September 7, 1977
Page 27989
SECOND CONGRESSIONAL BUDGET RESOLUTION, 1978
Mr. MUSKIE. Mr. President, I ask unanimous consent that the Senate proceed to the consideration of Calendar No. 363, Senate Concurrent Resolution 43.
The PRESIDING OFFICER. The clerk will state the concurrent resolution.
The legislative clerk read as follows:
A concurrent resolution (S. Con. Res. 43) revising the congressional budget for the United States Government for the fiscal year 1978.
The PRESIDING OFFICER. Without objection, the Senate will proceed to its consideration.
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 the consideration of and votes on Senate Concurrent Resolution 43:
John McEvoy, Karen Williams, Sid Brown, Van Ooms, Jim Storey, Dan Twomey, Tom Dine, Jacques Cook, Elizabeth Tankersley, Bob Sneed, Charles Flickner, Terry Finn, John Giles, Roger Schlickeisen, Don Campbell, Tony Carnevale, George Merrill, Becky Beauregard, Mike West, Ira Tannenbaum, and Ann Kelley.
Also, 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 and Wayne Neveau, on behalf of Senator Johnston; John Haynes, on behalf of Senator Anderson; and Paul Clark, on behalf of Senator Sasser.
Mr. BELLMON. Mr. President, will the Senator yield for a similar unanimous consent request?
Mr. MUSKIE. I yield.
Mr. BELLMON. Mr. President, I make the same request for the minority members of the committee staff. They are as follows:
Robert S. Boyd, Charles McQuillen, William Stringer, Letitia Chambers, Gary Kuzina, Barry Kinsey, Robert Fulton, and Becky Davies.
Also, Charles Gentry of Senator Domenici's staff, Jan Olson of Senator Hayakawa's staff, Gary Dickinson of Senator Dole's staff, and Mark Bisnow of Senator Heinz's staff.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I repeat the unanimous consent request that I find rather ridiculous, that the presence and use of small electronic calculators be permitted on the floor during the consideration of Senate Concurrent Resolution 43.
The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered.
Mr. MUSKIE. Without that request, we have to do our calculating on our fingers.
Mr. President, the Senate today begins debate on Senate Concurrent Resolution 43, the second concurrent resolution on the Federal budget for fiscal year 1978.
SUMMARY
The principal policies embodied in this budget resolution include:
Spending levels very close to the first budget resolution targets due to congressional restraint in spending decisions this summer. No change in national or international conditions has occurred since the first budget resolution which warrants significant changes in these amounts. They are adequate to meet the legislation already enacted or reasonably foreseeable in this Congress for fiscal year 1978.
A lower deficit than projected by the first resolution due to a slightly lower estimate of outlays and significant appropriations restraint.
Significantly increased spending and provision for tax reductions to implement energy legislation.
Support for legislative action to meet the financial problems of the social security system, provided that no new social security legislation take effect in this budget year.
An instruction to the Committee on Agriculture and Forestry to report legislation to reduce spending within its jurisdiction to the generous levels provided for agriculture in the second budget resolution.
BACKGROUND
Last spring, Congress adopted the first concurrent resolution which set targets to be implemented by subsequent congressional action. The Senate authorizing and Appropriations Committees are to be commended for their substantial restraint in holding to the targets of the first budget resolution. I wish to commend especially Chairman McCLELLAN and the entire Appropriations Committee for their diligence in holding to the spending levels of the first resolution.
This second resolution is designed to revise the spending and tax decisions in the first budget resolution insofar as changed circumstances require. The spending and revenue amounts set forth in this second budget resolution set limits on further congressional fiscal action. After adoption, which must occur by September 15, a point of order lies against any legislation which exceeds the aggregate limits of the second budget resolution.
In sum, Mr. President, the committee now recommends the following aggregate ceilings for fiscal year 1978:
Total budget authority of $501.2 billion;
Total budget outlays of $459.0 billion; and
Total revenues of $395.0 billion.
These result in:
A deficit of $64.0 billion and a public debt level of $778.2 billion.
THE DEFICIT
Mr. President, the continuing national budget deficit in the second concurrent resolution is largely a result of low levels of economic activity — well below the productive capacity of the economy — and intolerably high levels of unemployment.
The first budget resolution estimated a deficit for fiscal year 1978 of $64.65 billion. The second budget resolution would reduce the deficit to $64.0 billion. This deficit would be even lower — over $4 billion lower — were it not for the following factors:
The sum of $2.2 billion for energy legislation; $1.25 billion for increased Agriculture spending; and $0.7 billion for on-budgeting funding of the housing for the elderly program.
No doubt should linger, Mr. President, as to the commitment of the Budget Committee to a balanced budget and full employment at the earliest possible date. Of course, the committee is disappointed that a more rapid economic recovery has not occurred which could produce more revenues for fiscal year 1978. However, the news of the current economic slowdown is no surprise to the committee. The committee recognized this possibility early last spring and has recommended in the second budget resolution a fiscal policy which will continue a moderate recovery. Indeed, the economy is following the moderate path predicted for it by the committee in the adoption of both the first and second budget resolutions. The fiscal policy of the second budget resolution is moderation.
Progress toward a balanced budget will be gradual. It will depend upon steady fiscal and monetary policies which maintain the recovery. Budget surpluses in future years can be a reality. But increase in private sector demand is essential as Government spending must be complemented by strong business investment to achieve a balanced budget.
BUDGET DISCIPLINE
Mr. President, the need for fiscal restraint in congressional initiatives is all too clear. In its report on the first budget resolution last spring, the committee noted that holding to the tight budget targets contained in that budget would prove more difficult this year than ever before, since the temptation to relax the disciplines of the budget process would be stronger as the condition of the economy improved. The committee warned that a breach of the congressional budget could lower public confidence in the budget process, increase inflationary expectations, and retard the recovery. It stressed that an increase over the budget target in one function meant fewer resources available for meeting important competing goals.
The second budget resolution the committee has reported does not leave any room for excess spending in any functional category. It also assumes that significant savings will be made in health and income security programs within fiscal year 1978. Spending on any program in excess of the budget resolution or the failure to achieve the savings assumed means inadequate funds will be available for anticipated supplemental appropriations requirements during the next year. Programs over funded now mean programs underfunded later.
The Budget Act provides that the limits contained in the second budget resolution are binding on the Congress. Any legislation which exceeds these limits will not be in order. The Budget Committee will meet its responsibilities to the Congress to see that these limits, once adopted by the Congress, are not exceeded.
Mr. President, I ask unanimous consent that a table showing the limits recommended by the committee in the second budget resolution be printed in the RECORD at this point.
There being no objection, the table was ordered to be printed in the RECORD as follows:
[Table omitted]
Mr. MUSKIE. With regard to fiscal policy and economic recovery, Mr. President, let me repeat: this budget is designed to achieve a balanced budget and full employment at the earliest possible date.
The Budget Committee anticipated the slowdown in economic growth now being reported in the media. Indeed, last spring and again this summer, the Senate Budget Committee has adopted a fiscal policy which provides significant tax and spending stimulus spending, but does not allow unrestrained Federal expenditures.
The short term goal of this resolution is to maintain steady economic recovery for the remainder of 1977 and for 1978.
The long term goal is to help trigger increased business investment by the private sector required for full employment and a balanced budget.
GNP is presently about 5 percent below potential while at this stage in previous recoveries, it has averaged 1.9 percent below potential.
Substantial economic growth by the private sector is needed to increase productivity and generate additional revenues to move the budget into balance. Without adequate tax collections, a balanced budget cannot be achieved. In a recession, business investment is traditionally low. The fiscal policy of the second budget resolution is aimed at invigorating the private sector so that it will move with the Federal sector toward total economic recovery.
The Budget Committee believes that this recovery will continue and urges support of its fiscal policy to accomplish that goal.
ECONOMIC ASSUMPTIONS
The economic outlook is very similar to that of the first budget resolution. The committee's economic assumptions continue to be less optimistic than those of the administration for 1978, because they are based on a more conservative view of the likely growth of business investment and Federal outlays during the next year and a half.
Mr. President, I ask unanimous consent to have printed in the RECORD at this point a table which shows the economic assumptions underlying the committee's recommendations in comparison with those of the administration's current budget estimates for fiscal year 1978.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. Mr. President, the Budget Committee believes that the administration has made unrealistic and overly optimistic assumptions about the growth of the private sector and the collection of revenues. On the other hand, the committee has maintained its moderate course in establishing the economic assumptions which underlie this resolution. We believe that the latest indicators which reflect a softening of the economy justify our more cautious approach.
JOBS
Under the fiscal policy of the fiscal year 1977 budget, the unemployment rate has fallen from 7.9 percent in the fourth quarter of 1976 to 7 percent in the second quarter of 1977. This decline has taken place in spite of an exceptionally rapid increase in the labor force. Nevertheless, because of the high levels of unemployment and unused productive capacity at the beginning of the recovery, unemployment remains much higher, and production much further below capacity, than at a similar position in previous recoveries.
The steady economic recovery made possible by the proposed budget will continue to increase employment and lower the unemployment rate. The expansion of the economy and the jobs programs provided in this and previous budgets will create about 3 million additional jobs during fiscal year 1978, and unemployment should fall below 61/2 percent by the end of the year.
Mr. President, the fiscal policy in this resolution is designed to achieve moderate growth. By holding down unemployment and inflation and sanctioning moderate Federal spending, the committee hopes to trigger increased private investment. Undoubtedly, some tradeoffs must be made. While the committee might like to believe unemployment could miraculously drop to less than 5 percent during fiscal year 1978, and the production will increase significantly with a changed fiscal policy, these objectives cannot be achieved now without enormous costs.
The very heavy cost to our society of the recession is shown by the gap between actual output and that which the economy could produce with high utilization of labor and capital. This lost production and income is very large. At present it amounts to about $100 billion per year, or nearly $500 per year for each American. It is still over one-half as large as it was at the bottom of the recession. This lost output could be used to meet private and public needs in our society. The importance of continuing the recovery, and bringing this unused capacity into production cannot be overemphasized.
INFLATION
Mr. President, the present recession and recovery have been characterized by the persistence of extraordinary inflation. The rate of increase in consumer prices during the recovery has been about twice that experienced during the decade ending in 1972.
The present inflation results primarily from inflationary momentum in the economy. Wage demands reflect previous increases in prices, and prices are increased to cover higher wages. It is extremely difficult to squeeze this underlying inflationary momentum out of the economy.
Deflationary policies which drastically reduce output and raise unemployment are excessively costly remedies for inflation. Only a continuing recovery will provide the increases in investment and productivity required to hold down costs and prices, while allowing inflation to slowly decrease. The proposed budget will provide for moderate growth in demand and will therefore be consistent with a continuing reduction in the rate of inflation.
REVENUES
The committee has recommended a revenue floor of $395 billion. This revenue figure assumes a reduction of $0.9 billion to accommodate the significant energy tax legislation soon to be considered by the Senate. This substantial reduction will provide sufficient flexibility for the Senate to modify if necessary the energy tax measures recently approved by the House.
With respect to a very different area of revenue policy, the committee has not recommended any additional fiscal year 1978 revenues from social security tax increases. While the committee is concerned over the long term solvency of the social security trust funds, the committee believes it would be imprudent to enact new tax legislation for fiscal 1978 since this could retard significantly the continuing economic recovery. The committee encourages the Finance Committee to take future action to solve the social security dilemma.
The recommended revenue floor reflects the continued practice of the committee to treat the entire cost of the earned income credit as a revenue reduction. The committee welcomes the recent decision of the administration reflected in the July 1 mid-session review also to treat these payments as a revenue reduction, and would hope that the House will agree to a similar rule which would result in a uniform budgetary accounting practice.
COORDINATION OF FISCAL AND MONETARY POLICY
Mr. President, the strength of the recovery will depend in part on the monetary policy of the Federal Reserve in the rest of 1977 and 1978.
Over the past year, the money supply has grown at about the top of the FED's target range. Short term interest rates have remained relatively low, although some upward movement has occurred in the last few weeks in response to tighter monetary policy by the Federal Reserve. One trusts this indicates only a short term adjustment and not a change in longer term policy and monetary growth targets. A permanent tightening of monetary policy would weaken investment and increase unemployment in 1978 without significantly reducing inflation. Continued monetary accommodation will be essential to support the fiscal policy contained in this budget.
The attainment of full employment with a balanced budget also depends critically upon monetary policy. To generate the private investment needed to attain this goal, monetary policy must remain accommodative enough to support the recovery while the level of fiscal stimulus is being reduced through declining budget deficits. This will require strong fiscal discipline by the Congress and administration, but it will also require a monetary policy expansive enough to allow for vigorous growth in private sector demand.
Now, Mr. President, let me summarize the major thrusts of the Committee's recommendations.
NATIONAL DEFENSE
The committee recommendation for national defense is $116.6 billion in budget authority and $110.1 billion in outlays. The recommendation reflects Senate action to date in the national defense function, assumes congressional acceptance of much of the proposed Presidential actions on the B-1 and cruise missile programs, and takes into account certain financial adjustments in the function which both branches will be making.
The proposed second budget resolution target by $1.9 billion in budget authority and $0.9 billion in outlays. The major reasons for these differences are Senate reductions in the Defense appropriation bill and Senate approval of the B-1 budget amendment.
The national defense ceiling allows for significant real growth in defense programs, aimed at modernizing our strategic and general purpose forces and insuring the readiness of our equipment.
Mr. President, the committee's recommendation also assumes that at least 15 percent of any October pay raise will be absorbed through savings in Department of Defense activities which is consistent with previous experience; for fiscal year 1977, the DOD is absorbing nearly 30 percent of the pay raise amount estimated in the fiscal year 1977 budget submission.
Mr. President, let me commend the Appropriations Committee, under the able leadership of Senator McCLELLAN, and the Armed Services Committee, under the distinguished guidance of Senator STENNIS, for their diligence in establishing and adhering to the spending targets of the first budget resolution. The spending levels here are consistent with the actions they have endorsed in the course of Senate deliberation on defense legislation.
INTERNATIONAL AFFAIRS
Mr. President, the committee recommendation for international affairs is $8.3 billion in budget authority and $6.6 billion in outlays, the recommended ceiling is consistent with congressional policy supporting our commitment to fulfill our international obligations and to support the dignity of human rights throughout the world. It includes appropriation actions completed or underway and supplemental funding for foreign economic assistance programs.
The proposed second budget resolution ceiling is less than the first budget resolution target by $1 billion in budget authority and $0.7 billion in outlays. The principal reason for the decrease is reduced activity by the Export-Import Bank. Lower estimates for spending by several other international programs contributed to the reduction in outlays.
The committee continues to believe that this country's stake in the economic well being of its allies and friends is increasing, and multilateral and bilateral assistance should reflect this stake.
Mr. President, almost 10 percent of our gross national product is attributable to exports of goods and services. One quarter of those exports — nearly $50 billion — go to developing countries whose economies have been hard hit by the recession and the high cost of energy.Without strong financial support from the United States and other industrial nations, international trade and U.S. markets will be severely handicapped. Without U.S. leadership, the multilateral development banks which administer much of this assistance are less likely to obtain larger contributions from other industrial countries and richer OPEC nations.
PHYSICAL RESOURCES
Mr. President, the committee's recommendations in the physical resources areas reflect the policy decisions made by the Congress at the time of the first resolution as well as a significant increase for a national energy program. The recommended ceilings will accommodate congressional action to date as well as those known supplementals which are consistent with the first resolution, including a continuation of the Federal grants for construction of municipal waste water treatment facilities.
The committee is sensitive to the plight of American agriculture and the American farmers, and has consistently provided the full amount requested by the Agriculture, Nutrition and Forestry Committee, including a significant increase in agriculture spending in this resolution designed to accommodate the cost of the Senate-passed farm bill.
Indeed, the ceiling for agriculture this this resolution is $1.25 billion in outlays higher than that contained in the first budget resolution. While this was designed to accommodate the Senate version of the farm bill, S. 275, it will not cover the more expensive conference agreement. Therefore, the committee has also recommended action to insure that the conference agreement will be consistent with this budget resolution.
The Budget Act provides that if spending or revenue decisions inconsistent with the provisions of the second budget resolution have already occurred, that resolution is to contain a "reconciliation instruction" directing the committee with jurisdiction over such legislation to report further legislation promptly to conform the inconsistent tax or spending legislation to the congressional budget resolution.
Mr. President, this congressional budget resolution contains, for the first time in the course of the budget process, such a reconciliation instruction, directing the Committee on Agriculture, Nutrition,and Forestry to reduce agriculture outlays to $4.1 billion which is that committee's share of $5.6 billion in total outlays set forth in this resolution for function 350: Agriculture.
The Budget Committee and its staff have worked very closely with the Agriculture Committee to inform them of our concerns and to assist them in efforts to reduce the conference agreement to be consistent with the Senate budget resolution. We are disappointed by the fact that no reduction has been achieved. I will address this matter at greater length later in the debate.
Consistent with congressional action earlier this year, this resolution now includes, as an on-budget funding item, the housing for the elderly or handicapped program which accounts for $750 million in budget authority and $738 million in outlays.
Under the committee's recommendations, grants to State and local government for environment, transportation, community and regional development, and revenue sharing, as well as for human resources programs, are about at the same level as those in the first budget resolution. This will provide an increase or more than 15 percent over the level this fiscal year and will continue congressional support for the capital infrastructure of our Nation.
HUMAN RESOURCES
Mr. President, the committee recommendations in the human resources area reflect, by and large, a continuation of the policies Congress adopted in the first budget resolution last May. These policies include a major expansion of youth employment programs, forward funding of CETA public service jobs into fiscal 1979, substantial increases for education grants and for appropriated health programs, benefit increases for veterans, and improvements in veterans' medical care. The committee addressed one major issue that has arisen since adoption of the first resolution — the question of new social security financing. While the Budget Committee shares the widespread concern that Congress must shore up the trust funds in a timely manner, there is no compelling need for new taxes for fiscal 1978. Added payroll taxes would be inflationary and would act as a brake on the economic recovery that must continue if we are to return to full employment as rapidly as possible. Therefore, the second budget resolution reported by the Budget Committee assumes no new social security funding will be effective for fiscal 1978. However, the committee encourages the Finance Committee to take further action to resolve the social security financing issue.
The Budget Committee and the Congress must be disappointed that for the third consecutive year committees charged with responsibility for health and income security programs have failed to achieve savings through the adoption of needed efficiencies in these programs.
As in previous years, the first budget resolution assumed enactment of savings legislation to control health costs and to achieve benefit reforms in income security programs. While such legislation has not yet been passed by the Senate, bills are presently under consideration by the Human Resources and Finance Committees which would achieve significant savings. The Budget Committee urges Senate passage of legislation to obtain net savings of at least $600 million in health and income security programs, and to avoid wasteful expenditure of tax dollars. Higher savings would, of course, permit cost increases for other program improvements now being considered.
RECONCILIATION PROCESS
Mr. President, let me take a few minutes to explain the reconciliation instruction and the process which it triggers. A reconciliation instruction is the procedure prescribed in section 310(a) of the Budget Act for enforcing the aggregate functional totals contained in the second concurrent resolution. Such instruction is appropriate where the second concurrent resolution is exceeded by spending, revenue or debt, appropriations actions, legislation contained in laws, bills, or resolutions within a committee's jurisdiction.
The second concurrent resolution and its reconciliation mechanism were designed to provide Congress with the opportunity to reaffirm or revise its judgment about budget aggregates and their allocations in light of enacted — and pending — spending and revenue legislation.
Hence, a reconciliation instruction from the committee is appropriate to reduce outlays within the jurisdiction of the Agriculture, Nutrition, and Forestry Committee so that the second concurrent resolution is not violated. The Budget Committee is disturbed that the conference agreement on the Food and Agriculture Act provides for outlays in the agriculture function which exceed the second budget resolution. Since the recommended ceiling of $5.6 billion is already $1.25 billion over the first budget resolution, the addition of further spending is wholly unjustified and would violate every principle of sound fiscal policy and budgetary restraint.
Therefore the committee reluctantly recommends a reduction in the spending of the Agriculture Committee to comply with the second budget resolution.
Under section 310(c) of the Budget Act, reconciliation legislation must be reported recommending changes in new budget authority initially provided for prior fiscal years, and new spending authority for fiscal year 1978 contained in laws, bills and resolutions within the jurisdiction of the Agriculture Committee so that the total outlays therefrom do not exceed $12.660 billion. This levelof outlays reflects all spending which would be reflected in the crosswalk of the Agriculture Committee — including non-agriculture programs and programs within the spending jurisdiction of both the Agriculture and the Appropriations Committees. It should then produce totaloutlays for the agriculture function of $5.6 billion in fiscal year 1978. The committee reluctantly recommends that any reductions necessary to achieve consistency with the second budget resolution be made in the agriculture price support program.
DEBATING THE RESOLUTION
Mr. President, let me conclude with a word of caution about debating priorities. As my Budget Committee colleagues know well, it is easy to drift into a discussion of individual programs or line items in a budget discussion. Favorite programs or areas of expertise are prime candidates for programmatic debate.
The Budget Committee has successfully avoided this pitfall. We recognize that program jurisdiction belongs to the authorizing and appropriations committees. We have focused our attention, instead, on aiding Congress in establishing its broad national priorities.
Of course, we discuss individual programs and utilizethe special expertise of our members. But we do not vote to include or exclude a given program or even an amount for such a program except in rare cases where the program is of such magnitude as to constitute itself a significant national commitment.
AMENDMENTS
The Budget Act does contemplate the possibility of amendments to this resolution, which is the Budget Committee's considered recommendation to the Senate. The purpose of this debate is to allow the Senate to work its will in creationof an appropriate and comprehensive congressional budget.
The Budget Act provides a few important changes in Senate procedure affecting this debate. As you know, in creating the Budget Act, we limited debate on this second budget resolution to 15 hours, with no more than 2 hours allowable to each amendment and no more than 1 hour to amendments, debatable motions or appeals.
There are also several special rules affecting amendments. Amendments must be germane. In addition, amendments will be in order, even to sections of the legislation which have already been amended, as long as those further amendments propose to change a figure or figures then contained in the resolution so as to make the resolution mathematically consistent or to maintain such consistency.
Mr. President, as I have done often since the Budget Committee began its work 18 months ago. I commend my fellow committee members for their diligence, for their hard and successful work in a new field, and for their political courage in coming to grips with the conflicting demands that budgeting always entails.
I particularly commend and thank Senator HENRY BELLMON, whose bipartisan objectivity and support, more than any other single ingredient, have guaranteed our success to date. His courageous and consistent support of the budget process in the face of tremendous external pressures is indeed extraordinary.
Finally, I commend the staff of the Budget Committee for their highly professional support to the members of this committee in the preparation of the second concurrent resolution and in the operation of the budget process.
Through constructive, informed debate, I am convinced that we can produce a congressional fiscal policy and a congressional budget addressed to national needs.
Mr. President, I called attention in these remarks to problems associated with the agriculture function, which we shall discuss more fully tomorrow, when the Talmadge amendment is presented to the Senate. I urge Senators to give attention to those issues in connection with that amendment in the agriculture function, because I think they carry serious implications for the future of the budget process.
Mr. President, with that, I am happy to yield the floor to my good friend from Oklahoma, the ranking Republican on the committee (Mr. BELLMON) , who has been such a staunch supporter, as any colleague, in the process of making this budget discipline take hold.
Mr. BELLMON. I thank our distinguished chairman.
Mr. President, I call attention to the job which Senator MUSKIE has done as chairman of the Committee on the Budget, particularly making possible the discussion of the resolution in this timely manner. It has taken a considerable amount of negotiation and diplomacy to bring us to this matter. It is the leadership of Senator MUSKIE that is going to make it possible for us to deal with the budget resolution in a timely way.
Mr. President, our distinguished chairman, Senator MUSKIE, in his opening remarks, has discussed the aggregate and functional totals which are certainly the most visible aspects of the second concurrent resolution. I will not reiterate these same points. Instead, I choose to deal with some of the less obvious but no less important elements of this resolution.
A budget, any budget, is simply a plan expressed in financial terms. Like any plan, it shows us where we are, it instructs us with respect to where we are going, in what manner and at what cost.
In addition, this budget reflects preceding budgets and sets the course of the budgets which will follow. Thus, it is more than a set of numbers or a series of constraints. It is a creative document and, at the margin, commits us to a series of priorities with which, for better or for worse, we and the Nation will have to live in the years to come. In this extended context, I intend to focus the attention of the Senate on a few of the more important elements of the second concurrent resolution.
The Budget Committee has recommended a level of revenues for fiscal year1978 of $395 billion. Thus it permits the Federal Government to command, through taxes and borrowing, more than 21 percent of the national income. The figure assumes a cautious but realistic assessment of the resources which a recovering economy can make available to the Federal sector. This recommendation is stated in terms of a revenue floor. However, I view it to be a ceiling in that it precludes the diversion of additional resources from the private sector to support any funding of additional Federal programs.
The revenue figure, inasmuch as it extends current law, provides the flexibility which the Congress will require if it is to deal with fundamental tax reform within the context of a fixed share of GNP available to the Federal sector. In short, it challenges our creativity, as any budget must. It says that there is this much and no more. Within this constraint, Government must meet its commitments efficiently and effectively.
In function 300, energy and natural resources, budget authority has been increased by $4.2 billion and the outlay ceiling has been raised by $800 million. These generous allowances serve two purposes. First, they indicate that conservation and alternative fuel development are not without cost, budgetary and otherwise. Second, they encourage the Congress to avoid budgetary gimmicks such as loan guarantees or tax expenditures which disguise or remove from budgetary control the true cost of responsive energy legislation.
Any Federal energy plan is inherently limited by the level of resources which can be made available and effectively put to use. We are, therefore, put on notice that final energy solutions must be found in the private sector and that current energy plans can at best create an environment in which available supplies are not only conserved but also augmented through increased incentives for production, substitution, and exploration.
This budget resolution is sensitive to human needs as outlay levels for education, income security and health care demonstrate. However, in these same areas, the budget also provides a warning which I believe the Congress should and must heed. It places a heavy burden on those committees which are charged with the authorization and oversight of our now numerous social welfare programs. The constraints on spending and the savings anticipated in such programs will challenge this Congress.
That challenge, if it is to be met with success, will require each of us to abandon our old habit of incremental funding and "hold harmless" budgeting. If, for example, we desire welfare reform, we must become aware that such new programs cannot be added to those which already exist and that new initiatives must pass a stern test in which their true costs are related to their potential benefits. In this spirit, I make specific reference to a number of worthy initiatives which have been undertaken without adequate consideration of their final costs or their ultimate pragmatic efficiency. For example, the medicaid program enacted in 1965, with an estimated Federal cost of $268 million, now involves Federal outlays of $12 billion. Thus, the program costs 50 times the original estimate. Likewise, the social services program has within a decade grown to exceed original cost estimates by 100 times.
Those who project maximum benefits and minimum costs for welfare reform and national health insurance should be acutely aware of the above lessons of history.
Mr. President, this resolution anticipates, as did its predecessors, legislative action to achieve savings in income security and health care. Thus, it directs our attention, once again, to the painful but necessary task of increasing the efficiency of Federal programs. I am dismayed by our continued inability or unwillingness to effect recommended savings of $300 million in social security and $400 million in medicaid and medicare. Our words regarding such savings and efficiencies certainly come easier than our actions. However, words are idle. Effective action in both areas is overdue.
As we consider the merits of the second concurrent resolution, we should be aware that the significant changes are small and reflect the fact that priorities and their associated outlays change slowly over many budgets. The vast bulkof this particular budget has been committed by prior administrations and Congresses. In like manner, our actions today will determine the size, scope, and composition of future budgets. If we look carefully at the marginal commitments which this resolution contains, we can see in some manner the ultimate shape of things to come. Our defense commitment remains strong but more sophisticated and less manpower intensive. The Federal role in energy conservation and production will be an expanding one in terms of both regulation and cost. Likewise, natural resource and environmental programs will command ever larger budgetary resources.
Our commitments to developing nations are increased, and made less political as demonstrated by our growing commitment to international financial institutions. Commitments to human needs remain high, but this budget encourages greater efficiency in the administration of key programs. The budget also initiates a new Federal policy for agriculture.
Finally, let me reaffirm my commitment to achieve a balanced budget in the context of a limitation of the Federal share of national income. This budget shows a higher deficit than the anticipated fiscal year 1977 deficit. Some believe this puts a balanced budget further away. Let me point out that the fiscal year 1978 numbers first, include substantial spending resulting from stimulative programs put in place in fiscal year 1977; second, include spending for energy not included in fiscal year 1977; and third, have not yet been adjusted as 1977 numbers have for the phenomenon known as "shortfall" These are the primary reasons that the deficit appears higher in 1978.
I recognize that the level and the scope of this budget and what its enactment portends for the future will not satisfy the Senate in all respects. However, I judge it to be a fair compromise of competing views and a balancing of priorities which I can support.
I support the budget resolution which our chairman has just laid down. I congratulate him again on his work.
Mr. MUSKIE. Mr. President, I thank my good friend from Oklahoma and congratulate him for the record he has made in supporting the committee and myself over the years.