September 6, 1978
Page 28021
Mr. MUSKIE. Mr. President, I hesitate to put myself in the position of being critical of any proposal offered by the distinguished Senator from Florida. Really, what I have to say is not criticism but will result in my raising a point of order, which I will try to explain before I raise the point of order.
First, let me emphasize that I count the distinguished Senator from Florida (Mr. CHILES) as one of the most valuable members of the Budget Committee and have so valued him from the beginning of the budget process. He is one of the original members of the Budget Committee, along with the distinguished Senator from Georgia (Mr. NUNN). He is always constructive. He is ingenious; he is innovative; and, perhaps the most important quality of all, he is persistent in pursuing his ideas and the goal of a balanced budget.
So, I repeat, I am always hesitant to find myself in disagreement with him on a particular course of action.
Before I discuss the point of order. I would like to refer to the 5-year projections contained in the Senate Budget Committee report. It is upon those projections that Senator CHILES draws for analogies to support his proposal.
Let me make it clear that the 5-year projections in the Senate Budget Committee report are not forecasts at all, nor are they mandated spending totals.
They are simply an attempt to put in a 5-year context the consequences of the spending decisions we make with respect to fiscal year 1979. In making those projections, the Budget Committee does not say we should not have a balanced budget before 1983 at all. Every member of the committee would like to see a balanced budget in 1982, or 1981, or 1980, or even 1979.
But what we are able to achieve in that respect depends upon assumptions as to what the private sector of our economy will achieve and how it will perform over that 5-year period.
The assumption made in the 5-year projections contained in the Budget Committee report are moderate in their assumptions about the performance of the private sector over the next 5 years. They are moderate and yet, at the same time, if those moderate assumptions are realized, that realization would represent an unprecedented economic recovery.
We are now in the fourth year of economic recovery. If the recovery were to continue through 1983, it would represent a period of sustained economic recovery without precedent, and it is on that unprecedented assumption that we projected a balanced budget by 1983.
So, we think that that was a moderate kind of a projection, and we made it not to encourage deficits or to encourage spending, but to impose restraint upon spending.
It was our feeling that, if Members of Congress could see the consequences of today's spending decisions in a 5-year context and at the same time understand the prospect of new spending initiatives coming down the road, the effect may be restraint upon the inclination of Congresses and legislatures to spend.
So that is the reason we went into the 5-year projections.
What in effect Senator CHILES proposed is that we aim for a balanced budget 1 year earlier than 1983 by mandating now the ceilings on outlays and budget authority — I think it covered both outlays and budget authority — for each of the years covered by his amendment.
Mr. CHILES. Just the outlays.
Mr. MUSKIE. Just outlays.
Now, there are a couple of problems with that. As Senator CHILES knows as well, if not better than any of the rest of us, outlays are driven by budget authority. You cannot control deficits or spending by controlling outlays. Outlays are simply the result of appropriations in the form of budget authority. So if you mandate a certain level of outlays, that may or may not be a realistic reflection of the spending momentum that is underway to build weapons systems or to fund social security benefits, or whatever, across the whole range of the budget process.
(Mr. GLENN assumed the chair.)
Mr. MUSKIE. Second, if the underlying economic assumptions prove wrong, the mandated ceilings on outlays may prove to be very inflexible and unrealistic measures of the Federal Government's responsibilities or priorities in the economic circumstances in which we find ourselves.
I cannot help but remember that the Budget Committee was created in the fall of 1974 and within 6 months of that time we found ourselves plunged into a recession, the magnitude of which no one had anticipated or predicted at the time the budget committees were created. We were talking at the time we were created of a balanced budget in the fiscal year following. Instead we found ourselves with a deficit of $50 billion in less than 6 months.
In December 1974 the bottom fell out of the economy. So we found it impossible to predict the performance of the private sector for a 6-month period from the time that we were created.
Now it is proposed that we set mandatory ceilings for a period of years. I simply do not think that is a realistic thing for us to do, and if it were workable and achievable, there would be no need for the budget process. You simply write your ceilings into law 5 years in advance, 3 years in advance, and then live with them.
If the budget process does not exist to adjust Federal fiscal policy to the economic circumstances in which we find ourselves or which we try to predict with the best advice available to us, then it serves no purpose. We do not exist simply to set arbitrary ceilings or targets. We exist to adjust fiscal policy to the best of our ability to the economic circumstances and needs of the country, and these mandatory ceilings would simply deprive us of that flexibility because it would tell us in advance the maximum that we could spend.
It might have one other unfortunate consequence. It might actually encourage spending which would be excessive to our needs. Ceilings tend to be floors to a lot of people who vote on appropriations bills.
And if we have these and they are all going to be higher spending ceilings than in the current resolution, there is a temptation to spend up to those ceilings whether or not they are needed.
I raise these questions and suggest these problems not to denigrate Senator CHILES' objectives at all because in reality the objectives of the projections contained in the Budget Committee report and of Senator CHILES' amendment are the same.
We are both trying to find a more effective way to move the Federal budget toward balance, and we are seeking to do it by suggesting what the performance in the future should be.
So I do not criticize him at all. I simply have doubts as to the viability of mandated ceilings years in advance.
I will raise the point of order.
Mr. CHILES. Mr. President, will the Senator yield before he raises that point?
Mr. MUSKIE. I would be happy to yield to my good friend, if he will first let me describe the point of order. I will not raise it until the Senator is satisfied that there has been a sufficient dialog.
Mr. CHILES. All right.
Mr. MUSKIE. I would like to describe the point of order so that Senators will understand what it is. I have no desire to push aside the debate, and Senator CHILES should have a chance to respond or raise questions.
Section 305 of the Budget Act prohibits non-germane amendments to budget resolutions in order to prevent the resolutions from becoming vehicles for legislation within the jurisdiction of other committees and for matters not contained in the resolution.
The Chiles amendment provides spending ceilings and revenue floors for fiscal years 1980 to 1982, inclusive, fiscal years not addressed in Senate Concurrent Resolution 104, the second budget resolution to fiscal year 1979.
The amendment thus introduces new matter to the budget resolution as reported from the Budget Committee and is not germane within the meaning of section 305.
In addition, under section 306 of the Budget Act, this amendment would also be out of order, as it provides aggregate spending ceilings and revenue levels for fiscal years 1980 to 1982, matters within the jurisdiction of the Budget Commit-tee.
Section 306 provides:
That no bill, resolution, or amendment thereto which deals with legislative matters within the jurisdiction of the Budget Committee should be considered by the Senate unless the bill or resolution has been reported from the Budget Committee with such subject matter.
Since the Chiles amendment introduces new matter which is within the jurisdiction of the Budget Committee, which was not reported from the Budget Committee, it is out of order under section 306.
The proviso of section 301(6) that additional matters may be included doe not apply here for two reasons: First This proviso applies to the jurisdiction of the committee alone. Once reported the resolution is limited to its contents. Second. Section 301(a) applies to the first resolution.
That is the basis of the point of order which I will raise when Senator CHILE: is satisfied that there has been sufficient discussion.
I am willing to yield at this time to the Senator from Florida to further discuss the matter or to address myself to any questions he may wish to put.
Mr. CHILES. I thank the distinguished chairman. If he would yield to me—
Mr. MUSKIE. I yield such time to theSenator as he may need.
Mr. CHILES. I just wanted to make a couple of brief points and then make a comment on the point of order the Senator has indicated he intends to raise.
First, I will say that I think the distinguished chairman of the Budget Committee — and I compliment him for the long and arduous task that he works on in regard to the committee, and I know how dedicated he is to trying to get us on a path of fiscal restraint and toward a balanced budget — but I would like to comment on the point that he makes which, I think, is a valid point on binding the Congress, binding the Budget Committee, in future years and, perhaps, taking away the flexibility that we need.
I worried about this myself in thinking about an amendment like this. I tried to build some flexibility into my amendment which, I think, I have been able to do. Section (b) of that amendment states that "Total outlays shall only exceed those amounts to the extent that revenues are increased." So that allows the flexibility, if you can get some increased revenues, and we in the Budget Committee have often talked about this, and often to not much avail — that would be an opportunity. Second, in section (c) , that Federal deficits larger than those allowed by the foregoing limitations should only be permissible for a fiscal year in which the annual average unemployment is estimated to exceed 6 percent.
So if you had a change in economic conditions, if the path of recovery turns around, that would be reflected in an unemployment rate above 6 percent, and we get those reliable estimates. So I am again trying to build flexibility in that way. In addition, we can point out that any Congress can, upon a drastic change of conditions, change this schedule of fiscal policy.
But it seems to the Senator from Florida that we need more than pass the simple resolutions. I am delighted to see those passed, but we had a heavy vote in this Chamber for a balanced budget by 1981.
But really that resolution is worth just about the paper it is written on, because it is only a sense of the Senate resolution. But if it is worth that much it would seem to me that we need to bind ourselves a little firmer than that, and to commit ourselves to a path of restraint.
I do not think what we have now in the committee report does that at all, that is, a provision that says this is what we think will happen if you go along with the 1979 budget. It is our best guess, it is our best estimate, of a projection going into play if you went along with this budget and if you went along with this course of action we lay out. So it lays out a path, but no one commits to that path. No one, by voting for this resolution, says "I commit myself to restraint."
The other thing that I see happening in the Budget Committee itself is we go in and because we are a committee pretty evenly balanced, representing the constituencies that come into this Chamber, I am willing to cut into one area but I want to make sure there is enough money for defense, for example. That happens to be something that I worry about. I do not worry as much about some of the other areas.
There are other people who worry more in the health field than they worry about defense. So what happens is before we get through, in order to make sure that we get my adequate figure on defense, we have to take my friend's adequate figure on health, and we come out with a figure that is more than either one of us went in there wanting to spend. But that is the process, and that is the process that really worked in here without the Budget Committee restraint to the extent that we found ourselves over-spending every year, good times or bad.
So the purpose of the Budget Committee was to try to bring a restraint by coming in with a spending resolution and saying, "We are only going to spend so much, we are going to set a ceiling." But now we in the Budget Committee tried to come out with that resolution, which is debated on this floor, and every Senator has a chance to amend or agree, and we set that spending ceiling. But I find we need some kind of restraint on ourselves going into that Budget Committee because then if we had a restraint and saying that this year we have got number of dollars, how are we going to divide that within the priorities, I think we would match those priorities up to those dollars.
I think the level I am talking about as to spending is responsible as far as the total figure and that we can match the priorities within that. If we put enough restraint on ourselves to know that when we go in the room we have got to come out with a total resolution that stays within that figure, then I might not get exactly what I wanted for defense and he might not get exactly what he wanted for health. But I think the people would be better served because they would get something within the means of what we have, the dollars that are in the store, and that we would cut the cloth to fit the pattern.
That is the reason why I feel that a restraint like this is going to be necessary if we are ever going to balance the budget. We have to lay out some plan to the American people that shows our coming to a balance, even over a period of years, so that they might have some confidence in our processes.
Now if I might just discuss briefly the point of order. Section 301(a) (6) provides that the first concurrent budget resolution shall set forth, and I quote, "such other matters related to the budget as may be appropriate to carry out the purposes of the act."
It seems that a 5-year economic policy is certainly a purpose of the act. Section 301(a) states that the second budget resolution shall reaffirm or revise the first budget resolution.
So, therefore, the point I would make is if the 5-year totals are germane to the first resolution then they should be germane to the second resolution. I feel that they certainly would be germane to the first resolution and, therefore, should be in order to the second concurrent resolution.
Mr. MUSKIE. Mr. President, I do not think there is anything I can add to the point I have already tried to make with respect to the Chiles amendment. So if there is no further discussion I would raise the point of order as I have de-scribed it.
The PRESIDING OFFICER. Under the Budget Act, amendments to concurrent resolutions on the budget must be germane. Senate Concurrent Resolution 104 contains no matter dealing with a 5-year projection, or with other fiscal years. By attempting to deal with fiscal years not covered by this resolution, this amendment introduces new subject matter and, therefore, under the precedents the amendment is not germane. The point of order is well taken.
Mr. MUSKIE. May I make a few suggestions to my good friend from Florida? I will not take more than 1 or 2 minutes. I know the Senator from New York has a suggestion he wanted to discuss.
No. 1, I think the Senator from Florida has given the kind of thought and consideration to his proposal that deserves further consideration. The Senator knows how we struggled with and the doubts we had about our own projections as contained in the committee report. When we adopted those, we all felt, I think, that we were just beginning an evolutionary process that hopefully would produce something more specific, more disciplinary in its impact, and more influential in bringing Federal spending under control.
So I would urge the Senator to consider preparing legislation, maybe even an amendment to the Budget Act, and I would be happy to cooperate with the committee staff or in any other way that I can to try to develop his idea further, to the point where it might well serve as a useful instrument for budget policy.
Second, the Senator from New York, in his comments on the Senator's proposal, had some suggestions that I think are worth further study in connection with the proposal of the Senator from Florida. But I hope the Senator will not interpret my action today as throwing cold water on his idea. In fact, I would like to see him persist in trying to develop it and bring it to fuller fruition, and I will use the word maturity.
Mr. CHILES. I thank the distinguished chairman, and I will honor the kind compliment he gave me by saying that I will persist in it.
UP AMENDMENT NO 1817
(Purpose: To continue in the second congressional budget resolution for 1979 the allowance for fiscal relief for State and local welfare costs which was assumed in the first budget resolution)
Mr. MOYNIHAN. Mr. President, I send to the desk an imprinted amendment.
The PRESIDING OFFICER. The amendment will be stated.
The assistant legislative clerk read as follows:
The Senator from New York (Mr. MOYNIHAN) proposes an unprinted amendment numbered 1817:
On page 1, line 11, strike out
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 1, line 11, strike out "$557,700,000,000" and insert in lieu thereof "$558,100,000,000";
On page 2, line 2, strike out "$489,500,000,000" and insert in lieu thereof "$489,900,000,000";
On page 2, line 5, strike out "$42,300,000,000" and insert in lieu thereof "$42,700,000,000";
On page 2, line 7, strike out "$839,500,000,000" and insert in lieu therof "$839,900,000,000';
On page 2, line 9, strike out "$41,500,000,000" and insert in lieu thereof "$41,900,000,
On page 4, line 4, strike out "$191,500,000,000" and insert In lieu thereof "$191,900,000,000"; and
On page 4, line 5, strike out "$159,600,000,000" and insert in lieu thereof "$160,000,000.000".
Mr. MOYNIHAN. Mr. President, I rise today to offer an amendment to the second concurrent resolution on the budget to allow for the expenditure of $400 million for fiscal relief to assist States and localities with the cost of the Aid to Families with Dependent Children program. I seek to restore the funds which clearly were set aside for fiscal relief in the first concurrent budget resolution, and which the Finance Committee specifically endorsed in its recommendations to the Budget Committee on the second concurrent resolution.
The Senate Budget Committee chose to remove those funds, with the explicit instruction in its committee report that:
The Committee recommendation does not assume funding in FY 1979 for fiscal relief to States to offset public assistance costs.
This amendment, I hope, will correct what I regard as a serious omission.
I would make, at the outset, simply two points. The first is that the Senate has overwhelmingly indicated its basic support for interim fiscal relief. When we adopted the social security amendments last summer, we provided $384 million. This was agreed to in part by the House conferees; the other half was to be included in the legislation now before us. There was no dissenting vote on the floor of the Senate. The understanding was that we would have a series of annually increasing direct fiscal relief measures, leading up to that time when the President's welfare reform legislation would take effect — fiscal year 1981.The understanding was that we would pass a fiscal relief measure for fiscal years 1978, 1979, and 1980.
The second point I would like to make is that this does not represent an increasing expenditure in terms of the public sector of the GNP; this is the matter I touched upon in my colloquy with the distinguished Senator from Florida. These measures aim to provide tax relief, and, in many States, property tax relief of the kind which has been much in the news in recent months. The Senate Finance Committee first agreed to such a measure in November 1977, when it was understood that the situation with respect to the cost of welfare made it necessary. We have done so over and over again, and I will not burden the chairman and his colleague on the minority side with the details; they know the details.
What I would trouble them to hear, though, is my concern — and it is a concern that I know is theirs also, otherwise I would hesitate to raise it — that we should never have the impression that the Budget Committee, much less the staff of the Budget Committee, is imposing its own political choices and priorities upon the substantive committees of the Senate. This was a natural apprehension when the committee was established, and no one took greater pains to dispel any such concern than the distinguished chairman of the committee, the man who created it. Yet it is difficult for us not to sense in the persistence with which our concern here is singled out for rejection more than a penumbra of disapproval of a programmatic kind, rather than the macrobudgetary concerns of the committee itself.
So I would like to ask some questions of the chairman and his distinguished colleague, the Senator from Oklahoma.
It appears that the second budget resolution as it comes back from conference will provide some significant allowance for new legislation in the income security category, inasmuch as both the House resolution and the resolution recommended by the Senate Budget Committee included such an allowance.
Obviously, in recommending such an allowance, the Senate and House Committees have in mind certain program changes that it would accommodate. Nonetheless, I believe it is correct — and I would ask the chairman of the Budget Committee to confirm this — that the Budget process does not specify which programs should be accepted. That is a decision to be made in the course of subsequent action or subsequent legislation.
In other words, if the second budget resolution leaves room for a certain amount of additional spending in the income security category, the Finance Committee can, in full compliance with the letter and spirit of the budget process, recommend the use of that allowance for any income security program or programs over which it has jurisdiction. I would ask the chairman if that is not correct.
Mr. MUSKIE. The Senator's first question requires a somewhat lengthy reply, in order to have a complete record.
Mr. MOYNIHAN. It was a rather lengthy question. I am sorry for that.
Mr. MUSKIE. In order to put a complete record before the Senate, first let me read from the committee report. I am reading from page 99:
The Committee recommendation assumes savings from increased targeting of public service jobs on low-income people, from the standardization of the allowance provided to AFDC recipients for work-related expenses in determining their benefit levels, and from the liberalization of veterans pension benefits recently passed by the Senate. Additional funding is assumed for an expanded earned income tax credit, the refundable portion of which is included as spending in this function. The Committee recommendation does not assume funding in FY 1979 for fiscal relief to States to offset public assistance costs. The 5-year recommendations assume the costs of additional welfare reform initiatives in future years.
The exclusion of funds for fiscal relief was a rather specific decision. The reasons for the committee's decision to exclude funds for welfare fiscal relief were as follows:
One, the fiscal relief should be provided only in the context of overall welfare reform. The provision of additional funding to States should "buy" much needed reform of the welfare system.
Two, this type of block grant should be addressed during consideration of general revenue sharing legislation.
Three, the immediacy of States' need for fiscal relief is open to question: a. States and localities already received a block grant to offset welfare costs of $187 million in fiscal year 1978; b. Statesare showing budget surpluses; c. the AFDC program has experienced a reduction in participation in recent years and benefit costs have risen by less than the rate of inflation; d. the second budget resolution provides considerable additional funding for welfare related programs: title XX, social services, $200 million; expansion of the earned income tax credit, $500 million.
Those are the reasons for the decision taken.
Let me add this comment: Funds for fiscal relief could be taken from the above two program increases as both these programs are in the jurisdiction of the Finance Committee. Otherwise, they could be provided only by achieving costreductions in existing programs.
It should be stressed that under no condition can fiscal relief be provided in addition to the increases shown above unless substantial savings are made in existing programs within the Finance Committee's jurisdiction.
I think that answer covers it.
Mr. MOYNIHAN. I think that answers my question almost entirely. In thespirit of that, in a moment I will move to withdraw my amendment. But I wouldlike to make a point because it is in the interest of the chairman that when this committee acts, the people watch it, because the tendency will be to insert value judgments about program priorities. That is inevitable. One has to pick and choose before things are added up, and there are myriad choices implicit in that process.
The notion that the committee said fiscal relief should be offered only in the context of overall welfare reform constitutes a statement of what overall welfare reform represents.
I could make a perfectly good argument that fiscal relief is the welfare reform we need. I would not do that, but I could make that argument.
Secondly, as a point of fact, it was precisely in the context of overall welfare reform that we sought and succeeded in persuading the President that there ought to be a series of gradually increasing increments of fiscal relief to get the State and local governments interested in a bill which otherwise would not have any effect until fiscal year 1981.
Our persuasions, our blandishments, were perhaps not altogether disingenuous because we did not succeed — the bill did not pass the House. Still, fiscal relief is an integral aspect of welfare reform and it may be the only one we will get in the immediate future.
Of course, we are always interested in views. We must look upon them as obiter dicta.
Mr. MUSKIE. Let me add two observations. One is I simply gave the Budget Committee's rationale and conclusion, realizing that the Budget Committee's rationale is not binding.
Mr. MOYNIHAN. Yes, I understand that.
To sum up, I will ask for the chairman's judgment. It is my understanding from the chairman's very generous response that the Finance Committee would be free within the letter and the spirit of the budget process to recommend that any allowance for new legislation in the income security area be used for one or the other, or some combination of earned income tax credits and fiscal relief, as long as we remain within the budgetary limits assigned us by the Budget Committee.
Mr. MUSKIE. That is correct.
The Senator, of course, understands how difficult it would be to fit all the pieces of that puzzle together, because I understand he himself is a cosponsor of a plan to expand the earned income credit effective in 1979 at a cost of $700 million, which would use up all of the additional cost items which are provided in function 600. But the Senator has demonstrated in his career in the Senate an ingenuity that should stand him in good stead as he contemplates this puzzle. I certainly would not want to chill his right to pursue his objective.
Mr. MOYNIHAN. I take that to be a form in which the chairman wishes me good luck. I accept that observation. The Senator, as time passes, understands less and less, but he does understand that welfare reform is a complicated matter.
Mr. MUSKIE. And the Senator from New York has demonstrated an expertise and an understanding in this field which I do not believe is surpassed by any other Member of this body. I respect his wisdom and insight which he provides us in this field. I certainly do not challenge the validity of his observations. Welfare reform generally, as I am sure he understands it, involves popular as well as unpopular revisions of the system. States like the aspects of welfare reform which provide fiscal relief. Some may not like other aspects of welfare reform.
Fiscal relief alone, without other changes, would give the States the sweet without the sour. That is really what the Budget Committee is concerned about.
Mr. MOYNIHAN. The chairman is exactly correct in that respect, and I think the Senator from Oklahoma probably shares that view with an even greater degree of concern.
Mr. BELLMON. If the Senator will yield, I would like to join my chairman in agreeing that the adoption of this resolution will not preclude the Senate from voting later to grant fiscal relief to State and local governments for part of their welfare costs. The Finance Committee could choose different priorities than those recommended by the Budget Committee. But I would like to make clear that I personally feel very strongly that, if a choice has to be made between fiscal relief and improvement of the earned income tax credit, I would prefer to see us do the latter. Expansion of the earned income tax credit has been proposed in a number of welfare reform bills introduced this year, including the one that I introduced along with several of my colleagues, S. 2777. I believe Senator MOYNIHAN has also endorsed expansion of the earned income tax credit.
In presenting its recommendations on the second budget resolution, the Budget Committee provided room for expansion of the earned income tax credit but did not make specific room for fiscal relief, and I hope that this choice of priorities will ultimately be upheld by the full Senate — in other words, I hope the Senate will agree with the position we took.
The Budget Committee did not endorse fiscal relief for these reasons: There is no real urgent need for fiscal relief since States and local governments are generally in better financial shape than the Federal Government; welfare rolls have been dropping as the economy has improved over recent months; costs are growing more slowly than in past years, and this reduces the pressures on State and local government budgets. But the main reason, I feel, is that while there are valid reasons for the Federal Government to fund a larger share of welfare costs, this should be resolved as part of constructive changes in welfare programs. Providing fiscal relief as a first step undermines the drive for real welfare reform. This is the point that Senator MUSKIE was just making.
I am in favor of fiscal relief, but I think, as has been said, that States ought to take a little bitter with the sweet. I am afraid if we give them the sweet first, that is all we shall get.
Mr. MOYNIHAN. I thank the Senator from Oklahoma. I assume he is speaking in his own right as a distinguished Member of this body and a former Governor of his great State, and not as a member of the Committee on the Budget per se.
Mr. BELLMON. If the Senator will allow me, I am not sure you can separate the two, but I was speaking in my own right as a Member of this body.
Mr. MOYNIHAN. I am new to this Chamber, but I am already jealous of the prerogatives of my committee and alarmed at the imperial ambitions of all other committees.
I thank the distinguished chairman and his distinguished colleague for this opportunity. I thank the Chair.
Mr. DOMENICI addressed the Chair.
The PRESIDING OFFICER. Do Senators yield back the time on the amendment?
Mr. MOYNIHAN. Mr. President, in the circumstances, I withdraw my amendment.
The PRESIDING OFFICER. The Senator has the right to withdraw his amendment.
The amendment was withdrawn.
Mr. DOMENICI. Mr. President, I wonder if the Senator from Maine might yield 10 minutes on the bill to the Senator from New Mexico.
Mr. MUSKIE. Of course.
Mr. DOMENICI. I thank the distinguished chairman.
I want to acknowledge that there are several improvements in the second concurrent budget resolution when compared to the President's original budget request and the first concurrent budget resolution. I also want to commend our distinguished chairman, Senator MUSKIE, and our distinguished ranking minority member, Senator BELLMON, for their diligence and dedication to constant improvements in the budget process and its products.
Specifically, it is worthy of note, as several of our colleagues have done earlier today, that the second concurrent resolution reduces new budget authority by $11.4 billion below the President's budget request and $11.15 below the first concurrent resolution. Similarly, outlays are reduced in the resolution by $11.5 billion when compared to the budget request and $9.3 billion compared to the first resolution. As a result of these outlay reductions and the committee's recommendations on revenues, the deficit projected by this resolution is $18.2 billion less than contained in the President's budget request and $8.6 billion less than projected by the first concurrent budget resolution.
Regarding revenues, it is worthy of note that this resolution makes room for an additional tax cut of $15.2 billion, $1.2 billion of which is intended for a variety of smaller items, and $14 billion of which has been designated for a general tax cut, with an effective date of January 1, 1979.While I would have preferred an even larger reduction in the revenue floor to accommodate greater tax cuts, I am pleased that tax reductions of the kind and amount contemplated by the Roth-Kemp proposal can be accommodated, with slight modification, so that a permanent reduction of individual tax rates can be put in place. This is something the economy of the country so badly needs and I particularly commend my distinguished colleague, the ranking minority member of the Budget Committee, Senator HENRY BELLMON, for his excellent presentation of this issue in his "additional views" printed in the report accompanying this budget resolution.
This resolution is a significant improvement over the first resolution and it does indicate that the congressional budget process can be effectively utilized to better control and limit Government spending and more effectively utilize the fiscal policy tools available to the Government. In addition it demonstrates that responsible, sensible action can be taken to reduce the tax burden on individuals and businesses while maintaining due regard for the annual deficit and the public debt.
Still, I feel that further improvements in the budget process are possible and should be pursued. Acting on that conviction, I introduced S. 3200 on June 13 of this year. That bill would have amended the Budget Act to limit total outlays provided in any budget resolution to 20 percent of the estimated GNP. To date, there has been no action on that bill.
Mr. President, I should like to have printed in the RECORD a letter of July 24, 1978, which I received from the Board of Governors of the Federal Reserve System, from William Miller, chairman.
This letter, I say to my friends from the Budget Committee and to the Senators on the floor, basically was addressing the question of whether or not, since he had been talking about inflation very, very strongly, in the last 8 or 10 weeks, he thought it might be a prudent approach to set a percent of GNP as a procedural and substantive part of the budget process in the U.S. Congress. Without going into too much detail, let me say that, generally, the letter concurs with that and suggests that it might be a very good mechanism. I ask unanimous consent, for further details as to his views, that the letter itself be printed in the RECORD.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
FEDERAL RESERVE SYSTEM,
Washington, D.C.,
July 24, 1978.
Hon. PETE V. DOMENICI,
U.S. Senate,
Washington, D.C.
DEAR SENATOR DOMENICI: Thank you for your recent letter concerning the reduction of Federal spending as a share of GNP.
Many observers agree that a decline in the share of Federal spending over the next few years can assist in bringing about a much needed expansion of business capital accumulation. I am not aware, however, of an economic analysis that tries to specify precisely the level of Federal spending, relative to GNP, that would be optimal. Economists appear to have contributed only general ideas on this subject, by discussing why and how the share of the public sector has tended to change over time.
My own recommendation to reduce the percentage of GNP accounted for by Federal expenditures to 20 percent by 1982, represents a pragmatic, interim target. The proposed moderation of the Federal spending share is achievable, for example, if existing Federal spending programs were continued at current levels. This implies that new initiatives should be added only to the extent that savings can be made in other programs. Thus the President's FY 1979 budget projects a 20 percent Federal spending share in FY 1982. on the assumption of no additional spending initiatives beyond those listed in the 1979 budget.
Between the mid-50's and the mid-60's, when inflation rates were moderate, the Federal spending share ranged from 17 to 19½ percent. Since mid-1965 much higher levels have been reached, and lately the Federal share of total GNP has been over 22 percent. A return toward a more moderate Federal spending share would help to reduce the Federal deficit, thus relieving inflationary pressures. At the same time, the reduced budget demands on resources and credit would free resources and funds for capital investment and export development. This shift is needed to restore healthy productivity growth and to reduce the large deficits in our balance of trade.
I hope that these remarks are helpful. It was a pleasure to hear from you.
Sincerely,
BILL.
Mr. DOMENICI. Mr. President, let me say that there is a great deal of talk these days about inflation, about the excessive tax burdens that the American people are bearing, and about deficit spending. Those are all culminating, these days, in the very, very widespread and, I believe, appropriate discussions that the most significant problem in America today is inflation. I do commend our chairman (Mr. MUSKIE) and our ranking member (Mr. BELLMON) for their continuing concern throughout this process about the issue of inflation and what it does to the American people, whether they are on fixed income or producing men and women, or whether they are small businessmen. I commend them for their concern.
It appears to me that one thing is missing today when we speak about whether or not the House tax cut of $16 billion is correct, whether or not the Roth-Kemp approach is correct, or whether or not we need a capital gains change in our country. The thing that is missing is that we are not telling the American people how we intend to control the outlays, the annual expenditures of the Federal Government.
The budget process has obviously, for its short term of existence, been doing a rather good job of analyzing that and analyzing the economics of our country and trying desperately to bring that ever-expanding budget within control. I had intended today to offer an amendment that basically would — I intended to offer two. I shall discuss the first one quickly.
The first one would have asked the President of the United States to submit, next year and for the following 3 years, budgets to us as optional budgets that, in each year, would reduce the percentage of GNP that that budget represented until we got to 1982, when that budget would be no more than 20 percent of the GNP.
My second amendment, that I had intended to offer, was actually an amendment to the Budget Act which would set, as a part of our process, that next year and for the following 3 years, we would bring in an outlay budget annually that was, in each year, a diminishing percentage of the GNP from where it is now so that we got to 20 percent in 1982. That would have been part of the substantive law of our land. At that point, if we ever wanted to exceed that, it would require a two-third vote of each body to spend more annually than 20 percent of the gross national product.
We all know that if we do not do something like that, there is a move afoot in the country, coming right up from the grassroots, to impose these kinds of restrictions, by constitutional amendment or otherwise. I personally believe that 20 percent of GNP or thereabouts is an appropriate annual expenditure by the Federal Government, and that anything that exceeds that for any substantial period of time has such a debilitating effect on the basic economic growth and the basic system that produces growth that, sooner or later, we are going to arrive at this kind of conclusion. I thought that it would be best to do it now rather than to wait until later.
I clearly understand that both of these amendments, if offered to the second concurrent budget resolution, would have been subject to a point of order under the Budget Act itself, became, as a matter of fact, they are not contemplated as being part of the second concurrent resolution as the Budget Act is drawn.
I am correct, am I not, I ask the chairman and the ranking minority member, that had I submitted them, a point of order would have been raised against them?
Mr. MUSKIE. I believe so, Mr. President. I have not discussed it with the Parliamentarian, but I understand it has been discussed at the staff level and the same problem that arose with respect to the Chiles amendment would have plagued the Senator's amendment at this time.
Mr. DOMENICI. Mr. President, without offering these amendments as amendments, but merely as part of this discussion, I ask unanimous consent that the two amendments be printed in the RECORD as part of this dialog, without ever calling them up or submitting them as amendments.
There being no objection, the amendments were ordered to be printed in the RECORD, as follows:
On page 4, after line 26, add the following:
"SEC. 3. Notwithstanding any other provision of this Resolution, unless waived by a two-thirds vote in each House of Congress, the President is required to submit to Congress a budget for fiscal year 1980 in which outlays shall not exceed 21.5 percent of the gross national product of the United States as estimated for that fiscal year by the Office of Management and Budget; to submit to Congress a budget for fiscal year 1981 in which outlays shall not exceed 21 percent of the gross national product of the United States as estimated for that fiscal year by the Office of Management and Budget: to submit to Congress a budget for fiscal year1982 and in every fiscal year thereafter a budget in which outlays shall not exceed 20 percent of the gross national product of the United States as estimated for that fiscal year by the Office of Management and Budget."
On page 4, after line 26, add the following:
"SEC. 3. Notwithstanding any other provision of this Resolution, unless waived by a two-thirds vote in each House of Congress, the level of total budget outlays in any Concurrent Resolution passed in accordance with this Act shall not in fiscal year 1979 exceed 22 percent of the gross national product of the United States as estimated for that fiscal year by the Congressional Budget Office; shall not in fiscal year 1980 exceed 21.5 percent of the gross national product of the United States as estimated for that fiscal year by the Congressional Budget Office; shall not in fiscal year 1981 exceed 21 percent of the gross national product of the United States as estimated for that fiscal year by the Congressional Budget Office; and shall not in fiscal year 1982 or in any fiscal year thereafter exceed 20 percent of the gross national product of the United States as estimated for the fiscal year by the Congressional Budget Office."
Mr. DOMENICI. I ask our distinguished chairman of the committee (Mr. MUSKIE) and ranking representative (Mr. BELLMON) if, early next year, as part of hearings on the Budget Act itself — we are in a position, as I understand it, where the Budget Committee has jurisdiction to recommend changes to the Budget Act, and in this case, with this kind of amendment, we would have concurrent jurisdiction with the Committee on Governmental Affairs. Might I ask my two good friends from the Budget Committee whether they believe this approach deserves some hearing next year to see whether or not the Budget Committee would be amenable to recommending changes of this type to the Senate of the United States?
Mr. MUSKIE. I would, of course. The Senator may remember the hearings this winter on the first budget resolution. We were taking testimony from some of the distinguished economists of the country and I asked them whether or not there was a limit to which the government share — by that I meant all three levels of government — some limit above which the government's share of GNP ought not to rise if we were to maintain a viable private sector. At that time, I think the figure they used was 34 percent as a measure of the share of all levels of government in GNP. The Federal Government's share was about 22 percent at that time.
Mr. DOMENICI. Correct.
Mr. MUSKIE. They really had not — at least the witnesses we had that morning had not addressed themselves to that question. I think we ought to.
I think we ought to form some judgments about that.
With respect to the Federal Government's share, our present objective in our 5-year projections, as the Senator knows, is to get the Federal Government share of GNP below 20 percent. I think that is a valid projection and that we ought to seek to pursue it.
That will pose for this Congress and for future Congresses even more serious hard choices as to the role of the Federal Government with respect to some problems we can see lying ahead that we will be asked to do something about. The national health insurance is one of them, and there are others covered in that report.
So the Senator's amendments address themselves to some very valid questions, I am delighted that he has expressed his interest in those questions in this way on the floor of the Senate.
I assure him, if we can get enough members of the Budget Committee to share his concern and mine as to these questions, we will surely have hearings so that we may explore them.
What we will do with the results of those hearings or with the conclusions we may draw from those hearings is something we will have to consider later.
The PRESIDING OFFICER. The Senator's 10 minutes have expired.
Mr. MUSKIE. I yield the Senator another 5 minutes.
Mr. DOMENICI. I thank the Senator.
Mr. MUSKIE. But I would agree with him that we would need to think in terms of the role the people of this country would like the Federal Government to play in providing services, in influencing the state of the economy, in impacting upon their lives.
These are fundamental questions that are visible all across the political landscape from coast to coast and from border to border in this country.
We ought to address those questions in very specific terms: What would a limit to the Federal Government's role be, what an expansion of that role would mean, what the drain of the resources from the economy would mean in terms of the private sector.
These are all relevant questions that I do not think have been addressed adequately or comprehensively enough and, certainly, not sufficiently so that the average citizen in this country can focus on it and make a contribution to our thinking.
I think they are fundamental questions. I congratulate the Senator.
Mr. DOMENICI. I want to say to my good friend from Maine, as to the discussion we are having and the amendments that I was going to introduce and that I have instead made a part of the RECORD, I consider this to be a part of the maturing process of the Budget Act and budgeting.
As we well know, this, in and of itself, to come up with a first and second concurrent resolution, and the functions, and look at every one of them to see how much they are growing and going through all the torture we have been going through, and matching that up with macroeconomic policies has, indeed, been arduous.
I think after the few years we have been at it, for us to now be looking at this very fundamental issue, that is, can we have an enterprise system with private initiative, private investment, and its productivity which puts most of our people to work and does most of that which we want done in terms of growth and energizing in the country, have we arrived at a point in history when we must say that the Federal Government's share of it can be only a certain percent? I personally believe we have.
I am delighted the Senator has commented as he has and that that point is one we will consider very seriously next year and, specifically, in terms of whether or not we ought to make it part of the substantive budgetary process of this land.
I thank the Senator for his kind words.
Mr. MUSKIE. I thank my good friend from New Mexico.
Mr. BELLMON. Will the Senator yield3 minutes?
Mr. MUSKIE. Yes, I yield.
Mr. BELLMON. Mr. President, I would like to respond briefly to the comments made by the distinguished Senator from New Mexico, who is one of the most valuable members of the Budget Committee and who probably works as hard at the budget process as any other Member.
In 1978, the budget sets out 22.2 percent of GNP as the spending goal. In 1979, we are down to 21.7 percent of the GNP, which is a slight move in the right direction.
When we look at the report of the Budget Committee, we project GNP at $3.444 billion by 1983 and outlays of $669 billion, which is 19.9 percent of GNP.
So we are moving, if we can follow our plan, in the right direction.
I note that about $54 billion of tax reduction or spending increase is required to meet the economic projections on which these out-year numbers were based. If all of that $54 billion margin went to spending, outlays would amount to 21.2 percent of GNP by 1983.
So we have to make a choice between tax cuts or more spending.
I am certainly in favor of holding down on the spending. We will have to hold the line on new spending programs to meet the 2-percent goal, as the out-year budget shows. But this challenge can be met.
Rather than to mandate the change, however, I fear that such a rule might actually encourage spending under certain circumstances. I am not certain that 20 percent, 19 percent, or even 15 percent is the appropriate percentage of GNP to pursue. I also fear that such a rule will unduly encourage off-budget financing and other ingenious budgetary schemes.
I think we have to build safeguards against this.
I have great sympathy for the intent of the Senator from New Mexico. I feel that, clearly, when we undertake to look at the Budget Act as it has been working, this is one matter that deserves top consideration.
I join our chairman in agreeing it should be examined in appropriate hearings. I would certainly like to work with the Senator from New Mexico to see that this idea gets full consideration.
Mr. DOMENICI. I thank my good friend from Oklahoma.
Mr. President, I ask for an additional moment. I just want to say to my good friend from Oklahoma, I wholeheartedly agree with the remarks he has made and with the projections and predictions he has discussed. I hope they become a reality without a limitation.
On the other hand, I think he would agree with me, there are many "ifs" in getting to the 19.5 percent of GNP that is hoped for as found on page 27 of our concurrent resolution and the report today.
I think we have a choice to make as to whether or not mandating it will make it easier for us to discipline ourselves and whether it is realistic in terms of economics in our country, or whether we are apt to get there by just having it as a goal. I hope it becomes a full debate.
I do not know whether 20 percent is right, or 19 percent is right. But I do know it must continue to come down from where it is if we do want a vibrant private sector that can permit our country to grow enough to do all the things requested of the Budget Committee and the authorizing committees every year.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. MUSKIE. Mr. President, I know of only two requests to address the budget, one from the distinguished Senator from Maryland (Mr. MATHIAS), and I know Senator BYRD would like some time just before the vote.
I suggest the absence of a quorum, Mr. President.
The PRESIDING OFFICER. The clerkwill call the roll.
The second assistant legislative clerk proceeded to call the roll.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I yield such time as he desires to the distinguished Senator from Virginia.
Mr. HARRY F. BYRD, JR. Mr. President, the committee report on the second concurrent resolution on the budget for fiscal year 19'79 is a comprehensive report, and I think it is a very good report. Many facts and figures and much information have been made available to the Senate through this report, and I believe that is very important.
On page 29 of the report is a very significant table. I will read one sentence from the committee report on page 29:
The table below presents the recommendations of the committee by mission and function for fiscal year 1979 and illustrates the impact of these decisions through fiscal year 1983.
I think it is very important that the Senate have that information, and I commend the committee for developing the facts which are being presented by this report.
This table on page 29 shows that the cost of Government will increase 50 percent during the next 5 years. For the current year, fiscal 1978, the budget authority is $500 billion. By fiscal year 1983, according to the report, budget authority will have increased to $767 billion.
Outlays for the current fiscal year — namely, fiscal year 1978 — are $448 billion.By 1983, the outlays are projected to go to $669 billion.
So it is readily seen that the cost of Government during the 5-year period ending in 1983 will increase by 50 percent,according to the committee projections.
Mr. President, I ask unanimous consent to have this table on page 29 printed 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 ask unanimous consent that it be in order to ask for the yeas and nays at this time on the House concurrent resolution.
The PRESIDING OFFICER. Is there objection? The Chair hears none, and it is so ordered.
Mr. MUSKIE. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.