May 13 , 1977
Page 14654
FIRST CONCURRENT BUDGET RESOLUTION, SENATE CONCURRENT RESOLUTION 19 — CONFERENCE REPORT
The ACTING PRESIDENT pro tempore. At this time, in accordance with the previous order, the Senate will proceed to the consideration of the conference report on Senate Concurrent Resolution No. 19, which will be stated by title.
The legislative clerk read as follows:
The committee of conference on the disagreeing votes of the two Houses on the amendment of the House to the concurrent resolution (S. Con. Res. 19) setting forth the congressional budget for the U.S. Government for the fiscal year 1978 having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses this report, signed by a majority of the conferees.
The ACTING PRESIDENT pro tempore. Without objection, the Senate will proceed to the consideration of the conference report.
(The conference report is printed in the House proceedings of the RECORD of May 11, 1977.)
The ACTING PRESIDENT pro tempore. The time for debate on this conference report is limited to 1 hour to be equally divided between the distinguished Senator from Maine (Mr. MUSKIE) and the distinguished Senator from Oklahoma (Mr. BELLMON).
Who yields time?
Mr. ROBERT C. BYRD. Mr. President, I suggest the absence of a quorum and I ask unanimous consent that the time not be charged against either side.
The ACTING PRESIDENT pro tempore. Without objection, it is so ordered. . The clerk will call the roll.
The second assistant legislative clerk proceeded to call the roll.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. METZENBAUM). Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the following members of the staff of the Committee on the Budget be allowed to remain on the floor during consideration of and votes on Senate Concurrent Resolution 19:
John McEvoy, Karen Williams, Sid Brown, Van Ooms, Jim Storey, Dan Twomey, Tom Dine, Faye Hewlett, Mary Jane Checchi, Bob Sneed, Charles Flickner, Terry Finn, John Giles, Rodger Schlickeisen, Don Campbell, Tony Carnevale, George Merrill, Becky Beauregard, Pat Gwaltney, Mike West, Ira Tannenbaum, and Peggy Watts.
Mike Joy, on behalf of Senator Hollings; Hal Gross, on behalf of Senator Cranston; Rick Brandon, on behalf of Senator Chiles; Alan Chvotkin, on behalf of Senator Abourezk; Dick Andrews, on behalf of Senator Biden; Alan Yuspeh, on behalf of Senator Johnston; John Haynes, on behalf of Senator Anderson; and Paul Clark, on behalf of Senator Sasser.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the presence and use of small electronic calculators be allowed on the floor of the Senate during the consideration of the concurrent resolution.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. I ask unanimous consent that the Joint Explanatory Statement of the managers which accompanies the conference report on Senate Concurrent Resolution 19 be printed in the RECORD at this point.
There being no objection, the excerpt from the conference report (No. 95–134) was ordered to be printed in the RECORD, as follows:
JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at the conference on the disagreeing votes of the two Houses on the amendment of the House to the concurrent resolution (S. Con. Res. 19) setting forth the congressional budget for the United States Government for the fiscal year 1978 (and revising the congressional budget for fiscal 1977), report that the conferees have been unable to agree. This is a technical disagreement, necessitated by the fact that the revised deficit and public debt amounts for fiscal year 1977 are lower than the corresponding House and Senate provisions and the revenue figure in the substitute is greater than either the House or Senate provision.
It is the intention of the conferees that the managers on the part of the Senate will offer a motion in the Senate to recede and concur in the House amendment to the Senate-passed resolution with an amendment (in the nature of a substitute) consisting of the language agreed to in conference. Upon the adoption of such amendment in the Senate, the managers on the part of the House will offer a motion in the House to concur therein.
The managers on the part of the House,and the Senate submit the following joint statement in explanation of the action agreed upon by the managers:
The substitute language which is to be offered as described above (and which should be considered the language of the concurrent resolution as recommended in the conference report for purposes of section 802(a) of the Congressional Budget Act of 1974) hereinafter in this statement referred to as the "conference substitute"—is as follows:
That the Congress hereby determines and declares, pursuant to section 301(a) of the
Congressional Budget Act of 1974, that for the fiscal year beginning on October 1, 1977
(1) the recommended level of Federal revenues is $398,300,000,000, and the amount by which the aggregate level of Federal revenues should be decreased is $17,600,000,000.
(2) the appropriate level of total new budget authority is $503,450,000,000;
(3) the appropriate level of total budget outlays is $460,950,000,000;
(4) the amount of the deficit in the budget which is appropriate in the light of economic conditions and all other relevant factors is $64,650,000,000; and
(5) the appropriate level of the public debt is $784,900,000,000, and the amount by which the statutory limit on such debt should accordingly be increased is $83,600,000,000.
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, 1977, 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, $118,500,000,000;(B) Outlays, $111,000,000,000.
(2) International Affairs (150) :
(A) New budget authority, $9,300,000,000:
(B) Outlays, $7,300,000,000.
(3) General Science, Space, and Technology(250) :
(A) New budget authority, $4,900,000,000;
(B) Outlays, $4,700,000,000.
(4) Natural Resources, Environment, and Energy (300):
(A) New budget authority, $20,700,000,000;
(B) Outlays, $20,000,000,000.
(5) Agriculture (350) :
(A) New budget authority, $2,200,000,000;
(B) Outlays, $4,350,000,000.
(6) Commerce and Transportation (400) :
(A) New budget authority, $20,000,000,000;
(B) Outlays, $19,400,000,000.
(7) Community and Regional Development (450) :
(A) New budget authority, $8,200,000,000;
(B) Outlays, $10,800,000,000.
(8) Education, Training, Employment, and Social Services (500) :
(A) New budget authority, $26,800,000,000;
(B) Outlays, $27,200,000,000.
(9) Health (550) :
(A) New budget authority, $47,900,000,000;
(B) Outlays, $44,300,000,000.
(10) Income Security (600) :
(A) New budget authority, $179,900,000,000;
(B) Outlays, $146,700,000,000.
(11) Veterans' Benefits and Services (700) :
(A) New budget authority, $20,250,000,000;
(B) Outlays. $20,200,000,000.
(12) Law Enforcement and Justice (750) :
(A) New budget authority, $3,700,000,000;
(B) Outlays, $3,850,000,000.
(13) General Government (800)
(A) New budget authority, $3,800,000,000;
(B) Outlays, $3,850,000,000.
(14) Revenue Sharing and General Purpose Fiscal Assistance (850):
(A) New budget authority, $9,800,000,000;
(B) Outlays, $9,700,000,000.
(15) Interest (900):
(A) New budget authority, $43,000,000,000;
(B) Outlays, $43,000,000,000.
(16) Allowances:
(A) New budget authority, $800,000,000;
(B) Outlays, $900,000,000.
(17) Undistributed Offsetting Receipts (950) ;
(A) New budget authority, —$16,300,000,000;
(B) Outlays, —$16.300,000,000.
Sec. 3. In the Third Budget Resolution for fiscal year 1977, the Congress provided for revenue and spending proposals designed to stimulate the Nation's economy in order to reduce unemployment. These proposals, together with recent indications of more vigorous economic growth in the private sector, provide evidence that the Nation's economy may be returning to the levels needed to provide jobs to millions of our unemployed.
The Congress recognizes, however, that unusual uncertainties surround the current economic outlook for 1977 and 1978 — primarily, the economic impact of the stimulus proposals and the likelihood of continued economic growth in the private sector — and that additional time and information are needed to make final determinations with respect to fiscal policy for fiscal year 1978; and declares that, if economic recovery does not proceed satisfactorily during the months immediately following adoption of the First Budget Resolution for Fiscal Year 1978, it will be necessary to provide additional stimulus to the economy in appropriate amounts to be determined in the Second Budget Resolution for Fiscal Year 1978. On the other hand, if the recovery continues to show signs of long term renewed growth, it may be desirable to reduce some of the economic stimulus provided for fiscal year 1978 in order to make more rapid progress toward a balanced budget.
SEC. 4. (a) Pursuant to section 304 of the Congressional Budget Act of 1974, the appropriate aggregate amounts for the fiscal year 1977 set forth in the first section of S. Con. Res. 10 are revised as follows:
(1) the recommended level of Federal revenues is $356,600,000,000, and the amount by which the aggregate level of Federal revenues should be decreased is $2,600,000,000;
(2) the appropriate level of total new budget authority is $470,200,000,000;
(3) the appropriate level of total budget outlays is $409,200,000,000;
(4) the amount of the deficit in the budget which is appropriate in light of economic conditions and all other relevant factors is $52,600,000,000; and
(5) the appropriate level of the public debt is $701,300,000,000, and the amount by which the statutory limit on such debt should accordingly be increased is $1,300,000,000.
(b) Pursuant to section 304 of the Congressional Budget Act of 1974, the allocations for the fiscal year 1977 made in section 2 of S. Con. Res. 10 are revised so that the appropriate levels of new budget authority and the estimated budget outlays for the various functional categories are as follows:
(1) National Defense (050) :
(A) New budget authority, $108,800,000,000;
(B) Outlays, $98,900,000,000.
(2) International Affairs (150) :
(A) New budget authority, $7,900,000,000;
(B) Outlays, $6,500,000,000.
(3) General Science, Space, and Technology (250);
(A) New budget authority, $4,500,000,000;
(B) Outlays, $4,600,000,000.
(4) Natural Resources, Environment, and Energy (300):
(A) New budget authority, $18,700,000,000;
(B) Outlays, $16,100,000,000.
(5) Agriculture (350) :
(A) New budget authority, $2,300,000,000;
(B) Outlays, $4,500,000,000.
(6) Commerce and Transportation (400) :
(A) New budget authority, $17,300,000,000;
(B) Outlays, $14,900,000,000.
(7) Community and Regional Development (450):
(A) New budget authority, $14,800,000,000;
(B) Outlays, $10,100,000,000.
(8) Education, Training, Employment, and Social Services (500) :
(A) New budget authority, $30,400,000,000;
(B) Outlays, $20,900,000,000.
(9) Health (550):
(A) New budget authority, $40,600,000,000;
(B) Outlays, $39,000,000,000.
(10) Income Security( 600) :
(A) New budget authority, $167,700,000,000;
(B) Outlays, $137,100,000,000.
(11) Veterans' Benefits and Services (700):
(A) New budget authority, $18,900,000,000;
(B) Outlays, $18,100,000,000.
(12) Law Enforcement and Justice (750) :
(A) New budget authority, $3,500,000,000;
(B) Outlays, $3,600,000,000.
(13) General Government (800) :
(A) New budget authority, $3,500,000,000;
(B) Outlays, $3,600,000,000.
(14) Revenue Sharing and General Purpose Fiscal Assistance (850) :
(A) New budget authority, $7,600,000,000;
(B) Outlays, $7,700,000,000.
(I5) Interest (900):
(A) New budget authority, $38,000,000,000;
(B) Outlays, $38,000,000,000.
(16) Allowances:
(A) New budget authority, $800,000,000;
(B) Outlays, $700,000,000.
(17) Undistributed Offsetting Receipts (950):
(A) New budget authority, —$15,100,000000;
(B) Outlays, —$15,100,000,000.
BUDGET AGGREGATES
The budget aggregates for fiscal year 1978 would be as follows:
Revenues.—The Senate resolution provided for revenues of $395.7 billion. The House resolution provided for revenues of $398.094 billion. The conference substitute provides for revenues of $396.3 billion and, to achieve that level, provides that revenues should be decreased by $17.6 billion.
The conference substitute (1) assumes the level of fiscal stimulus in fiscal year 1978 provided in the Tax Reduction and Simplification Act as recently agreed to by House and Senate conferees; (2) accepts the House position of a $65 million allowance for miscellaneous tax and tariff legislation; and (3) accepts the Senate position for this First Budget Resolution that the entire cost of the earned income credit be reflected as a reduction of revenue. The conferees agree that the treatment of tax credits in excess of recipients' tax liabilities shall be considered de novo during the development of the Second Budget Resolution later this year.
Budget Authority.—The Senate resolution provided for total new budget authority of $504.6 billion. The House resolution provided for budget authority of $502.267 billion.The conference substitute provides for budget authority of $503.45 billion.
Outlays.—The Senate resolution provided for outlays of $459.2 billion. The House resolution provided outlays of $464.477 billion. The conference substitute provides for outlays of $460.95 billion.
Deficit.—The Senate resolution provided for a deficit of $63.5 billion. The House resolution provided for a deficit of $66.383 billion. The conference substitute provides for a deficit of $64.65 billion.
Public Debt.—The Senate resolution provided for a public debt level of $789.9 billion. The House resolution provided a public debt level of $792.714 billion. The conference substitute provides a public debt level of $784.9 billion.
ECONOMIC OBJECTIVES AND ASSUMPTIONS
The fiscal policy contained in the conference substitute is designed to maintain a sustained economic recovery. Enactment of the legislation assumed in the totals, in conjunction with a supportive monetary policy, will provide the balanced expansion necessary to move the nation steadily towards full employment and a lower rate of inflation. The economic assumptions underlying the revenue and spending ceilingscontained in the conference report are as follows:
[Table omitted]
FUNCTIONAL CATEGORIES
NATIONAL DEFENSE (050)
The Senate resolution provided budget authority of $120.8 billion and outlays of $111.6 billion. The House resolution provided budget authority of $117.136 billion and outlays of $109.947 billion.
The conference substitute provides budget authority of $118.5 billion and outlays of $111.0 billion. This substitute assumes that financial adjustments can be made to the Administration’s budget request in order to remain within these targets. Such adjustments may include a possible slowdown in projected foreign military sales, the utilization of prior year unobligated funds to finance a portion of the FY 1978 program, a lower inflation rate from that now assumed in the Administration's budget, and a partial absorption of the October pay raise.
INTERNATIONAL AFFAIRS (150)
The Senate resolution provided budget authority of $9.3 billion and outlays of $7.3 billion. The House resolution provided budget authority of $9.543 billion and outlays of $7.297 billion. The conference substitute provides budget authority of $9.3 billion and outlays of $7.3 billion. The conference substitute reflects a lower estimate of the activities of the Export-Import Bank than assumed in the House resolution.
GENERAL SCIENCE, SPACE AND TECHNOLOGY (250)
The Senate resolution provided budget authority of $4.9 billion and outlays of $4.7 billion The House resolution provided budget authority of $4.930 billion and outlays of $4.737 billion. The conference substitute provides budget authority of $4.9 billion and outlays of $4.7 billion.
NATURAL RESOURCES, ENVIRONMENT, AND ENERGY (300)
The Senate resolution provided budget authority of $20.5 billion and outlays of $19.9 billion. The House resolution provided budget authority of $20.950 billion and outlays of $20.677 billion. The conference substitute provides budget authority of $20.7 billion and outlays of $20.0 billion. The decrease in outlays from the House resolution is due primarily to acceptance of a recent lower estimate for outlays from prior year budget authority in the EPA construction grant program.
AGRICULTURE (350)
The Senate resolution provided budget authority of $2.2 billion and outlays of $3.7 billion. The House resolution provided budget authority of $2.153 billion and outlays of $4.395 billion. The conference substitute provides budget authority of $2.2 billion and outlays of $4.35 billion. The increase over the Senate outlay level is provided for reestimates by the Administration of agriculture price support programs.
COMMERCE AND TRANSPORTATION (400)
The Senate resolution provided budget authority of $19.4 billion and outlays of $19.1 billion. The House resolution provided budget authority of $20.569 billion and outlays of $20.277 billion. The conference substitute provides budget authority of $20.0 billion and outlays of $19.4 billion. The conference substitute permits increases in funding above current policy for transportation programs and for Small Business Administration credit assistance programs. Estimated outlays of the Highway Trust Fund are reduced from those included in the House resolution to reflect a lagging rate of obligations in fiscal year 1977.
COMMUNITY AND REGIONAL DEVELOPMENT (450)
The Senate resolution provided budget authority of $8.1 billion and outlays of $10.7 billion. The House resolution provided budget authority of $8.237 billion and outlays of $10.926 billion. The conference substitute provides budget authority of $8.2 billion and outlays of $10.8 billion.
EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES (300)
The Senate resolution provided budget authority of $27.1 billion and outlays of $27.0 billion. The House resolution provided budget authority of $22.739 billion and outlays of $27.756 billion. The conference substitute provides budget authority of $26.8 billion and outlays of $27.3 billion. The conference substitute assumes $3.8 billion in forward funding for the public service jobs program.
HEALTH (550)
The Senate resolution provided budget authority of $48.0 billion and outlays of $44.4 billion. The House resolution provided budget authority of $47.685 billion and outlays of $44.238 billion.
The conference substitute provides budget authority of $47.9 billion and outlays of $44.3 billion. The conference substitute assumes budget authority of $28.4 billion and outlays of $25.2 billion for the medicare program and budget authority and outlays of $11.5 billion for the medicaid program. The medicare and medicaid figures reflect the net effect of cost control savings and possible legislative improvements in medicaid. The conference substitute assumes budget authority of $8.0 billion and outlays of $7.6 billion for the remaining programs in the health function.
INCOME SECURITY (600)
The Senate resolution provided budget authority of $179.9 billion and outlays of $145.9 billion. The House resolution provided budget authority of $182.688 billion and outlays of $148.309 billion. The conference substitute provides budget authority of $179.9 billion and outlays of $148.7 billion.
VETERANS BENEFITS AND SERVICES (700)
The Senate resolution provided budget authority of $20.3 billion and outlays of $20.2 billion. The House resolution provided budget authority of $20.235 billion and outlays of $20.203 billion. The conference substitute provides budget authority of $20.25 billion, and outlays of $20.2 billion.
LAW ENFORCEMENT AND JUSTICE (750)
The Senate resolution provided budget authority of $3.2 billion and outlays of $3.0 billion. The House resolution provided budget authority of $3.620 billion and outlays o $3.820. billion. The conference substitute provides budget authority of $3.7 billion and outlays of $3.85 billion.
GENERAL GOVERNMENT (800)
The Senate resolution provided budget authority of $3.8 billion and outlays of $3.8 billion. The House resolution provided budget authority of $3.891 billion and outlays of $3.991 billion. The conference substitute provides budget authority of $3.8 billion and outlays of $3.85 billion.
REVENUE SHARING AND GENERAL PURPOSE FISCAL ASSISTANCE (850)
The Senate resolution provided budget authority of $9.8 billion and outlays of $9.7 billion.The House resolution provided budget authority of $9.822 billion and outlays of $9.783 billion. The conference substitute provides budget authority of $9.8 billion and outlays of $9.7 billion.
INTEREST (900)
The Senate resolution provided budget authority of $43.0 billion and outlays of $43.0 billion. The House resolution provided budget authority of $1.069 billion and outlays of $43.900 billion. The conference substitute provides budget authority of $43.0 billion and outlays of $43.0 billion.
ALLOWANCES (920)
The Senate resolution provided budget authority of $0.8 billion and outlays of $0.9 billion. The House resolution provided budget authority of $1.069 billion and outlays of $1.021 billion. The conference substitute provides budget authority of $0.8 billion and outlays of $0.9 billion.
UNDISTRIBUTED OFFSETTING RECEIPTS (950)
The Senate resolution provided budget authority of $18.8 billion and outlays of $16.6 billion. The House resolution provided budget authority of $16.000 billion and outlays of $16.000 billion. The conference substitute provides budget authority of $16.3 billion and outlays of $16.3 billion.
REVISED CONGRESSIONAL BUDGET FOR FISCAL YEAR 1977
The Senate resolution revised the Congressional budget for fiscal year 1977 to reflect the current budget situation. The revised budget aggregates and functional spending totals reflected adjustments in revenues of a technical nature, the latest estimates of budget authority and outlays, including the effects of shortfalls in outlay projections; and withdrawal of the President's proposal for rebates to taxpayers in excess of tax liability and special payments to nontaxpayers.
The House resolution revised the Congressional budget for fiscal year 1977 to reflect the withdrawal of the rebate for taxpayers and special payments to nontaxpayers.
The conference substitute provides revenues of $356.6 billion, budget authority of $470.2 billion, outlays of $409.2 billion, a deficit of $52.6 billion, and a public debt of $701.3 billion.
Reductions in the Fiscal Year 1977 Deficit
The effect of the above revisions is to reduce the fiscal year 1977 deficit by $17.15 billion to $52.6 billion.
THE CONFERENCE AGREEMENT
Mr. MUSKIE. Mr. President, the Senate today turns to consideration of the conference report on Senate Concurrent Resolution 19, the first concurrent resolution on the Federal budget for fiscal 1978.
The conference report reflects many hours of deliberation in which House and Senate conferees argued persuasively for their respective resolutions. In the end, after 3 long, difficult days, and five separate meetings of the conference, we achieved agreement.
As amended by the conference, the budget resolution provides slight increases over the Senate-passed aggregate amounts and more substantial reductions in the House-passed totals.
Most notably, the higher deficit proposed by the House — $66.4 billion — has been reduced by $1.75 billion to $64.65 billion in the conference substitute. Amounts at least equal to the Senate-passed version of the budget are included in all but a few instances.
Mr. President, at the outset I wish to commend all the conferees on their dedication and commitment to the budget process. In recent weeks the congressional budget process has been tested and strained. But, it is my firm belief that the process has emerged stronger for this test.
The overwhelming majority of the conferees signed the report, including the entire Senate delegation. The House conferees, with the exception of only two Members, also endorsed the report. For the first time in the history of the budget process minority Members on the House side signed the conference report.
Mr. President, the significance of this bipartisan support in both Houses speaks well of the continued viability and integrity of the budget process. I urge my colleagues to reflect the same unanimity expressed by the conferees in adopting this report.
PARLIAMENTARY SITUATION
This conference report is being submitted by the managers on the part of the two Houses in technical disagreement. The technical disagreements are very minor, and it is the intention of the conferees of both Houses to urge adoption of the substitute budget resolution described in the statement of managers which I have asked to have printed in the RECORD.
The disagreement is not over substance. It is a parliamentary technicality. This result has occurred because the Parliamentarians of the two Houses have ruled that, even on technical matters, a conference report on a budget resolution must in all its particulars remain within the range established by the action of the two Houses. Thus, where the numbers are even slightly below or above the range, the conference must report in disagreement. This is what has occurred here.
The conference agreement contains revised deficit and public debt figures for fiscal year 1977 that are lower than the corresponding provisions in either the House or Senate, and a revenue figure greater than either the House or Senate provision.
So, when the Senate votes today, we will first be voting to confirm the conference report in disagreement. A second vote will then occur to recede to the original House amendment to the Senate budget resolution, with an amendment which is spelled out in the statement of managers accompanying the conference report. Other than this two step procedure, this consideration of the conference report can proceed as if it had been reported in agreement.
The conference report not only provides targets for the overall budget in fiscal year 1978, but also for the 17 budget functions such as defense, agriculture, and so forth.
Mr. President, I believe that the conference report represents a sound and effective budget for fiscal year 1978. Although it is a tight budget, it will nonetheless provide significant help in reducing our country's continuing unemployment problem while at the same time avoiding the rekindling of inflation.
The conference agreement provides substantial real growth in defense spending and maintains a strong national defense posture. Likewise, the agreement accords a high priority to education and energy programs.
Mr. President, what follows is a brief description of the major features of the conference substitute.
MAJOR FEATURES OF THE CONFERENCE SUBSTITUTE BUDGET AGGREGATES
Mr. President, the recommended conference substitute contains aggregate budget totals for fiscal year 1978 as follows:
For revenues, the conferees agreed on a level of $396.3 billion. This is $1.8 billion below the House resolution and $600 million above the Senate resolution.
For budget authority, the conferees agreed on a level of $50.45 billion. This is $1.15 billion above the House and $1.15 billion below the Senate.
For outlays, the conferees agreed on a level of $460.95 billion. This is $3.55 billion below the House and $1.75 billion above the Senate.
For the deficit, the conferees agreed on a level of $64.65 billion. This is $1.75 billion below the House and $1.15 billion above the Senate.
For the public debt, the conferees agreed on a level of $784.9 billion. This is $7.8 billion below the House and $5.0 billion below the Senate.
A comparison of all three sets of totals — House, Senate, and conference — reveals that the conference compromise remains closer to the Senate version on outlays and represents a deficit closer to the lower Senate figure.
Mr. President, let me be candid. This agreement, like any agreement between two firmly held points of view, represents some compromise on both sides. I suspect that individual Members will find areas of the budget that they regard as too high or too low.
But, I ask my colleagues to remember that the purpose of a conference on the disagreeing votes of the two House is to resolve those differences. Neither side can expect to come away with its resolution intact. To shape a compromise, modifications are always necessary.
The Congressional Budget Act requires that the Congress establish national budget priorities. But the Budget Act does not indicate how difficult this might be to achieve. The Budget Act does not warn that deliberate choices among deserving programs might be acutely painful.
These challenges to the budget process became apparent in the conference on the first concurrent resolution for fiscal year 1978. But, should we have expected anything less, anything easier? The budget process, after all, is the political process with the choices within limited resources laid bare. When the process is working well, it is bound to force difficult and painful choices on all of us.
In the spirit of compromise the Senate conferees worked diligently to attain the most comprehensive resolution that would be endorsed by both the house and the Senate. Our task was not easy. Hard negotiation, and deliberate debate were essential. Difficult choices had to be made. Programmatic priorities had to be weighed and balanced against economic realities.
Mr. President, I ask unanimous consent that a table illustrating the differences between the House and Senate resolutions for fiscal 1978 and the conference substitute be printed at this point
in the RECORD.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. Mr. President, let me say a word about the conference debate on the national defense function in which many Senators have a special interest. There should be no doubt that the conferees, on both sides of the table are committed to the national security of the United States. Our discussion focused only on the total level of spending necessary this year to achieve that goal.
Only a difference of about $3 billion separated the two Houses. At several junctures we considered reporting in disagreement on this vital issue. That road would have been easy, Mr. President, but it might have destroyed the budget process. The conferees determined instead that to preserve the budget process and to serve the Congress they should continue to talk and to work for a compromise agreement. We believe that the spending levels contained in the conference substitute reflect a determination that our national defense, the second highest spending category in the Federal budget, will be fully maintained.
Mr. President, at this point I wish to express my appreciation and gratitude to our distinguished colleagues, Senator STENNIS, chairman of the Armed Services Committee, and Senator McCLELLAN, chairman of the Appropriations Committee, for their assistance in working out this agreement in the interest of maintaining the integrity of the budget process.
Mr. President, I wish to assure my Senate colleagues that this compromise package contains room for enactment of many worthwhile programs. Not all legislative proposals can be enacted, not all programs can be fully funded by the Congress. In comparison with the requests from the Senate authorizing committees the conference agreement represents a reduction of $37.4 billion in budget authority and $13.4 billion in outlays. In comparison with the request from the Senate Appropriations Committee, the conference agreement represents a reduction of $12.8 billion in budget authority and $3.8 billion in outlays.
If Congress is to exercise a responsible fiscal policy, restraint with respect to spending must be exercised by this body. Restraint exercised by the Budget Committee, or the Committee of Conference is meaningless without restraint by at least 51 Senators and 218 Members of the House. Cooperation in this effort is essential if the budget process is to succeed.
The conference substitute is a realistic budget. It takes account of today's political and economic circumstances and makes an important contribution to the establishment of broad congressional priorities.
FISCAL POLICY
The levels of revenue and spending in the conference budget proposal reflect the choice of a policy for steady long term growth.
The continuation of unacceptably high levels of unemployment and inflation means that a steady and continuing economic recovery must be achieved. The current recovery must be extended over a much longer period than the 34 months averaged by other peacetime recoveries since World War II. At the previous average, the present recovery would end in 1978, leaving the economy stranded with high unemployment and continuing inflation.
Mr. President, we cannot allow this to happen. The costs of failure are too high. We are determined to follow policies for fiscal year 1978 that recognize the problems of both unemployment and inflation, and therefore offer the best hope for prolonged recovery.
JOBS
Over 6½ million Americans remain outof work in spite of the drop in the unemployment rate to 7 percent in April. Indeed, the fact that a 7 percent unemployment rate is now regarded as an achievement, rather than as a problem, indicates how severe the recession has been. We cannot rest on our laurels. We must continue and strengthen our commitment to steady economic growth.
We remain about twice as far from full employment as we were at this stage of other postwar recoveries. The plain fact is that employment has grown at about the same rate during this recovery as during other postwar recoveries, but the employment we lost in the downturn was much greater this time. We therefore have much further to go before full employment can be achieved.
The conference agreement provides for a steady recovery in employment in 1978.Total employment from the end of 1976 to the end of 1978 should increase by about 5.2 million jobs as a result of the policies established in this budget resolution.
INFLATION
Inflation is a concern to all Americans. While the inflation rate has fallen from the levels of several years ago, it remains unacceptably high. Recent increases in the Wholesale Price Index and Consumer Price Index are a cause for particular concern.
To achieve a decline in inflation, however, it will be necessary to follow steady fiscal and monetary policies. We cannot stop inflation with draconian policies which throw millions of Americans out of work, any more than we can cure unemployment with higher inflation. Progress toward full employment and lower inflation can be achieved only through consistent policies aimed at continued recovery.
In addition to general fiscal restraint, the recommendations of the conference are designed to discourage specific actions which increase prices and the inflation rate in particular sectors. The conference agreement recognizes, for example, an urgent need to curb the rapid inflation in medical care costs and recommends lower outlays in the health function to reflect enactment of legislation to reduce such cost inflation.
The committee endorses the "targeted" public service jobs concept which emphasizes employment and training for the structurally unemployed — unskilled workers, young people, and welfare recipients.
THE BUDGET DEFICIT.
Mr. President, the conference report is consistent with movement toward a balanced budget when this is compatible with prevailing economic circumstances.
As in the past 3 years, the Federal deficit projected in these recommendations is largely a result of unacceptably low levels of economic activity and high levels of unemployment. A weak economy shrinks Government revenues at the same time that it raises costs of unemployment compensation and other income support programs. Because large budget deficits result from a weak economy, steady economic growth must be maintained. Unacceptably large budget deficits can be eliminated only by a strong economy.
Some Members have observed that the deficit in fiscal year 1978 is larger than that in the revised fiscal 1977 budget and feel that this is inconsistent with progress toward a balanced budget. However, this conclusion is incorrect.
The increase in the year-to-year deficit, Mr. President, results from a last minute, and, in my judgment, inappropriate decision by the administration to restrict fiscal policy in fiscal year 1977, not from an increase in the deficit for fiscal year 1978. I regret the withdrawal of stimulus for fiscal year 1977, which makes stronger investment and economic growth in 1978 less likely. We should not, however, conclude that the fiscal policy for fiscal year 1978 is inappropriate simply because the administration has weakened fiscal policy for fiscal year 1977.
COORDINATION OF FISCAL AND MONETARY POLICIES
In the next 2 years, coordination of fiscal and monetary policies will become increasingly important. As the Congress maintains fiscal discipline and restrains fiscal policy, it will be necessary that monetary policy be expansionary enough to encourage the private investment required for increases in productivity and growth.
It must also be recognized that price increases may result from supply considerations such as the recent food price increases produced by the severe winter, and higher energy prices resulting from foreign and domestic policies. The last several years have taught us that fiscal and monetary measures alone cannot prevent these price increases even at unacceptably high levels of unemployment. The social costs of fighting unemployment with inflation, or inflation with unemployment, are simply too high.
Mr. President, we can reconcile this dilemma only through careful coordination of fiscal and monetary policies. However, in pursuing these policies, we must not mistake inflation caused by restricted supplies with that caused by excess demand.
Price increases caused by severe winters or by unavoidable increases in energy prices should not cause us to adopt restrictive fiscal and monetary policies.
REVENUES
The conference agreement provides for1978 revenues of $396.3 billion. This is $0.6 billion more than had been provided under the Senate resolution, but $1.8 billion less than the House figures of $398.1 billion.
The conference agreement assumes the tax reductions provided in the Tax Reduction and Simplification Act as recently agreed to by House and Senate conferees. The agreement also assumes a small $65 million allowance for miscellaneous tax and tariff legislation. The conferees also agreed to continue to treat the entire cost of the earned income credit as a reduction of revenue, but that the treatment of tax credits in excess of recipients' tax liabilities shall be considered de novo during the development of the second budget resolution later this year.
Let me now indicate the major provisions of the conference agreement in the functional categories of the budget.
NATIONAL DEFENSE
Mr. President, the conference agreement for the national defense function provides for budget authority of $118.5 billion and outlays of $111 billion. These proposed targets allow for very significant increases in defense funding over the ceilings established by Congress in the third concurrent resolution for fiscal 1977, an increase of $9.7 billion in budget authority and $12.1 billion in outlays.
The Senate conferees' major concern is that the United States maintain real growth in defense spending for the modernization of our forces and for the operational readiness of equipment. The proposed conference targets allow for a defense budget which can provide for substantial improvements in U.S. force capabilities as a means to counterbalance growing Soviet attempts to strengthen its defense forces.
The conference agreement for the national defense function was particularly difficult to attain because of the widely divergent views of the two bodies on what an adequate level of defense spending is in view of U.S. national security needs and the relationship of these needs to domestic requirements.
Mr. President, a very delicate balance exists here, and it must be maintained in setting our national priorities. The agreement, signed by all Senate conferees, accomplishes this aim. I commend the conferees on both sides of the aisle for their cooperation and support in achieving this decision.
The first concurrent resolution targets for national defense contained in this conference agreement are based on the following assumption. Reductions in manpower and its associated costs and in investment and readiness costs will not be used as the vehicle for accommodating the targets. Rather, it is assumed that significant financial adjustments can be made to the administration's request for the defense function in order to remain within these targets. These financial adjustments may include such items as a possible slowdown in projected foreign military sales, the utilization of prior year obligated funds to finance a portion of the fiscal year 1978 program, a lower inflation rate from that now assumed in the administration's budget, and a partial absorption of the October 1977 pay raise. It is anticipated that these types of adjustments may constitute a major portion of the actions necessary to meet the recommended defense targets.
INTERNATIONAL AFFAIRS
In the international affairs function, the House agreed to the Senate level of $9.3, billion in budget authority and $7.3 billion in outlays.
Although this proposed target is below the administration request, it would allow for substantial increases over the congressional budget for fiscal year 1977 and over current policy levels in the area of international affairs. During the course of the summer, there is room for Congress to work its will on programs for bilateral and multilateral development assistance, for initiatives in Africa, and for a balance-of-payments loan for Portugal.
Aware that the level assumed for activities of the Export-Import Bank has been reestimated downward by the Congressional Budget Office and the executive branch since Senate Concurrent Resolution 19 passed both Houses, the conferees felt, nonetheless, constrained by the limited range between the Senate and the House levels for this function. However, the Senate conferees were of the opinion that any downward reestimate for the Export-Import Bank should be reflected in the second budget resolution. Speaking for myself, I would discourage the Senate from enacting measures with costs in excess of the net figures of roughly $8.6 billion in budget authority and $7.2 billion in outlays which would be the levels for this function if the reestimates were fully taken into account.
HUMAN RESOURCES
In the human resources area, the conference agreement on the budget resolution makes room for additional Federal efforts in several high priority programs serving the Nation's human needs.
The resolution agreed to in conference maintains the Senate resolution's assumption of substantial funding increases for education programs; the veterans' medical care system and other veterans' benefits; cost-of-living increases for recipients of social security and other such payments; programs aimed at improving health care services, planning, and research; and social services grants.
Mr. President, the first budget resolution for 1978 will continue the strong congressional commitment to public service jobs for unemployed adults and strong initiatives to combat youth unemployment. The economic stimulus supplemental for 1977 will fund 725,000 CETA jobs by the end of fiscal 1978, to be targeted mainly on the long term unemployed and persons with low income. It will also fund a major expansion of youth jobs and training programs. The conference agreement anticipates the prompt implementation of these efforts. The conferees agreed to allow for a substantial forward funding of CETA jobs into fiscal 1979 — $3.8 billion in budget authority — to assure local prime sponsors that this sizable program will not encounter the funding irregularities that plagued it last year.
A major problem confronting all Americans the past several years has been the rapid inflation in health care costs. The conferees agreed with the Senate that Congress should take measures this year to bring these costs under control. Senate Concurrent Resolution 19 now assumes such an effort will yield outlay savings of $700 million for the medicare and medicaid programs.
The resolution sets an outlay figure for income security programs that is $300 million below the estimate for continuing current policy. This adjustment represents the net effect of possible administrative and legislative savings that have been proposed by the President or suggested by other committees and increases for new legislative initiatives.
PHYSICAL RESOURCES
In the area of natural resources, environment, and energy, the conferees agreed upon budget authority of $20.7 billion and outlays of $20.0 billion, increases in budget authority of $0.2 billion and outlays of $0.1 billion above the Senate-passed levels. The conference targets permit new and ongoing programs in water resources and environmental quality. The targets also would allow major increases over last year in energy research and regulation. However, the report does not assume specific increases in funding for the yet uncertain impact of the President's proposed national energy plan. Any changes needed to implement a new energy plan can be accommodated in the second budget resolution after Congress has had an opportunity to work its will on the President's proposal.
For agriculture the level of budget authority agreed upon — $2.2 billion — is the amount proposed by the Senate. With respect to outlays, the conference level — $4.35 billion — is sufficient to accommodate the latest USDA revised estimate for commodity price support programs. The Senate-passed level of $3.7 billion was based on an earlier CBO estimate and did not reflect a more up-to-date review of income support payments to farmers which are expected to be made under current law.
In the commerce and transportation function, the conferees agreed upon budget authority of $20.0 billion and outlays of $19.4 billion. These targets represent increases of $0.6 billion in budget authority and $0.3 billion in outlays above the Senate-passed figures, and were reluctantly agreed to by the Senate conferees to provide for a conference compromise satisfactory to the House. The new targets could accommodate increased appropriations for transportation, Small Business Administration, or other programs in the function. If such increases are not required, they could be reduced in setting the second budget resolution ceilings.
To fund programs for community and regional development, the conferees agreed upon budget authority of $8.2 billion and outlays of $10.8 billion, both $0.1 billion above the Senate-passed levels. The agreed upon targets thus can accommodate the Senate floor amendment of $0.5 billion in budget authority for community development block grants that many Senators persuasively advocated. The targets also permit some increases above current policy for Action, the Community Services Administration, and other urban and rural economic development programs.
In the remaining functions, the conference made, at most, relatively small adjustments to the Senate targets to achieve reasonable compromises between the marks of the two Houses.
ALLOCATIONS TO SENATE COMMITTEES UNDER SECTION 302 OF THE CONGRESSIONAL BUDGET ACT
Mr. President, section 302(a) of the Congressional Budget Act provides that the statement of managers accompanying the conference report on the first budget resolution shall include an allocation of the budget totals among the committees of the House and Senate. This is the so-called crosswalk provision.
The allocations to the Senate committees pursuant to section 302 (a) are contained in pages 12 and 13 of the joint statement of managers on Senate Concurrent Resolution 19.
The conference managers have provided separate allocation tables for the House and Senate to reflect the differing committee jurisdictions in each body and to allow for the differing approaches to certain legislation that each body may elect. I point out, however, that the allocations reflect a common agreement among the conferees regarding budget priorities that would affect the allocations. Thus, while the committee allocations are different for each body, they are based on the agreements reached in conference.
I should also point out, Mr. President, that the Senate allocation table is designed to comply with the requirements of the Budget Act as set forth in section 302(a). Thus, on the Senate side, we have provided only the total budget authority and outlays assigned to each committee and have not further subdivided these amounts by function. This is different from the House. In the next few days, the Senate Budget Committee will provide functional details and other relevant information to each Senate committee so that they can better understand our thinking with respect to the allocations. But since this information is not called for by the terms of section 302(a), we believe it is better to convey it separately from the conference report itself.
Let me now turn to the Senate committee allocations. The allocations to Senate committees under section 302 (a) are in two parts.
The first part deals with committee spending jurisdiction. In this part, the budget totals are allocated among committees on the basis of their jurisdiction over bills and resolutions that directly provide the budget authority contained in the first budget resolution. Generally, all budget authority provided through the appropriations process is allocated to the Appropriations Committees and all budget authority provided apart from the appropriations process is allocated to the appropriate authorizing committees. With certain modifications, outlays resulting from budget authority follow a similar pattern.
The second part deals with entitlement programs that require appropriations action. Amounts for these programs are allocated both to the appropriations Committee and to the relevant authorizing committees, although they are counted only once — in the Appropriations Committee spending jurisdiction total. Nevertheless, these amounts are an equally important part of the allocations to the authorizing committees.
Pursuant to section 302(b) of the Budget Act, each committee receiving an allocation under section 302(a) is to report to the Senate as soon as practicable after adoption of the budget resolution, and after consultation with the counterpart committee or committees of the House, how it would subdivide its allocation among its subcommittees — in the case of the Appropriations Committee — or among its subcommittees or programs — in the case of the authorizing committees. In the case of the authorizing committees, this report will be in two parts — one part dealing with programs over which they have spending jurisdiction and the other part dealing with entitlement programs under their jurisdiction which requires appropriations action.
Section 401(b) (2) of the Budget Act requires a reference to the Appropriations Committee in the case of any entitlement that is reported which authorizes new spending authority exceeding the allocation previously made under this crosswalk procedure. The Appropriations Committee must then report within 15 days. Appropriations may report the bill in question with an amendment which limits the total new spending authority provided under that entitlement.
Mr. President. these reports under section 302(b) of the congressional Budget Act will be used to assess the relationship between the budget resolution and individual spending bills that are considered by the Senate over the summer. While the Budget Act indicates that these reports should be made to the Senate "as soon as practicable" after the budget resolution is agreed to, I should like to stress the importance of receiving them at the earliest possible time. Until these reports are received, it will be difficult for the Senate to assess the relationship of individual legislation to the budget resolution totals. Once they are received, we shall have a basis for comparing individual bills against the targets each committee has set for itself. That is what the Budget Act intended and that should be our objective. We believe that this process will facilitate budget scorekeeping.
BUDGET PRIORITIES
Mr. President, I know that many members of the Senate will be less than fully satisfied with the results of the conference. With the overall spending limits set by requirements of fiscal responsibility, hard choices, compromises, and even disappointments, have been inevitable.
In weighing national priorities, we have had to give special consideration to the conflicting needs of national defense and our domestic social responsibilities. We have examined the claims of jobs programs, of energy demands, of environmental improvement, agricultural development, and of grants to State and local governments. We have looked at requirements in the areas of health, income security, and veterans.
Mr. President, there were needs in all of these areas which could not be met. There may be deserving programs in many areas which will not be funded. The results of the conference agreement will please no one completely. Yet the conference agreement is the result of an arduous, considered, and careful process of debate and compromise as provided by the budget process. I urge my colleagues, as they consider the conference substitute, to reflect upon the careful and delicate balance of priorities which it reflects. I remind them that the budget process is built upon the balancing of needs, upon flexibility and compromise. I urge them to support the conference agreement.
CONCLUSION
I urge my colleagues to support this conference report and to continue to work with the Budget Committee so we can continue to proceed in an orderly and responsible manner to live within the constraints of this resolution. In my view, this is the best prescription for strengthening the public's confidence in the ability of the Government to cope with and to resolve our financial problems.
I express my sincere appreciation to the ranking minority member (Mr. BELLMON), and to the other Senate conferees for their splendid efforts, cooperation, and loyal support in the conference and in bringing this report to the floor for consideration today. I express again my thanks to House Budget Committee Chairman GIAIMO and his conferees for their cooperation reaching this agreement.
Finally, I commend the staff of the Budget Committee for their superb and indefatigable performance over the months leading up to this report. We have come to expect such efforts from them but we are, nonetheless, deeply grateful.
Mr. President, in the course of the conference discussion, an issue emerged which is of concern to the distinguished chairman of the Senate Committee on Finance. That is the treatment of the earned income credit from the budgetary point of view. It is an issue on which House and Senate conferees have been in disagreement over all of this calendar year. It was decided to postpone final resolution of the issue until later in the year, in connection with the second concurrent budget resolution, thus maintaining the Senate position at this time.
For the purpose of enlightening Members of the Senate as to the nature of that issue, I ask unanimous consent to have printed at this point in the RECORD a letter addressed to the conferees by the distinguished chairman of the Committee on Finance (Mr. LONG) so other Members may have access to it.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
U. S. SENATE,
COMMITTEE ON FINANCE,
Washington, D.C.
May 12, 1977.
Hon. EDMUND S. MUSKIE
Chairman, Budget Committee,
U.S. Senate,
Washington, D.C.
DEAR Mr. CHAIRMAN: Up to the present, the Congress has treated refundable tax credits both legislatively and in the budget process as reductions in revenues. I understand that the House Budget Committee has undertaken to change this aspect of the budget process in a way which would treat the refundable portion of those credits as outlays. I am pleased to note that the Senate Budget Committee has upheld the traditional Congressional approach to this issue and I strongly urge the Senate conferees to maintain this position.
A change in the Congressional budget process to treat the refundable portion of tax credits as outlays rather than revenue reductions is unnecessary and undesirable for several reasons:
1. It makes the budget process less rather than more intelligible. Since the budget process deals with the total budget revenues and expenditures and the resultant deficit or surplus, there is no substantive difference in treating a refundable tax credit as an outlay or as a revenue reduction. However, since Congress has always legislatively dealt with such provisions as a part of revenue legislation. treating these credits as outlays would be inconsistent with those Congressional legislative procedures which the budget process is designed to support. In fact, such a change might obscure the total impact of a provision to the extent that part of its cost is accounted for as an outlay and part as a revenue reduction (the non-refundable part).
2. The change proposed by the House would have some significant procedural and administrative problems. For example, if an individual had a tax liability of $200 and an earned income credit of $300, two-thirds of his credit would be accounted for as a revenue reduction and one-third as an outlay.
3. Treating refundable tax credits as outlays rather than as revenue reductions represents a fundamental change in the Congressional budget process which could hamper the ability of Congress to deal with tax legislation. The use of refundable tax credits makes it possible in dealing with tax legislation to provide more relief to certain categories of low income individuals than would be possible if we were limited to only non-refundable credits. It is possible, however, that treating refundable credits as outlays rather than as revenues could effectively preclude their use in some circumstances. If a second budget resolution allowed for a tax reduction but contained no allowance for increased outlays, it would be out of order to consider a refundable tax credit even if the Congress should decide that some portion of the total tax cut ought to go to low-income workers who bear the heaviest weight of payroll and sales taxes though they have no income tax liability.
4. The change the House proposes could even interfere with the consideration of tax legislation not dealing with refundable credits directly. For example, an increase in the minimum standard deduction reduces the tax liability of many low income taxpayers. This automatically has the indirect effect of increasing the refundable portion of their earned income credit. In such circumstances if refundable credits were considered outlays, the Congress might find itself in the position of having to avoid any tax relief to low-income individuals in order not to run afoul of the budget process.
The success of the Congressional budget process enjoyed to date is due in no small part to the fact that it has been seen as a means of enabling Congress to more effectively deal with legislation within an overall budgetary framework and not as a means of placing procedural and technical roadblocks in the way of spending and revenue legislation. For the reasons outlined above, I think the change in accounting procedures proposed by the House Budget Committee for the refundable part of tax credits is a step in exactly the wrong direction. It may be a more pleasing methodology for some theoreticians. But it makes no improvement in the operations or intelligibility of the Congressional budget process, and it places an unnecessary procedural constraint on the flexibility of the Congress in considering revenue measures benefitting low-income persons.
I hope the conferees on the budget resolution will not adopt this far-reaching and undesirable change in the budget process.
With every good wish, I am
Sincerely,
RUSSELL LONG,
Chairman.
Mr. MUSKIE. I wish to pay special tribute to Mr. Sid Brown, senior counsel, whose enormous knowledge, indefatigable energy, and unflappable competence make our work possible. Special recognition should be paid to Karen Williams as well, our committee's new chief counsel, who, in a matter of a few short months, has mastered the budget process and whose extraordinary grace under pressure has already made her a full working partner on the committee staff. I also want to recognize the contribution of Van Ooms, who became the committee's chief economist early this year. He, too, has already demonstrated his great value to the committee and is esteemed for his balance, clarity, and eloquence by committee members on both sides of the. aisle.
I want to extend my thanks to each and every member of the Budget Committee staff, whose work includes not just the work on the budget and the committee's markup materials, but an analysis of every significant bill which passes through the Senate each session. Senator BELLMON and I spoke more than 60 times last year alone on major legislation. Not only did the staff help prepare those presentations, but they analyzed and prepared memoranda on hundreds of other bills as well. The Budget Committee staff is always in "adjournment rush" yet always does its job in an exemplary fashion.
Let me also pay tribute to the new staff director, John McEvoy, who succeeded to his task at a difficult time for the committee staff. Two of the five senior staff of the committee, our former staff director and our chief economist, both left the committee to accept cabinet level positions in the new administration earlier this year. But despite this 40 percent loss of senior staff, the committee has managed the markup, enactment, and conference of two complete budget resolutions in the past 90 days without missing a step.
Finally, I want to give special recognition to the spirit of cooperation and partnership which exists between the majority and minority staffs. That cooperation reflects the same bipartisan spirit which exists among the members of the committee and is facilitated by the open, cooperative, and constructive attitudes of Bob Boyd, minority staff director, and the very able staff he has assembled on the minority side. Bob's attitude, his energy, and his work have made it possible to disagree agreeably where that is necessary, but much more often to find areas of common concern where joint efforts can lead to economies, reforms, and improvements in the way our Government meets our people's needs.
This high competence, cooperation, and dedication on both sides of the Budget Committee staff are not only vital to the budget process. They are an example, I believe, to all committees.
Mr. President, in closing my remarks, again I express my deep appreciation to Senator BELLMON, the ranking Republican on the Senate Budget Committee and in conference. Without his assistance and that of his colleagues on the Republican side of the aisle, it would have been much, much more difficult, if not impossible, to resolve the major issues which arose in the conference. I am most grateful to them for their help and their understanding.
Mr. BELLMON. Mr. President, I thank our distinguished chairman for his overly kind comments. I express my personal appreciation to our distinguished chairman (Mr. MUSKIE) for the patience and sensitivity to everyone concerned that he demonstrated in getting out of a very dangerous dilemma during the conference with the House. He rendered a great service to the Senate, to Congress, and to the country by the firm, yet understanding, leadership he exhibited during this most difficult time in the history of the budget process.
Mr. President, perhaps more than in any previous budget conference report, the conferees from the Senate and House return to their respective Houses with a sense of pride and achievement. The budget process has been endangered in recent days and weeks. Yet, despite those dangers and despite sharply divided feelings about the appropriate level of defense spending, a conference agreement has been achieved. Moreover, the conference report was signed by all 10 Senate conferees — something that has not been achieved in other recent budget conferences, even when the controversies were significantly less sharply divided.
Further, it should be noted that for the first time the conference report was signed by two of the House Republican conferees. I believe this represents a major step in strengthening the budget process in the House. Republicans in both Houses must realize that the end product of the budget process in any one year will be shaped more to our liking if we are part of the process, working hard, function by function, to negotiate and choose among the priorities rather than merely taking the spectator role of voting no. Such a stance makes the minority ineffective and drives the entire budget process more in the direction of the big spenders. If fiscal conservatives always vote no, the only place votes needed to approve the resolution can be garnered is from those whose favorite programs have been treated generously.
Therefore, Mr. President, I believe that the Republicans made a significant step in the right direction when they participated more effectively and more positively in the budget process during our recent conference.
Thus, Mr. President, we have been through some rather difficult budget days, but here we are — back on the Senate floor with a conference agreement supported by conferees representing the full spectrum of views on the budget and its spending levels and its priorities.
History of past congressional budget efforts shows that in 1947 and again in the early 1950's, the process got off to a modestly successful start but in the second or third year, irreconcilable differences arose and the process failed. This time the process has not only survived but with our voting support today and with the support of the House next week, we can demonstrate that the process is even stronger for having been through these trials.
Now what is in this budget? We have revisions for fiscal year 1977 which represent reestimated spending levels and a withdrawal of the rebate program. The result is an $8.25 billion reduction in spending and a $17.15 billion reduction in the deficit — $69.75 billion reduced to $52.6 billion.
Mr. President, I believe those figures are significant enough to repeat them again. The result is an $8.25 billion reduction in spending and a $17.15 billion reduction in the deficit — $69.75 billion reduced to $52.6 billion.
For fiscal year 1978, we ended up with a budget which has less spending than the Carter budget — we have $460.95 billion in outlays versus the administration's April estimate of $462.6.
In other words, we are roughly $2 billion under the Carter budget. Moreover, our deficit figure looks different from the Carter level simply because of economic assumptions behind revenue levels. We take one assumption, Mr. Carter another, and that is what causes the different deficit figure. We believe the Carter level is too optimistic. The important point for my colleagues to remember is that, given equal economic assumptions, the Carter deficit is $1.65 billion higher than Congress budget, which this resolution anticipates. I trust that those who most loudly preach fiscal discipline will keep this fact in mind and express their support for this conference report by voting in the affirmative. It is hard to see how any fiscal conservative could vote otherwise.
Mr. President, I turn for a moment to the defense function in this conference report. Members are all aware of the difficulties this one area presented to the conferees. The House brought with it an unrealistically low defense target, but the polarized floor environment in the other Chamber made it more difficult than usual for the House conferees to compromise.
Parenthetically, let me say that it is never easy for the House to compromise.
Mr. President, I express my personal appreciation to our distinguished chairman, Senator MUSKIE for the patience and sensitivity to everyone's concerns that he demonstrated in extricating us from this dangerous dilemma. The continued success of the budget process owes much to his leadership.
I also thank Senators HOLLINGS, CHILES, DOMENICl, and McCLURE for their tenacious, persuasive efforts to keep the defense figures close to the more realistic Senate target. A measure of their success is the fact that while the conference recommendation for BA is $200 million below a halfway split, the more critical outlay target is $250 million over a 50-50 split.
Nevertheless, I recognize the target recommended by the conference is very tight. It will require a concerted effort by all concerned to stay within this target. I believe, however, that if the committees involved and the Senate as a whole makes a good faith effort to live within this target, it can be done.
Mr. President, a budget process is basically one of setting priorities. In the Defense function the top priorities are clearly weapons procurement, research and development, and combat manpower. Hence, it follows that we should not make cuts in these areas in order to stay within the target recommended by the conference. I believe some savings probably can be achieved in lower priority areas and in the types of financial adjustments mentioned in the report language. I pledge to do my part in this difficult undertaking of staying within the target without cutting Defense muscle.
Mr. President, I would take this opportunity to provide some additional insights into economic policy for 1977 and 1978. I spoke more extensively on this vitally important matter when the Senate approved the first concurrent resolution last week. Mr. President, as I said earlier, the conference agreement removes room for further tax reduction initiatives from the fiscal year 1977 third concurrent resolution. Along with outlay reductions due to the shortfall in Federal spending, the budget deficit in this resolution is amended and reduced by some $17 billion.
At the same time, Mr. President, in raising the revenue floor due to removal of the rebate, it was assumed that there was no accompanying reduction in revenue projections to reflect somewhat slower economic performance. The economic data assumptions for 1978 are also unchanged from our earlier version of this resolution; the level of the economy in 1978 depends largely on how much progress the economy makes toward recovery in 1977.
Mr. President, essentially $17 billion of deficit and fiscal stimulus has been removed from 1977, and yet the economy is estimated to perform just as well as before.
I am not fully persuaded that these economic assumptions are correct, and I will comment more on this in a moment. I suggest that this remarkable adjustment in policies and expectations reflects two things: First, the great strength and potential of the private sector of our economy, and, second, a more modest assessment of the impact and importance of fiscal stimulus. More specifically, Government spending and the tax rebate apparently would not be so effective and were not so vital after all. Zealous supporters of fiscal stimulus to solve all the ills of our economy may wish to take note.
As I have stated before, I believe a tax rebate approach was the least appropriate way to boost the economy under current conditions and forecasts. But even this inefficient stimulus would have had a substantial impact according to the Congressional Budget Office. Again, according to CBO — and my staff concurs — the economic data for the first quarter was anticipated and does not warrant a stronger economic forecast at this time; it does not support an unchanged forecast in the absence of the rebate.
Mr. President, in spite of this wave of optimism, I would note that the economic assumptions and the associated revenue projections of this budget resolution are still more moderate than those of the administration. I sincerely hope that the administration's expectations are realized, but we believe it is more prudent to base our economic policies and budgetary plans on projections that appear more realistic.
Mr. President, my Republican colleagues and I continue to believe that an additional moderate reduction in tax rates would greatly improve the prospects for sustaining a strong economic recovery through the later part of 1977 and 1978. By offsetting the unlegislated automatic increase in taxes resulting from inflation, a further tax reduction would help sustain the strong trends in consumer spending and elicit the surge of business investment so badly needed to expand our productive capacity for future years. Such an expansion will reduce future inflationary pressures.
I will observe the next few months with great anticipation. If the economic data is not as favorable as the news as of 2 weeks ago, will the administration or congressional advocates ask for more fiscal stimulus in the second concurrent resolution? Most recently, reported retail sales f or April actually declined very slightly from March; initial unemployment insurance claims in the first week of May showed an increasing trend. I question if a few more of these reports and then will we be asked to accommodate some new quick stimulus plan in our next budget resolution? Mr. President, I sincerely hope not. I hope the economic data continues strong. But, if we do return later this summer with an apparent need for action to strengthen the economy in fiscal year 1978, I trust my colleagues on both sides of the aisle will recall the analysis and policy proposals of my Republican colleagues. I hope we look to the revenue side of the budget for fiscal stimulus and reconsider a permanent tax rate reduction.
Mr. President, I strongly urge my colleagues — especially those on the Republican side of the aisle here on the floor today — to support this budget. It is one that has been constructed under fire and I believe deserves the wide support of the full Senate. It will prove critically important in the months ahead as we review the authorizing and appropriating bills from the other committees. As much as at any previous time, the budget process will derive its strength from Senatorial support. I sincerely hope that support is again reflected in a strong vote of approval today.
Mr. President, again, I congratulate and thank our chairman for his very skillful leadership of the budget process and, particularly, for the very fair treatment he has accorded all Members of the Senate. I feel that the result we have before us today is largely due to his diplomatic, yet, at the same time, strong and firm leadership.
Mr. President, I ask unanimous consent that Gary Dickinson of Senator DOLE's staff be permitted access to the floor during consideration of the budget conference report.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, if the Senator will yield, I wish to comment on some of the Senator's last remarks or the state of the economy. It is interesting to note the differences between the Carter administration budget and the budget we are about to approve with respect to revenues, outlays, and deficit for 1978. I ask unanimous consent that a table showing this be printed in the RECORD.
There being no objection, the table was ordered to be printed in the RECORD as fellows:
[Table omitted]
Mr. MUSKIE. This demonstrates, as the Senator has already said, that our outlay figure is below that of the administration. The administration revenue figure is higher in large part because of its more optimistic — perhaps overly optimistic — view of the performance of the economy.
Now, if our revenue estimates were the same as those of the Carter administration, our deficit would be $57.2 billion, as compared to the Carter April deficit of $57.9 billion. So if we were attempting to indulge in that optimism, which, in our judgment, is not justified, we could show a smaller deficit than the administration shows. I think it is important to indicate that in the record.
Mr. BELLMON. Mr. President, I join our chairman in sharing the sense of importance he has expressed. I feel the budget process owes a part of its success to the fact that we tried to be responsible and did not indulge in some of the optimistic estimates that could make our deficit figures look a lot better. But, I think, in the long run Members of Congress will come to appreciate the fact that we are not trying to play games but that we are here trying to tell it like it is, and I think the budget reflects this attitude.
Mr. MUSKIE. I say to the Senator that we are not being different just for the sake of being different. I told the President a week or two ago that what he has to understand about this budget process is that unless it is an independent process, an opportunity for Congress to exercise its independent judgment on these matters, it will not survive, it will not succeed; and when we have our differences, so long as each one believes his own position is the right one, then the process is working.
Mr. STENNIS. Mr. President, will the Senator yield to me?
Mr. MUSKIE. I yield.
The PRESIDING OFFICER. The Senator from Mississippi.
Mr. STENNIS. Mr. President, I wish to commend as well as thank the entire membership of our Budget Committee for a very signal service they are rendering and for their leadership in this matter, which comes, of course, partly from the Senator from Maine and the Senator from Oklahoma, but all have contributed.
The Senator has been generous with something he said with reference to the fact that he and I had a conference. I do not deserve any credit at all. He called me and we merely conferred over these figures. I had been preparing for debate on the military authorization bill which, I hope, will come up Monday, and I had all of these things on my mind, anyway. I merely tried to reflect these figures as they relate to our bill.
Mr. President, may I mention another matter. I want to highly commend members of the minority for supporting the congressional budget concept, for carrying on their part of their obligation and duty, and for their support. Certainly no political party can solve these budget problems absolutely. It is beyond comprehension to think that they could. It just takes a lot of hard work.
I again say I thank the Senator because of the work he has done, and it will be appreciated more and more in the years to come.
Mr. MUSKIE. I thank the Senator. The kind of consultation we were able to have in this connection is a good precedent if we are to make this budget process work, because, as I said to the Senator privately, unless every Senator takes it upon himself to help make it work, it will not work. ED MUSKIE cannot do it alone, HENRY BELLMON cannot do it alone, and JOHN STENNIS cannot do it alone. Working together, we can do it, and I repeat my gratitude to the Senator for his help.
I am happy to yield to the Senator from Idaho. I wish to express my personal appreciation to the Senator from Idaho for the assistance he has given in the committee and in the conference. He contributes to an intelligent, constructive dialog. He has a philosophy different from mine, but we found it possible, I think, to discuss matters in a way that have been resolved in the public interest, and I am most appreciative.
Mr. McCLURE. Mr. President, I thank the Senator from Maine for those kind words as well as yielding at this time.
I want to underscore what the Senator just said in regard to the distinguished Senator from Mississippi, the chairman of the Armed Services Committee, who, in spite of his modesty, I think, made a very great contribution to the deliberations that made it possible for us to come to agreement in the conference.
Mr. President, this is the sixth budget resolution in which I have been involved and which the Budget Committee has reported for approval of the full Senate. Over these 3 years, we have diligently reported and have become accustomed to working with budget authority and outlay figures for all 17 functional categories and the budget aggregates. These concepts have been complex for us all and it is only now that we are beginning to understand that it is budget authority which we must scrutinize fully to exert any influence over future year spending. Yet, there are a myriad of further complexities, two of which I wish to describe to you now, Mr. President.
First, the resolution calls for a level of public debt no greater than $701.3 billion in fiscal year 1977 and $784.9 billion in fiscal year 1978. The amount is staggering equal to one-third of our Nation's GNP. But note further that the public debt jumps $83.8 billion from fiscal year 1977 to fiscal year 1978, or $18.95 billion more than the amount of the deficit. This massive increase in the national debt is more than 18 percent of the total budgeted outlays. About two-thirds of this increase is caused by the borrowing activities of so-called off-budget agencies. Nevertheless, these agencies exert their influence in credit markets in a degree every bit as great as borrowing to cover our reported deficit. It is unwise to believe that only numbers reported in our functional targets pose a threat to fiscal soundness and integrity.
Second, Mr. President, if we were to look at the total financial obligations during fiscal year 1978 of even our "on-budget" agencies and compare those obligations with the numbers we report as "budget authority," we would find a staggering difference. This is because many agencies are able to utilize budget authority granted in previous years, offset loan repayments and asset sales against their reported obligations, and often sell securities or paper of their own to reduce reported budget authority.
For example, in function 050 — national defense — obligations are $40 billion more than new budget authority requested. In function 300, natural resources, environment, and energy, obligations are about $3.2 billion greater than new budget authority — $7.1 more for function 350, agriculture; $12.6 billion for function 400, commerce and transportation; $3.1 billion for function 500, education, training, employment, and social services; $7.0 billion for function 600, income security; and $4.9 billion for function 850, revenue sharing and general purpose fiscal assistance.
Even though these numbers do not add to our national debt — they reflect revenues from other sources — they must be considered when discussing the size and scope of the Federal bureaucracy. These functions in recent years have grown enormously and one should not think the budget we present today, or any other single measure of spending, fully reflects the size and scope of government. It requires several perspectives to gain the necessary insight.
Mr. President, the technical complexities of this budget are as great as its political complexities. I raise these two issues so that we might all better focus on what we are voting on today and better understand what we are not voting on today.
Mr. President, I shall join with my colleagues on the Budget Committee in voting for this conference report not because I approve of all the figures that are in it, but because I recognize the very great difficulty that confronted the chairman of this committee and the other members of the committee in the conference in trying to arrive at an agreement with the other body, and I think the agreement that we came out with was the best possible product of that conference process.
So I support the process, and I wish it to work. I commend both the Senator from Maine, the chairman of the committee, and the Senator from Oklahoma (Mr. BELLMON) , the ranking minority member for the immense amount of work that they did on this. I am certain that they both share with me the commendations to the staff for the tremendous technical assistance that went to each of us not only in the budget markup in the initial stages but also in the conference.
Mr. President, I thank the Senator for yielding me this time.
Mr. HEINZ addressed the Chair.
Mr. MUSKIE. How much time does the Senator wish?
Mr. HEINZ. Mr. President, will the Senator yield me 10 minutes?
Mr. MUSKIE. I think we have 10 minutes remaining, and I yield 10 minutes.
I am glad to yield with an expression of appreciation to my good friend from Pennsylvania. This is his first year on the Budget Committee. He has attended faithfully and contributed effectively and intelligently to the dialog of the committee and has not been reluctant to give us support when the crucial votes come. I am most appreciative to him and delighted to yield to him at this point.
Mr. HEINZ. Mr. President, I would be happy to yield more of my time to the distinguished chairman of the committee if he wishes to continue in that vein for a while.
The PRESIDING OFFICER. The Senator has 10 minutes.
Mr. HEINZ. Mr. President, first of all, I thank the distinguished Senator from Maine, the chairman of the committee, for the absolutely outstanding work and leadership he has provided to the Budget Committee. I cannot be more sincere when I say that without his perseverance, fairness, commitment to hanging tough when called for, and willingness to compromise as need be, we might well have lost the budget process this year.
Had we done so, we would have lost, I think, a very valuable tool in trying to bring under control the various vagaries, wastefulness, and incompatibilities of the Federal budget.
Mr. MUSKIE. Mr. President, will the Senator yield briefly?
Mr. HEINZ. I am happy to yield.
Mr. MUSKIE. Mr. President, I ask unanimous consent that it be in order to ask for the yeas and nays on the second vote.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. I 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. ROBERT C. BYRD. Mr. President, I ask unanimous consent that the vote occur at 12:30 p.m. today.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HEINZ. Mr. President, I also particularly commend the Senator from Oklahoma, my good friend and colleague, HENRY BELLMON, for the role he has played, which has been one of great responsibility, sticking up, time and again, for positions that might not always be
conventionally popular. In my view, however, they have clearly been based not only on conviction but also on considerable depth of insight into what is good and right for the United States of America.
In my comments, Mr. President, I shall try to be as brief as possible. To begin with, there is one specific piece of legislative history I wish to reinforce with respect to a relatively modest function, function 150, because as a summer of spending goes by there may well be a tendency to forget it. Since our original markup of the First Concurrent Resolution, CBO has informed us that the level of Export-Import Bank activity will be about $700 million less than we expected in budget authority, and about $100 million less in outlays. Ideally, the conference should have been able to lower our figures automatically by this amount, but unfortunately we felt boxed in by the small range between the figures the House and Senate figures. The upshot is that the Senate's original figures of $9.3 billion in budget authority and $7.3 billion in outlays, though they remain on the record, are outdated. Our working assumption, though, should now be that the figures, respectively, are $8.6 billion and $7.2 billion. The matter can be formally corrected when we come to the Second Concurrent Resolution, and we might as well wait since some more reestimating is bound to occur. But in the meantime, not to heed the informal new figures will open the door to excessive spending, which the Budget Committee tried to rule out in its assumptions at the time the Senate bill was passed. For example, contrary to the House, it was assumed that, in addition to other reductions in the Carter request, $300 million in budget authority would be cut from foreign economic and financial assistance, and $200 million in outlays. In the April deliberations of the committee, we were quite determined that no category of spending be exempted from belt tightening. It would be inexcusable if our painstaking decision were now undermined on technical grounds.
As for the defense function, 050. I think it is clear from the consensus that finally emerged in conference, considering the wide political spectrum represented, that reductions from the Senate figures do not in the least endanger our national security or defense posture. All bureaucracies have fat, even the Pentagon. Yet it is in defense above all that we should have efficiency. Rather than cut into any muscle, we simply made some commonsense financial adjustments, as the language of our report makes clear. In the critical investment accounts of procurement and research and development, we have assumed a real growth of at least 8 percent. This insures a defense second to none. It is my hope that in the future we will delve more into prospective manpower efficiencies and savings since — contrary to the popular impression that defense money mainly goes for hard stuff like tanks and bullets — manpower costs represent, in fact, 55 percent of the Pentagon's budget. Furthermore, it is encouraging that for fiscal year 1979,agencies will be justifying their budget requests along mission lines. This should make for a leaner military. Rather than voting willy-nilly for all the latest gadgets, because another superpower on the block has them, the Pentagon will have a burden of proof to show that they fit into a logical, cost-effective framework. If the Pentagon can show this on a particular weapons system or whatever, I will be its biggest booster. Since the Budget Committee has the assignment to bring down the deficit, it simply must enforce the distinction between things that are essentials and things that are luxuries.
It is gratifying that we were able to cut the Ford-Carter defense budget of some $123.4 billion down to $118.5 in budget authority without sacrificing the muscle. That $5 billion cut from those budget levels, I think, makes a great deal of sense, and that is why I am supporting the 050 function as well as the resolution.
Now, if I may address myself to a larger issue, one that always comes up at budget time; namely, the balance between military spending and social spending. I sometimes get a little concerned, Mr. President, at the way we talk about that. There are some who suggest that in order to raise one we have to lower the other, and vice versa. I do not think that is necessarily so.
I think our job, particularly those of us who are conferees of the Budget Committee, is to judge each and every function on its own merits. I think that is what we have done. It has resulted, compared to the original Senate position, in a modest and, I think, fiscally correct reduction in budget authority for the military and an increase in budget authority for socially oriented expenditures. No one is going to tell me that, by talking like this, I support anything less that whatever is necessary to defend this country and its Constitution from all enemies, foreign and domestic. I took this oath solemnly on coming to Congress. My concern is, however; that our real security is much more than a matter of raw military might. It is as much a matter of the economic and moral strength we project to the world, and the health and happiness of our people. That is why I supported the Senate Budget Committee in taking new initiatives for medical care for veterans, education for the handicapped and disadvantaged, grants to State and local governments who are suffering still from the recession, and energy research and conservation. That is also why I supported Senator PROXMIRE's floor amendments for increased funding in housing and community development.
I do not support such spending blindly: We have a whopping big deficit, and no one should paper over that fact. It gives one second and third and fourth thoughts about voting for this budget resolution. But we do not make deficits just for fun. If it were easy to eliminate them, we would do it pronto. The Budget Committee has done its darndest to get a grip on them, but the practical difficulties must be understood. Almost one-half of the budget is in the form of congressionally mandated entitlements, such as those for social security. Add to that the legal obligations and contracts the Government has incurred, and over three-fourths of the Federal budget is regarded as "relatively uncontrollable." As if that were not enough, inflation this year has slapped on a $25 billion surcharge. I do not think Congress is willing to rescind cost-of-living increases for pensions, social security retirement or, for that matter, the Department of Defense. In addition, Congress has made decisions in previous years, especially in the defense area, for real growth in budget authority, and these are only now spending out. Finally, the recession has severely aggravated the deficit. Unemployment means the loss of tax revenue and a slowdown in the normal overall expansion of the economy. The estimate commonly cited is that for each percentage point reduction in the unemployment rate, $45 billion GNP is generated, and in turn $14 billion in additional tax revenues. Unemployment also means more unemployment compensation — which is projected to be $13 billion this year — the need for more CETA jobs, and an untold number of other ramifications.
The PRESIDING OFFICER. The Senator's 10 minutes have expired.
Mr. HEINZ. Mr. President, will the Senator yield 1 more minute.
Mr. MUSKIE. Yes.
Mr. HEINZ. I appreciate that.
I do think that we are all committed to bringing those deficits into line, and as long as the Budget Committee has this kind of commitment, both on the part of the House and on the part of the Senate, and particularly the kind of leadership evidenced by the Senator from Maine and the Senator from Oklahoma, I think we will be able to meet our responsibilities to the American people.
INTEREST ON METRO BONDS FOR FISCAL YEAR 1978
Mr. MATHIAS. I wish to compliment the chairman of the Budget Committee and support the committee's recommendation that will insure the Washington, D.C., subway construction remains on schedule.
As a member of the Appropriations Committee, I interpret the Budget Committee proposal as providing sufficient flexibility for the Appropriations Committee to make a direct appropriation for the 30 percent Federal share of the interest charges on Metro construction bonds rather than relying on interstate transfer funds.
Metro construction bonds are 100 percent federally guaranteed and therefore the Federal Government is obligated by the Metro Bonds Guarantee Act to support the interest on these bonds. The local jurisdictions in the Washington metropolitan. area have agreed to provide a 20 percent share of that interest cost in keeping with the national policy on mass transit funds which uses an 80/20 cost-sharing formula.
I think that at this point direct appropriations are the best way to handle the debt service problem of the Washington Metro. I hope that in the near future we will be able to work out a long term solution to this debt servicing problem.
Mr. DOLE. Mr. President, the Senator from Kansas rises to comment on the revised first concurrent resolution.
As a member of the Senate Budget Committee, the Senator from Kansas has participated in the 4-month process which preceded the reporting out of this resolution. As a member of the Budget Committee, I am also aware of the amount of effort the process requires. I would first like to thank Senator MUSKIE, and the ranking minority member, Senator BELLMON, for their strong leadership during this process in committee, and during the Senate-House conference on this resolution.
Mr. President, the Senator from Kansas voted to report the first concurrent resolution out of the Budget Committee. At that time, even though there were some functions about which I had reservations, on the whole, it seemed to me that we had done an effective job of establishing priorities and maintaining some discipline over the budget process.
On May 4, amendments were added to this resolution, which in total added an additional $7.2 billion to budget authority, and $400 million to outlays, raising the expected deficit in 1978 and committing us to even higher nondiscretionary spending levels in future years. While the Senator from Kansas supported an amendment for a small increase in BA for veterans — $0.5 billion — I could not support the aggregate BA figure after the additional $6.7 billion was added by other amendments.
The budget resolution which we are considering today, however, is superior in two particular areas.
NEED FOR PRICE SUPPORT RECOGNIZED
First, in Agriculture, the conferees have recognized that outlays for fiscal year 1978 will have to increase to reflect farm commodity price support expenses. The most recent OMB estimates indicate that market prices will be low this 1977 planting season, particularly impacting wheat and feed grains, assuming good weather this summer.
The budget now reflects these most recent estimates for price support, which I firmly believe it should. It will be reassuring to the Nation's farmers that we have not overlooked their needs. However, market prices for commodities such as wheat and feed grains are extremely variable, and may need adjustment again for the second concurrent resolution. As the distinguished chairman, Senator MUSKIE, pointed out in a letter to the chairman of the Agriculture Committee, the amount of outlays for commodities support could vary by as much as $2 billion during the year.
REDUCED BUDGET AUTHORITY, LOWER SPENDING
The second area in which this budget resolution shows improvement, Mr. President, is the $1.15 billion reduction in budget authority which is reflected in this resolution. I do not believe we can continue to obligate future budgets with nondiscretionary expenses if we ever expect to achieve a balanced budget; $1.15 billion of reduction does very little to counter the $7.2 billion in budget authority which was added to the Senate resolution by amendment on May 4, but it is certainly a step in the right direction.
I am also encouraged that the level of outlays in this resolution is still lower — by $1,65 billion, $460.95 for the Senate Budget Committee versus $462.6 for Carter — than the Carter administration budget proposal in their April estimate. As Senator BELLMON stated earlier, given equal economic assumptions, it means that this budget represents a lower deficit — by $1.65 billion — than the Carter budget proposal in April.
STRONG NATIONAL DEFENSE
Mr. President, I also want to comment on the reduction in the national defense function which is represented here. One area where I believe the budget should reflect real growth is in national defense. As passed by the Senate last week, budget authority and outlay figures were both higher than current policy. Because of the difficulties encountered by the House Budget Committee in getting approval for their budget proposal, the House budget was unrealistically low in both budget authority and outlays, posing a serious threat to conference agreement in this area. The resulting agreement was slightly lower than current policy in budget authority, but above current policy in outlays. Recognizing the difficulty of their task, I can agree with the earlier remarks of the distinguished ranking minority member. Focusing on the higher priority items, and assuming the financial adjustments described in the conference report to stay within the targets for this function, would seem appropriate. This compromise allows for reductions in budget authority and outlays in this function without significantly detracting from continued growth in national defense.
Mr. President, in this, the third year of the new budget process, it is important to recognize that two of the purposes of this process were "to assure effective congressional control over the budgetary process," and "to provide for the congressional determination each year of the appropriate level of Federal revenues and expenditures." This year, the process of controlling the budget seemed extremely difficult, and agreeing on the appropriate level of expenditures seemed to be more an acceptance of spending levels requested by our committees and the administration than an establishment of appropriate levels of revenues. I do not want the Senate to lose sight of the purpose of this process, it is my hope that we can retain a degree of fiscal responsibility throughout our consideration of this resolution and through the rest of this legislative session.
Mr. President, with these reservations, I voice my support for this resolution.
Mr. CHILES. Mr. President, the Senate is now considering the first concurrent restitution on the budget for 1978. This is the third year in which we have brought such a resolution, and a good time to assess the new congressional budget process.
We have shown the public that Congress can set itself firm limits on spending and stick within them. I think this is one reason that public opinion polls are showing an increase in confidence about Federal economic policy.
We have also shown that Congress can move quickly to respond to changing conditions and either modify economic policy or shift spending priorities to meet new challenges.
Perhaps the most important part of the process is that we have brought to the public an open debate on spending priorities. We have brought forth a summary of all current and proposed spending at one point in time. The Senate has shown that it can debate those priorities, amend the resolution after debate, and still produce a workable total.
We have also learned a lot from 3 years of the budget process. We have found that we need a longer time perspective, since many programs start small then grow later. We need as much emphasis on budget authority, which controls future year spending, as on current year outlays which are largely beyond control.
This conference resolution represents many difficult choices and compromises within the Senate and between the Senate and the Home. I have reservations about some of the individual targets and about the size of the overall spending totals. But I will support the resolution, because without it spending would probably be $10 or $15 billion higher. Without the resolution, we would not know what our priorities were until we got to the end of the year, looked back on what we had done, and added up the totals.
Mr. President, that would totally eliminate any public input into spending priorities. Each bill would be considered in isolation and at no point would it have to compete with other possible ways to use the same amount of money.
Overall, I think this resolution represents a well balanced set of expenditures, providing top priorities for new expenditures in defense, education, energy, job creation, and child health. The resolution will allow full cost-of-living increases for all Federal retirement programs — veterans, social security, military, and civil service retirees. At the same time, the total deficit is restrained so that it will not worsen the problem of inflation that inflicts a cost on all of us.
The target for defense spending was the major area of controversy in the conference. Over the last 2 years the Congress has committed ourselves to a real increase in the level of defense spending, particularly in weapons systems and maintenance of our capacity for ready response to emergency situations. I have strongly supported this renewed commitment to defense, while working on several committees to see that expenditures are made more efficient.
The Senate conferees argued to reduce the defense total adopted by the Senate only on the stipulation that the reduction be achieved from financial adjustments and savings from efficiency, rather than cuts in the real program growth provided in the President's budget. If these savings and adjustments do not work out, the totals may have to be modified.
The budget resolution assumes major program increases in many areas of the budget. I hope that in all areas Congress will carefully examine existing programs and possible tradeoffs before it undertakes increased expenditures. I think we have to recognize that there are limits to both financial and human resources. Each new program means shifting the attention of both the public and the Government away from ongoing activities. I hope that we can recognize these tradeoffs as we proceed through the authorizing and appropriating process. In many cases we may be able to come in below target and reduce the size of the deficit.
The American public expects us to show this kind of restraint and begin moving toward a balanced budget and stable economic policy. I am hopeful that with continued support for the congressional budget process we will be able to help restore the confidence of the American people that Government is acting reasonably and rationally.
Mr. THURMOND. Mr. President, on this vote, I am voting in the negative. While the conference substitute reduces the fiscal year 1977 budget by $17.15 billion, there still remains a $52.6 billion deficit. I cannot, in good conscience, sanction such a deficit.
Until the Congress accepts the basic law of economics as to the evils of deficit financing, we will not see significant long range improvements in our economy.
Mr. HATCH. Mr. President, once again the Congress has passed up the opportunity to do something positive for the millions of productive people who provide the economic power of this Nation. Once again we have given precedent to building our spending constituencies. Once again we have made it clear that the people who work and produce exist, in our eyes, only to fund our spending programs. Once again the vested interests, the recipients of handouts, have triumphed over the working American. Once again the Congress chose to spend at the expense of the economic health of the Nation.
Five times this year the Congress has voted down permanent reductions in the personal income tax rates. Each time those of us who pushed for a tax reduction were told that there was no room in the budget. There was not any room in the budget for the spending programs either. But that did not keep us from spending. Any time that there is no room in the budget for spending, we find room in the deficit. This time there is a $60 billion deficit to accommodate the spending programs that could not find room in the budget.
This Congress has never explained why there can be spending programs, but not tax cuts, when there is no room in the budget. However, this Congress has made it clear that it prefers spending money to cutting taxes.
I do not share this preference, and neither do the American people.
Mr. WALLOP. Mr. President, I want to take this opportunity to commend the members of the Senate Budget Committee for their diligent efforts in establishing budget targets for fiscal year 1978. The formation of this committee and its substantive contributions have done much to make the Senate, the Congress, and the American public aware of aggregate spending levels. After the passage of the Budget Act in 1974, Congress for the first time had an advance handle on aggregate spending levels. Before this act, Congress would spend some here, and some there, and pass a tax bill to raise some money, but there was no advance indication of where all that spending would lead us. Deficits depended on how much Congress spent, and Congress spent without any consideration of the deficits. The Budget Act appears to have changed much of that process, adding order and control where there was none before.
But while I can commend the process, I do not approve of the result. Senate Concurrent Resolution 19 sets the revenue levels at $396.3 billion for fiscal year 1978 and spending levels at $460.95 billion with an estimated deficit at $64.65 billion. Mr. President, that is too much. The public debt is pushing $800 billion, and with gigantic yearly deficits we will slide over the $800 billion mark all too soon. Although the Budget Act gives us the opportunity to incorporate some fiscal discipline into our lives, we have yet to maximize the potential of that process. Fiscal discipline means spending restraint, and a deficit of $65 billion is not spending restraint.
For this reason, I will not support the conference report on Senate Concurrent Resolution 19, the budget resolution. I look forward to the day when the process as well as the result merit commendation.
Mr. MUSKIE. Mr. President, to eliminate the technical question, at this time I move that the conference report be agreed to.
The PRESIDING OFFICER (Mr. ZORINSKY). The question is on agreeing to the conference report.
The conference report was agreed to.
Mr. MUSKIE. Mr. President, at this time I yield 5 minutes to my good friend the Senator from New Mexico, an invaluable member of the Budget Committee from its inception.
The PRESIDING OFFICER. Does the Senator from Maine wish to make his motion at this time?
Mr. MUSKIE. Mr. President, I move that the Senate recede from its disagreement to the House amendment to Senate Concurrent Resolution 19 and concur therein with an amendment which is at the desk.
The amendment is as follows:
That the Congress hereby determines and declares, pursuant to section 301(a) of the Congressional Budget Act of 1974, that for the fiscal year beginning on October 1, 1977
(1) the recommended level of Federal revenues is $396,300,000,000, and the amount by which the aggregate level of Federal revenues should be decreased is $17,600,000,000.
(2) the appropriate level of total new budget authority is $503,450,000,000;
(3) the appropriate level of total budget outlays is $460,950,000,000;
(4) the amount of the deficit in the budget which is appropriate in the light of economic conditions and all other relevant factors is $64,650,000,000; and
(5) the appropriate level of the public debt is $784,900,000,000, and the amount by which
the statutory limit on such debt should accordingly be increased is $83,800,000,000.
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, 1977, 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, $118,500,000,000:
(B) Outlays, $111,000,000,000.
(2) International Affairs (150) :
(A) New budget authority, $9,300,000,000;
(B) Outlays, $7,300,000,000.
(3) General Science, Space, and Technology (250) :
(A) New budget authority, $4,900,000,000;
(B) Outlays, $4,700,000,000.
(4) Natural Resources, Environment, and Energy (300) :
(A) New budget authority, $20,700,000,000;
(B) Outlays, $20,000,000,000.
(5) Agriculture (350) :
(A) New budget authority, $2,200,000,000;
(B) Outlays, $4,350,000,000.
(6) Commerce and Transportation (400) :
(A) New budget authority, $20,000,000,000;
(B) Outlays, $19,400,000,000.
(7) Community and Regional Development (450):
(A) New budget authority, $8,200,000,000;
(B) Outlays, $10,800,000,000.
(8) Education, Training, Employment, and Social Services (500):
(A) New budget authority, $26,800,000,000;
(B) Outlays, $27,200,000,000.
(9) Health (550):
(A) New budget authority, $47,900,000,000;
(B) Outlays, $44,300,000,000.
(10) Income Security (600) :
(A) New budget authority, $179,900,000,000;
(B) Outlays, $148,700,000,000.
(11) Veterans Benefits and Services (700):
(A) New budget authority, $20250,000,000;
(B) Outlays, $20,200,000,000.
(12) Law Enforcement and Justice (750):
(A) New budget authority, $3,700,000,000
(B) Outlays, $3,850,000,000.
(13) General Government (800) :
(A) New budget authority, $3,800,000,000;
(B) Outlays, $3,850,000,000.
(14) Revenue Sharing and General Purpose Fiscal Assistance (850) :
(A) New budget authority, $9,800,000,000;
(B) Outlays, $9,700.000,000
(15) Interest (900),:
(A) New budget authority, $48,000,000,000.
(B) Outlays, $43;000,000,000.
(16) Allowances:
(A) New Budget authority, $800,000,000;
(B) Outlays, $900,000,000.
(17) Undistributed Offsetting Receipts (950):
(A) New budget authority,416,300,000,000;
(B) Outlays,—$16.300,000,000.
Sec. 3. In the Third Budget Resolution for fiscal year 1977, the Congress provided for revenue and spending proposals designed to stimulate the Nation's economy in order to reduce unemployment. These proposals, together with recent indications of more vigorous economic growth in the private sector, provide evidence that the Nation's economy may be returned to the levels needed to provide jobs to millions of our unemployed.
The Congress recognizes, however, that unusual uncertainties surround the current economic outlook for 1977 and 1978 — primarily, the economic impact of the stimulus proposals and the likelihood of continued economic growth in the private sector — and that additional time and information are needed to make final determinations with respects to fiscal policy for fiscal year 1978; and declares that, if economic recovery does not proceed satisfactorily during the months immediately following adoption of the First Budget Resolution for Fiscal Year 1978, it will be necessary to provide additional stimulus to the economy in appropriate amounts to be determined in the Second Budget Resolution for Fiscal Year 1978. On the other hand, if the recovery continues to show signs of long term renewed growth, it may be desirable to reduce some of the economic stimulus provided for fiscal year 1978 in order to make more rapid progress toward a balanced budget.
Sec. 4. (a) Pursuant to section 804 of the Congressional Budget Act of 1974, the appropriate aggregate amounts for the fiscal year 1977 set forth in the first section of S. Con. Res. 10 are revised as follows:
(1) the recommended level of Federal revenues is $356,600,000,000, and the amount by which the aggregate level of Federal revenues should be decreased is $2,600,000,000;
(2) the appropriate level of total new budget authority is $470,200,000,000;
(3) the appropriate level of total budget outlays is $409,200,000.000;
(4) the amount of the deficit in the budget which is appropriate in light of economic conditions and all other relevant factors is $52,600,000,000; and
(5) the appropriate level of the public debt is $701,300,000,000, and the amount by which the statutory limit on such debt should accordingly be increased is $1,300,000,000.
(b) Pursuant to section 304 of the Congressional Budget Act of 1974, the allocations for the fiscal year 1977 made in section 2 of S. Con. Res. 10 are revised so that, the appropriate levels of new budget authority and the estimated budget outlays for the various functional categories are as follows:
(1) National Defense (050) :
(A) New budget authority, $108,800,000,000;
(B) Outlays, $98,900,000,000.
(2) International Affairs (150) :
(A) New budget authority, $7,900,000,000;
(B) Outlays, $6,500,000,000.
(3) General Science, Space, and Technology (250):
(A) New budget authority, $4,500,000,000;
(B) Outlays, $4,600,000,000.
(4) Natural Resources, Environment, and Energy (300) :
(A) New budget authority, $18,700,000,000;
(B) Outlays, $16,100,000,000.
(5) Agriculture (350) :
(A) New budget authority, $2,300,000,000;
(B) Outlays, $4,500,000,000.
(6) Commerce and Transportation (400) :
(A) New budget authority, $17,300,000,000;
(B) Outlays, $14,900,000,000.
(7) Community and Regional Development (450) :
(A) New budget authority, $14,800,000,000;
(B) Outlays, $10,100,000,000.
(8) Education, Training, Employment, and Social Services (500) :
(A) New budget authority, $30,400,000,000;
(B) Outlays, $20,900,000,000.
(9) Health (550) :
(A) New budget authority, $40,600,000,000;
(B) Outlays, $39,000,000,000.
(10) Income Security (600) :
(A) New budget authority, $187,700,000,000;
(B) Outlays, $137,100,000,000.
(11) Veterans Benefits and Services (700) :
(A) New budget authority, $18,900,000,000;
(B) Outlays, $18,100,000,000.
(12) Law Enforcement and Justice (750) :
(A) New budget authority, $3,500,000,000;
(B) Outlays, $3,600,000,000.
(13) General Government (800) :
(A) New budget authority, $3,500,000,000;
(B) Outlays, $3,600,000,000.
(14) Revenue Sharing and General Purpose Fiscal Assistance (850)
(A) New budget authority, $7,800,000,000;
(B) Outlays, $7,700,000,000.
(15) Interest (900) :
(A) New budget authority, $38,000,000,000;
(B) Outlays, $38,000,000,000.
(18) Allowances:
(A) New budget authority, $800,000,000;
(B) Outlays. $700,000,000.
(17) Undistributed Offsetting Receipts (950):
(A) New budget authority, —$15,100,000,000;
(B) Outlays, —$15,100,000,000.
The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from Maine.
The Senator from New Mexico is recognized.
Mr. DOMENICI. I thank my good friend from Maine. I do not think I will use the full 5 minutes. I have a statement which omitted a couple of points I think are important. I want to state them early, and then introduce the statement.
Mr. President, a great deal was made in the conference between the House and the Senate about whether or not the Senate's figures on military preparedness were sacrificing domestic programs, nonmilitary in nature, for an increasing percentage of either the GNP or the budget for the military.
As the conferees know and as the Senate should know, this became the focal issue that almost caused us not to have a budget resolution.
I have gone back over past budgets in my prepared statement for more than 10 years, and in real dollars the reviews shows the path of spending by the U.S. Government on military preparedness and domestic programs of all types, including those that deal with helping people with actual cash outlays and programs such as food stamps, and I think it is safe to say that but for the last 2 years, we have indeed not sacrificed domestic programs for the military. Quite to the contrary, and if there was a noticeable growth pattern, it was an annualized increase in domestic programs, nonmilitary, and a stagnant or even diminishing real dollar support for military.
President Ford's budget of 2 years ago began to move a little bit in the direction of real increases in military preparedness, and I think it is fair to say that this summary should clearly indicate that the Budget Committee in the Senate has not attempted to sacrifice domestic programs for exaggerated or bloated support for military, but quite to the contrary. We told the conferees that over and over, and we really hope that those in the House of Representatives who are genuinely concerned about that will do some analysis, will read these figures, and will conclude that we compromised significantly in lowering our outlay figure and budget authority figure for the military.
I wish to say for myself that I am not totally satisfied with the conference report. I think we have, indeed, set some extremely low targets for the military and I raised that in the conference meetings. That is not my total concern, but as the Senate knows, I thought our budget authority figures were too high, especially after we added about $7.2 billion in budget authority here on the floor.
I tried to take that out, and did not succeed; so it would have been logical that I not vote for this budget conference report, because we are really close to those figures that we came up with, with the add on.
But in all honesty, I want the Senate to know that I do not think there is a process more important to our institutions, to the House of Representatives and the Senate, and to the prosperity of America, than the budget process. We can talk all we want about programs, we can talk all we want about substantive changes in programs and levels of funding, but the stark facts are that a Federal Government that is uncontrolled in terms of what it is trying to do and how much it will spend was quickly losing the respect of the people of this country in terms of why they should be taxed, in terms of why we build up their expectations and then cannot meet them; and as I see it, this Budget Reform Act came about from the grassroots up. The American people were demanding priorities and discipline, and we felt the need here 2 or 3 years later than they felt it out in the byways and the grassroots of America.
I am genuinely concerned that if we do not have this process, which sets these goals and offers realistic targets, and does bring discipline to our almost unquenchable desire to use the Federal Government to solve all problems in our country, then I think there is little hope for credibility between these institutions here in Washington and the American people in the area of taxation, whether they will stand for it, in the area of social programs, whether they will support them, and in the area of those in need in our country, whether they have any confidence that we will try to help them.
Because of that, I felt that the stalemate in the conference was probably going to end up with the real probability of no Budget Act at all, because the cornerstone of the Budget Act is the first concurrent resolution, the one that sets the targets. We know it gets adjusted in the real world of legislation, and changed, but if we had come back without resolving it, then I think the Budget Reform Act and its tremendously important qualities for credibility in this democratic process could very well have gone by the board, as previous budgetary reform proposals have found their way onto the Hill and into the institutions and then somehow found their way out rather quickly.
If we can withstand that now, with the enormous pressures that have come up on this process because of economic conditions, economic stimulus needed and then not needed, differences of opinion in terms of inflation being more important than recession — and we have fought all of this in that field, and been battered around — if we had come back unresolved because of some couple of billions of dollars in disparity, I think we would not have had a budget process next year.
I have been on the Budget Committee for 2½ years — almost 3 — as a part of this team, and I am proud of that. I think we might well, in this period, have saved in unneeded expenditures as much as $20 billion, maybe $10 billion each year, or maybe $13 or $14 billion 1 year and $10 or $11 billion the other.
The reason we have done that is that every time America has a crisis, especially an economic crisis, the nature of the institution and its committees is for everyone to want to solve it immediately. In my short 5 years here, I have seen that once without a Budget Reform Act. Every committee that thought it had a chance to help solve the economic crisis quickly called national hearings and got bills to the floor, whether it be new CETA programs for economic reform, extension of unemployment insurance and emergency employment programs, the reform of government operations through countercyclical revenue sharing, or any of the rest of those that preceded this particular kind of program.
I believe we would have had those here on the floor in the last 3 years in abundance, with no targets to measure them against and nothing but the individual persuasiveness of Senators to keep them from becoming law.
We now have the collective spirit of reasonable macro-targets in this budget, and we do not always succeed. The nature of the institution is such that the committees are still very important. Their jurisdictions are properly the pride of the committees. So they want to get into developing the solution when we have problems. That has caused us to have to adjust; it has caused us to have to stretch targets, it has even caused us to have to analyze what programs belong in some of these targets, as Senators well know.
With all that concern, that is why I came down on the side of supporting the compromise.
Let me say what my version of the military preparedness figures is.
Yes, we came down to $118.5 billion in BA and $111 billion in outlays. But we very clearly indicated in our position that we did that with certain savings assumptions. I hope everyone will read those. My version as one Senator — and I am glad the chairman of the Armed Services Committee is here — is that we are saying, "Try to do that." We are saying, "The figures would assume you could do that."
I want to add for myself that in the process of accommodating, in the appropriations process, and in analyzing inflation in the next 4, 5, or 6 months, if, as a matter of fact, those savings cannot be made, as far as this Senator is concerned I will seriously consider, for the second targets, the fact that these first might have to be breached. I want everyone to understand that is why I voted for it. I am not sure we can get those savings. I say that to the good chairman from Mississippi.
I did not vote for this to cut procurement because I believe the administration has already recommended procurement cuts that are right at the bottom of what we can stand.
I supported it on that score. I compliment those who thought up that approach as a way to break the stalemate and preserve the resolution and, in turn, preserve the budget process.
In conclusion, I would be remiss if I did not say to the good Senator from Maine and my good friend from Oklahoma that sometimes this process must seem to both Senators to be far less dramatic than the work of a substantive committee that is bringing new legislation to the floor, which gets a Senator all kinds of notoriety because, as a matter of fact, a Senator has a new idea to help solve a problem.
I commend the Senators for the time they have spent on the process and on this resolution. This is a rather difficult existence when contrasted with the glory of huge new programs that the Senators could be part of in other committees.
Let me say this: Basically, the economic system of America is what gives support to all the programs of which we could be part.
If it does not work, then we are going to have to be here dreaming up programs that are facades, that are trying to cover up the issue of the economic system weakening, which is the basic strength of Americans, their jobs, their capital investments, their improving standard of living. In turn, the budget process has, as its basic motivator, an appropriate relationship of government to the overall economy of America. That is what macroeconomics are about and that is what the priorities are about.
I want to say that I believe the Senators' time is more than well spent. The fact that most of the fights are in conferences and over numbers that many do not understand should not discourage persistence, for if we succeed in balancing government versus the other activities of people in this country with a proper mix, we may very well have found the route to an ever-increasing economy.
It could very well be that government size is out of balance with the economy and that the budget process might find that is the real inhibitor to growth. Maybe 23 percent of GNP for the Federal Government and 38 percent for total government expenditures may just be too much. That may be why the private sector which we pride ourselves in might not be working as well as it could. If that is the case, this process has a better chance of finding that out than anything in which we have been involved, institutionally, I would assume, in many, many decades.
I commend the Senators for their efforts. It is a privilege to join them in their work.
Mr. President, I ask unanimous consent that my prepared statement, including my detailed evaluation of domestic social programs versus military be printed at this point in the RECORD.
There being no objection, the statement was ordered to be printed in the RECORD, as follows:
SUPPORT FOR CONFERENCE REPORT ON S. CON. RES. 19
It was with a considerable amount of reluctance and misgivings that I signed the Conference Report now before the Senate. I had voted against the Senate version because I felt it was deficient in several respects, primarily because it projected an FY 78 deficit I found unacceptably high, particularly in comparison with the FY 77 deficit.
You will recall that three floor amendments were adopted which added $7.2 billion in Budget Authority and $0.4 billion Outlays. You will recall further that I offered an amendment to eliminate those floor increases, an amendment which was defeated. My main arguments at that time was that we had casually increased Budget Authority by a totally unjustified amount without regard to the fact that Budget Authority is the force which drives future spending and fuels government programs, increasing the already too high degree of uncontrollability in the Federal budget.
Now we have before us a conference version of the resolution which has a higher deficit but a smaller number for Budget Authority. While these two factors tend to offset each other, these modifications are not significant enough, in themselves, to cause me to support the Conference Report.
I signed the Conference Report and I will support it today because the nation cannot afford to be again without a congressional budget process. The very foundation of the budget process is a budget resolution, and the conference version before us is a vast improvement over the House's Budget Resolution. In order to preserve the process and prevent adoption of a version closer to the House product, I am, reluctantly, as I said, supporting the Conference Resolution.
In the area of national defense, I am particularly pleased that we rejected the inadequate figures contained in the House's Budget Resolution. It was a difficult conference mainly because the conferees on the House side resisted reasonable defense expenditures. I am pleased that the Senate conferees stuck together and came out of conference with $118.5 billion in Budget Authority and $111.0 billion in outlays for national defense.
There are many undoubtedly who will argue, as House conferees did, that these figures are too high since they represent increases over this year of more than 9 percent in Budget Authority and more than 12 percent in Outlays.
In light of past budget trends it seems entirely proper to me to have increases of this magnitude in this nation's commitment to its national security.
By any measure one chooses to use, military spending has declined when compared to total federal expenditures, or as a portion of the GNP, and as compared to nondefense spending.
Critics of defense spending conventionally forget or overlook the fact that since 1968 defense outlays have gone down from 44% of Federal expenditures to less than 26% in this budget. During that same period payments to individuals and grants have gone up from 32% of Federal outlays to over 53%.
As I said previously, choose any comparison you want during the last two decades and you will confirm this alarming trend. Typical examples are found by comparing national defense with grants to State and local governments. Over the 20 year period ending in 1976, grants to State and local governments increased at the rate of about 14% per year or over 1000% for the period.
During that same time, defense spending increased by only 126%. I support Federal assistance to State and local governments and I only point out this trend to demonstrate that people are simply wrong to say that we fund military programs at the expense of domestic assistance.
The 20-year period from 1955 to 1978 saw spending for defense and spending for direct payments to individuals, as a percentage of Federal outlays, almost change places. In 1955, defense spending was 56.5% of Federal outlays while direct payments to individuals was 14.8%. By 1976 defense spending had fallen to 24.4% of Federal outlays while payments to individuals accounted for 46.9% of Federal outlay.
So, it is time we reversed this trend and this Resolution contained an increase in defense spending to 25.7% of projected outlays, up from the 24.1% anticipated for fiscal year 1977.
Finally, Mr. President, the difference between the Senate Resolution and the Conference Resolution for the National Defense Function do not adversely affect the national security aspects of the military function. These reductions represent certain anticipated financial adjustments for unobligated balances, some absorption of inflation in operations and maintenance accounts, a possible realization of savings from increased personnel efficiencies and a lower inflation rate than assumed by the Administration. These downward adjustments will not affect the capability of the defense establishment to procure the weapons, conduct the research and development, and recruit and train the personnel required to maintain the defense posture envisioned in the Senate Resolution. If these adjustments cannot be achieved or these savings cannot be realized in spite of all efforts, we will have the opportunity, through the Second Concurrent Resolution, to reevaluate our numbers and adjust as necessary to reflect those realities.
In closing, Mr. President, I know that none of us is entirely satisfied with the Resolution. There are lots of things I would change were it up to me alone, but, we all must realize that there is no single budget document that would satisfy everyone. I am convinced that, under the circumstances in which we find ourselves in May of 1978, this is an acceptable blueprint for Federal actions in fiscal year 1978. Accordingly, I urge my colleagues to support it. It is certainly better than no blueprint at all.
Mr. MUSKIE, May I say in response to the Senator he has demonstrated a high level of statesmanship in contributing his support in the conference for a budget resolution that he found it necessary to vote against in reporting out of committee and on the floor of the Senate. He has demonstrated his concern for this process. I honor him for it, and I am grateful to him for it.
Mr. DOMENICI. I thank the chairman. Mr. President, I yield back the remainder of my time.
Mr. MUSKIE. I believe there are no other speakers. I suggest the absence of a quorum, Mr. President.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.