May 15,1978
Page 13710
ORDER OF BUSINESS
Mr. ROBERT C. BYRD. Mr. President, the Senate will now proceed to take up the conference report on the budget resolution, under the leadership of Mr. MUSKIE and Mr. BELLMON.
I ask the distinguished Senator whether or not he expects a roll call vote.
Mr. MUSKIE. Mr. President, we have inquired of all interested parties — I think we have — and there is no desire for a roll call vote. So far as we are concerned, there is no need for a roll call vote, unless some Senator now present wishes it.
Mr. ROBERT C. BYRD. Mr. President, if I may be heard by all Senators
The PRESIDING OFFICER (Mr. MATSUNAGA) . The Senate will come to order. The Senate will be in order.
Mr. ROBERT C. BYRD. Mr. President, unless a Senator now indicates that he intends to ask for the yeas and nays on the adoption of the conference report on the budget resolution, I take it that there will be no roll call votes, and the matter will be decided by voice vote, and Senators may govern themselves accordingly.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. ROBERT C. BYRD. I yield..
Mr. MUSKIE. I suggest that this report is of surpassing interest, and for those who would like to linger for the purpose of hearing it, we would be delighted to have an audience.
Mr. ROBERT C. BYRD. Of course. I thank all Senators.
Mr. MUSKIE. Mr. President, is the conference report at the desk?
The PRESIDING OFFICER. The conference report is not yet before the Senate.
Mr. MUSKIE. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The 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 President, I ask unanimous consent that the order for the quorum call be rescinded.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.
AUTHORIZATION TO TRANSMIT ADDITIONAL VIEWS ON S. 2441 TO PRINTER
Mr. WILLIAMS. Mr. President, I ask unanimous consent that the additional views on S. 2441, the Federal Public Transportation Act of 1978, be sent to the printer not later than the close of business on May 16, 1978.
The PRESIDING OFFICER. Without objection, it is so ordered.
FIRST CONGRESSIONAL BUDGET RESOLUTION, 1979
Mr. MUSKIE. Mr. President, I submit a report of the committee of conference on Senate Concurrent Resolution 80 and ask for its immediate consideration.
The PRESIDING OFFICER. The report will be stated.
The legislative clerk read as follows:
The committee of conference on the dial agreeing votes of the two Houses on the amendment of the House to the concurrent resolution (S. Con. Res. 80) setting forth the congressional budget for the United States 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 May 15, 1978.)
Mr. MUSKIE. Mr. President, I ask unanimous consent that the following members of the staff of the Committee on the Budget be allowed to remain on the floor during consideration of and votes on Senate Concurrent Resolution 80: John McEvoy, Karen Williams, Sid Brown, Van Ooms, George Merrill, Dan Twomey, Tom Dine, Ira Tannenbaum. Jacques Cook, Elizabeth Tankersley, Bob Sneed, Barbara Levering, Charles Flickner, Terry Finn, John Giles, Rodger Schlickeisen, Don Campbell, Tony Carnevale, Rob Fersh, Gail Picker, Anne Lockwood, and Brenda Tremper.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MAGNUSON. Mr. President, will the Senator yield for a half-minute?
Mr. MUSKIE, I yield to the distinguished chairman of the Appropriations ommittee, Senator MAGNUSON.
The PRESIDING OFFICER. The Senator from Washington.
Mr. MAGNUSON. Mr. President, I compliment the conferees on arriving at what I think is quite a reasonable figure on outlays, and it will really reduce the so-called estimates of the budget deficit quite a bit. I know the Senator from Maine might agree with me that we in the Appropriations Committee may reduce it even more.
Mr. MUSKIE. I appreciate that.
Mr. MAGNUSON. But I compliment the Senator on giving us some leeway, some flexibility to look at these programs for needs of the American people in the way we can, but I know the Senator from Maine hopes that we will even cut it a little further.
Mr. MUSKIE. I would not want to deprive my good friend from Washington of that pleasure and prerogative.
Mr. MAGNUSON. I thank the Senator.
Mr. MUSKIE. I thank my good friend for that statement.
We concluded this conference report this afternoon, just hours before the May 15 deadline for final congressional action on the budget resolution.
I wish I could report that both Houses can complete action on this conference report before the midnight deadline. Regrettably, an unforseeable week-long delay encountered by the House in its debate of the resolution also delayed our conference for a week.
So now we are up against the deadline for final action. But I hope we can adopt this conference report in the Senate tonight, so that final action will be possible in the House early tomorrow.
THE CONFERENCE AGREEMENT
Mr. President, in order to help Senators understand the conference report, a full copy of that report and the statement of managers accompanying it has been placed on every Senator's desk.
In addition, a document summarizing the conference report and statement of managers has also been placed on every desk.
As Senators can see from those documents, the $50.9 billion deficit contained in this conference agreement is significantly lower than the deficit contained in either the House or Senate version of the budget resolution.
A the same time, with a few nonsubstantive exceptions, the spending totals contained in the conference report are at least as great as the amounts contained in the Senate-passed resolution.
I do not make that statement about spending totals with any great pride. The Senate regularly passes more frugal budget resolutions than those adopted by the House. And, generally, we must increase our totals to some extent to achieve conference agreement with the House.
I do cite this fact as an assurance to Senators who may be concerned that the conference agreement might crowd out spending plans countenanced by the Senate-passed version of the resolution. It does not. Frankly, however, many of our Senate conferees, including myself, regret the fact that to reach agreement with the House, we had to increase the Senate-passed budget levels in many cases.
I am very pleased to report that the deficit contained in this resolution is lower than that considered by either House.
It is also $10 billion lower than the deficit contained in the President's budget, and $6 billion lower than the projected deficit for 1978.
We have achieved this lower deficit principally by agreeing to tax cuts lower than those originally contemplated by either House.
The Senate budget resolution contemplated a tax cut of $25 billion on a 12-month basis and $19.4 billion on the 9-month basis. Those were the estimates upon which the budget resolution was based. The House had proposed a tax cut of $18.2 billion on an annual basis.
The conference agreement, regarding revenues, arrived at after consultation with the President and his economic advisers and the leadership of the House and Senate, reduces the size of the tax cut to a total cut of $19.4 billion on an annual basis. It also assumes an effective date for any tax cut not earlier than January 1, 1979, so that the tax cut will be in effect only for 9 months of the fiscal year. Thus, the total $19.4 billion tax reduction in the Senate-passed resolution is reduced to $15 billion in the conference agreement.
We had at least three reasons for reducing the tax cut.
First, the economy now appears to be more robust than economists predicted only a few months ago. Accepting a deficit of a magnitude which a few months ago appeared necessary for continued economic recovery, now appears more likely to raise inflationary expectations, force up interest rates and weaken the dollar. So we scaled it back.
Second, joblessness has declined more rapidly than expected when the tax cut was first proposed. It now appears we do not need as much tax-cut job stimulus as appeared necessary last winter. So we scaled it back.
Third, and very important, we want to send a signal to the American people, American business, and the world community that we are serious about controlling inflation in this country. We are not going to lose sight of the unemployment problem or deny jobs to those who want and need them. But we are not going to overstimulate the economy and we are going to hold the line on spending and the deficit whenever and wherever we can.
Inflation control means budgetary control.
Furthermore, Mr. President, by setting a 5.5 percent limit on Federal employee pay raises, this conference agreement sends another strong signal to the American people that the Congress is serious about curbing inflation.
Mr. President, the conference agreement significantly increased the Senate-passed budget levels in such budget categories as agriculture, transportation, energy, veterans, higher education, and jobs programs. The defense category, although reduced somewhat from the Senate-passed level, represents an actual increase of $2 billion over the President's budget, taking into account slippage in the Trident submarine program unforeseen when that budget was submitted and the anti-inflationary pay cap proposed in this budget.
The conference agreement, as I have already noted, also makes cuts in several other areas of the budget. Except for thedefense category, which remains well over the President's budget request, these reductions are all technical estimating differences, which do not affect program levels.
Let me now turn to some of the other major points of difference between the conference agreement and the budget resolution which passed the Senate 2 weeks ago.
NATIONAL DEFENSE AND INTERNATIONAL AFFAIRS
The conference agreement for national defense provides for budget authority of $128.7 billion and outlays of $115.7 billion.
The proposed target for budget authority is $0.3 billion over the President's defense budget of $128.4 billion. However, when an adjustment of $1.7 billion is made to the President's request for the congressional assumptions regarding deferment of the Trident submarine, a 5.5 percent "pay cap" and 20 percent absorption of the October 1978 pay raise, the conference level is $2.0 billion higher than the President's request.
The proposed target for outlays is $2.1 billion below the President's request. This amount does not actually reduce the President's proposed spending level because the conferees assumed the CBO outlay reestimate associated with a lower rate in DOD obligations than previously anticipated.
The Senate conferees' major concern is that the United States maintain real growth in defense spending, particularly in those investment areas that are intended to enhance the strength of the NATO alliance. The proposed conference targets allow for a defense budget which can provide for substantial improvements in U.S. force capabilities as a means for meeting the NATO pledge of each member nation to aim for 3 percent real growth in defense spending for the next several years. The Senate conferees believe that this is necessary to counterbalance Soviet and Warsaw Pact attempts to strengthen their defense forces.
The conference agreement for international affairs is only slightly changed from the Senate- passed levels for this function. Budget authority remains at $12.8 billion, the conferees having agreed to language designating $1.8 billion of this amount for a possible fiscal year 1979 appropriation for the IMF Witteveen Facility. Outlays have been reduced by $0.3 billion, to $6.9 billion, mostly as a result of technical adjustments.
PHYSICAL RESOURCES
For energy, the conferees agreed to $10.4 billion in budget authority and $9.8 billion in outlays.
These amounts reflect an increase in budget authority of $0.2 billion above the Senate-passed targets but a decrease in outlays of $0.3 billion.
In budget authority these amounts can accommodate the President's full funding request for the strategic petroleum reserves as well as congressional initiatives in energy supply-related programs. In addition, the amounts will cover many of the energy conservation spending programs authorized in the National Energy Act now in conference, including several energy programs the House placed in other functions.
The decrease in outlays reflects acceptance of the House's lower estimate for outlays from the strategic petroleum reserves. These targets reflect the view of both Budget Committees that energy remains a critically important national priority.
For natural resources and environment, the conferees agreed upon budget authority of $13.6 billion and outlays of $12.2 billion. The conference targets represent decreases of $0.1 billion in budget authority and $0.3 billion in outlays below the Senate-passed figures. These targets still would allow for continuation of ongoing water resources programs as well as new project starts, and provide increases for conservation and renewable resources programs. Increases for recreational resources programs and the research and regulatory programs of the Environmental Protection Agency also are provided, although a more realistic estimate of outlays is now included.
In recognition of the special problems in the agriculture sector, the conferees agreed upon budget authority of $12.3 billion and outlays of $8.3 billion for these purposes. These targets are $0.1 billion in budget authority below and $0.5 billion in outlays above the Senate-passed levels.
Budget authority was reduced to reflect CEO's reestimate of funds needed for the agriculture credit insurance fund. With respect to outlays, the conference agreement provides $0.5 billion more than the Senate-passed level to allow some flexibility in funding agriculture initiatives. The agreement funds CBO's latest current law estimate for CCC price support activities; allows for CBO's estimate for H.R. 6782, the Emergency Agriculture Act of 1978, as passed by Congress; and provides $0.8 billion for new farm programs or reestimates.
For commerce and housing credit activities, the conferees accepted the Senate targets of $5.9 billion in budget authority and $3.6 billion in outlays. The targets should accommodate the projected operations of Federal mortgage assistance programs, including GNMA's targeted tandem program. They assume continued appropriations to the Postal Service in keeping with existing law, and anticipate that small business assistance in fiscal year 1979 will place greater emphasis on loan guarantees than in the past. Providing that other spending initiatives do not completely utilize the first budget resolution, these targets could be accommodated.
In transportation, the conferees agreed upon budget authority of $20.3 billion and outlays of $17.8 billion. These targets represent increases of $0.8 billion in budget authority and $0.3 billion in outlays above the Senate-passed figures, and were reluctantly agreed to by the Senate conferees in order to accommodate at least a portion of the transportation funding increases being proposed, primarily by the House Public Works Committee. The conference recommendation is adequate to cover the priority requirements for funding increases to highway, railroad, mass transit, and air transportation programs. At the same time, it is inadequate to accommodate the extravagant funding increases being proposed in the House.
In the community and regional development area, the conferees agreed upon $11.1 billion in budget authority and $9 billion in outlays. These targets represent increases above the Senate-passed figures of $0.7 billion in budget authority.
The conference agreement would accommodate substantially expanded economic development programs and full funding of these elements of the President's urban initiative that are likely to be enacted for fiscal year 1979.
HUMAN RESOURCES
In the human resources area, the conference agreement on the budget resolution provides for $299.95 billion in budget authority and $261.1 billion in outlays. These amounts are $2.15 billion in budget authority and $0.7 billion in outlays above the Senate resolution.
The conference agreement makes room for additional Federal efforts in several high priority programs serving the Nation's human needs.
The resolution agreed to in conference maintains the Senate's assumption of substantial funding increases for education programs; the veterans' pension program and other veterans' benefits; programs aimed at improving health care services, planning, and research; and social services grants.
Mr. President, the conference agreement will provide for up to $1.0 billion in additional middle-income student tuition assistance. The resolution would allow for a revenue loss of up to $0:3 billion to accommodate a tuition tax credit and up to $0.7 billion for student aid to middle-income college students.
The conference agreement maintains the Senate assumption that employment and training programs ought to be continued at current policy levels, but that half the available resources for such programs will be redirected from the temporarily unemployed to the structurally unemployed, who now comprise the largest portion of the unemployed population. The conference agreement assumes that the targeting of these programs will produce savings in public assistance programs in function 600.
The conference agreement reflects the continuing concern of both the House and the Senate over the rapid inflation in health care costs and supports efforts to restrain these costs including the hospital industry's voluntary efforts. At the same time, the conference agreement allows for some expansion of the medicaid program as well as increases in other health service programs. The conference agreement does not assume reduction in the level of funding for research and health education programs to the extent proposed by the President.
The conference agreement also assumes enactment of significant reforms in the Veterans' pension program. The conferees expect that, while short-term costs will be incurred as a result of this reform, it will ultimately lead to substantial savings.
The conference agreement also assumes enactment of welfare reform initiatives effective in fiscal year 1979, with an expanded earned income credit and fiscal relief to states as major possibilities.
The conference agreement also accommodates various other new initiatives, including elementary/secondary education funding, expanded nutrition program funding, and additional funding for social services.
REVENUES
Turning to revenues; the conference agreement provides for fiscal year 1979 revenues of $447.9 billion. This is $4.6 billion more than had been provided under both the House and the Senate resolutions of $443.3 billion. As I have noted previously, the increased revenue floor results from a deliberate fiscal policy decision taken by the conference, in conjunction with the administration, to moderate the size of a fiscal year 1979 tax reduction in response to changes in economic circumstances over the past several months.
The revenue target would accommodate a general tax reduction of $15 billion effective not earlier than January 1, 1979, as well as structural tax law: changes which would reduce fiscal year 1979 revenues by $1.4 billion. These changes include a tuition tax credit, a targeted employment tax credit and other miscellaneous provisions.
The revenue target also reflects acceptance by the conferees of the Senate position that refundable tax credit payments in excess of the recipients' tax liabilities should be treated as outlays and budget authority, rather than as revenue reductions.
FISCAL POLICY AND THE DEFICIT
The coexistence of unemployment and inflation means that a moderate economic expansion must be continued. Then current expansion must be extended over a much longer period than the 34 months averaged by other peacetime recoveries since World War II. At the previous average, the present recovery would end this year, leaving the economy stranded with substantial unemployment and continuing inflation.
The economic environment has changed dramatically in the 5 months since the preparation of the President's budget and tax proposals at the end of 1977. Inflation has increased and unemployment has fallen more than expected. Monetary policy has become more restrictive, and interest rates have risen, in response to higher inflation and the weakness of the dollar.
In light of all these circumstances, a moderate and prudent fiscal policy is appropriate for fiscal year 1979. The budget resolutions passed by both the Senate and the House reduced fiscal stimulus and the budget deficit below those contained in the President's budget proposals. The recent performance of the economy subsequently indicated that an even smaller budget deficit for fiscal year 1979 might be desirable.
The chairmen of the budget committees therefore met with the President to examine the economic outlook and fiscal policy. The President concurred in the view that a reduction in the budget deficit for fiscal year 1979 below those proposed in the budget resolutions of the House and the Senate would be appropriate at this time.
The report of the conference committee therefore accommodates general tax reductions for fiscal year 1979 effective January 1, 1979 and an aggregate tax cut of $24.7 billion including the extension of $8.3 billion of previous tax cuts.
In combination with the spending recommendations of the Conference Committee, this would result in a budget deficit for fiscal year 1979 of $50.9 billion. This reduced deficit will signal Congress' determinations to maintain fiscal discipline, reduce inflationary pressures, ease the pressures on capital markets, and maintain the integrity of the American dollar as a reserve asset.
As in the past 3 years, the projected Federal deficit is associated with economic activity, incomes and employment below the full capacity of our economy. This reduced level of activity shrinks Government revenues while it raises costs of unemployment compensation and other income support programs. Unacceptably large budget deficits can be eliminated only by a strong economy. The fiscal policy in the conference report will move the economy further towards full employment and budgetary balance.
INFLATION
According to a recent Harris poll reported in this morning's Washington Post, Americans are more worried about the rise in the cost of living than they have been since January, 1975. The inflation rate remains unacceptably high, and recent increases in the wholesale price index and consumer price index are a cause for particular alarm.
To achieve a decline in inflation, however, it will be necessary to follow moderate but supportive fiscal and monetary policies. We cannot stop inflation with Draconian policies which throw millions of Americans out of work, any more than we can cure unemployment with higher inflation. Progress towards full employment and lower inflation can be achieved only through consistent policies which avoid the boom-and-bust cycle of too much stimulus followed by excessive restraint.
In addition to reducing the budget deficit, the recommendations of the conference discourage specific actions which increase prices and the inflation rate in particular sectors. The conference agreement 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 enactment of legislation to reduce such cost inflation. The conference substitute also recognizes the need for a Federal pay cap.
The committee endorses the "targeted" public service jobs concept which emphasizes employment and training for the structurally unemployed — unskilled workers, young people, and welfare recipients. This policy will improve the longer-run tradeoff between inflation and unemployment.
JOBS
Over 6 million Americans remain out of work in spite of the drop in the unemployment rate to 6 percent in April. Indeed, the fact that a 6-percent unemployment rate is now regarded as an achievement, rather than as a challenge, indicates the severity of the recent recession. We cannot rest on the last year's employment gains. We must continue and strengthen our commitment to steady economic growth and to reducing structural unemployment.
The conference agreement provides for steady job gains in 1979. Employment should increase by over 2 million jobs from the end of 1978 to the end of 1979.
COORDINATION OF FISCAL AND MONETARY POLICY
Mr. President, coordination of fiscal and monetary policies has now become critically important. As the Congress maintains fiscal discipline and moves to a less expansive fiscal policy, it is vital that monetary policy be accommodative enough to encourage the private investment required for increases in productivity and growth. A proper balance between fiscal and monetary policy is essential to achieving a strong economy with lower budget deficits.
The prudent fiscal policy recommended by the conference committee should have a beneficial effect on the economy. The Chairman of the Federal Reserve has emphasized that Federal Reserve monetary policy will be responsive to fiscal discipline by the Congress and the size of the budget deficits This fiscal policy will provide additional latitude for the relaxation of monetary policy and for a better balance between fiscal and monetary policy. We are confident that Chairman Miller and the Federal Reserve will provide a monetary policy which accommodates this congressional fiscal policy and provides for continued economic growth, progress against inflation,and further gains in employment.
We must also recognize that price increases may result from supply shortages, as recently occurred in food and energy. The last several years have taught us that fiscal and monetary restraint cannot prevent price increases of this type, even at unacceptably high levels of unemployment.
Mr. President, we can reduce inflation only through deescalation of wage and price increases and careful attention to the effects of public policies on costs and prices. However, in fighting inflation, we must not mistake inflation caused by severe weather, or by unavoidable increases in energy prices, with inflation caused by excess demand. Our fight against inflation should not cause us to adopt overly restrictive fiscal and monetary policies that threaten another recession.
PARLIAMENTARY SITUATION
Mr. President, as has frequently occurred in previous years, this conference report is being submitted by the managers on the part of the two Houses in technical disagreement.
As in the usual case, the disagreement is not over substance. It is a parliamentary technicality. This result has occurred because the parliamentarians of the two Houses have ruled that, even on technical matters, a conference report on a budget resolution must in all its particulars remain within the range established by the action of the two Houses. Thus, where numbers are even slightly below or above the range, the conference must report in disagreement. This is what has occurred here.
The conference agreement contains revised figures for fiscal year 1979 that are in some cases outside the range of the House and the Senate provisions. It is the intention of the conferees of both Houses to urge adoption of the substitute budget resolution described in the statement of managers accompanying this conference report in disagreement.
So when the Senate votes today, we will first be voting to confirm the conference report in disagreement. A second vote will then occur to adopt to the original House amendment to the Senate budget resolution, with an amendment which is spelled out in the statement of managers accompanying the conference report. Other than this two-step procedure, this consideration of the conference report can proceed as if it had been reported in agreement.
CONCLUSION
I urge all Senators to support this conference report today, and throughout the summer as we consider the spending and tax legislation which must be made to fit within it. In my view, this is the best prescription for strengthening the public's confidence in the ability of the Government to cope with and to resolve our financial problems.
Finally, Mr. President, again I want to express my sincere appreciation to the ranking minority member (Mr. BELLMON) and to the other Senate conferees for their splendid efforts, cooperation, and loyal support in the conference and in bringing this report to the floor for consideration today. I wish to express again my thanks to Chairman GIAIMO and his conferees for their cooperation in reaching this agreement.
And I want to acknowledge and express our committee's gratitude for the high level of consideration and support the majority leader (Mr. BYRD) continues to give the entire budget process.
Finally, I want to commend the staff of the Budget Committee for their superb and indefatigable performance over the months leading up to this report, and in particular for their efforts in making it possible for us to bring this conference report to the Senate at 8:30 this evening, with all of the complicated paperwork completed for our consideration, even though the conference was not concluded until 4 o'clock this afternoon. We have come to expect such efforts from
them, but we are nonetheless deeply grateful, and want to make sure that we indicate our appreciation on the record on occasions such as this.
Mr. President, I am happy to yield now to my good friend the Senator from Oklahoma (Mr. BELLMON) , with my special thanks for his efforts.
The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
Mr. BELLMON. I thank our distinguished chairman..
Mr. President, 2½ weeks ago, the Senate overwhelmingly approved a budget for fiscal year 1979 that balanced our many conflicting concerns, providing adequate spending for our major programs and policies, while accommodating our macroeconomic objectives. Reconciling our many and diverse priorities with those of the House proved to be a difficult and arduous task. I support the conference agreement on the fiscal year1979 budget resolution and note that outlays and the deficit are below the respective amounts in both the Senate and House resolutions.
As should be expected, however, several changes have been made in that budget, some of which I find troubling. First, while the Senate resolution placed a high priority on aiding the improvement of our national defense forces, the House was not so disposed. It may prove necessary to raise these Defense totals in the second resolution later this year.
Second, the conferees increased the revenue floor by $4.6 billion over the figure in the Senate resolution. The conference revenue number does not totally restrict the flexibility of tax programs however. A variety of tax packages presently under consideration could be altered or added to fit within this revenue floor.
Mr. President, we on the Senate side of the budget process have continuously resisted the temptation to produce a line-item budget. Rather, we have worked hard to keep the budget resolutions and the accompanying reports free of details so as to preserve maximum flexibility for the authorizing and appropriations committees. This conference agreement is consistent with that approach. When we mentioned a specific assumption, we do so without prejudice to other alternative decisions the Congress may choose to make.
For example, in function 600 (Income Security) the report indicates that initiatives related to welfare reform can be accommodated within the functional target. Although no mention is made in the conference report of the possible expansion of the earned income credit, the Finance Committee will be free to present a bill expanding the credit, so long as it stays within the overall revenue floor and the spending allocations made available under this Resolution.
Though I agree with the need to reduce the budget deficit, I regret that this reduction could not have been partially accomplished through further cuts in spending. The Senate conferees offered numerous motions to reduce spending below the House levels. Should anyone believe that reductions of this magnitude were not feasible, I would note that many spending functions have enjoyed considerable real increases in recent years. Mr. President, I ask unanimous consent that a table documenting this growth pattern 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. BELLMON. Mr. President, though there are disappointments, my support for the conference report is based upon my belief that these targets are not wholly inappropriate and generally reflect proper national priorities.
For example, a major effort has been made by the conferees to address the persistent problem of inflation. By arriving at a deficit of $50.9 billion, which is $4.7 billion below the deficit in the Senate resolution and a full $7.2 billion below the President's request, we are taking strong action to allow the economy to sustain its momentum without putting additional upward pressure on prices. Furthermore, to demonstrate that the Federal Government must take the lead in this battle, we have assumed a 5.5 percent pay cap for Federal, civilian, and military employees and have suggested redirecting many of our jobs programs toward the structurally unemployed.
This resolution also reflects our desire to limit the overall growth of the Federal Government by containing spending. The outlay level agreed to in conference is $0.1 billion below the Senate target, is $2.6 billion below the House's and $0.6 billion below the President's.
Mr. President, while the deliberations on the budget resolution have reflected a spirit of cooperation by Members of both the House and Senate, acceptance of these targets represents only the first step in our effort to bring Federal spending and revenue policy under control. The task we now confront, and it will be a difficult one, is to abide within these constraints. If Congress is to effectively assert a responsible fiscal role, and I believe it will, this cooperation must continue, in fact as well as in spirit.
Mr. President, Members of the Senate who are not privileged to serve on the Budget Committee cannot know of the enormous debt of gratitude this body and the country owes to Chairman MUSKIE. It is only through his leadership, dedication, his negotiating skill, his thorough understanding both of the budget process and the need for sound fiscal policy that progress has been possible. Truly, ED MUSKIE is the right man in the right place at the right time. I can only hope other Members of the Senate can grasp the same sense of urgency that the senior. Senator from Maine has shown toward getting effective control over Federal spending and to give the budget process the same support given by our chairman; 1978 is a crucial year in the budget process. I congratulate Chairman MUSKIE and the able and dedicated staff of our Senate Budget Committee for their effectiveness and urge the full Senate to abide by the functional totals in this report.
Mr. President, I believe we all respect the fact that inflation has come to be an increasing threat, and the main thrust of this budget is to respond to that threat by holding down the deficit and by taking action that we feel will help to contain inflation without throwing the economy into a tailspin.
I ask unanimous consent, Mr. President, that a table showing the changes that this resolution makes in the first resolution that passed the Senate he printed at this point in my statement.
There being no objection, the table was ordered to be printed in the RECORD,
[Table omitted]
Mr. BELLMON. Mr. President, I ask further unanimous consent that a statement by the senior Senator from New Mexico (Mr. DOMENICI) be printed in the RECORD.
The PRESIDING OFFICER. Without objection, it is so ordered.
STATEMENT BY SENATOR DOMENICI
As much as I regret to do so, I find that I must oppose this Conference Report on the First Concurrent Resolution for Fiscal Year 1979. I take my position as a member of the Senate Budget Committee and as a conferee on this budget resolution very seriously and, consequently, I feel I owe my colleagues and the American public an explanation of my opposition.
During the entire time I have been involved in the new congressional budget process, I have tried to accommodate diverse interests for the good of the process. As many of my colleagues, I earnestly want the budget process to succeed, to grow and become the controlling force in budgeting for our national government. This desire has prompted me on several past occasions to agree to budget resolutions I found questionable in some details and in general effect.
I still have that same strong desire to see the budget process prosper and become that vital force for meaningful budget restraint and effective fiscal policy direction this country needs and deserves. Unfortunately, even as far as we have proceeded toward that goal, this resolution throws us considerably off track because it mandates the adoption of fiscal policies and spending decisions which I feel are not in the best interests of the Nation.
I say this not just because I disagree with some of the fiscal policies implicit in this resolution and certain specific spending levels, but because this budget resolution represents a sudden unexplained reversal of revenue decisions previously announced with great fanfare and resulting high expectation on the part of the general public. That expectation was for a general tax cut on the order of $25 billion annually, a tax cut long overdue for hard working Americans who have seen their spendable incomes eaten away by inflation and elevation to higher tax brackets. Now they will wake up tomorrow morning and find that the Congress, by means of the First Concurrent Resolution on the Budget, has demolished that expectation.
It seems to me that this resolution could have been adjusted in other places enough to have allowed the $19.4 billion dollar tax cut the Senate provided room for in S. Con. Res. 80. To be sure, this resolution has some attractive features compared to either the House or Senate versions. For example, the most attractive feature is that it estimates the FY 79 deficit at $50.9 billion compared to the senate's $55.6 billion and the House's $57.0 billion. Before we make too much of that, however, we should be aware that this comparatively low deficit has been achieved largely at the expense of the larger tax cut contained in the Senate version.
While a smaller deficit is a highly desirable goal and one we ought always to seek, it should not become so dominant that other important considerations are ignored or rejected. To this point, many will claim that a recent change in economic conditions — the leveling off of unemployment and the continuing spiral of inflation — justify a smaller tax reduction. That argument is grounded on the premise that a general tax cut as large as $25 billion on an annual basis would be too inflationary. This may be a reasonable and defensible economic thesis and I recognize that tax cuts do carry inflationary consequences, but in my mind, those possible consequences are more than offset by the documented need for a large general tax cut and by the economic benefits which would result.
So, in spite of the reduction in the estimated deficit, I feel we are making a mistake and that we are failing in our duty to the American taxpayer by limiting substantially the tax cut that could be enacted by FY 79, not to mention the implication of this action for future year revenues.
To be more specific, let me close by itemizing my other objections to this approach.
1. This resolution can be correctly described as effectively raising the taxes paid by individual Americans by $4.4 billion in FY 79.
2. This action took the pressure off spending limitations both now and in later years because it guarantees higher revenues to pay for larger spending programs.
3. It provides for real growth in all functional areas of the budget, some well beyond justification, while refusing to allow taxpayers the full tax reduction they are entitled to and have been led to expect.
Just a word now about the spending side as a further indication of my dissatisfaction with this resolution. In the National Defense Function, 060, the Conference settled on $128.7 billion in Budget Authority and $115.7 billion in Outlays. This is $1.2 billion less in BA and $0.9 billion less in Outlays than the amounts the Senate approved in S. Con. Res. 80. It should be emphasized that the senate strongly supported those numbers and I feel that we did not adequately fulfill our duty as Senate Conferees by reducing our commitment to a strong National Defense.
There are those, apparently a majority of my fellow conferees, who feel that the military can always make do sufficiently with a couple of hundred million less. Perhaps they are right. There are those, again apparently a majority of my fellow conferees, who feel that we can play off the lower deficit figure against a smaller tax cut, justifying the latter in the name of fighting inflation, and no one will be the wiser. These are notions I cannot support, as much as I would like to, and, accordingly I must vote against this resolution.
The PRESIDING OFFICER. The Senator from Maine.
Mr. MUSKIE. Mr. President, I would like to express my personal appreciation to the distinguished Senator from Oklahoma for the undeserved comments with respect to my performance. I wish I had thought of them. I would have directed them to his performance and his support of the budget process.
I did not know Senator BELLMON well before he came to the Budget Committee where he joined me some 3 or 4 years ago. Having worked with him for these years, I must say I now regard him as one of the preeminent Senators in this body in terms of intellect, balance of judgment, and just plain courage. I am proud to serve with him and will always remember our association in this process with great affection. I shall never forget the strength and support he has given me in difficult times in conferences as well as in the Budget Committee itself.
Mr. BELLMON. Mr. President, I thank my distinguished chairman for those kind and undeserved comments.
Mr. MUSKIE Mr. President, I ask unanimous consent that a statement of the managers of the conference report be printed in the RECORD.
There being no objection, the statement was ordered to be printed in the RECORD, as follows:
(Statement of managers is printed in the House proceedings of May 15, 1978.)
Mr. MUSKIE. Mr. President, I also ask to have printed in the RECORD a table showing the conference agreement broken into the mission categories which the Senate Budget Committee used in the process of developing the budget resolution.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. BELLMON. Will the Senator yield for a unanimous consent request?
Mr. MUSKIE. Yes.
Mr. BELLMON. Mr. President, I ask unanimous consent that R. S. Boyd, Charles McQuillen, Bob Fulton, Bill Stringer, Carol Cox, Becky Davies, Gary Kuzina, Paul Carttar, and Barry Kinsey have the privileges of the floor during the consideration on this resolution.
The PRESIDING OFFICER. Without objection, it is so ordered.
Is the Senator from Virginia seeking recognition?
Mr. HARRY F. BYRD, JR. Yes, Mr. President.
The PRESIDING OFFICER. The Senator from Virginia is recognized.
Mr. HARRY F. BYRD, JR. Mr. President, I applaud the Senator from Maine and the Senator from Oklahoma for their work on this matter. I know how conscientious and dedicated they are.
I dislike to express a contrary view to those expressed by my two distinguished colleagues. I feel, though, that I should at least present a minority point of view.
Obviously, there is no political sex appeal in Government finance, and I do not know of any more dramatic evidence of that than the fact that we are considering tonight a budget resolution dealing with $500 billion of American tax funds and there are three Senators on the floor of the Senate: The Senator from Maine, the Senator from Oklahoma, the Senator from Virginia, and the distinguished Presiding Officer, the Senator from Hawaii. There are three on the floor and the captive in the chair.
Mr. President, I think the Congress and the Senate take too lightly the financial affairs of our Government.
May I ask a question of the distinguished manager of the resolution?
Mr. MUSKIE. By all means.
Mr. HARRY F. BYRD, JR. What is the Federal funds deficit?
Mr. MUSKIE. I do not have a break-out of just the Federal funds. The figure I presented earlier was Federal funds and trust funds. I will try to get that information for the Senator as soon as possible.
Mr. HARRY F. BYRD, JR. I thank the Senator. As the Senator well knows, the Federal funds budget is the general operating cost of the Government. The unified budget takes into consideration the surplus in the trust fund. I think the most significant figure to use in regard to deficits is what is the deficit in the Federal funds in the general operations of Government, the general expenditures of Government as compared to the general revenues of Government.
I think there is some significance to the fact that we do not even have that figure available at the moment.
Now let us get to the other figure. There has been great praise tonight that this budget resolution provides for a deficit of only $50 billion.
Well, I do not join in that praise, I do not join in that praise for one moment. It is a $50 billion deficit and we are praising it, saying how great it is that we only have a deficit of $50 billion.
Mr. MUSKIE. Will the Senator yield?
Mr. HARRY F. BYRD, JR. I yield.
Mr. MUSKIE. I do not believe the distinguished Senator from Oklahoma or the Senator from Maine referred to a $50.9 billion deficit in that context at all. I have constantly worked, as has the Senator from Oklahoma, to bring the deficit lower by proposed cuts in committee and in conference.
We take no satisfaction whatsoever from a deficit of this magnitude. I shall take no satisfaction until we have arrived at a balanced budget.
I do not object, of course, to the Senator's unhappiness with a $50.9 billion budget. I share it. I just do not want my position misunderstood. I take no satisfaction whatever from it. But it is better than the $80 billion deficit I feared wouldbe the consequence when I got the recommendations of the Senate Committee on Finance and the Senate Committee on Appropriations; better than the $61 billion deficit that the President proposed and that I feared we might have to accept during the markup in the senate Budget Committee; better than the $55.6 billion deficit that was the result after Senate consideration of the budget resolution.
I should like it to be below 50, below 40,below 30, below 20, at balance. I take no satisfaction from it.
I want the RECORD clearly to reflect that. If the Senator wants to express his indignation about any deficit, he can be my guest. I share that concern with him.
Mr. HARRY F. BYRD, JR. Thank you, sir. I am delighted to hear that. I appreciate the comments of the chairman of the Budget Committee. I am glad to hear him state that he feels that what we should have is a balanced budget. I am glad to know that he feels that way, because most of the Senators do not feel that way.
This $50.9 billion deficit that the Budget Committee has brought into the Senate is the third largest deficit in the history of the Nation. That is just the unified budget deficit. We have not even been able to get the Federal funds deficit yet.
Mr. MUSKIE. On that score, if the Senator will yield, I think we did give the Senator that figure during consideration of the Senate budget resolution.
Mr. HARRY F. BYRD, JR. I am asking the Senator for it now. What is the figure?
Mr. MUSKIE. I do not have that figure with me now, but if the Senator will subtract $4.6 billion from the Senate-passed level, he will have today's figure.
Mr. HARRY F. BYRD, JR. I thank the Senator from Maine, but we are dealing with a new budget resolution tonight.
Mr. MUSKIE. I understand, but I am not a walking encyclopedia of every number in this budget.
I believe the Senator had the number when the deficit in the resolution was $55.6 billion. The deficit is now $50.9 billion. All he has to do is take the difference, and subtract it from the earlier Federal funds deficit, and he will have it.
Mr. HARRY F. BYRD, JR. Well, I want to say to the Senator from Maine — I do not want to say it to the Senator from Maine; I shall just say it to the Senate:
The Senate is being asked tonight to consider a budget resolution authorizing the expenditure of $500 billion of American tax funds. Those who are handling the budget resolution are able to tell the Senate what the unified budget deficit is, $50.9 billion. But up to this point, those who are handling the budget resolution are not able to tell the Senate what the Federal funds deficit is. That is the key to this whole thing. That is the key to the cost of Government.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. HARRY F. BYRD, JR. Yes.
Mr. MUSKIE. If the Senator's memory met the standard he applies to mine, he would have the number.
Mr. HARRY F. BYRD, JR. I am not applying a standard to anybody's memory. I am talking about the resolution tonight, the new figures being brought before the Senate tonight.
Mr. MUSKIE. I told the Senator that if he will take the earlier number and will subtract from it this $4.6 billion, he will have the figure.
Mr. HARRY F. BYRD, JR. I am going to
Mr. MUSKIE. I do not mind substantive disagreements, I say to the Senator, but nitpicking is something I do not understand.
Mr. HARRY F. BYRD, JR. Nitpicking?
Mr. MUSKIE. Yes. You ask for a figure now, but you do not remember the earlier figure.
Mr. HARRY F. BYRD, JR. Senator MUSKIE, I shall give you the figure and you tell me whether the figure is wrong. The figure, the Federal funds deficit —I will make it a statement, and if I am wrong, you can correct me.
Mr. MUSKIE. Yes.
Mr. HARRY F. BYRD, JR. The Federal funds deficit was $73.9 billion. If that figure has been changed, I should be glad if the Senator from Maine would tell me how that has been changed.
Mr. MUSKIE. Of course it has been changed, because revenues have been increased by $4.6 billion.
Mr. HARRY F. BYRD, JR., Well, then, is the Senator from Virginia to understand that the Federal funds deficit will be $69.3 billion?
Mr. MUSKIE. If the $73.9 billion figure is accurate. I assume the Senator is quoting accurately. If that is the case, then that is the arithmetic.
Mr. HARRY F. BYRD, JR. I should think that, with all the dozens of people around here, we ought to be able to find out what the exact figure is.
Mr. MUSKIE. Well, even if I had an army of people here, I would not necessarily be able to pick out any single figure in the Federal budget in a matter of seconds.
Mr. HARRY F. BYRD, JR. The figure that I am speaking of, I say to the Senator from Maine—
Mr. MUSKIE. I am getting that figure for you.
Mr. HARRY F. BYRD, JR. If you will just let me finish: The figure I am speaking of is the second most significant figure in the entire budget; namely, what is the deficit of the Federal funds. The deficit of the Federal funds, up to this time — I do not know what it is now, but up to this new budget resolution, it was $73.9 billion. That was the highest deficit of Federal funds that this country has ever experienced. All I am asking .is, before we have to vote on this resolution, how is that changed?
Mr. MUSKIE. Well, I have given, based upon your recollection of what it was 2 weeks ago, its value on the basis of the major change that has taken place.
We will get your number, but we cannot get it instantly.
Mr. HARRY F. BYRD, JR. Thank you, sir.
Mr. MUSKIE. It takes a little time. When you begin to belabor me because I do not instantly produce one number out of a complex Federal budget, then I am tempted to believe—
Mr. HARRY F. BYRD, JR. I do not consider that it is belaboring anyone when you ask for a matter-of-fact piece of factual information.
I shall not pursue the point.
Regardless of what the figure is, and if I am off the Senator from Maine will correct me, the budget resolution tonight provides for the highest Federal funds deficit in the history of our Nation — the highest Federal funds deficit in the history of this Nation — and we are talking about getting inflation under control. We are talking about getting inflation under control with this budget resolution.
Nothing could be further from the case.
I know how hard the chairman and the ranking minority member worked on this budget and I dislike to take disagreement with them. But I have a strong feeling about this Government finance and I feel we are headed for trouble. This country is headed for trouble because of the Congress and because of the executive branch, too.
I took encouragement, however, and I want to commend the Senator, when the Senator from Maine said, and if I quote him wrong I know he will correct me, but in his remarks he said this: "Inflation control means budget control."
I want to repeat that. If I took it down accurately, the remarks of the chairman of the Budget Committee (Mr. MUSKIE) were: "Inflation control means budget control." That is the point I have been trying to make around here for years and years and years. We are not going to get inflation under control until we get the cost of Government under control.
This budget resolution does not get the cost of Government under control.
As the Senator from Maine pointed out, as the Senator from Oklahoma pointed out, the only reason that it is a lower deficit is not because there is a reduction in spending. The only reason it is a lower deficit is that less money is being given back to the people in the form of a tax reduction. The spending is just the same. This budget deficit being brought in by this resolution, compared to the other resolution, this deficit figure is lower not because of less spending, but because of less tax reduction.
Mr. President, this country is headed for deep trouble. It is heading for deep trouble because of the excessive and just totally unrealistic, in my judgment, spending by the Federal Government.
I think the people of this Nation have seen that for quite a while. I believe that Congress is beginning to see it.
I take great encouragement, I will repeat it again, in what the Senator from Maine said just a little while ago in his opening remarks: "Inflation control means budget control."
Now, the distinguished Vice President spoke in Virginia last Friday evening. He spoke at Hot Springs to the Advisory Council on Business, or something like that, and the headline in the Richmond Times Dispatch the next morning was along this line:
Mondale seeks spending restraint.
Well, I thought to myself, is this my long-time colleague and long-time friend, FRITZ MONDALE? I think it probably is, but in the nearly 13 years I served with him, it is the first time I have heard him call for budget control, for spending restraint, and to me that is a very encouraging sign.
I point that out tonight to commend our Vice President and to associate myself with him in calling for spending restraint.
So I think between the comment made Friday evening by the Vice President and the comment made tonight by the senior Senator from Maine (Mr. MUSKIE), that they are two very encouraging statements, that inflation control means budget control.
But despite the fact that they are encouraging, that does not at all persuade me to vote in favor of this budget resolution.
This budget resolution says this, and I will quote several parts of it:
The appropriate level of new budget authority is $568,850;000,000.
I do not regard that an appropriate level. I regard it as much too high. The resolution says:
The appropriate level of total budget outlays is $498,800,000,000.
I do not regard that as appropriate. I regard that as much too high. Then it says:
The amount of the deficit in the budget which is appropriate is $50.9 billion.
I do not regard that as appropriate. I regard that as totally inappropriate. I am not going to vote for anything that says that is an appropriate deficit.
Then it says:
The appropriate level of the public debt is $849,100,000,000.
I do not agree that that is appropriate. Then it says:
The amount by which the statutory debt limit on such debt should accordingly be increased is $97,100,000,000.
This budget resolution will increase the public debt between now and September 30, 1979, by $97,100,000,000.
Yes, Mr President, the public debt willbe increased in that short period of time by more than $97 billion and this is presented to the Senate as being an appropriate budget resolution. In my judgment, it is a totally inappropriate budget resolution.
Mr. President, as one who rather consistently has been in the minority when it comes to Federal spending, Federal deficits, I am not at all surprised that I am in the minority this evening. I dislike it. I dislike having to take exceptionto the proposals recommended by two outstanding Members of the Senate. Rightly or wrongly, I believe that it is so vitally important that Federal spending be got under control that I feel it is necessary to say these few words.
The American people are going to realizes that you cannot very well logically reduce taxes unless you are able to control spending.
The current resolution provides for a tremendous increase in the cost of Government. That increase must be paid for. It can be paid for through direct taxa tion, or it can be paid for by the hidden and cruel tax of inflation. That is the way we have been paying the debts around this place for a long time now.
We have not been willing to finance the Government on a sound basis. We aresaying, "We'll just create the deficits; we will let somebody worry about the deficits later, and we will let it be paid for through inflation," because that is the way it has been paid for.
I say again that Government spending must be paid for. Whether we in Congress realize it or not, it must be paid for. It must be paid for either through direct taxation or through the hidden and cruel tax of inflation.
When the vote comes, I shall vote against this resolution, because I do not feel it to be in the best interests of the people of our country.
Mr. MUSKIE. Mr. President, I will take a few minutes to make sure that the record of this discussion contains at least minimal information with respect to the so-called Federal funds deficit.
I ask unanimous consent to have printed in the RECORD the table on page 261 of the Federal budget.
There being no objection, the table was ordered to be printed in the RECORD as follows:
[Table omitted]
Mr. MUSKIE. Mr. President, from this table comes the following information bearing upon the question of the distinguished Senator from Virginia.
The Federal funds deficit in that table is $74.5 billion. That is the figure that seems roughly to coincide with the figure the Senator from Virginia used in the course of the debate in the Senate on the budget resolution.
The trust fund surplus in that table for 1979 — it is an estimate — is $13.9 billion, for a total deficit of $60.6 billion, which was the President's deficit.
At the time we considered the Senate Budget Committee's first resolution, the deficit in that resolution was $55.6 billion, or $5 billion less than the President's deficit. The effect of this on the Federal funds deficit at that time was to reduce it to $69.5 billion. There is one caveat to that figure: It depends upon the trust fund surplus, and that $13.9 billion may well have been affected and probably was affected, by other actions taken in connection with the budget resolution. We would have to examine separate accounts, throughout the budget, in order to determine the exact value of the trust fund surplus of the budget which the conference agreed to this afternoon.
So at the time the first resolution was agreed to by the Senate — bearing in mind the possibility that the trust fund surplus may have changed, and assuming it did not — the Federal funds deficit was $69.5 billion. We have reduced the deficit to $50.9 billion. We have reduced it by $4.7 billion. We therefore would take the Federal funds surplus down to $64.8 billion instead of $74 billion, which is the figure that the Senator from Virginia was using.
When we have been able to evaluate fully the impact of the conference report on the trust fund surplus then, and only then, can we give a current estimate of the Federal funds deficit.
Incidentally, it is not my impression that the Federal funds deficit, separate from trust fund revenues and outlays, is as good a measure of economic impact as unified budget deficit, which takes into account all revenues and spending by the Government. The more comprehensive measure is superior.
If one is interested in the economic impact, I believe that the $50.9 billion which this conference report represents provides the essential information.
Mr. President, I take it that now the first parliamentary step is to move that the conference report be agreed to — and it is the conference report in disagreement, I might say.
The PRESIDING OFFICER. The question is on the adoption of the conference report.
Mr. HARRY F. BYRD, JR.. Mr. President, I do not want to pursue the issue with the able Senator from Maine as to the Federal funds deficit. I will say this:
It has only been in the last few years that the unified deficit has been a figure utilized around the halls of Congress. If one will go back a few years, it was always a Federal funds deficit. The change began to come about — it was not accomplished then, but it began to come about — during the administration of President Johnson. The Federal funds deficit became so high — it looks low now, but it was high then — that the Johnson administration recommended and urged that Congress go to the unified basis.
When one goes to the unified basis, when you take into consideration the trust funds, then you have taken into consideration funds not from general taxation.
The social security tax is paid by the employer and the employee. Except to a very minor degree, there are no Federal general revenues involved in that.
So I think there is a great distinction between Federal funds and the trust funds. The trust funds can be used only for specific purposes. They are in trust. They are in trust for the most part to pay the social security recipients.
The Federal funds, the Federal revenues, or the general revenues, are used for the general operation of Government and that determines the extent and the cost of the general operation of all of the Government activities of the Nation leaving out the trust funds which, as I say again, can be used only for a specific purpose and are in trust for that one purpose. So the significant figure dealing with the Government deficit is how much is the Government in the red insofar as the general operations of Government are concerned. And that figure is far greater than is the unified deficit. But let us assume now we do not want to worry about the general fund deficit. The unified deficit still is over $50 billion in this resolution that the Senate is being asked to approve this evening.
I have some tables which in a moment — I do not now — I will ask to print in the RECORD, and with the exception of fiscal 1976 and with the exception of fiscal 1978, the current year, the deficit for the upcoming year will be the largest deficit that our Nation has had on a unified basis. When you get to the Federal funds basis, it will be the highest deficit that we have had. So, I am not sure that we are making a great deal of progress in putting the Government's financial house in order, but as I say, I am encouraged by the fact that has been asserted on the floor today that inflation control means budget control, and I commend again the Senator from Maine for that assertion, and associate myself with his comments in that regard.
Mr. President, I ask unanimous consent to print in the RECORD three tables that I have prepared.
There being no objection, the tables were ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. ROTH. Mr. President, I oppose the first budget resolution setting spending and revenue targets for fiscal year 1979.
The American taxpayer is lashed to the center of this target and is about to be the victim of a direct hit.
Let us be clear what we have done here today. We are reducing the size of the deficit at the expense of a tax cut. Why should Americans sacrifice for Federal excesses in runaway spending?
The root cause of inflation is Federal spending. Let us attack that, instead of the hard-pressed taxpayer.
This Congress is going on record as showing its concern for inflation by delaying and reducing the size of the tax cuts in order to reduce the budget deficit. But raising taxes to reduce the budget deficit will not reduce inflation. It will drain resources out of the economy just as budget deficits do.
We shot down nine amendments to re-duce Federal spending — this body rejected all of them — including one aimed solely at the elimination of documented waste in HEW. That amendment alone would have accommodated the tax cuts we are now voting to deny our citizens.
The President has called upon the country to adopt serious anti-inflationary measures, to make sacrifices, to hold down spending for the good of the country: This resolution is hardly the message we, as responsible legislators, should be sending home to both labor and management.
This is a blueprint for bigger Government and a continuation of the spend, spend, spend — tax, tax, tax philosophy.
The right kind of tax cut — a tax rate reduction — would not be inflationary. Substantital tax rate reductions will increase the incentive to work, save, and produce, expanding the production of goods and services in the economy and resulting in lower prices and more jobs.
Michael Evans, president of Chase Econometrics Associates, has written that—
Income tax cuts, particularly those for corporations, raise investment and productivity growth, and hence lower inflation.
Evans also believes a reduction in income tax rates would produce more, not less, Federal revenues. He wrote that—
A reduction in income tax rates increases the size of the private sector of the U.S. economy, thus reversing the erosion of the tax base which has occurred almost continuously over the postwar period. Federal government revenues, after declining initially, will begin to rise much more rapidly as the private sector expands. For example, an extra1 percent growth in real GNP during the past twelve years would have generated an additional $47 billion in Federal tax receipts in 1977 and $16 billion less in expenditures, thus resulting in a slight surplus of further tax reduction. In the long run the Federal budget deficit will be larger with an oppressive tax system than it will be with lower tax rates and rapid growth.
We have robbed Peter, taxed Paul, and now we are going to systematically mug 216 million Americans.
It's time to blow the whistle.
Mr. President, I submit for the RECORD an article entitled "The Dangers of Budget Bloat," which was published in the May 15, 1978, issue of Time Magazine.
THE DANGERS OF BUDGET BLOAT
Even conservatives now accept that moderate deficit spending is often necessary to lift the economy out of a recession. Fair enough, but as the U.S. enters the fourth year of recovery, deficit spending is reaching tidal wave proportions. The deficit called for in Jimmy Carter's budget for fiscal 1979 is $60.6 billion, and it promises to keep the flood of red ink cresting at least through 1980 and probably much longer.
The dizzy growth of the deficit must be reversed because it condemns the U.B. to unending inflation, sapping not only the nation's economic vitality but even the strength of its political institutions. When the Government spends beyond its means, the Federal Reserve Board confronts a cruel choice. If it prints more money to accommodate the Government's heavy borrowing, it feeds inflation. If the board refuses to print the money, it risks creating a recession, because the Government sops up so much credit that little is left for private borrowers.
Congress is only making the deficit problem worse. As next week's deadline approaches for House approval of the so-called target budget, which will determine the basic size of fiscal 1979 spending, many of the 435 Congressmen are rushing to push various pet projects into the overloaded document. Expenditures for agriculture, education, community development, and veterans' benefits all have been increased by at least $1 billion more than Carter proposed.
Complains House Budget Committee ChairmanRobert Giaimo of Connecticut: "We've got to stop all these bright little ideas from being passed. You add them up and multiply by 436 and you've got trouble."
In recent weeks Congress has grown uneasy.about the size of the deficit, but instead of acting to limit spending, a movement is gaining ground to reduce or delay the $25 billion tax cut that Carter plans for October. Doing that might crimp the growth of the economy. It would be far better to reduce spending and use part of the savings to cut taxes.
The problem is that Congress has historically viewed the very idea of budget cutting as rather like repealing Christmas. Special-interest groups instantly howl, and Congress listens. The groups are as large as the 84 million Social Security beneficiaries and as small as the 1,700 beekeepers who this year will draw $2.9 million in federal indemnities because their bees may have been harmed by Government spraying of pesticide.
Beyond that, many of Washington's ever multiplying programs provide funding commitments that grow automatically with the population or the inflation rate. In the past ten years, the share of the budget consumed by these programs has increased from less than 30% to nearly 45%. Because of all these factors, perhaps as much as 90%, of the entire budget is treated as politically untouchable by Congress.
All this makes a mockery of Carter's vow to discipline the budget process by requiring each department to justify every dollar in its annual spending request. That approach, known as "zero-based budgeting," is saving little or no money and is simply creating a lot more paper work.
The President has abandoned his campaign pledge to balance the budget by 1981, and the Office of Management and Budget admits that a 1981 deficit of "around $10 billion" is more likely. If present spending trends continue, the Administration will not come anywhere near the target. In fact, computer projections by Data Resources, Inc., show that if the Administration gets just a few bad breaks — a continued substantial upward thrust in food prices, sporadic big increases in the cost of imported oil — the deficit could explode to $220 billion in 1987.
The first step to prevent such a disaster is for Carter to block spending from going any higher, he can do this by adhering to his pledge to veto bills that would push the budget above his suggested $500.2 billion. In addition, although most of the 1979 budget is fixed in stone, some cuts can be made. Wisconsin's William Proxmire, chairman of the Senate Banking Committee, ambitiously calls for a total reduction of as much as 7%; Jack Carlson, chief economist of the U.S. Chamber of Commerce, urges a 2% across-the-board reduction, amounting to $10 billion. At the least, Carter has to start pressing Congress to accept even sharper reductions in the rate of spending growth in fiscal 1980 and later years. The only way to do that is for some "uncontrollable" spending to be controlled, some "mandated" programs to be un-mandated. Among the fastest growing:
FEDERAL PENSIONS
Spending for civil service and military pensions has surged from less than $3 billion in 1955 to $20 billion annually. A $15,000-a-year Government worker can retire at 55, after 30 years of service, and draw $703 a month, with cost of living increases. After 20 years, a member of the military can retire with an inflation-proofed pension equal to 50% of his salary; then, as a veteran, he gets preference for a civil service job. If he had joined the armed forces at age 17, he could leave at 37, go to work as a federal civilian employee, retire at 67 and draw Social Security, military and civil service pensions all at once.
GRANTS TO STATES
Federal grants-in-aid to state and local governments have just about doubled from $43 billion in 1973 to Carter's recommended $85 billion in fiscal 1979. But 44 of the nation's states are awash in budget surpluses that total $10 billion. So why did Congress this year appropriate $250 million just to help them fill potholes in their streets? A portion of the money that Washington will give to state and local governments in 1978 is supposed to be spent for recession-fighting public works projects; the funds keep pouring in, even though the recession is over and unemployment dropped last month to a 3½ year low of 6%.
EDUCATION
Since 1972, aid to education has more than tripled, to $3.2 billion. Typical of the excess is the interest-subsidized student loan program, which began in the mid-1960s to help needy children go to college. Students now qualify if their families earn up to $25,000, and defaults have soared. Next year's default write-offs and interest charges will cost the Government $870 million. Yet Congress is considering spending perhaps as much as $3 billion a year more to allow any student, nomatter how wealthy, to qualify for a loan.
Additional waste is contained in the panoply of programs for elementary and secondary schools. So-called impact aid funding started during the Korean War to help educate children from G.I. families, has been unnecessarily broadened to cover children of all federal workers, at a cost of $712 million annually. A bill now in the House would lift this to $1.3 billion by 1980. Not many Congressmen will oppose it: 411 of them come from districts that will benefit.
SOCIAL SECURITY
Now the largest single program in the budget, Social Security has grown from $17.5 billion, in 1965 to as much as $133 billion next fiscal year. Congress saved the whole program from eventual bankruptcy only by passing a Social Security tax increase of $227 billion over the next ten years, by far the largest peacetime revenue-raising measure in the nation's history. Collapse threatened because Social Security payments have been automatically increased to offset inflation, a scheme that does more to spread the plague than cure it. Nobody wants to reduce current benefits, but their future growth can be contained. The rising cost of health care has also burdened the program. Beginning in 1966, low-cost medical care for the elderly has been provided by Social Security through the Medicare program, but without sufficient funds to do the job.
DEFENSE
Though the nation has been at peace for the past five years, military spending has grown by 58%. Money is wasted by maintaining dozens of unnecessary defense bases, many of which were set up during World War II when 12 million men and women were in the services, v. 2 million now.
Reports TIME Washington Correspondent Simmons Fentress: "There is no compelling strategic or economic reason not to shut down such large military training bases as Fort Dix, N.J., or Fort Jackson, S.C. But there are political reasons. For six years the Pentagon has been trying to close the training facilities at Fort Dix, and for six years the effort has been fought off by the New Jersey congressional delegation." Last month Defense Secretary Harold Brown joined the battle all over again, announcing a plan to phase out the Fort Dix facilities and eliminate or consolidate 84 other bases. The saving would be $337 million a year, but at a cost of 23,200 jobs, and Congressmen in the affected districts are up in arms.
Cutting the budget down to affordable size would not mean unraveling every spending program, but would require a sober reappraisal of what Government can and should accomplish. The basic question is whether even the world's wealthiest nation has the resources to heap one program on top of another with little thought to the consequences. Some of the goals are admirable, but the runaway spending is producing a stumbling nanny-state that tries to help powerful special interests but in fact hurts the whole nation by ravaging it with inflation
Mr. ROBERT C. BYRD. Mr. President, I compliment the distinguished Senator from Maine and the distinguished Senator from Oklahoma on a job well done. It is a thankless task, really. There are no headlines back home, no votes back home, but innumerable hours of labor, sweat, worry, tension, and the Senate is in their debt.
If there is one thing that has made this Budget Reform Act work it has been the steel discipline, the determination, the skill and effectiveness of Senator MUSKIE and Senator BELLMON and those members of the Budget Committee who spend hours and days and weeks poring over books, papers, arguing, and preparing for the floor debate, and I personally express my gratitude, my respect, and my high regard for them and again I believe that I speak the sentiments of the Senate. It is a tough, tough job but I will say to these two men they are tough tough men, and I admire them.
Mr. MUSKIE I thank the majority leader and I also do not want to neglect to thank the distinguished Senator from Virginia. He has even a lonelier job than we have. If I lose patience with him at times, it is because I share his frustration but from a different perspective — frustration with the difficulty of bringing our financial house in order. And I hope he understands that.
Mr. ROBERT C. BYRD. Mr. President, will the Senator yield?
Mr. MUSKIE. I yield.
Mr. ROBERT C. BYRD. I have something to say about the distinguished Senator from Virginia,
Mr. HARRY F.BYRD, JR. He is one tremendous man. His father was a man who was a student of economics of our Government and HARRY FLOOD BYRD, JR., has certainly followed in his footsteps, and I express deep admiration for him and for his dedication and devotion.
So to all these men I salute. But again I say, as I said before and as I will have reason to say again, I am tremendously grateful to the men on this Budget Committee for the herculean task that they confront and confront well, studiously, effectively, and with such dedication.
Mr. BELLMON. Mr. President, if the Senator will yield, I also express my gratitude and appreciation to the distinguished majority leader. The work on the Budget Committee is difficult but it is certainly a highly educational process. So we on the committee gain great deal from our experiences but we appreciate very much the support that the majority leader gave the budget process. Without him it could not come as far as it has. I hope he will help us further when we come down to the votes later on where some Members will be trying to add spending that will breach the budget resolutions.
I also say, Mr. President, I hope the distinguished Senator from Virginia realizes that the chairman of the Budget Committee and myself are in concert with him. We are trying to hold the spending down as far as we can, but we are not the whole committee, and we are not certainly the whole conference. We had hours, days of debate, sometimes almost battle with the House of Representatives over these figures and if the Senator from Maine or I could have had our way, we would have been several billion dollars under where we are, but this represents the best arrangement we could work out with the House of Representatives. While we are sorry that the deficit is as large as it is, it could have been much larger, had it not been for the leadership of Senator MUSKIE and those on the Senate side who supported him. So we are in accord with the objectives the Senator from Virginia has but we cannot get there as rapidly as we would like to. -
Mr. MUSKIE The frustrating thing, if I may say to the Senator, is in the course of the conference with the House of Representatives. As I listened to their rhetoric and their pleas to lift the spending ceilings I was made to feel like Scrooge. Then I come to the floor of the Senate and the distinguished Senator from Virginia makes me feel like Santa Claus, and I am not entirely sure what my role is. But I will try to carry both costumes with me to wear on an appropriate occasion.
But we must not forget this final vote we need to have, Mr. President, so I move that the Senate concur in the House amendment to Senate Concurrent Resolution 80 with an amendment which is at the desk.
The PRESIDING OFFICER. The conference report must be acted upon. The question now occurs on the adoption of the conference report.
(Putting the question)
The conference report was agreed to.
UP AMENDMENT NO. 1814
Mr. MUSKIE. Mr. President, I move that the Senate concur in the House amendment to Senate Concurrent Resolution 80, with an amendment which is at the desk.
The amendment is as follows:
It is the intention of the conferees that the managers on the part of the Senate will offer a motion in the Senate to recede and concur in the House amendment to the Senate-passed resolution with an amendment (in the nature of a substitute) consisting of the language agreed to in conference. Upon the adoption of such amendment in the Senate, the managers of the House will offer a motion in the House to concur therein.
The managers on the part of the House and the Senate submit the following joint statement in explanation of the action agreed upon by the managers:
The substitute language which is to be offered as described above (and which should be considered the language of the concurrent resolution as recommended in the conference report for purposes of section 302(a) of the Congressional Budget Act of 1974 ) — hereinafter in this statement referred to as the "conference substitute" — is as follows:
That the Congress hereby determines and declares, pursuant to section 301(a) of the Congressional Budget Act of 1974, that for the fiscal year beginning on October 1, 1978—
(1) the recommended level of Federal revenues is $447,900,000,000 and the amount by which the aggregate level of Federal revenues should be decreased is $24,700,000,000.
(2) the appropriate level of total new budget authority is $568,850,000,000.
(8) the appropriate level of total budget outlays is $498,800,000,000.
(4) the amount of the deficit in the budget which is appropriate in the light of economic conditions and all other relevant factors is $50,900,000,000 and
(5) the appropriate level of the public debt is $849,100,000,000 and the amount by which the statutory limit on such debt should accordingly be increased is $97,100.000,000.
SEC. 2. Based on allocations of the appropriate level of total new budget authority and of total budget outlays as set forth it paragraphs (2) and (3) of the first section of this resolution, the Congress hereby determines and declares pursuant to section 301 (a) (2) of the Congressional Budget Act of 1974 that, for the fiscal year beginning on October 1, 1978, the appropriate level of new budget authority and the estimated budget outlays for each major functional category are as follows:
(1) National Defense (050) :
(A) New budget authority, $128,700,000,000;
(B) Outlays $115,700,000,000.
(2) International Affairs (150) :
(A) New budget authority, $12,800,000,000;
(B) Outlays, $6,900,000,000.
(8) General Science, Space, and Technology (250):
(A) New budget authority, $5,200,000,000
(B) Outlays, $5,000,000,000.
(4) Energy (270):
(A) New budget authority, $10,400,000,000;
(B) Outlays, $9,800,000,000.
(5) Natural Resources and Environment (300):
(A) New budget authority, $13,600,000,000;
(B) Outlays, $12,200,000,000.
(6) Agriculture (350) :
(A) New budget authority, $12,800,000,000;
(B) Outlays, $8,800,000,000.
(7) Commerce and Housing Credit (870) :
(A) New budget authority, $5,900,000,000;
(B) Outlays. $3,600,000.000
(8) Transportation (400):
(A) New budget authority, $20,300,000,000;
(B) Outlays, $17,800,000,000.
(9) Community and Regional Development (450) :
(A) New budget authority, $11,100,000,000;
(B) Outlays. $9,000,000,000.
(10) Education, Training, Employment, and Social Services (500) :
(A) New budget authority, $33,000,000,000;
(B) Outlays, $31,400,000.000.
(11) Health (550) :
(A) New budget authority, $52,550,000,000;
(B) Outlays, $49,500,000,000.
(12) Income Security (600) :
(A) New budget authority, $193,100,000,000;
(B) Outlays, $160,200,000,000.
(13) Veterans Benefits and Services (700) :
(A) New budget authority, $21,300,000,000;
(B) Outlays, $21,000,000,000.
(14) Administration of Justice (750) :
(A) New budget authority, $4,300,000.000;
(B) Outlays, $4,200,000,000.
(15) General Government (800)
(A) New budget authority, $4,100,000,000;
(B) Outlays, $4,100,000,000.
(16) General Purpose Fiscal Assistance (850):
(A) New budget authority, $9,700,000,000;
(B) Outlays, $9,600,000,000.
(17) Interest (900) :
(A) New budget authority $47,000,000,0000;
(B) Outlays. $47,000.000,000;
(18) Allowances (920) :
(A) New budget authority $800,000,000;
(B) Outlays, $800.000,000.
(19) Undistributed Offsetting Receipts (950) :
(A) New budget authority, —$17,300,000,-000;
(B) Outlays, —$17,300,000,000.
The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from Maine.
The motion was agreed to.
Mr. MUSKIE. Mr. President, I move to reconsider the vote by which the motion was agreed to.
Mr. ROBERT C. BYRD. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. HARRY F. BYRD, JR. Mr. President, will the Senator yield for just a moment? I would like the record to show that the Senator from Virginia voted in the negative.
The PRESIDING OFFICER. The record will so show.