September 9, 1977
Page 28477
HOUSE CONCURRENT RESOLUTION 341
Mr. MUSKIE. Mr. President, I ask the Chair to lay before the Senate House Concurrent Resolution 341.
The PRESIDING OFFICER (Mr. RIEGLE) laid before the Senate House Concurrent Resolution 341 providing for revising the congressional budget for the U.S. Government for the fiscal year 1978.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of the House concurrent resolution.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I ask unanimous consent to strike all of the language after the resolving clause and to insert in lieu thereof the language of Senate Concurrent Resolution 43, as amended.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. I ask for the yeas and nays on the House concurrent resolution, as amended.
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
Mr. MUSKIE. I thank the Chair and I thank my good friend.
Mr. LONG. Mr. President, the second concurrent resolution on the budget sets forth overall budgetary totals which are intended to be binding on the Congress. Legislation which would create a deficit greater than allowed for in the resolution, or cause higher levels of spending, or reduce revenues below the floor specified in the resolution becomes subject to a point of order.
Unlike the first resolution which sets congressional guidelines — objectives desired to be achieved — the second resolution sets mandatory budgetary totals. Because of this, we must be careful to set totals which we realistically believe we can live within.
I am disappointed that the Budget Committee in shaping the totals it recommends for the second resolution has not seen fit to follow the advice of the Finance Committee with regard to what is likely to be enacted in at least two areas under Finance Committee Jurisdiction. I recognize that, in acting on the budget resolution, the Senate is adopting the overall totals in that resolution
and not the assumptions which the Senate Budget Committee, in its report, says led it to those totals. That issue has clearly been settled through Senate action on previous budget resolutions.
Nevertheless, if the Senate adopts budgetary totals which were arrived at on the basis of unrealistic assumptions, we will have betrayed the true purpose of the congressional budget process.
In the first budget resolution, there was an assumption that significant savings could be achieved in the health care and income maintenance areas under the jurisdiction of the Finance Committee. At the same time, the assumptions underlying the first budget resolution totals also allowed for the enactment of some increased funding for welfare and social services programs. The savings in health and income maintenance could only come through enactment of certain benefit reductions in the social security program and cost controls in the medicare and medicaid programs. The Finance Committee recognized that legislation to reduce benefits and impose fiscal restraints is somewhat harder to achieve than legislation to improve benefits. We indicated our reservations whether we could really anticipate that the House and Senate could complete action in these areas in time to achieve savings in fiscal year 1978. Nevertheless,we were willing to accept those savings as goal for purposes of the first concurrent resolution.
By late July, we had received from the House a bill providing for the added spending in the welfare and social services areas. We had not, however, received legislation providing for the reductions in social security and medicare and medicaid spending envisioned in the first budget resolution. In a letter to the chairman of the Budget Committee, I pointed out that the Finance Committee did not believe it would be advisable to count on legislation being enacted in time to achieve those savings for fiscal year 1978: The Budget Committee reduced the anticipated savings but, according to its report, continues to expect fiscal year 1978 savings totaling some $700 million in these programs.
Mr. MUSKIE. Mr. President, will the Senator yield for just a moment?
Mr. LONG. I yield to the Senator.
Mr. MUSKIE. May I say to the Senator I appreciate the points he is making. I will not have time to reply, but I would like to assure him that I will include in the RECORD a statement undertaking to respond to the points which he appropriately raises. I have given the Senator all my time.
Mr. LONG. I would be happy to extend the time or do whatever the Senator would like to do about the matter.
Mr. MUSKIE. I am being pressed by Senators who are watching the clock, and I would just as soon put it in the RECORD.
Mr. LONG. I thank the Senator.
The Finance Committee certainly intends to continue working toward achieving savings in the programs under its jurisdiction. Realistically, however, the odds are not good for actually enacting legislation to reduce social security, medicare, and medicaid spending by $700 million in the fiscal year beginning less than a month from now. We have not even received legislation dealing with these areas from the House. If we adopt a budget resolution with totals which assume such savings, we may find that we have simply not lived up to the budget process.
The Finance Committee also recommended that the Budget Committee allow room in the second resolution for the enactment of legislation to improve social security financing. Actually, room must be left in the budget resolution for such legislation only because of what amounts to a technicality. Under the budget process we may not reduce revenues below the second resolution floor but nothing prevents our raising more revenues than the resolution provides for. However, because social security taxes are automatically appropriated into the trust funds, an increase in social security taxes — and we would like to increase them to make the program solvent — also raises budget authority. Because there is a very serious need to remedy the financial deficit in the social security system, the Finance Committee recommended that the Budget Committee, in setting its budget authority totals, leave room for up to $3 billion in added social security taxes which we would like to levy to reduce the overall deficit and to make the social security fund more solvent. This in no way increases the deficit — in fact the deficit would be reduced if social security taxes are raised. However, it would give the Congress the flexibility to deal with this important issue if it is possible to do so.
However, at least technically, this budget resolution would like to deny us the flexibility we need to deal with this important issue. In other words, what the Finance Committee would like to do is to help reduce the deficit that we are facing here, not to increase it.
Since the second concurrent budget resolution is binding only as to its totals and not as to the assumptions the Budget Committee may have made in reaching those totals, a point of order will not lie against Finance Committee legislation providing additional financing. Nevertheless, such legislation will use up budget authority which other committees maybe counting on for their programs. Since social security financing legislation is now being actively considered by the Finance Committee and also by the House Ways and Means Committee, it seems only prudent that the second budget resolution's totals allow for the possibility that Congress will in fact enact such legislation. I think most Senators are aware of the fact that the disability insurance fund may not be able to meet its benefit obligations by the end of 1978 unless we act to provide new funding. The retirement benefit fund is also well below acceptable levels and will be unable to meet its obligations within the next few years unless we provide additional funding in that area also. In these circumstances, the Finance Committee felt the budget resolution should allow maximum flexibility for the actions which may have to be taken to increase the funding by providing more taxes to put more revenue into those programs.
I do not intend to offer an amendment to the budget resolution. I do, however, call attention to these areas in which the assumptions which led the Budget Committee to recommend the totals contained in this resolution appear to be unrealistic from the viewpoint of the chairman of the Finance Committee.
I thank the distinguished Senator.
Mr. MUSKIE. I thank my good friend from Louisiana.
May I say that I particularly appreciate the attention he is giving to the budget process. He has learned as much if not more about it than I have. We do not always agree, but I think as time goes on as I watch the perceptiveness with which he digs into these issues we should find it possible to accommodate our views increasingly as we move along. I do not really think we are that far apart. I express my appreciation for his interest.
The chairman of the Finance Committee, Senator LONG, has raised some veryimportant issues with regard to the second budget resolution. I disagree with the Senator, however, when he asserts that the Budget Committee's assumptions for the health and income security functions are unrealistic.
Let us review the changes in the Budget Committee's assumptions with regard to social security and welfare costs between the first budget resolution and the second. The first budget resolution assumed savings in the social security programs of about $0.8 billion. These savings were recommended by President Carter in his 1978 budget. The first budget resolution also assumed increased cash welfare costs of nearly $0.2 billion. This amount would have accommodated the public assistance bill being considered at that time by the House Ways and Means Committee.
For social services, the first budget resolution assumed increased costs of $0.3 billion; again, this amount would have accommodated amendments under consideration at that time by the House. Thus, for social security, cash welfare, and social services programs, the first budget resolution assumed net savings of about $0.3 billion.
With the second budget resolution, the Budget Committee assumed increased social services costs of $0.2 billion. This change in assumptions for social services reflected action that had been taken since the first budget resolution by the Senate Finance Committee.
For social security and cash welfare programs, the Budget Committee acknowledged that the net savings of $0.6 billion assumed in the first budget resolution were probably not achievable, due to the fact that it was late in the fiscal year and no legislation had been brought to the floor of either House to achieve such savings as yet. However, the Budget Committee assumed that some net savings could be achieved in these programs in fiscal 1978, and it therefore reduced the expected amount of net savings for these program from $0.6 billion to $0.3 billion.
In reducing its expected net savings for social security and cash welfare programs, the Budget Committee was conforming to the advice given by the chairman of the Finance Committee in his letter dated July 28, 1977. In that letter the chairman said in part:
The committee will carefully examine the possibility of achieving such savings but, given the legislative situation, it would appear somewhat imprudent to base the second concurrent budget resolution on an assumption that changes of this type can be enacted in time to produce the anticipated savings in fiscal year 1978.
The Budget Committee took this advice to mean that while not all of the savings assumed in the first budget resolution could be achieved in 1978, at least part of them could be.
Thus, the second budget resolution, as reported by the Budget Committee, assumes overall net savings in social security, and welfare, and social services programs of only $0.1 billion, as compared to the savings assumed in the first budget resolution of $0.3 billion. These changes in assumptions are reflected in the following table. I ask unanimous consent that the table appear in the RECORD at this point.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
BUDGET ASSUMPTIONS REGARDING SOCIAL SECURITY AND WELFARE PROGRAMS
Net savings 100
Mr: MUSKIE. I think that these figures show that the Budget Committee, rather than being inflexible and blind to the legislative realities, has been quite flexible in adjusting its assumed savings for these programs to these realities. Indeed, that these assumed savings are possible in fiscal 1978 was demonstrated yesterday by the action of the Finance Committee when it adopted amendments to the public assistance bill, H.R. 7200, which would achieve the savings assumed in the second budget resolution. I wish to commend the chairman and the committee for this high degree of fiscal responsibility that it has demonstrated in adopting these proposals.
With regard to the assumed savings in health programs, I again maintain that our committee's assumptions have not been unrealistic. We scaled down the net savings assumed in the first resolution from $0.6 to $0.3 billion. The Human Resources Committee has already reported a measure that could achieve the assumed savings in medicare and medicaid.This measure awaits the Finance Committee's consideration. The Finance Committee held hearings on a related bill last July. Thus, legislation in this area is already well underway, and it is not inconceivable that, with the support of the distinguished chairman of the Finance Committee, this legislation could be enacted in time to achieve all or nearly all of the expected savings. I urge the chairman to give this legislation his full support.
Last, with regal to the allowance in the second budget resolution for social security financing provisions, let me explain the reasons behind the budget committee's recommendation.
First, the Budget Committee considered general fund financing of the social security trust fund deficits to be a dead issue, given the Finance Committee's decision of July 28 that general funds would not be used for this purpose. Rather, the Finance Committee has decided that it will use some form of payroll tax increases to finance the short range social security deficits. Here again, I submit that the Budget Committee was highly realistic in recognizing that this decision by the Finance Committee effectively killed the President's proposal to use transfers of general funds to shore up the social security system.
The Budget Committee then focused its attention on the issue of payroll tax increases to finance the social security deficits. Let me make sure that the record is clear on one point right now: The Budget Committee is not opposed to taking action now to finance the social security deficits. To the contrary, I believe I can speak for the entire Budget Committee by saying that it wholeheartedly supports such action. However, the Budget Committee does have a responsibility to consider the macroeconomic effects of Federal spending and taxation policies. Almost every economic indicator points to a weak continuing economic recovery in 1978.
Our staff economists estimate that the 1978 tax increase recommended by the Finance Committee staff would raise inflation in 1979 by 0.2 to 0.4 percent and would cost the economy 250,000 jobs in 1979. Given the prospect of a weak economic recovery in the months ahead, the Budget Committee feels strongly that we cannot afford such negative consequences of a tax increase in 1978.
Moreover, it is not essential to raise payroll taxes in 1978. According to the 1977 social security trustees' report, by shifting funds among the retirement and disability insurance trust funds, the combined fund reserves will not be depleted until 1982. Of course, the Budget Committee is not recommending delaying action until that year. My only point is that it is not absolutely essential to the social security funds to raise new revenues in that year, particularly in light of the economic considerations to which I have already referred. In addition, I understand that the Finance Committee staff has developed a proposal that will eliminate the entire short and long range social security deficits. A deferral of the tax increase from January 1, 1978 to January 1, 1979 would not significantly alter the affect of this plan. In other words, if the Finance Committee staff plan were adjusted so that social security tax increases were initiated in January 1979 rather than in January 1978, the results of the plan would be virtually the same — the elimination of the short and long range deficits.
One last point on this issue: The Nation has known since at least 1974 that social security deficits were impending. This is not a new issue. Nonetheless, in its March 15 report to the Budget Committee, the Finance Committee made no recommendation for social security tax increases in 1978. The financial situation of the social security funds have not changed so drastically in the last 6 months to justify such a sudden shift in policy as the Finance Committee is now recommending. I say to the chairman, then, that if tax increases in January 1978 were not considered to be essential in March of this year, then they should not be considered essential at this time.
In closing, let me say that I do not think that the Budget Committee and the Finance Committee are so very far apart on the issues raised by the chairman of the Finance Committee. With regard to the income security savings assumed in the budget resolution, the Finance Committee has already acted to carry out savings in the amount assumed in this resolution, so that it would appear that this is no longer a point of issue between our committees. With regard to the health cost savings, the Finance Committee has already begun consideration of legislation to achieve these savings, and it does not appear impossible that such legislation could be enacted in time to achieve these savings. And last, with regard to social security financing, the Budget Committee has no objection to any action by the Finance Committee to resolve the social security deficits.
To the contrary, the Budget Committee applauds any such actions by the Finance Committee. The only contention between our two committees in this area is that the Budget Committee does not believe that increases in payroll taxes in 1978 are either desirable from the standpoint of macroeconomic policy or necessary in order to resolve the short range deficits.
Mr. LONG. May I explain to the Senator that part of my complaint is that we would like to help with the very problem we have. The circumstance that I am complaining about here today is that Senators offer amendments to increase the deficit. What we would like to do is to bring forth some legislation to reduce the deficit, and I hope we can have the help of the chairman of the Budget Committee and his committee at some future point to do that.
Mr. BELLMON. Mr. President, the Senator from Louisiana seems concerned primarily about the fact that the budget resolution now before the Senate does not provide room, in the recommended budget authority total, for increased social security taxes to take effect in fiscal year 1978. I think I reflect the views of everyone on the Budget Committee when I assure Senator LONG that the Budget Committee agrees that more revenue must be provided for the social security system.
What we disagree with Senator LONG on is the question of timing. The Budget Committee concluded, based on our study of the overall economy, that a social security tax increase in fiscal year 1978 would have adverse economic effects and inhibit the recovery. One of the ideas the Senate Finance Committee is apparently considering is raising $7 billion in social security taxes in 1978 by eliminating the wage base limit for the employer's share of social security taxes.
This would raise unemployment by 0.2 percent and would raise prices by at least 0.3 percent. That is the conclusion of our staff economists drawing on the work done by CBO and other economic analyses.
Moreover, Mr. President, let me point out a couple of facts which Senator LONG knows very well:
First, the social security financing problem does not require added taxes effective in fiscal year 1978. There is sufficient money in the trust funds to continue paying social security benefits in fiscal year 1978. Indeed, by shifting some money into the disability trust fund, Congress can assure that the trust funds will be adequate until at least fiscal year 1982.
Second, there would be no barrier under this resolution to the Senate Finance Committee's reporting a social security tax increase bill with an effective date in fiscal year 1979 or beyond. Indeed, I personally think we should act on such a bill as soon as possible.
I point out that the social security financing problem was well recognized early this year, before we acted on the first budget resolution. Yet, neither did the Carter administration include any social security tax increases in its initial fiscal year 1978 budget, nor the Finance Committee ask the Budget Committee to include room for a tax increase in the first budget resolution. Indeed, the Finance Committee's March 4, 1977, letter to the Budget Committee did not even suggest that a social security tax increase in fiscal year 1978 should be considered. What has changed since March of this year? Certainly, nothing significant has happened to the balances in the social security trust funds. What has changed is that President Carter sent to Congress in May of this year a set of social security financing proposals. This apparently caused the Finance Committee to conclude that it should try to raise social security taxes in fiscal year 1978 after all. On July 28, Senator LONG, as chairman of the Finance Committee, wrote to the Budget Committee and indicated that we should allow in the second budget resolution, for "the possibility of $3 billion of added social security revenues."
Mr. President, Senator LONG and the Finance Committee have not yet made any kind of case for raising social security taxes in fiscal year 1978. Until they do provide reassurances about effects on the economy, I do not believe Senator Long is justified in his criticism of the Budget Committee. Moreover, I assume that Senator LONG would have offered an amendment to this Budget Resolution if he knew what the Senate Finance Committee would eventually conclude relative to the increase of social security taxes in fiscal year 1978.
Mr. MUSKIE. Mr. President, I think that concludes all statements and all amendments.
I yield back the remainder of my time, whatever it is, and I am ready to proceed to a vote.