June 8, 1977
Page 18011
THE FISCAL YEAR 1978 BUDGET DEFICIT
Mr. MUSKIE. Mr. President, in a story appearing in the Washington Post on June 8, 1977, Budget Director Bert Lance is reported to have told a group of bankers, investors, and business leaders that the deficit for fiscal year 1978 will be about $7 billion higher than originally expected, due primarily to congressional spending.
This statement attributed to the Budget Director is simply not true, Mr. President. Let me set the record straight.
It is true that the deficit for fiscal year 1978 contained in the congressional first budget resolution, Senate Concurrent Resolution 19, is about $7 billion higher than the President's latest fiscal year 1978 estimate submitted to Congress in April of this year. But the higher deficit is entirely attributable to a more realistic estimate of budget revenues by the Congress as compared to the administration. Spending in the congressional budget is in fact lower than the administration estimate.
I ask unanimous consent, Mr. President, that a table setting forth the key figures be printed in the RECORD at this point.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. These figures show, Mr. President, that the higher deficit in the congressional budget is due to a lower estimate of revenues of $7.5 billion — not to greater congressional spending.
Of the $7.5 billion difference in the revenue estimates, about $4 billion is due to the Tax Reduction and Simplification Act which was strongly supported by the President. The higher administration estimate does not take account of this bill, which was signed into law by the President on May 23, about a month after the administration revenue estimate was prepared.
The remaining $3.5 billion difference in the revenue estimates is due to the differing economic assumptions of the administration and the Congress and to small technical estimating differences.
Congress assumed what we believe is a more realistic view of the economy than the administration, and as a result the congressional revenue estimate is lower. Regardless of who is right about the performance of the economy, Mr. President — the Congress or the administration — the fact is that the difference is not caused by profligate congressional action.
In sum, the statement attributed to the Budget Director is wrong. Congress is not adding to the President's budget — indeed, it proposes to spend less. The increased deficit in the congressional budget is due to revenue estimates that the Congress believes are more realistic than those of the administration. The Congress should not and will not sacrifice truth in budgeting to stay within Presidential estimates it considers unrealistic.
It is regrettable that errors such as this occur. I hope that Mr. Lance will set the record straight promptly.
Mr. President, I ask unanimous consent that the Washington Post article to which I have referred be printed in the RECORD at this point.
There being no objection, the article was ordered to be printed in the RECORD, as follows:
LANCE CRITICIZES BANKS FOR PRIME RATE JUMP
NEW YORK, June 7.— President Carter's chief budget official today criticized bankers again for raising their prime lending rates, but sought to reassure them and other business leaders about the administration's overall economic policies.
Bert Lance, director of the Office of Management and Budget, repeated Carter's pledge to balance the budget by 1981, spoke proudly of the reduction in unemployment, promised less red tape and inconsistency in government regulations, and expressed his hope for "a steadily declining rate of inflation."
"I have not yet seen anything (since the Carter administration began in January) that indicates to me that we can't balance the budget by fiscal year 1981," Lance told about 200 bankers, investors and business leaders at an economic seminar.
The balanced budget would be achieved even though the 1978 deficit will be about $7 billion higher than the level originally expected ($58 billion), he said. According to Lance, the increase is due primarily to congressional spending.
Lance said Carter, unlike previous presidents, has begun discussions about the 1979 budget in the spring. "We're now actively working on the '79 fiscal year budget process," Lance said. "To my knowledge, no President has been willing to spend a great deal of time in the spring on the budgetary process. They usually wait until the fall.
"President Carter has given us a total of 25 hours over a three-week period in June to sit down with (him and) the Cabinet officers and agency heads and go through the budget."
Last week, Lance criticized bankers for raising the prime interest rate from 6¼ to 6 ¾ per cent in early May. The prime is the rate a bank charges its best corporate customers for loans and is not directly linked to consumer loan rates.
Bankers have said they are raising their prime rates because the price they pay for money is going up. But Lance repeated his criticism today, that he sees no justification for the increase.
He said the American people blame inflation on two factors: huge budget deficits and high interest rates.
Asked about reports that, despite his criticism, the prime rate soon might be boosted to 7 per cent, Lance said: "That shows the amount of influence I have."
Lance also said that the Council on Wage and Price Stability, which has no power to order roll-backs, should be retained and strengthened. He added that a strong name is needed to head the council "standing between labor and management."
Expressed pleasure that the unemploymentrate is down to 6.9 per cent. But he cautioned that there "still are significant problems in the area of unemployment."
Refused to predict the rate of inflation three years from now, but added that the administration's goal is a steadily declining rate of inflation.