion.
That is not a magic number to me, but the economic policy underlying it is. The Senator knows what we have been trying to do, and Congress has done pretty well with this for the last year and a half or more. What we have been trying to do is to plan for a smooth recovery, with the $15.3 billion of tax reductions spread evenly over this fiscal year, and with no abrupt changes at the end of the year. Now, that is the target.
The Finance Committee bill is full of what I would call stops and starts. The reforms raise $1 billion next year but lose money the following year. The tax reduction part keeps the $9.5 billion annual rate of reduction for 9 months of the fiscal year but then removes it for 3 months. Now, stop-and-go policy is not going to meet the needs of this economy, may I say to the Senator, with all respect.
With respect to the details of the tax cut, I have never tried to prescribe what they should be. We agreed, I think, last December, when the President wanted to tie the tax reductions to a reduction of dollar per dollar in spending, we agreed, all of us — I went down to the White House with the distinguished Senator from Louisiana and others — and we agreed that the economy required a continued extension through all of calender 1976, but we cut it back to 6 months in order to compromise with the President.
We did not think that ideal, to change the tax policy in the middle of the year, but we agreed to it in the happy spirit of compromise because we had not had our first concurrent resolution for fiscal year 1977. So we all agreed at that time although we ought to have had continuity in policy. The assumption was that we would have it because the first concurrent resolution would be decided in the spring of this year, and we were reasonably certain that it would be continued for the rest of this fiscal year and for next year we would take a look at it when this spring came, and we did.
There was no challenge to that on the floor. There was no challenge to it at all that I can recall. Even if you assumed there was no way of amending the resolution for that purpose — and I disagree with that — I think there was. But even if there was not — I mean if anybody seriously challenged the economic policy underlying the first concurrent resolution, it seems to me he had a duty to say so at that time.
But I do not recall any challenge to those underlying assumptions.
What was a challenge then was that we ought to be providing more stimulus. Indeed, many economists at the time recommended a larger tax cut continued beyond the period we provided it for.
President Ford, as the Senator knows, recommended a larger tax cut than we have recommended, but I do not recall anybody recommending less to us at that time. I think most economists at the present time recommend continuing even beyond the time we are now talking about.
Mr. BENTSEN. Will the Senator yield?
Mr. MUSKIE. Yes, I yield to the Senator.
Mr. BENTSEN. I say to the distinguished Senator, for a while, there was agreement between two very distinguished Members of the Senate, able members of respective committees.
But I do think it is obviously a jurisdictional fight.
I note that the distinguished Senator from Maine says, as I get his words down, "There is no magic in the $15.3 billion figure."
Apparently, there is in the report. No magic in the statutory—
Mr. MUSKIE. In the policy.
Mr. BENTSEN. My concern is, very candidly, where do we draw the line when we are talking about economic policy, when we are talking about the underlying objectives for the country?
When the Senator talks about national priorities — and I understand his concern — he says they are not going to have a line item designation. Yet we talk about a $35 figure for a tax credit, which is a line item on the tax return, and I can show it to the Senator. I do not see how we can get much more line item than that. I agree, that is a national priority and—
Mr. MUSKIE. If the Senator—
Mr. BENTSEN. I stood here for about 30 minutes trying to say just a few words so, if I might, I do not see how one can get much more line item than that.
Mr. MUSKIE. I do have the floor, let me say.
Mr. BENTSEN. With respect to the $15.3 billion figure, the Senate Finance Committee was subject to that discipline and we accepted it.
I believe that is the fiscal discipline we should have because I do not think we will ever get control of the budget unless we do that.
People lined the halls to talk to members of the Finance Committee every time we went to a Finance Committee meeting, to talk about further tax reductions, to talk about their own particular interests. We were trying to balance these out in that tax bill and finally came to the Senate with a bill that met the $15.3 billion target.
I get a little turned off with this reference to tax expenditures. That term is also appropriate to the $35 individual tax credit. Some people talk as though that money belonged to the Government that it is not the people's money, that it is the Government's money. I do not agree.
The Finance Committee was able to achieve an appropriate mix of tax increases and tax cuts to get to the $15.3 billion figure which was mandatory.
Now, as I understand what the Senator is saying, what the Senator meant in that April Senate colloquy with Senator PACKWOOD, is that we would wait until the September Budget Resolution and that any additional balances could be arrived at after the Budget Committee had a chance to take another look at it.
But I assure the Senator, the Finance Committee worked very hard with what they thought was a directive from the Congress and the Budget Committee and a fiscal discipline that I suppose no Finance Committee ever had before. I think this was an excellent fiscal discipline to have.
I thank the distinguished chairman for giving me a chance to comment on some of the things he suggested.
The PRESIDING OFFICER (Mr. FORD). The Senator from Maine.
Mr. MUSKIE. I appreciate the Senator's comments and I apologize for the delay in recognizing him.
There are a couple of points I need to clarify.
We did not originate the tax package which became the tax reduction bill of 1975. The Budget Committee had nothing to do with the items that went into that. When we wrote the first concurrent resolution of 1975, we simply affirmed that policy.
We did not write the $35 credit. We did not make those decisions.
When we attempted, in conjunction with the chairman of the Finance Committee last December, to urge a policy of continuing those tax cuts, we were not line itemizing. We were just saying that the policy of the tax reduction we have had for a year now should be continued for another year.
When the President did not agree to that, we said that we ought to continue it for 6 months until we can look at it again.
We did not line itemize it.
In the first concurrent resolution this year, we said that we continue those tax cuts. We did not line itemize. We did not go back and second guess those who had put together the tax reduction provisions of last year at all.
If we had been line itemizing, as the Senator is under the impression that we did, I am sure that each of us on the Budget Committee might have come up with a different kind of tax reduction package. But we did not regard that as our business.
It was put in place last year. It was extended 6 months. It was attempted to be extended for a year.
We said, extend it 15 months. We were looking at the macroeconomic implications, not the line items. We were not choosing, when we recommended extension, between those tax reductions and some others that might be adopted. That is not our function.
There were provisions in that tax proposal that I could have been behind. Some of those I would have preferred. Wedid not get involved in that.
So I want to make it clear to the Senator, we never line item that tax reduction package. We took what was in place and for macroeconomic reasons urged its extension. And that is all we did.
So with respect to the makeup, if the Senate should decide it ought to be some other makeup — which seems to me unwarranted frankly, for another 3 months.It seems to me, talking about 3 months, that we should leave in place what is in place and take a look at the next fiscal period, when we come up to the next concurrent resolution, or when we come to the second concurrent resolution for the year.
But honestly, we are not line itemizing that tax bill. We were not blessing those items, because we did not consider it in that way.
I just want the Senator to know that because it happens to be the fact.
Mr. ALLEN. Will the Senator yield for a question?
Mr. MUSKIE. Yes.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. ALLEN. What disturbs me, I will say to the distinguished Senator from Maine, is that apparently the budget resolution called for an extension of the tax cuts for 15 months instead of 12 months proposed by the committee, and it directed the committee to raise, or said it should raise, $2 billion in tax reform.
Is that not correct?
Mr. MUSKIE. Because there have been statements, I want to try to persuade the Senator precisely.
Mr. ALLEN. Yes.
Mr. MUSKIE. We set a target.
Mr. ALLEN. Yes.
Mr. MUSKIE. We believe, like a spending target, that that should be treated as a serious matter.
Mr. ALLEN. Yes.
Mr. MUSKIE. But my colloquy with Senator PACKWOOD in response to a question, whether or not if they found it impossible to hit that target
Mr. ALLEN. I understand, but that they have a target of $2 billion.
It would seem to the Senator from Alabama that this mandate that they extend the tax cuts preempted the role of the committee almost entirely in that they were supposed to have a target of $2 billion in tax reform, and to use $1.7 billion or $1.8 billion in extending the tax cut leaving practically no area of operation for the committee. That is what disturbs the Senator from Alabama. For the Budget Committee to say that we are going to use some 90 percent of the $2 billion target in increased revenue through tax reform to extend the tax credit left the Finance Committee practically no field of operation in coming back with a true tax reform bill. It confined it 90 percent of the way to an extension of a tax cut for 15 months instead of 12 months. Is that not correct?
Mr. MUSKIE. I do not agree with the Senator. It is in the same area of operations as other committees when we have set spending totals. I have said over and over that on the request of $440 billion we cut it back to $412 billion. That reduces the operation of every committee. The spending committees spelled out in their reports to us on March 15 how much they thought could be justified. We cut them back $28 billion. We cut back, if that is a phrase that means anything, on every committee, not just the Finance Committee. How else does one budget?
If we are going to give them a blank check, we have no budget process. May I say in addition if the Senator will read section 301 of title II of the congressional budget process, he will find that we are given this jurisdiction.
Mr. ALLEN. I understand that, but the point the Senator from Alabama is seeking to make is that they told the committee to go out and make this determination but they used $1.8 billion of that for extending the tax credit leaving the field of operation of only $200 million or $300 million for further tax reduction. I would like for the Senator to explain that that is not correct.
Mr. MUSKIE. The total tax reduction for fiscal 1977 was $17.3 billion. That included what I have in my amendment. That was through fiscal year 1977. Beyond that we ask that $2 billion be raised in tax expenditure reductions, which is 2 percent tax expenditures. The reduction we made in appropriations was between 2 and 3 percent of direct spending. So we were being evenhanded across the board.
Mr. ALLEN. But the Senator says to make room for this $1.8 billion in tax extensions out of this $2 billion.
Mr. MUSKIE. No, the extension is $17.3 billion.
Mr. ALLEN. I understand, but we tell them to raise only $2 billion in additional taxes. The $17.3 billion is in tax reductions. The Senator says to raise $2 billion but use $1.8 billion of that in extending the tax cuts. That is the long and short of it.
Mr. MUSKIE. I am afraid I cannot follow the logic of the very last statement. We recommended an extension of tax cuts, which have been on the books since April of 1975, until the end of fiscal year 1977. For the period covered it would be $17.3 billion. The tax expenditure reform is a way to reduce the deficit. We need the $17.3 billion, we concluded, as a stimulus to the economy. It worked last year. It is widely credited with turning the economy around. We said let us not have a tax increase, which would be the effect of terminating the tax reduction. The economy could not stand a general across-the-board tax increase. We wanted to keep the deficit down. We thought that $2 billion out of $105 billion in tax expenditure was a reasonable target to find what would be considered low-priority tax expenditures. They are not of general benefit.
Mr. ALLEN. The committee followed all of the recommendations except the last 3 months, is that not correct?
Mr. MUSKIE. That is right.
Mr. ALLEN. They changed it from 12 months to 15 months.
Mr. MUSKIE. It has more serious implications than that, may I say to the Senator. If we terminate as of July 1, and if we find as of July 1 we need the continued stimulus, it is a little difficult and a little late to reenact it for 3 months. We would have to do it for a longer period than that, I would think, to justify it. Certainly in tax law that is an important advantage.
Mr. ALLEN. The committee lived up to the committee's recommendation on the dollars figure, the $15.3 billion, is that not correct?
Mr. MUSKIE. They have $14.5 billion in the reported bill, and I think they approved subsequent amendments which have not yet been made part of the bill.
Mr. ALLEN. They did not have quite as much of a tax reduction as the Senator would call for.
Mr. MUSKIE. That is not my problem.My problem is, the effect of the bill is to gut the tax policy which the Congress put in place a year ago last spring as its major policy initiative to turn this economy around. It is our responsibility, as I read the law, as the Budget Committee, to give budget policy to the needs of this economy.
This was a central policy last year. It is not less important this year nor will it be less important next year. After July 1, after the Congress as a whole has accepted a budget which continued through fiscal 1977, thus making it available beyond that date if we wanted it, I think is a decision to be made with full appreciation of what is involved. That policy was very clear.
Mr. ALLEN. Do I understand the Senator to say that because the committee extended the tax cuts for 12 months instead of 15 months it gutted the recommendations of the Budget Committee?
Mr. MUSKIE. I did not mean to use the word gutting. I meant it is inconsistent. It is a different policy. It is a new policy.
Mr. ALLEN. It is a changed policy.
Mr. MUSKIE. It is a changed policy if the Congress as a whole approves it.
Mr. ALLEN. The mere fact that it did not extend the tax cuts for 15 months and instead extended them for 12 months changed the tax policy, is that what the Senator is saying?
Mr. MUSKIE. It changes it not only for the 15 months but changed it or set the momentum of policy in the opposite direction for the period beyond that. I cannot see ending it as of July 1 if we decide on July 10 it should be continued for the 3 months and beyond. We have interrupted the policy. That is not in the public interest. So it is more than the 3 months, may I say to the Senator. If the Senator will look at the President's budget last year, the President's budget this year, if he will look at the congressional budget reports for last year and this year, he will find unemployment above 6 percent projected for 3 to 4 years into the future. Hopefully, it will not materialize but with all of this judgment that we are going to have this problem for not just until July 1, 1977, but beyond, we just think we need continuous policy moving in the same direction, consistent with the policy we have had for a year, to be sure that we continue to climb out of this recession. We still have a recession. With just under 7 percent unemployment we are very much in a recession.
Mr. ALLEN. If the Senator's amendment is adopted, then the Senate, in order to keep the balance, is either going to have to impose $1.8 billion in additional taxes
Mr. MUSKIE. One billion dollars.
Mr. ALLEN. On account of the fact that the Senate did not use up all of the tax deduction; is that correct?
It will have to impose $1 billion more in additional taxes or take from the committee bill some of the tax reductions that it did put in place, is that correct?
Mr. MUSKIE. I would assume so. And one other option, may I say to the Senator.
Mr. ALLEN. I wanted to ask the Senator one further question.
Mr. MUSKIE. Let me state this other option first, because I am not sure the Senator completely understood.
Mr. ALLEN. Go ahead.
Mr. MUSKIE. The Budget Act anticipates the possibility that there will be a number of decisions between the first targets in the spring and the final resolution in the fall — spending decisions, revenue decisions, and so on — and it provides that in September, after the passage of the last appropriation bill, the Budget Committee will look at the total cumulative result of all the changes that have been made, and prepare a new resolution, which could result in a recommendation for more taxes or a recommendation for cuts somewhere else. If there have been increases in unanticipated spending areas, or the deficit has been larger than anticipated in the spring, all of those options are available.
Part of our function as a Budget Committee is to tag these possible consequences along the line, and the discipline is one that we impose on ourselves. If we do not tag these possible consequences, so that Senators can be aware of them, you know, the discipline is gone.
Mr. ALLEN. Suppose the Senate — and we have already had one test vote on the Nelson amendment — refuses to add $1 billion in additional taxes, or it refuses to take from the bill some of the tax reductions that the committee stipulated. What would the shape of the bill be then?
Mr. MUSKIE. That, of course, is the prerogative of the Senate and the Congress as a whole, and if that is the decision that is made, and the President signs it into law, then that is a change in congressional policy that will have to be taken into account in September.
Mr. ALLEN. Would that not be contrary to the Budget Committee's recommendation?
Mr. MUSKIE. It would be.
Mr. ALLEN. And would be out of order for that reason?
Mr. MUSKIE. No, it is not out of order. It is not out of order until put in place — that is, it is not subject to a point of order, I should say — it is not subject to a point of order until the second concurrent resolution is adopted. That is, it is not subject to a point of order after the first concurrent resolution, where after the second concurrent resolution it would be subject to a point of order.
The first concurrent resolution sets targets. When I say this bill is inconsistent with the first concurrent resolution, it is not to say that I have a point of order that I can raise against it, because I do not. All I can do is chatter and tell the Senate that is my judgment. If the Senate says "Accepting the fact" — and this is the healthy basis on which it ought to be done — "that this is inconsistent with the first concurrent resolution, nevertheless we as a Senate have changed our minds and we are going to accept the proposal," the Senate has that option.
Mr. ALLEN. If we add $1.8 billion to the first concurrent resolution — some say $1.7 billion — would we not be running the risk of making a Christmas tree out of this bill and instead of ending up with $15.3 billion in tax reductions we might end up with $18 billion or more in tax reductions?
Mr. MUSKIE. Not if the budget process becomes what the Senator from Alabama and the Senator from Maine would like it to be.
This $17.3 billion is in the budget. The Senate certainly has the prerogative to change it, but it is in the budget now, and it should not be regarded as an addition to it. It is in the budget.
Mr. ALLEN. I will say to the Senator from Maine, if the tax reduction exceeded the $15.3 billion at the time of final passage, if it exceeds the $15.3 billion as shown on the board there as the net revenue loss, in keeping with the recommendations of the Budget Committee, it would seem that it would not be out of order to vote against such a bill, in keeping with the budget resolution. Is that correct?
Mr. MUSKIE. It is in order for any Senator to vote any way he wants to, but I think I would say to the Senator from Alabama (Mr. ALLEN) or the Senator from Maine (Mr. MUSKIE) , "If you were to vote that way at this point, you are changing your mind about the first concurrent resolution, and whatever discipline the budget resolution has over revenues is gone. You may not want the budget resolution to have any discipline over revenues. If not, that is your prerogative; but it is so easy to break it on revenues, and once we get in the habit of breaking it, we are going to break it on spending."
Mr. ALLEN. As I understand the Senator's amendment, then, this amendment would sop up, you might say, some $700 or $800 million in tax reductions that the committee did not put into place, and it would make it necessary to levy an additional billion dollars in taxes, or to reduce by a billion dollars the tax reductions made by the committee bill. Is that correct?
Mr. MUSKIE. Yes.
Mr. ALLEN. I thank the Senator.
Mr. MUSKIE. Let me put it in one final form, myself, and then I am going to yield the floor.
Mr. LONG. Mr. President, will the Senator yield?
Mr. MUSKIE. No.
Mr. LONG. Will the Senator yield for a question?
Mr. MUSKIE. If I may respond first. To those Senators who have already made up their minds about how they are going to vote — and I suspect that is all of us — it has mystified me a little bit about why we cannot get to a vote, but if all Senators have made up their minds and they have individually decided not to support the first concurrent resolution, if they decide to vote for the committee bill, that is their prerogative; but I am going to tell them that by voting that way, they are not supporting the budget targets of the spring. If the majority of the Senate votes against the policy adopted just a month ago, then I will say to the Senator from Alabama, changing our minds that quickly is going to become an awfully easy habit to indulge in, and once we have indulged in it with respect to this subject, we can do it with respect to others.
The Senator knows — he was on the floor, I think, most of the time when we debated the first concurrent resolution and the eight amendments, I think, that were offered — that a lot of those amendments I favored, but I thought it was most important to establish the discipline, and I held back on my preferences, and the Senator from Alabama did as well.
I am not going to make it a point of personal privilege with any Senator who might differ with me on this amendment, and I certainly do not find it easy to have myself challenged as an intruder on other committees' jurisdiction, or as attempting to bludgeon the Senate or grasping for power. I do not find that particularly pleasant. But all I can do is call this as I see it, and what I am trying to do with this amendment at this point, and the reason why I am trying to do it at this point, is to either reaffirm the policy of the first concurrent resolution before we get into these other amendments, or reject it.
It seems to me this is the logical place to do it. Either we reaffirm it or we reject it. If we reaffirm it, then, as the Senator has so clearly pointed out, we have a burden to carry with the rest of the bill. If we reject it, then I suspect that will mean that all of these proposals on tax expenditures will go down the drain.
This is the pressure point, and I think it is the logical point at which the Senate ought to make the decision.
Mr. LONG. Mr. President, will the Senator yield?
Mr. ALLEN. Let me say that I think the Senator from Maine has discharged his responsibility in a highly responsible manner.
Mr. MUSKIE. I thank my good friend from Alabama.
Mr. LONG. Will the Senator yield?
Mr. MUSKIE. I yield.
Mr. LONG. The Senator knows that business conditions change. We have a bill before us that was reported to the Senate almost 6 weeks after that budget resolution, or at least a full month after the budget resolution. We have, since that time, been favored by information about the way the economy is moving which indicates that things are coming along very well.
For example, here is a story, and I ask unanimous consent that it be printed in the RECORD at this point, entitled "Profits, GNP in Quarter Topped Earlier Estimates."
There being no objection, the article was ordered to be printed in the RECORD, as follows:
PROFITS, GNP IN QUARTER TOPPED EARLIER ESTIMATES
WASHINGTON.— Corporate profits and the gross national product posted even better first quarter gains than previously estimated, revised Commerce Department figures show. After tax corporate profits rose 7.3%, or at a $5.8 billion annual rate, in the first quarter to a seasonally adjusted annual rate of $85.7 billion, according to the latest report. Initially, they were estimated to have jumped 6.3% or at a $4.4 billion rate, to a seasonally adjusted $84.3 billion yearly pace.
Total output of goods and services, adjusted for inflation, grew at an 8.7% annual rate in the first quarter. Previous estimates had put the growth rate for "real"GNP at 7.5% and later 8.5%.
Prices rose at a 3.6% annual rate in the first quarter as measured by the GNP price index, considered the broadest gauge of inflation. Previously the estimate was 3.5%.
Mr. LONG. So, when conditions change for the better, why should not the Senate, in acting on a major bill as this, take into account the fact that conditions have changed for the better. They are continuing to change for the better. Why cannot the Senate, after having voted for a budget resolution, come along 6 weeks later or perhaps even several months later and vote to say that we will have a somewhat different mix of tax items than the Budget Committee had in mind, because at this point we know more than we knew then?
Mr. MUSKIE. I shall make two points: First, the cumulative evidence we receive, and we receive it on a continuing basis, is that the economy has not improved all that much that we can assume we will be at full employment on October 1, 1977.
Second, if economic policy which underlies the budget is to be changed this is a change to be made by Congress in accordance with procedures set up in the Budget Reform Act and not by each committee justifying its own programs by writing its own economic policy.
I believe the Senator from Massachusetts had asked me to yield.
Mr. KENNEDY. I simply wished to ask the chairman of the Budget Committee a question, after stating my observation.
There has been a great deal said during the debate and the discussion, about how we reached the various figures that we have established in the budget resolution and in the recommendation for the reduction of tax expenditures.
As I understand it, the current policy budget would have been about $420 billion, and the budget resolution asked a 2 percent reduction, which brought spending down to $412 billion approximately. We recognized, as well, that we have approximately $106 billion worth of tax expenditures. We also asked a 2 percent reduction in tax expenditures. Proportionally, we asked the same percentage reduction in both direct expenditures and tax expenditures.
So, beyond the other reasons and justifications which the Senator has given in terms of economic implications, it seems to me that is a reasonably fair and evenhanded rule of thumb in terms of what was attempted to be achieved in cutting spending. The same burden was placed by the budget resolution in both of these areas. I thought it was a point that was useful to consider when we were listening to the debate in recent days over how we came up with the 2 percent figure on tax expenditures. It seems tome there is some basis for logic in this calculation, which I think needs to be underlined. Is that correct?
Mr. MUSKIE. The Senator is correct. I think that is a point that ought to be emphasized.
I yield at this point to my good friend from Oklahoma, who joined me on the present amendment.
Mr. BELLMON. Mr. President, I thank the distinguished Senator from Maine, the chairman of the Budget Committee, for yielding.
I have listened with great interest to the debate this afternoon. We have been debating this issue now for several days, and, in my opinion, it is time to settle the matter. The issue is well understood by Members of the Senate. Many have been in the Chamber for much of the debate.
Without trying to go into the merits of the Long proposal, I simply feel that we have spent enough time on it, it is understood, and further debate would seem to serve no constructive purpose.
So, Mr. President, I move to table the Long amendment, and ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
Mr. LONG. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. LONG. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
The question is on agreeing to the motion to table. On this question the yeas and nays have been ordered, and the clerk will call the roll.
The assistant legislative clerk called the roll.
The result was announced — yeas 39, nays 53, as follows:
[Roll call vote tally omitted]