October 13, 1978
Page 36729
Mr. MUSKIE addressed the Chair.
Mr. PROXMIRE. Who yields time to the Senator from Maine?
Mr. NELSON. Mr.. President, how much time do we have on our side?
The PRESIDING OFFICER. The time has been divided. There is 1 hour to each side.
Mr. NELSON. How much time does the Senator from Maine desire?
Mr. MUSKIE. Ten minutes.
Mr. NELSON. I yield 10 minutes to the Senator from Maine.
The PRESIDING OFFICER. The Senator from Maine is recognized for 10 minutes.
Mr. MUSKIE. Mr. President, I have not seen the language of this amendment so I hope I do not find myself guilty of misstating it, but as I understand it what it does are these things:
One, it establishes a national goal of gradual reduction in the share of gross national product accounted for by Government outlays. That goal has been the stated objective of the Senate Budget Committee for all of the years that the Budget Committee has been in existence, and our most recent statement of that objective was 19.9 percent by 1983. But may I suggest, Mr. President, that it is one thing to state that as the objective of a process that we have in place and another thing to try in 1978 to pinpoint the precise date when you can achieve a precise share, for reasons that I will try to get into.
I have these same reservations about trying to pick the precise date when we can achieve a precise numerical inflation rate or the precise date when we can achieve a precise unemployment rate.
I will never forget the first year that the budget process was in existence. We were created in August 1974. The new President, President Ford, at that time assembled an economic conference and he declared that in the next fiscal year we were to achieve a balanced budget. In the fiscal year just ended we had come very close to achieving a balanced budget. So he declared in August or September of that year we would achieve a balanced budget in the next fiscal year. So come January what had happened? The bottom had fallen out of the economy and the unemployment rate was flirting with 10 percent. Within a period of months the Nation's GNP had declined sharply. Inflation, of course, was out of control with the rest of it.
Mr. PROXMIRE. Mr. President, will the Senator yield on that point?
Mr. MUSKIE. I wish to finish and then I will yield. I wish to finish my point.
So within a matter of less than 6 months the President's optimistic guesses as to what would happen just went out the window. They were no longer relevant and he was projecting not a balanced budget for the next fiscal year but a budget deficit of $50 billion. With that kind of drop of GNP the Government share of GNP rose precipitately to something like 23 percent.
Then I have this year's experience in mind. In January of this year the President projected a budget deficit of $60 billion, outlays of $500 billion, and budget authority of about $570 billion. This was just a few months ago.
So that was his recommendation in light of his assumptions about the performance of the economy of this year and next year. So what happened? Congress has just completed the Second Budget Resolution in which the deficit has been reduced to $38.8 billion, in which outlays have been cut by $12.7 billion, and in which budget authority has been cut by $12.5 billion. The unemployment rate has dropped below what we projected in January. So the picture is rosier than we expected just a few months ago. So now we are in the process of predicting not a few months ahead but a few years ahead as to precisely what we expect to achieve by a certain date.
Second, this amendment requires the President each year to set 5-year goals for the share of GNP accounted for by Government outlays. The amendment specifies that those goals should be 21 percent or less by 1981, 20 percent or less by 1983 and thereafter. That 20 percent compares with a Budget Committee projection for 1983 of 19.9 percent, and we also projected figures for 1979, 1980, 1981, and 1982.
So we have 5-year projections in this year's Senate Budget Committee report, and they are not inconsistent with those that the amendment of the distinguished Senator from Wisconsin, I gather, would mandate by law.
Now, what troubles me about putting these fixed numbers in the budget resolution, and we would have to if we disagreed because of changes in economic conditions, we should have to put fixed numbers here; then those numbers would be subject to debate in the Chamber. What would be the response? I can just hear it because I have been presiding over this process for 4 years. Senators will be competing with each other to add a number to the budget resolution that was the most politically attractive one they could get, whether or not it made economic sense at all in the economic climate of the day in which that number would be subject to debate in the Chamber.
It is argued that this amendment is consistent with the administration's position. The President has set a goal of reducing the Federal share of GNP to 21 percent by 1981. The President has not set any other GNP share goals. The sponsors of this amendment derive the 20 percent goal for 1983 from the President's budget by calculating the share based on out-year estimates for outlays and GNP, but those outlay estimates are current services, not policy base budget estimates. The GNP figures are assumptions not forecasts. Therefore, the 20 percent share calculated by the sponsors is not. an administration forecast of where the economy is likely to be or where the administration would like it to be.
In short, the administration has no goal of a 20-percent GNP share by 1983,and has the same reservations about stating a formal goal in the statute this far in advance that I have, and I have the same commitment—
Mr. PROXMIRE. Mr. President, will the Senator yield?
Mr. MUSKIE. I have the same commitment to that goal and to that trend in budget-making that the Senator from Wisconsin has.
I share the goal of 4 percent unemployment. I share the goal of 3 percent to 0 inflation, but I have had to live with the reality of trying to accommodate what we do with the Federal budget to changing pictures of the state of the economy.
I have rarely found an economist who boasts about his forecasts of a year ago. But they are always certain about what is going to happen a year ahead of us, and that is what I find difficulty with in all of these proposals to put the specific numbers and specific years into a piece of legislation.
I had the same difficulty with the Nunn-Bellmon-Roth-Chiles amendment to the tax bill. To pretend, after the experience I have had that you can, in effect, write a congressional budget resolution for 4 or 5 years in advance is simply unreal, and it raises expectations that can only lead to further distrust of Government if the expectations are not met.
Mr. PROXMIRE. Mr. President, will the Senator yield?
Mr. MUSKIE. We have a process for achieving exactly what this amendment and the other amendments are talking about, and we have made it clear that those are the trends we are seeking to achieve.
But when you tie our hands and put us on the defensive, when economic circumstances over which we have no control arise, then I have serious questions about that.
Yes, I yield to the Senator.
The PRESIDING OFFICER (Mr. ABOUREZK). The time of the Senator from Maine has expired.
Mr. PROXMIRE. I yield myself 5 minutes.
The PRESIDING OFFICER. The Senator from Wisconsin.
Mr. PROXMIRE. The Senator knows how highly I respect him and how much I admire the remarkable job he has done in the Budget Committee, and I would vote against my own amendment if it tied his hands and if he convinced me that it did, and I would do so. But I think this is a very flexible amendment.
In the first place, the Banking Committee, in acting on this amendment, said the following:
The Banking Committee recognized in adopting this amendment to reduce Federal outlays as a percentage of GNP that the goal would have to be flexible, especially in cases of national emergency or other type of cataclysmic event. It was agreed that if the goal becomes counterproductive such as might happen during the time of a national emergency then it certainly would not and should not be followed.
Here is what we have done to write that into the language of the statute. We provide — if the Senator has a copy of the amendment—
Mr. MUSKIE. I do not have it.
Mr. PROXMIRE. I apologize. I thought the Senator had that in his hands. On page 2, halfway down, subsection 3, we say:
Reducing the share of an expanding gross national product accounted for by Federal outlays to 21 per centum or less in the fiscal year 1981 and 20 per centum or less in the fiscal year 1983 and thereafter: Provided, That policies and programs for balancing the budget and for reducing the share accounted for by Federal outlays of an expanding gross national product shall be consistent with the goals and timetables specified in clause (1) of this subsection for the reduction of unemployment in accord with the purpose of encouraging the full use of productive resources.
That makes the reduction of spending as a percentage of, GNP subordinate to the unemployment goal.
Furthermore, we provide in the bill itself that the President can change the timetables, and there is no veto on the part of the Congress, if he thinks he is unrealistic.
So we accommodate to the fact that we know this is an economy in which we can go into a recession, we know it would be counterproductive to try to achieve this, the objective in this amendment, in the event of a recession, if it cannot be done or if they tried to do it and it would be very damaging and greatly increase unemployment.
We subordinate that to the unemployment objective which is the fundamental purpose of the Humphrey-Hawkins bill and, furthermore, I might say to my good friend from Maine that any objection here would lie also to an objection to our trying to achieve the inflation goal and the unemployment goal by 1983. They also are specific, only the unemployment goal is given priority, and I think should be.
Mr. MUSKIE. Was that a question?
Mr. PROXMIRE. On my time I was making a statement, and I was responding to my good friend from Maine.
Mr. MUSKIE. I take it the Senator would like me to respond to that?
Mr. PROXMIRE. All right, go ahead.
Mr. President, will the Senator from Wisconsin (Mr. NELSON) yield the time?
Mr. MUSKIE. I do not want to use up all the Senator's time.
Mr. NELSON. No. What time does the Senator want?
Mr. PROXMIRE. I reserve the remainder of my time.
Mr. MUSKIE. Why does not the Senator reserve the remainder of his time, and if he has time to give me later, some more time toward the end of the debate on this amendment, I will be glad to respond to the Senator from Wisconsin's amendment. But half an hour is a short time.