September 23, 1978
Page 31105
SECOND CONGRESSIONAL BUDGET RESOLUTION, 1979
Mr. MUSKIE. Mr. President, what is the pending business?
The ACTING PRESIDENT pro tempore. A message from the House on House Concurrent Resolution 683 is before the Senate.
Mr. MUSKIE. I thank the Chair.
Mr. President, I ask unanimous consent that Tom Dougherty, of Senator GLENN's staff, and Tom Dine and Rick Brandon, of the Budget Committee staff, have the privilege of the floor.
The ACTING PRESIDENT pro tempore Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, this second budget resolution had been scheduled for 8 o'clock this morning, and we have been engaged in a discussion of other important issues, without the appearance of other Senators who conceivably might be interested in the second budget resolution.
The ACTING PRESIDENT pro tempore The Chair is most attentive.
Mr. MUSKIE. In any case, it does not appear that amendments or objections to the resolution are likely at this point. Nevertheless, I think it is important to lay out the record of this second budget resolution, because it is an important record and will have great importance in imposing restraints and in giving guidance to our spending decisions as we move through the months ahead with respect to the fiscal year which begins on October 1, 1978.
Mr. President, the second budget resolution for fiscal year 1979, now before the Senate for final action, takes a major step toward balancing the budget.
It contains a 36-percent reduction in the deficit the President proposed last January. It reduces by 24 percent the deficit contained in the first budget resolution of last spring.
Some of the reduced deficit results from lower-than-expected costs in existing programs. But a large share of the reduction results from deliberate congressional action to cut back on new programs.
Mr. President, we can be proud of this congressional budget. It gives us real reason to hope that we can balance the budget earlier than the 1983 target established in the budget process.
The reductions in spending Congress has made show that the budget process does work. I hesitate to think how high a deficit we would have if we did not have the congressional budget process.
The budget process is far from perfect.It contains loopholes which must be closed.
But it is clearly our best hope for reaching a balanced budget and setting reasonable priorities within such a budget.
As usual, this conference substitute between the two Houses does not resolve all individual program decisions within the budget. To do so would usurp the role of other standing committees. Reaching agreement on such line-item decisions in a budget resolution conference would be nearly impossible, because of the vastly different views about individual programs in each House.
Instead, we agree on the overall totals for each major budget priority. Then all legislation passed by the Congress must fit within them.
One specific multibillion dollar spending program did prove to be a major roadblock to the agreement, however.
The House budget resolution contemplated spending of $2 billion a year for new public works programs.
The Senate budget resolution contained more than $40 billion in traditional public works, but none for the new program. The Senate believes such a new program would be inflationary and unnecessary in our maturing economic expansion.
Although we supported such programs during the recession, we did so with the expressed view that they should be phased out as the economy recovers. New public works programs would perpetuate in inflationary boom times these programs designed to deal with recession.
This conference deadlock on this issue kept us from meeting the September15 deadline for the conference report.
The deadlock did not delay the legislative process.
And the deadlock was resolved in a way which makes enactment of a new public works program very unlikely.
The Senate, for example, went on record last week in a 3 to 1 vote against such spending.
The Senate did so when it instructed its conferees, by a vote of 63 to 21, to stand firm against such a program.
Now, Mr. President, let me describe the parliamentary situation on this conference report.
Our conference with the House found it could make economies in the budget which actually reduced the spending totals passed by either House.
Under the rules of the House and Senate, such agreements require the conference report to be submitted in technical disagreement.
The disagreement is not over substance. It results from the parliamentary technicality that a conference report must remain within the range established by the separate action of the two Houses.
Thus, where numbers agreed to in a conference are below or above that range, the conference must report in technical disagreement even if no real issue is involved.
We have frequently reported budget resolution conferences in such technical disagreement when we reduced spending and the deficit.
We do so here, where we have reduced the deficit so greatly.
In these cases the conference actually does produce an agreement on a budget resolution, called the conference substitute.
And we have done so in this case. It is fully described in the statement of managers accompanying the conference report.
I ask unanimous consent that relevant portions of this statement of managers be printed in the RECORD at the conclusion of my remarks.
The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.
(See exhibit 1.)
Mr. MUSKIE. So, when the Senate votes today we will first vote to accept the conference report in technical disagreement.
A second vote will then occur on whether to accept the actual budget agreed to by the conferees and spelled out in the statement of managers. That vote will conclude congressional action on this budget resolution.
Other than this two-step procedure, this consideration of the second budget resolution will proceed as if the conference report had been reported without any technical disagreement.
MAJOR FEATURES OP THE CONFERENCE SUBSTITUTE
Now, Mr. President, let me review the major features of this congressional budget.
This budget contains the following binding totals for fiscal year 1979:
It contains revenues estimated at $448.7 billion, about $1 billion higher than estimated in the first resolution last spring.
It contains budget authority of $555.65 billion, $2 billion less than passed by the Senate, $5 billion less than passed by the House. This conference budget authority figure is $13 billion less than proposed by the first budget resolution.
This budget contains outlays of $487.5 billion, $2 billion less than passed by either House and $11 billion less than proposed by the first resolution.
The deficit is $1 billion lower than passed by either House, and $12 billion lower than the first resolution.
The public debt contemplated by the resolution is $836 billion, $2 billion lower than passed by either House and $13 billion lower than we contemplated in the first resolution.
Mr. President, I ask unanimous consent that a table illustrating the differences between the House and Senate resolutions for fiscal year 1979 and the conference result 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, I also ask unanimous consent that a table showing the spending totals by major mission within each function be printed in the RECORD at the conclusion of my remarks.
The ACTING PRESIDENT pro tempore. Without objection, it is so ordered.
(See exhibit 2.)
REVENUES
MUSKIE. Mr. President, the tax reduction assumed in the conference substitute is sufficient to offset the higher tax burdens in 1979 which will result from inflation and social security tax increases.
The Senate resolution provided for Federal revenues of $447.2 billion, and to achieve that level, provided that revenues be decreased on a net basis by $23.4 billion. The House resolution provided for revenues of $450 billion with a net decrease for legislation of $19.9 billion.
To reconcile the difference in the size of the two tax reductions, the conferees agreed to cut the level of Senate tax reductions by $1.5 billion, or approximately 43 percent, of the $3.5 billion difference.
However, as I will explain shortly, this increase in the revenue floor reflects a technical revenue estimating adjustment. It does not reflect any change in the fiscal policy adopted by the Senate in its second resolution.
The revenue level agreed to by the conference assumes an extension through fiscal year 1979 of temporary tax reductions of $8.2 billion and additional tax reductions in fiscal year 1979 of $13.7 billion.
This $13.7 billion reduction reflects an assumption of $12.5 billion for general income tax reductions and an allowance of $1.2 billion for structural tax law changes.
The $12.5 billion of general tax reductions is the reestimated fiscal year 1979 impact of the tax policy adopted in the Senate version of the budget resolution. For the full calendar year 1979, these tax cuts will amount to $19.4 billion.
The Senate-passed second resolution revenue floor had been based upon the assumption that a $19.4 billion general tax reduction would reduce revenue collections by $14 billion in fiscal year 1979. Subsequently, CBO and the Joint Committee on Taxation both adopted a new convention for estimating the portion of a calendar year tax reduction attributable to the same fiscal year. The fiscal year impact is limited to the first 9 months or the last 3 of any calendar year.
This new methodology had been used to calculate the impact of the House-passed tax bill. It had also been incorporated in the budget resolution approved by the House.
Applying this new methodology to the tax policy assumed in the Senate resolution reduces the fiscal year 1979 cost of a $19.4 billion full-year tax cut from $14 billion to $12.5 billion.
Accepting this $12.5 billion estimate does not change the tax policy of the Senate second resolution.
The assumption of a $19.4 billion calendar year general tax reduction remains unchanged. In fact, if the Senate conferees had not agreed to this new estimate, the Senate could have approved a 1979 tax reduction several billion dollars higher on an annual basis than was anticipated in the Senate resolution.
In total, the conference substitute allows for the same $21 to $22 billion overall level of calendar year 1979 tax reductions assumed by the Senate resolution. These reductions include $19.4 billion in general reductions plus the $1.6 to $2.6 billion for structural tax changes.
NATIONAL DEFENSE AND INTERNATIONAL AFFAIRS
Now, let me review some of the major spending decisions reflected in the conference substitute.
For national defense, the conference substitute provides the same amounts as the Senate resolution except for a $100 million downward outlay reestimate.
These totals fully provide for the current congressional action on major defense bills and possible later requirements in the defense function.
These possible later requirements include the defense appropriation bill and the October Government pay raise for the Department of Defense.
The ceilings established in the conference substitute provide for needed modernization of our strategic and tactical forces and improvements in combat readiness.
In the international affairs function, the conference substitute provides the budget authority total adopted by the Senate, with outlays $100 million below the Senate level, due to a reestimate.
These totals reflect congressional action to restrain year-to-year growth in foreign economic development assistance programs. They also provide fully for the United States share of the International Monetary Fund's Witteveen Facility.
NATURAL RESOURCES
For natural resources programs, the downward conference adjustments to the Senate resolution primarily reflect congressional action which occurred after the Senate resolution was reported. They also include some CBO reestimates.
In the general science, space, and technology function, the conference accepted the Senate-passed levels, which reflect conference agreements on the major appropriations for the function.
The energy function reflects a CBO and GAO review of progress on the strategic petroleum reserve. As a result of that review, CBO has reduced its outlay estimate for that program by $600 million.
A $200 million reduction in budget authority compared to the Senate resolution reflects the decreased likelihood we will need any budget authority for the strategic petroleum reserve beyond what is contained in the Senate-passed interior appropriation bill.
In the natural resources and environment function, the conference substitute reflects adjustments made in appropriation bills and a decreased allowance for supplemental appropriations, based on the latest estimate of requirements for such programs as the oil spill pollution liability fund and the nonpoint source pollution program.
The conference substitute reduces the Senate-passed budget authority level for the agriculture function by $3 billion, reflecting the latest estimate of the amounts of new authority needed by the Commodity Credit Corporation to operate current programs. The conference substitute also includes an allowance for legislative initiatives, such as agricultural export credit legislation and the international grain reserve bill.
Neither the budget authority nor the outlay allowance would accommodate any significant new initiatives beyond these two already proposed programs. The Senate-passed outlay level for agriculture was increased to allow for the grain reserve.
COMMERCE AND COMMUNITY DEVELOPMENT
In the commerce and housing credit function, the conferees accepted the Senate-passed ceilings. They provide sufficient funding to accommodate the current level of program activity.
The conference substitute will continue Federal support to insure an adequate supply of mortgage credit.
The conference substitute assumes continued appropriations to the Postal Service in line with current law. It assumes that the Small Business Administration will place more emphasis on the use of loan guarantees in fiscal year 1979.
In the transportation function, the conference substitute provides budget authority identical to the Senate-passed resolution. Outlays are $200 million below the Senate figures.
The outlay reduction reflects lower assumptions about the rate of spending for highway programs. The conference substitute is adequate to increase Federal support for transportation activities substantially. It will accommodate the Senate version of all major bills reported, including the pending highway and air legislation.
The figures agreed to will not accommodate the extravagant funding increases proposed in transportation legislation pending before the House.
In the community and regional development function, the conferees agreed on the Senate ceilings of $8.9 billion in budget authority and $9.6 billion in outlays. However, the House and Senate conferees differ significantly in their interpretations of these ceilings.
I want to make clear the nature of the differing interpretations of the conference substitute.
The community and regional development ceilings agreed to by the conferees are equal to those which passed the Senate. In accordance with the Senate's continuing interpretation of these ceilings, there is no room for a new public works program.
The Senate believes that further Federal stimulus of the already booming construction industry would be wasteful and inflationary.
In fact, last week, the Senate reaffirmed that judgment by a vote of 63 to 21 to instruct the Senate conferees to oppose any new public works program in this budget.
On the important issue of disaster assistance, the Senate ceilings were carefully chosen to reflect CBO's best estimate of the cost of disaster assistance in fiscal year 1979. These estimates assume that farmers will continue to be eligible for SBA disaster loans, that SBA interest rates will revert to the Government's average cost of capital, and that disasters will be declared at about the average level experienced in recent years.
In contrast, the House conferees assume that Congress will enact new legislation to reform Federal disaster assistance programs in time to achieve substantial savings in fiscal year 1979. They therefore maintain that the Senate ceilings agreed to by the conferees can accommodate up to $700 million for such a new public works spending program.
Mr. President, I believe most Senators are convinced that reforms in the SBA disaster loan program are absolutely necessary to bring Federal spending under control and to prevent the waste of tax dollars by assuring such assistance goes only to those in real need.
Senator BELLMON and I have pressed for these reforms, and we intend to continue working for them.
The President also has made a reasonable proposal for achieving needed reform.
GENERAL GOVERNMENT
In the General Government function, the conference substitute will accommodate current levels of program activity for the legislative and executive branches, increased IRS activity, and small growth in administrative law reform.
For general purpose fiscal assistance the conference substitute will allow funding of most programs at current levels. It will also contain room for a supplementary fiscal assistance program.
HUMAN RESOURCES
For human resources programs, the conference substitute retains most of the basic policies assumed in the Senate resolution.
Among these policies are funding increases for several existing programs. These programs include handicapped education, health services, child nutrition, veterans' compensation and pension programs, and an expansion of the earned income tax credit.
Mr. PROXMIRE. Mr. President, will the Senator yield?
Mr. MUSKIE. Yes; I would be happy to yield.
Mr. PROXMIRE. First, I commend the distinguished Senator from Maine on what I think is a remarkable job. I do not think anybody in the Senate felt it would be possible to come in with this kind of a remarkable reduction below the estimates in January. I think where the accomplishment is particularly impressive is with respect to budget authority because these are the programs we are going to have to have outlays for in future years.
As I understand it, while much of the outlay is because of reestimates, and part of the budget authority is because of reestimates, in this case so far as budget authority is concerned, most of it,$12 billion of the $13.5 billion roughly, is a matter of actual substantive program reductions; is that correct?
Mr. MUSKIE. The Senator is correct. To give a figure which pinpoints the excellent point which the Senator is making, the budget authority number in this resolution is $13.5 billion below the President's January budget estimate.
Mr. PROXMIRE. I think that is a most reassuring achievement. I think people in this country realize that inflation is a serious problem. There are many causes of inflation. Government spending is only one, but it is an important part of it.
I notice that one of the most unfortunate developments in recent months has been that for the first time since they have been taking polls on consumers' expectations, we now have a situation in which most people feel the future will be less attractive, less favorable, and less promising, than in the past. I think that is largely because of their perceptions about inflation. What the Senator is working on here is to develop a budget situation which will begin to bring Federal spending under control, begin to reduce the increase in Federal spending so that that pressure on prices will be reduced in the one area where we, as a country, can consciously move to reduce it.
Mr. MUSKIE. The Senator is correct.
There is another point which, to my great dissatisfaction, is not sufficiently articulated, and not taken into account by economists, and that is the effect of inflationary expectations upon inflation.
I think if people begin to expect inflation they govern their own behavior accordingly, and thus tend to contribute to inflationary pressure.
For instance, labor is looking for new contracts. If they expect inflation to continue at a given rate or a higher rate, then there are intensified pressures for higher settlements.
Or the average citizen, expecting inflation to continue, may well expedite his spending and contribute to demand for particular products. I know I have been doing that in the last couple of years — spending for things that I might otherwise have delayed, because of the conviction that later they would be more costly.
So I think trying to reduce action based upon inflationary expectations was very much a part of our year-long preoccupation with this budget. In other words, we felt that if we could demonstrate to the country that we are determined to reduce the potential inflationary impact of the Federal budget, then expectations of inflation might be reduced, and the inflationary impact of those expectations might be reduced.
Mr. PROXMIRE. I hate to keep pointing this out, but as the Senator may know I have tried to reduce the budget outlays by $25 billion. That would seem impossible, by any amendment I might offer, but the amazing thing is that the recommendation of the Senate and the Congress now is to go at least halfway, and that is an amazing achievement.
Mr. MUSKIE. May I say on that point that I do not think there is a real difference between the objectives of the Senator from Wisconsin and mine. I think the budget process gives us the means for moving in the direction that the Senator proposes. I have no objection to the proposing of such an amendment, but by doing it this way we do it on a selective basis that reflects priorities and perhaps adds to the willingness of Members of Congress to reduce appropriations, because they understand that priorities are given appropriate consideration.
I am delighted that the result we came up with reassures the Senator.
Mr. PROXMIRE. Well, it reassures me, but I am going to have to vote no on this resolution, although I am sure the Senator from Maine understands, because I do have impossible dreams, and I just hope that somehow we can get down even lower than we are.
But I commend the Senator from Maine and the Senator from Oklahoma for doing such a magnificent job here, far better than I expected they could do.
Mr. MUSKIE. Well, I do not object to pressure from that end, and I appreciate the Senator's suggestions.
To continue my statement:
For education, training, employment, and social services, budget authority and outlays are higher than the Senate-passed levels by $1.4 billion and $100 million, respectively.
Funding is assumed for the President's proposals for education concentration grants and a private sector employment initiative.
The most significant departure from the policies of the Senate resolution is an assumption about funding for the middle-income tuition assistance program.
The Senate resolution assumed no funding for this program. The House assumed funding of $1.5 billion.
The conference substitute assumes appropriations of $1 billion for this purpose, but the conference substitute also states clearly that the Congress must choose between the tuition tax credit and spending programs now under consideration.
We cannot afford both.
The conference substitute also includes small increases over the Senate levels in other education programs and in the CETA program.
As noted in the conference report, the conferees continue to encourage increased targeting of employment programs on the structurally unemployed as the most efficient and least inflationary way to fight unemployment. The ceilings for this function assume a phase-down, beginning in fiscal year 1979, of CETA countercyclical jobs due to the expected continuing improvement of the economy.
In the health function, the conference substitute ceilings are $100 million higher in budget authority and $500 million lower in outlays than the Senate-passed levels.
These ceilings assume that the hospital industry's voluntary efforts will continue to reduce costs in fiscal year 1979. The conferees agree that the present rate of inflation in health care costs is unacceptable. They urge the hospital industry to pursue vigorously its efforts to control that inflation.
The conference substitute also anticipates that the Department of Health, Education, and Welfare will make significant progress in reducing fraud, waste, and abuse in health programs.
In the income security function, the conference substitute is $300 million above the Senate level in budget authority and $300 million below the Senate total in outlays.
The rise in budget authority reflects the HUD-independent agencies appropriations conference agreement for assisted housing.
The lower outlay total reflects anticipated savings from the reduction of waste, fraud and abuse in programs under the jurisdiction of the Department of Health. Education, and Welfare.
For veterans benefits and services, the conference substitute increased the Senate total for budget authority by $150 million, and increased the Senate total for outlays by $300 million. These increases will accommodate the HUD-independent agencies appropriations conference agreement for veterans programs.
INTEREST, ALLOWANCES AND OFFSETTING RECEIPTS
For interest, the conference substitute provides budget authority and outlays of $48 billion, which is $100 million below the Senate resolution, based on the reduction in the deficit achieved in this conference.
For allowances, the conference substitute provides budget authority and outlays of $800 million. This amount is sufficient to cover the October 1978 pay raise for Federal employees of civilian agencies.
The conference substitute distributes to the appropriate functions savings assumed in the Senate and House resolutions for across-the-board cuts in appropriation bills.
For undisturbed offsetting receipts, the conference substitute provides budget authority and outlays of $18 billion, which is $700 million below the Senate resolution.
The conference. substitute assumes that either enactment of legislation or administrative action will result in higher Outer Continental Shelf leasing bids, which will increase such receipts compared to the Senate-passed level.
FISCAL POLICY
Mr. President, the spending and tax policies in this budget will sustain the current economic expansion into its fifth year.
With this budget, we can assume an economic growth rate of 3.9 percent, some further reduction in the unemployment rate, and moderation of inflation.
I ask that a table summarizing these economic assumptions 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. The reductions in spending and the deficit achieved in this budget are necessary in light of recent developments in the economy. Unemployment has fallen more rapidly than had been expected earlier this year, decreasing the need for an expansionary Federal budget. At the same time, inflation has accelerated to a rate more rapid than had been anticipated, making a reduction in the level of budgetary stimulus the only prudent course.
This budget also provides for tax reductions to offset the tax increases in 1979 from social security tax increases and inflation.
INFLATION
Americans properly view inflation as the Nation's most pressing problem. That comes as no surprise.
Inflation for the year has been running at close to a 10 percent annual rate.
This pace of inflation is intolerable. To reduce it, we must follow moderate fiscal and monetary policies.
Extreme measures would produce extreme results. We cannot abruptly throw millions of Americans out of work through impulsive budget slashes.
We cannot try to cure unemployment in the present economy with higher Federal spending and even more inflation.
We can use fiscal policy to moderate and reduce inflation. We must continue to decrease the deficit as the economy approaches capacity.
Progress toward full employment and lower inflation can be achieved through consistent Federal policies designed to avoid the boom-and-bust cycle of too much spending followed by excessive restraint.
We must also adopt so-called structural policies designed to create employment opportunities for the disadvantaged and to increase productivity and investment.
The conference substitute reduces the budget deficit. It also contains recommendations against specific action which increase prices and the inflation rate in particular sectors.
The conference substitute recognizes, for example, an urgent need to curb the rapid inflation in medical care costs.
It recommends lower outlays in the health function to reflect Federal and private efforts to reduce health cost inflation.
The conference substitute also recognizes the need for the Federal Government to set an example of wage restraint by limiting Federal pay increases this fall.
The conference substitute also encourages "targeted" public service jobs which emphasize employment and training for unskilled workers, young people, and welfare recipients — the so-called structurally unemployed.
These structurally unemployed programs help reduce the longer run tradeoff between inflation and unemployment.
Such structural unemployment policies will provide additional jobs without putting new pressures on wage rates. They will help us achieve highest rates of employment without accelerating inflation.
JOBS
Nearly 6 million American workers remain out of jobs in spite of the drop in the unemployment rate to 5.9 percent in August. Indeed, the fact we must accept this nearly 6-percent unemployment rate as an achievement, as well as a challenge, indicates how far we have come, yet how far we still have to go to recover from the recession.
The conference substitute provides for steady job gains in 1979. Employment should increase by over 1.8 million jobs during 1979, reducing the unemploymentrate to 5.6 percent by the end of that year.
This means a reduction of over 3 full points in the unemployment rate and creation of about 12 million jobs since the economic recovery began in early 1975.
We cannot rest on these employment gains.
We must preserve those gains by maintaining steady economic growth.
At the same time, we must also strengthen our commitment to reducing structural unemployment.
A BALANCED BUDGET
The deficit reduction achieved in this budget represents real progress toward a balanced budget.
It is more than $12 billion lower than the current year's deficit.
The budget deficit was $66.4 billion just 3 years ago. The deficit was 4.1 percent of the GNP that year.
The deficit in this new budget resolution represents only 1.7 percent of GNP, less than half the 1976 figure.
The 5-year budget projections of this budget indicate that continued moderate economic growth led by a strong private economy will bring the Federal budget to balance by 1983.
We would, of course, prefer to balance the budget before then.
We will try.
It is possible that exceptional economic growth in the private sector will allow us to balance the budget before 1983.
But the time it will take to reach budgetary balance depends critically on both the strength of the private sector and on congressional control over the budget.
So while these projections indicate a balanced budget in 1983, they do not suggest that we can simply pass a law which will somehow magically create a balanced budget in that or any other year.
This last point is particularly important. The two budget goals I hear mentioned again and again in this body and in my own State of Maine are budgetary balance and lower taxes.
We all wholeheartedly support these goals.
But too often the rhetoric and the simple solutions that receive so much attention are not the answers to our budget problems.
The fact is that "balance the budget" amendments added to bills on the floor will not bring us either a balanced budget or lower taxes.
Nor are "across-the-board" spending cuts an effective substitute for deliberateand careful weighing of national priorities.
Neither of these approaches can effectively control Federal spending.
But Federal spending must be held down if we hope to balance the budget and reduce taxes in the years ahead.
I urge all Senators to keep that vital fact in mind as they vote on spending legislation. Budget balance will only be achieved bill by bill and vote by vote.
Not by panacea or wishes enacted into law.
The budget reflects the dividends of spending restraint.
Under this budget, the share of Federal outlays in GNP will fall from 22 percent in fiscal year 1978 to 21.6 percent in fiscal year 1979.
The budget deficit will fall from 2.5 percent of GNP in 1978 to 1.7 percent in 1979.
Most important, this spending constraint will allow Congress to reduce the deficit in the coming fiscal year and at the same time provide American taxpayers with significant tax reductions.
THE DOLLAR
Mr. President, finally I want to discuss the relationship between this conference substitute and the value of the dollar. Continued confidence in the dollar is essential to both domestic and international economic stability.
A loss of confidence not only producesfinancial instability in the exchange markets, but also forces more restrictive monetary policies, higher interest rates, and higher unemployment upon us at home.
The recent decline in the dollar is not justified by underlying economic differences between America and our trading partners. It is in large part due to a weakening of confidence — confidence that this Nation can control Government spending, control inflation, control the budget deficit, and control its appetite for imported energy.
These reductions in spending and the deficit in this budget are designed to convince the American public and the international community that the Congress is serious about reducing spending, reducing the deficit, and bringing the budget under firm control.
The moderate and prudent fiscal policy provided by these reductions shows that we are serious about restraining inflation and can resist inflationary spending.
This is the congressional budget. It is also the Federal budget.
And it is intended to be a clear signal we can bring spending under control.
EXHIBIT 1
ECONOMIC ASSUMPTIONS
The fiscal policy contained in the conference substitute is designed to maintain the economic expansion and further reduce unemployment without adding to inflationary pressures. The reduction in the deficit from $50.9 billion in the first budget resolution to $38.8 billion in the conference substitute will improve economic confidence both at home and abroad. The economic assumptions underlying the revenue and spending ceilings contained in the conference report are as follows:
[Table omitted]
BUDGET AGGREGATES
REVENUES
The House resolution provided for Federal revenues of $450 billion, and to achieve that level, provided that revenues be decreased on a net basis by $19.9 billion. The Senate amendment provided for revenues of $447.2 billion with a net decrease of $23.4 billion.
The conference substitute provides for Federal revenues of $448.7 billion, and to achieve that level, it provides that revenues should be decreased on a net basis by $21.9 billion. This revenue level assumes extension through fiscal year 1979 of temporary income tax rate reductions of $8.2 billion and additional tax reductions in fiscal year 1979 of $13.7 billion.
The conferees agree that all general income tax rate reductions become effective not earlier than January 1, 1979.
The conferees believe enactment of both a tuition tax credit and a college tuition assistance spending program would be inefficient and duplicative. The Congress should choose between these two proposals.
BUDGET AUTHORITY
The House resolution provided new budget authority of $561.019 billion. The Senate amendment provided for new budget authority of $557.7 billion.
The conference substitute provides for new budget authority of $555.65 billion.
OUTLAYS
The House resolution provided for outlays of $489.790 billion. The Senate amendment provided for outlays of $489.5 billion.
DEFICIT
The House resolution provided for a deficitof $39.790 billion. The Senate amendment provided for a deficit of $42.3 billion.
The conference substitute provides for a deficit of $38.8 billion.
PUBLIC DEBT
The House resolution provided for a public debt level of $838.100 billion. The Senate amendment provided for a public debt level of $839.5 billion.
The conference substitute provides for a public debt level of $836 billion.
FUNCTIONAL CATEGORIES 050:NATIONAL DEFENSE
The House resolution provided budget authority of $127.013 billion and outlays of $112.403 billion The Senate amendment provided budget authority of $127 billion and outlays of $112.5 billion.
The conference substitute provides budget authority of $127 billion and outlays of $112.4 billion.
150:INTERNATIONAL AFFAIRS
The House resolution provided budget authority of $12.365 billion and outlays of $7.119 billion. The Senate amendment provided budget authority of $12.6 billion and outlays of $7.2 billion .
The conference substitute provides budget authority of $12.6 billion and outlays of $7.1 billion.
250:GENERAL SCIENCE, SPACE AND TECHNOLOGY
The House resolution provided budget authority of $5.146 billion and outlays of $4.991 billion. The Senate amendment provided budget authority of $5.2 billion and outlays of $5.0 billion.
The conference substitute provides budget authority of $5.2 billion and outlays of $5.0 billion.
270:ENERGY
The House resolution provided budget authority of $9.801 billion and outlays of $8.684 billion. The Senate amendment provided budget authority of $8.9 billion and outlays of $8.9 billion.
The conference substitute provides budget authority of $8.7 billion and outlays of $8.1 billion.
The conference substitute reflects a $1.1 billion reduction in budget authority from the House resolution for the Strategic Petroleum Reserve, reflecting fiscal year 1979 needs of the program, rather than full-funding of the first 500 million barrels in the reserve. The conferees note that the full-funding approach is one means of promoting early disclosure of total program costs, improved management and long-term savings for major construction and procurement programs.
The action taken on this approach to this particular program is not intended to prejudice its application to appropriate programs, which both committees will be reviewing in the context of the budget resolution for fiscal year 1980.
Also, the conference substitute incorporates a technical reestimate, provided by the Congressional Budget Office, reducing estimated outlays in the strategic petroleum reserve program by $0.6 billion.
300:NATURAL RESOURCES AND ENVIRONMENT
The House resolution provided budget authority of $12.963 billion and outlays of $11.380 billion. The Senate amendment provided budget authority of $13.6 billion and outlays of $11.7 billion.
The conference substitute provides budget authority of $13.3 billion and outlays of $11.5 billion.
350:AGRICULTURE
The House resolution provided budget authority of $12.225 billion and outlays of $7.628 billion. The Senate amendment provided budget authority of $12.2 billion and outlays of $7.2 billion.
The conference substitute provides budget authority of $9.2 billion and outlays of $7.5 billion. The reduction in budget authority from the Senate and House levels reflects theconferees' estimate of the amount of new borrowing or contract authority required to carry out Commodity Credit Corporation programs.
370:COMMERCE AND HOUSING CREDIT
The House resolution provided budget authority of $5.551 billion and outlays of $2.814 billion. The Senate amendment provided budget authority of $5.5 billion and out-lays of $2.8 billion.
The conference substitute provides budget authority of $5.5 billion and outlays of $2.8 billion.
400:TRANSPORTATION
The House resolution provided budget authority of $19.451 billion and outlays of $17.063 billion. The Senate amendment provided budget authority of $19.5 billion and outlays of $17.5 billion.
The conference substitute provides budget authority of $19.5 billion and outlays of $17.3billion.
450:COMMUNITY AND REGIONAL DEVELOPMENT
The House resolution provided budget authority of $10.327 billion and outlays of $9.474 billion. The Senate amendment provided budget authority of $8.9 billion and outlays of $9.6 billion.
The conference substitute provides budget authority of $8.9 billion and outlays of $9.6 billion.
The House conferees assume that within these amounts $0.7 billion in budget authority is available for public works.
The Senate conferees assume the amounts agreed to are necessary to fund existing legislation.
500:EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES
The House resolution provided budget authority of $33.887 billion and outlays of $31.111 billion. The Senate amendment provided budget authority of $31.5 billion and outlays of $30.2 billion.
The conference substitute provides budget authority of $32.9 billion and outlays of $30.3 billion.
The conferees believe enactment of both a tuition tax credit and a college tuition assistance spending program would be inefficient and duplicative. The Congress should choose between these two proposals.
The conference substitute continues the first resolution assumption of a significant shift in emphasis in CETA resources to provide employment and training services targeted to the structurally unemployed. In view of improvement in the overall employment situation, the conferees recognize the reduced need for public service jobs for the temporarily unemployed. The conferees, therefore, assume a phase-down in the number of such countercyclical public service jobs and increased emphasis on private sector initiatives and programs to serve youth, who continue to suffer high unemployment. This shift should result in significantly increased savings in public assistance costs under Function 600.
These totals include a reduction in outlays of $0.1 billion which the conferees expect to result from efforts by the Department of Health, Education, and Welfare to eliminate waste, fraud, and abuse.
550:HEALTH
The House resolution provided budget authority of $52.158 billion and outlays of $49.298 billion. The Senate amendment provided budget authority of $51.9 billion and outlays of $48.6 billion.
The conference substitute provides budget authority of $52.0 billion and outlays of $48.1 billion.
These totals include reductions in outlays of $0.7 billion which the conferees expect to result from the voluntary efforts of hospitals to constrain cost increases and $0.6 billion from efforts by the Department of Health, Education, and Welfare to eliminate waste, fraud, and abuse.
600:INCOME SECURITY
The House resolution provided $192.139 billion in budget authority and $159.650 billion in outlays. The Senate amendment provided $191.5 billion in budget authority and $159.8 billion in outlays.
The conference substitute provides $191.8 billion in budget authority and $159.3 billion in outlays. These totals include reductions in outlays of $0.3 billion which the conferees expect to result from efforts by the Department of Health, Education, and Welfare to reduce waste, fraud, and abuse.
700:VETERANS BENEFITS AND SERVICES
The House resolution provided budget authority of $21.251 billion and outlays of $20.913 billion. The Senate amendment provided budget authority of $20.9 billion and outlays of $20.4 billion.
The conference substitute provides budget authority of $21.05 billion and outlays of $20.7 billion.
750:ADMINISTRATION OF JUSTICE
The House resolution provided budget authority of $4.163 billion and outlays of $4.173 billion. The Senate amendment provided budget authority of $4.3 billion and outlays of $4.2 billion.
The conference substitute provides budget authority of $4.3 billion and outlays of $4.2 billion.
800:GENERAL GOVERNMENT
The House resolution provided budget authority of $4.098 billion and outlays of $4.035 billion. The Senate amendment provided budget authority of $4.1 billion and outlays of $4 billion.
The conference substitute provides budget authority of $4.1 billion and outlays of $4 billion.
850:GENERAL PURPOSE FISCAL ASSISTANCE
The House resolution provided budget authority of $8.931 billion and outlays of $8.959 billion. The Senate amendment provided budget authority of $8.8 billion and outlays of $8.8 billion.
The conference substitute provides budget authority of $8.8 billion and outlays of $8.8 billion.
900:INTEREST
The House resolution provided budget authority of $48.000 billion and outlays of $48.001 billion. The Senate amendment provided budget authority of $48.1 billion and outlays of $48.1 billion.
The conference substitute provides budget authority of $48.0 billion and outlays of $48.0 billion.
920:ALLOWANCES
The House resolution provided budget authority of -$1.087 billion and outlays of -$0.743 billion. The Senate amendment provided budget authority of $0.5 billion and outlays of $0.5 billion.
The conference substitute provides budget authority of $0.8 billion and outlays of $0.8 billion. The conference substitute distributes to the appropriate functions savings assumed in the House and Senate resolutions as a result of across-the-board cuts and efforts to eliminate waste, fraud, and abuse in programs administered by the Department of Health, Education, and Welfare.
950:UNDISTRIBUTED OFFSETTING RECEIPTS
The House resolution provided budget authority of -$17.163 billion and outlays of - $17.183 billion. The Senate amendment provided budget authority of -$17.3 billion and outlays of -$17.3 billion.
The conference substitute provides budget authority of -$18.0 billion and outlays of -$18.0 billion.
Mr. MUSKIE. Mr. President, I ask unanimous consent to have printed in the RECORD the statement of my good friend from Oklahoma (Mr. BELLMON), my staunch supporter in this vital effort, following my statement.
The PRESIDING OFFICER. Without objection, it is so ordered.
STATEMENT OF MR. BELLMON
During the past 4 months since the passage of the first concurrent budget resolution fiscal year 1979, the Senate has successfully balanced conflicting goals and adhered to the fiscal constraints which were established at that time. Two weeks ago, the Senate voted overwhelmingly in favor of the second congressional budget resolution, and with the presentation of this conference report, we in the committee approach completion of a fourth budgetary cycle. It now becomes the responsibility of the Senate, and Congress as a whole, aided by the Budget Committees, to adhere to the ceilings established under this resolution.
The economic objectives and priorities in the conference report reflect the general agreement by both Houses that inflation is a critically important problem. Both Houses also agreed, however that some tax reduction is required in fiscal year 1979 to counteract the fiscal drag effects arising from increased social security taxes and inflation-induced increases in personal taxes as a result of our progressive tax system. This fiscal stimulus is needed in order to preserve the extraordinary employment gains achieved thus far during the current economic expansion.
However, the Senate entered the conference disagreeing with their colleagues in the House as to the best means for achieving this stimulus. The Senate has consistently supported a two part policy — (a) a tax cut in 1979 at least equal to expected tax increases and (b) highly targeted funding in CETA and other job creation and training programs. In contrast, the House has preferred a lesser tax cut, permitting more budgetary latitude for additional funding of employment and education programs.
The conference agreement reflects the Senate position on tax policy and some accommodation to the House position on middle-income tuition assistance and very modest adjustments in employment and education programs in function 500. For example, the increase in the revenue floor from $447.2 to $448.7 billion is the result of changes in estimating techniques and not changes in policy, and provides for the full $19.4 billion in annualized tax reductions contained in the second resolution for the coming fiscal year.
While the conferees increased budget authority for middle-income tuition assistance by $1 billion with the understanding contained in the language of the report that middle-income tuition assistance and a tuition tax credit would not both be accommodated in the fiscal year 1979 budget, the conferees succeeded in reducing aggregate budget authority from both the Senate and the House position by over $2 billion — or to a total authority for fiscal 1979 of $555.65 billion. The reduction in BA includes a large reduction in agriculture CCC borrowing authority and lesser adjustments in energy, natural resources, and off-setting receipts.
The total budget authority contained in the conference report is $18 billion below that requested by the President in his January budget message.
Aggregate outlays also are $2.0 billion below the Senate level set in the second resolution. The reduction in aggregate outlays was due to downward reestimates of energy and reductions in spending for natural resources and transportation.
As a result of these changes, fiscal year 1979 deficit is $38.8 billion or $3.5 billion below the estimate contained in the Senate version of the second resolution. I would note that this deficit figure is over $20 billion below the President's deficit as stated in his January budget report — in fact, the $38.8 billion deficit for fiscal year 1979 approximates the President's January estimates for the fiscal year 1980 deficit. We may have gained 1 full year on our road to a balanced budget.
The focus of disagreement between the Senate and the House has been the inclusion of an additional $2.0 billion in the budget for a new and expanded public works program. I am pleased that these funds are not in the conference result and I would like to congratulate Senator MUSKIE for his determination and leadership on this issue. While labor intensive public works was initially conceived to be a highly targeted program to assist the structurally unemployed, in its current form, it constitutes an expansion of countercyclical public works and clearly represents a high cost analog of the existing CETA program. For these reasons and because of the already rapid growth in construction spending which argues against additional stimulus at this time, our second concurrent resolution calls for more stringent targeting of CETA funding on the structurally unemployed and a new $400 million per year private sector initiative rather than the labor intensive public works alternative. The conference report contains additional funds for the private sector initiative and youth employment programs. The total funds allocated to the structural unemployment problem in the conference agreement amounts to $7.3 billion.
Thus, we return to the Senate from conference with the Senate position both on focus and on funding unaltered. Labor intensive public works issue is a clear example of how new programs are created which ultimately gain their own spending constituencies and absorb an ever increasing share of Federal resources. I am certain that Senator MUSKIE joins with me in expressing appreciation to the Senate for its support when this issue was brought to the floor for instruction.
The conferees' task was a difficult one and I am encouraged by their willingness to resolve their differences on the basis of substantive judgments to the benefit of both Houses. The fiscal year 1979 budget achieves our many and varied objectives with a balance between stimulus and restraint which, I believe, assures the continuation of the current expansion without aggravating our already acute inflation problem.
Moreover, with its further reduced deficit, the fiscal year 1979 budget demonstrates clearly the ability of the Congress to execute its responsibilities with fiscal discipline. Such discipline is important not only because of citizen pressure for tax and spending limitation initiatives, but also because of the increasingly critical appraisal of U.S. economic policy in foreign exchange markets. Since January, the dollar has declined 7 percent relative to the French franc; 15 percent relative to the German mark; 21 percent to both the Swiss franc and the Japanese yen. Clearly, the cause of this adjustment is more complex than the preference of the Congress for one fiscal policy in contrast to another. However, to the extent that the dollars' decline is the result of past fiscal policy choices and the inflationary bias these policies may suggest, the fiscal year 1979 budget should serve to restore foreign confidence in the economic policy judgment of the Congress and, ultimately, contribute to a more stable dollar.
My colleagues in the Senate have supported the Budget Act and the budgetary process. With their cooperation, we have moved one more step toward balancing the budget by 1982 or earlier. But, we have a difficult road ahead. Prolonging the expansion, restraining inflation, and balancing the budget are our most important long-term considerations. They are not competing objectives, they are mutually dependent. A recession, which could be easily induced by a rise in the inflation rate, would delay a balanced budget indefinitely and create disturbing fiscal stress. The fiscal year 1979 budget and its $38.8 billion deficit, which is a full $21.8 billion below the fiscal year 1979 deficit projected by the President last January responds effectively to these long-term considerations. I urge the Senate to accept the conference report.
In my final remarks, I would like to reiterate my continued support of tax reduction as an effective fiscal policy tool and my desire that a multiyear tax reduction approach be combined with multiyear outlay projections which are an important part of the budget process. Multiyear projections of program expenditures help us to evaluate the longer term fiscal commitment we are making by our current decisions — and the corresponding constraint on our ability to achieve a balanced budget. Multiyear tax reductions would enable us to compare these commitments to our expected revenue flow, not only in light of economic expectations; but also mindful of our fiscal responsibility to those who pay the taxes.
In the context of this responsibility, we recognize that significant money could be saved by a reduction in what has recently become the much publicized fraud and abuse in Government agencies and programs. Fraud and abuse, however, is not part of the budget and is virtually impossible to be redressed through the budget process. We would hope that the relevant authorizing and appropriations committees as well as the agencies under their jurisdiction would work with us in this regard.
I would like to extend my personal appreciation to the conferees for their willingness to expedite the less controversial issues, to articulate their differences on the more controversial issues with a spirit of personal detachment, and to strive for compromise. We on the Budget Committee and in the Senate, owe a great debt to Senator MUSKIE for his initiative and leadership through these early years of the budget process and, to the extent that the American people now have confidence in the budgetary discipline of the Congress and the legislative process, they also are indebted to the guidance of my distinguished colleague from Maine.
Mr. MUSKIE. Mr. President, I am now prepared to respond to questions in the time remaining.
Mr. CHAFEE. Mr. President, I would like to join in commendation of the Senator from Maine and the Senator from Oklahoma for what they have accomplished. I want to offer my support for the second concurrent budget resolution which my able colleagues, Senator MUSKIE, chairman of the Budget Commit-tee, and Senator BELLMON, ranking minority member, have successfully brought through a difficult conference. In the course of the Budget Committee's efforts, both in the Senate and in conference, Senators MUSKIE and BELLMON have labored hard to reduce the deficit, combat inflation, and provide additional flexibility so that taxes can be cut.
One vexing issue which faced our Budget Committee involves a matter which has been pending before our Environment and Public Works Committee's Subcommittee on Regional and Community Development; namely, the Labor Intensive Public Works bill, introduced as part of the Carter administration’s urban policy. I serve on this subcommittee. In my opinion and in the opinion of nearly all the minority members of the full committee, this new $3 billion program is not justified by the condition of our economy. And I might add that $3 billion is a low estimate, since the House has proposed a bill authorizing $6 billion over 2 years for labor-intensive public works and local public works. Mr. President, we still have $2 billion left to spend on round 2 of the local public works.
Furthermore, since the bill was introduced last June, it has undergone changes, recommended and sanctioned by the administration, which undermine the rationale offered for the program. The most attractive argument for this new expensive program, in my opinion, was that it would be targeted to those long-term unemployed in our communities, the people who have not seen the fruit of a general economic recovery. But on closer examination of the bill and all the changes it was going through, one could see that that target population was not going to receive substantial benefits. The revised administration bill provides only half the employment opportunities originally proposed for the long-term unemployed. And the labor-intensive features which make the program different from the 1976 and 1977 local public works programs, have been compromised away.
Mr. President, the number one problem facing this country today is inflation. We are trying desperately to balance the budget. The Senate recognized this by the support we gave to the Budget Committee on the vote for the Senate budget resolution that came to the floor. When Senator MUSKIE and Senator BELLMON came to us last week to show continued support, we voted 3 to 1to hold the line on new public works spending and to instruct the Senate Budget Committee to continue their efforts to provide no funds for this program in fiscal year 1979.
Why do I bring all this up? Because, in providing budget authority for community and regional development programs, the conferees still disagree on the precise programs that will be funded in this functional category. Apparently the House believes that there is leeway to make $700 million available for public works, while the Senate conferees assume that the amounts agreed to are necessary to fund existing legislation. Specifically, the Senate anticipates that disaster assistance will account for this $700 million and then some, leaving no room for new public works.
Mr. President, I know something about natural disasters and the disaster relief programs of the Federal Government. My own State of Rhode Island suffered a disaster last winter, a blizzard, which brought forth great need for assistance to our crippled State. Experience suggests that we are being prudent in anticipating that these funds will be needed in other locations during the coming year.
In short, Mr. President, I support the Senate's position in this matter of no new additional spending for public works. Under present inflationary conditions, it is unthinkable. I believe the second concurrent resolution on the Federal budget should not be interpreted in any other way.
I would like to comment that, as I understand, the budget deficit for fiscal 1978 is $51 billion, and under this proposal it would be less than $40 billion; namely, $39.8 billion for fiscal 1979, is that correct?
Mr. MUSKIE. $38.8 billion.
Mr. CHAFEE. $38.8 billion, excuse me. So there is a drop of more than $12 billion, because the $38.8 billion is on a bigger budget; so the reduction, percentage-wise, is even greater than the figures would represent. It is not just a $12 billion drop, which is very, very significant, but percentage wise it is even a more sizable drop.
Mr. MUSKIE. The Senator is correct.
Mr. CHAFEE. There is only one question I would have here. Do I correctly understand that as you went into the conference, the Senate version on the second concurrent resolution reflected a $42.3 billion deficit, and the House version was $39.8 billion, and then the conference, by pushing from both sides, came up with $38.8 billion? I have always looked on us as the leaders in tightfisted efforts over here, and I was rather discouraged to see that the House went in with a lower version than we did. Was there some sleight of hand artist there? Was their figure of $39.8 billion going into the conference a legitimate one, compared to our $42.3 billion, or are they more tightfisted than we are?
Mr. MUSKIE. No; the difference is a difference in the size of the tax cut. Actually, on the outlay side, we were below the House going into conference. We were also well below the House on budget authority. What we did was to calculate properly the fiscal year impact of the tax cut. We did not change the fiscal policy assumptions which we assumed in the first concurrent budget resolution or the Senate second budget resolution. We simply corrected the fiscal year impact of the full calendar year cut, and that correction was the result of a new methodology for estimating the fiscal year impact of the calendar year tax cut on which CBO, the Joint Committee on Taxation, and the Treasury are now agreed
So this conference report, on the spending side, reflects solid reductions in budget authority and in outlays. I hope the Senator will be reassured about that.
Mr. CHAFEE. I thank the Senator very much.
Mr. JAVITS. Mr. President, will the Senator yield to me?
Mr. MUSKIE. I yield to the Senator from New York.
Mr. JAVITS. Mr. President, I came in a little earlier, first to congratulate the Senator from Maine and the Senator from Oklahoma on their very fine work. I have always sought to support the work of the Budget Committee, on which I originally served and found it a very rewarding experience. I very deeply appreciate the slight contraction of the deficit; it is extremely helpful in the world, and that is where my particular expertise is fixed.
I would like to say to the Senator, because I have noted particularly the public debt figure — which is slightly down, and I think that is important — for next year it is off, I see, by 2.1 percent, and down to $836 billion, that I think it would be very useful if a much closer relationship could be developed between the Budget Committee and the Joint Economic Committee, for this reason: No business just publishes its liabilities or its expenditures, or its cash flow, which is all we are doing. Every business publishes its assets and its liabilities. I realize that would include contingent liabilities or guarantees, on which, by the way, we have had extremely good luck.
But when I see anomalies like the one we went through yesterday over the Witteveen Facility, where we are making a bank deposit and it is charged as an expenditure, and we have a big row about it on the theory that it is an expenditure, it makes a mockery of our judgment. We would never have gone into this Witteveen Facility as an expenditure. It also makes fools of these agencies that think they are operating on a businesslike basis. As far as we are concerned, we are giving away the money, though you might as well charge off what you are depositing in a bank.
Therefore, it seems to me it might be wise, in the Budget Committee's reports, to take into account the operations of the country, to reflect that, sure, while we are in debt $836 billion, we are worth three or four or five times that, even charging contingent liabilities. I hope the Senator will think about that very seriously, because, now that the Budget Committee has matured as an agency of Congress, I think it would be extremely helpful if a balanced policy could be presented by the Budget Committee, too.
Mr. MUSKIE. The Senator makes a good point. The Federal budget includes both operating costs and capital investment.
Mr. JAVITS. Yes.
Mr. MUSKIE. The last time I looked at it, I think that capital investment amounted to some $80 billion in the budget; and what other budget in the world would put capital investment items, that have long life, in the so-called operating budget? That is a frustration.
I am not inclined to change the budget resolution itself, but I think we should focus on it, as the Senator suggests, in our reports.
Some of this information can be found in the President's budget if you look through it long enough. But what the Senator is asking for is a more visible display in our own reports which will reflect the differences between actual operating costs and investments.
Mr. JAVITS. And something about the asset side. All of that does not need to change the budget resolution. The Senator can do it in the way he brings the budget in here to reflect those facts. I hope the Senator will seriously consider that.
Mr. MUSKIE. We will look into it.
Mr. BAKER. Mr. President, I commend the Senator from Maine and the Senator from Oklahoma for their good work in this matter. I think they have done an outstanding job concerning the growing importance of the Budget Committee to the work of the Senate.
Mr. President, I ask unanimous consent that a compilation of budget outlays, revenues, and deficits, according tothe administration proposal, the first concurrent budget resolution, the Senate second concurrent budget resolution, and other matters, may 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. HARRY F. BYRD, JR. Mr. President, I would ask the floor manager, Mr. MUSKIE if he could provide me with some information with regard to "Federal funds deficit" as a result of this conference substitute?
COMPOSITION OF THE DEFICIT
Mr. MUSKIE. In response to the Senator's inquiry, I have asked the Budget Committee staff to prepare a table showing the budget surplus or deficit over a 40-year period, from 1940 through 1979. I submit this table for the RECORD at the conclusion of these remarks.
This table shows both the unified budget surplus or deficit — the total figure we are accustomed to dealing with in budget resolutions — and the separate surplus or deficit attributable to operations of the Federal funds and the trust funds.
The table shows each surplus or deficit both in current dollars — that is, the figures that actually show up in the budget — and in constant 1972 dollars.
The constant dollar figures make year-to-year comparisons more meaningful.
Let me emphasize that I believe the best measure of the fiscal impact of the Federal budget is the unified budget deficit, which takes into account all revenues and spending by the Government.
If one is interested in economic impact, it does not matter whether a tax dollar is deposited in a trust fund or in the general fund of the Treasury. Likewise, it does not matter whether a dollar spent is paid out of a trust fund or out of a Federal fund appropriation. In the first instance, the Government has taken a dollar out of the economy; in the second, it has put a dollar back. The economy is indifferent to internal Government bookkeeping, and primarily responds to the difference between how much the Government takes out of the economy and how much it puts into the economy.
The table follows:
[Table omitted]
Mr. BIDEN. Mr. President, I want to join in supporting the greatly reduced budget for fiscal year 1979 that is before the Senate today.
First, Mr. President, I would like to congratulate the chairman of the Budget Committee, Senator Muskie, for his tenacity in conference with the House. It was his refusal to concede to a large new spending program — backed by a vote of the Senate — that made the deficit as low as it is. I would also thank the distinguished ranking minority member, Senator BELLMON, for his continuing fight to keep the budget down.
No budget is ever satisfactory in every regard. This one is no exception as far as I am concerned. But it is nonetheless a remarkable achievement. The deficit is reduced $21.7 billion below the President's original estimate of $60.5 billion. Thus, the new deficit figure is $38.8 billion. This represents a major effort on the part of Congress, working through the congressional budget process, to reduce the Federal deficit. It also represents a recognition on the part of Congress of the role that deficit spending plays in feeding inflation.
In terms of overall spending, this final congressional budget reduces outlays by over $45 billion below the original requests of the legislative committees. Spending is $13.5 billion below the President's original request.
Budget authority is the factor that drives future year spending. Much of the budget authority approved in one year will actually be spent in future years, impacting on the deficit in those years. This resolution reduces budget authority by $13.4 billion below the President's request.
This is most important because next year, and the year after, are the years that will present the real challenge to the congressional budget process. The OMB mid-session review of the budget showed potential spending in the next 2 fiscal years approaching a $100 billion increase. This is simply not tolerable, especially in the inflationary climate in which we are living. We simply must find ways to bring the budget into balance in these next 2 years. We cannot do that with such large spending increases. I know that the Senate Budget Committee, under Senator MUSKIE will face up to the challenge. I would add parenthetically that I hope the chairman has sunset legislation on the books to help in the task of restraining Federal spending. I know he shares that view with me.
I mentioned that no one is ever completely satisfied with a budget. My main concern about this one is that the revenue figure is a little tight to provide the kind of tax cut that the American people need. However, it will allow a much larger cut than that already adopted by the House of Representatives. I am sure that we can fashion a tax bill that will stay within this budget and yet provide for a major tax cut.
While I believe next year will be the big test for fiscal restraint, we have certainly made significant strides in holding back on Government spending in this resolution and I support it.
Mr. DANFORTH. Will the Senator yield for a unanimous consent request?
Mr. MUSKIE I yield.
Mr. DANFORTH. Mr. President, I ask unanimous consent that Ed Twiny of Senator THURMOND's staff be granted the privileges of the floor during the consideration of the pending concurrent resolution.
The PRESIDING OFFICER (Mr. STONE). Without objection, it is so ordered.
Mr. CHAFEE. Mr. President, I make the same request for Mimi Feller, of my staff.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE Mr. President, if there are no other Senators who wish to ask questions or make observations, as indicated earlier, two motions are in order to deal with the fact that we bring back a conference report in technical disagreement.
As a first motion, Mr. President, I move that the conference report be agreed to.
The PRESIDING OFFICER. Does the Senator submit the conference report?
SECOND CONGRESSIONAL BUDGET RESOLUTION, 1979 – CONFERENCE REPORT
Mr. MUSKIE. Yes.
Mr. President, I submit a report of the committee of conference on House Congressional Resolution 683 and ask for its immediate consideration.
The PRESIDING OFFICER. The report will be stated.
The assistant legislative clerk read as follows:
The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the concurrent resolution (H. Con. Res. 683) revising the congressional budget for the U.S. Government for the fiscal year 1979, 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 PRESIDING OFFICER. 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 September 20, 1978.)
The PRESIDING OFFICER. The question is on the adoption of the conference report.
The conference report was agreed to.
Mr. MUSKIE. Mr. President, I now move that the Senate concur in the House amendment to the Senate amendment to House Concurrent Resolution 683, and 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 this be a 20-minute rollcall vote with the warning bell to sound after the first 12½ minutes.
The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered.
Mr. LEAHY. Mr. President, I ask unanimous consent that Mike Chaoukas, of my staff, be granted the privileges of the floor for the entire day.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. PROXMIRE. Mr. President, I make the same request for Howard Shuman, of my staff.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Washington.
Mr. JACKSON. Mr. President, I ask unanimous consent that Mike Harvey, General Counsel for the Energy Committee, be granted the privileges of the floor for the entire day.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MATHIAS. Mr. President, I make the same request for Joe DeGenoa of my staff.
Mr. DECONCINI. Mr. President, I make the same request for Romano Romani, of my staff.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MATHIAS. Regular order, Mr. President. The time of 9 o'clock has arrived.
Mr. HATCH. Mr. President, I ask unanimous consent that Paul Haddow, of Senator RIEGLE's staff, be granted the privileges of the floor for the day.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DANFORTH. Mr. President, I ask unanimous consent that Allen Moore, of my staff, be granted the privileges of the floor during the proceedings of the Senate today.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DANFORTH. I thank the Chair.
The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from Maine. The yeas and nays have been ordered and the clerk will call the roll.
The assistant legislative clerk called the roll.
The result was announced — yeas 47, nays 7, as follows:
So the motion was agreed to.
(Later in the day the following proceedings occurred: )
Mr. MUSKIE. Mr. President, I ask unanimous consent that it be in order to make a motion to reconsider the vote by which the resolution was agreed to.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I move to reconsider the vote by which the resolution was agreed to.
Mr. CHILES. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
(Conclusion of later proceedings.)
Mr. MUSKIE. Mr. President, again I wish to express my deep appreciation to the ranking member of the Budget Committee, Mr. BELLMON, who is necessarily absent today. His support and leadership have been essential to the success of the budget process.
I also wish to thank the staff of the Budget Committee for their excellent work on the second budget resolution. We have come to expect the highest caliber of professionalism from them and they are always equal to the task.
I would especially like to commend John McEvoy, Sid Brown, Van Ooms, George Merill, Dan Twomey, Tom Dine, Rodger Schlickeisen, and Ira Tannenbaum for their diligent work for the committee.