April 25, 1978
Page 11376
Mr. MUSKIE. Mr. President, with some reluctance, I rise in opposition to the amendment of my good friend from South Dakota. I understand his motivations and his concerns, in fact, I share many of those concerns.
This so-called transfer amendment about which Senator MCGOVERN alerted us in testimony before the Budget Committee is intended to put more Federal dollars, now allocated to defense, into domestic programs which, hopefully, will contribute to the cure of certain domestic ills currently existing in this Nation.
So there are really two basic parts to the amendment: First, the cut in defense spending; and, second, the proposed increase in spending in domestic functions of the budget.
As chairman of the Budget Committee, Mr. President, I am well aware of the pressures exerted in every single function of the budget. Members and interest groups want the maximum amount of the funds available for the missions that comprise the functions that are of direct concern to them.
The budget before us today is an attempt at allocating funds in a way to achieve the best balance between defense and non-defense needs.
The approach of the transfer amendment offered by Senator MCGOVERN presumes that the total amounts in this recommended congressional budget are appropriate, but that the allocation within the functions is wrong. Such, I submit, Mr. President, is not the case.
To gain the proper perspective on the question of priorities, it might be useful to make a few observations about the nature of the budget process as we have tried to implement it on the Senate side.
First, in the development of the Budget Act in 1974 one proposal we considered writing into the act was the requirement that the budget resolution reported from the Budget Committees could not be amended except by amendments that undertook balance in the sense of a transfer amendment which had balance impacts on the resolution. In other words, if there was a proposal to increase spending the same amendment ought to propose cuts in spending or increases in revenue in order to leave the total intact.
The theory was that the budget resolution was an economic instrument as well as a programmatic instrument, and that the amendment or any amendment offered should be thus disciplined.
The authors of the Budget Act, Mr. President, decided not to do that because we thought that was too inflexible. Instead we created the reconciliation process with which the Senate is familiar.
This process enables Congress, after it has amended and finally acted on the first budget resolution, and modified it in the second resolution examining the authorizing and appropriations legislation, to make a second judgment about what resources are to be devoted to what needs. So although the transfer amendment idea was considered, it was not made a part of the budget process.
The alternative of the reconciliation process has offered greater flexibility to all committees in resolving any reallocation problems.
Second, Mr. President, in the Senate we have adopted the practice of pursuing two rounds of votes on functional totals. The first round involves votes on each function separately without any advance judgments as to what the total will add up to when we are through. We really try in this round in the Budget Committee to nail down a reasonable estimate of the need.
Then, in the second round we look at the bottom line and determine its significance. If we think it is excessive in terms of the resources that ought to be available, and the fiscal policy needs of the economy, then we examine the whole budget for possible cuts.
Third, Mr. President, in its deliberations this year the Budget Committee had three paramount concerns: the programmatic needs, the size of the total budget, and the size of the deficit. The committee, as a whole, is enormously concerned with the threat of inflation, given the present trend in the economy and the potential deficit that might result from enactment of these pending recommendations we received from other committees.
As we examined each function and each mission and the needs expressed by the committees and the President, we were watchful for any reduction or modification in programs that might lead to a reduction in the deficit.
Indeed, in an effort to find savings and to hold down the deficit, I took a hard look at the spending recommendations of the committee after our first round decisions. I examined not only defense spending, but non-defense areas as well. I came back to the committee with a proposal that cut $4.7 billion in budget authority and $4 billion in outlays from our original recommendation. I felt strongly that there were areas within the defense and non-defense budget where significant savings could be achieved without damaging our national security or impinging on essential Federal programs.
I believe this was a balanced cut that called for sacrifice in a number of different areas. Included in these cuts were programs with which I have had a special interest, including the emergency fuel assistance program, the EPA construction grant program, and countercyclical revenue sharing.
It was my hope that in demonstrating support for cuts in programs that I consider of vital importance that this would set an example for other members of the committee and, hopefully, the entire Senate, to support small sacrifices in other areas in which I was able to identify room for savings and program efficiency.
As I have indicated earlier, my principal motivation in offering these second round reductions in 17 functions of the budget was to send a signal to the American people that the Senate was serious in its anti-inflation efforts and in its drive to hold down the Federal deficit.
Adoption of the transfer amendment would not achieve these goals, as indeed its only purpose is to reallocate the same total spending levels and maintain the aggregate budget totals. Moreover, it is clear that the establishment of priorities should be based on national needs.
Mr. President, let us look closely at the transfer amendment. The purpose of the amendment is to reduce the national defense targets in the fiscal year 1979 first concurrent resolution by $4.6 billion in budget authority and $1.5 billion in outlays. The funds available from this reduction would be transferred to other functions of the budget in order to shift priorities away from national defense to education, employment, and other domestic and social needs. A major objective of this approach is to reduce unemployment and stimulate the economy.
Mr. President, I would like to outline my reasons for opposing this amendment:
First. There are many priorities that this country must decide upon in determining U.S. commitments throughout the remainder of this century. These priorities touch not only our commitments here at home, but also those that involve us in international matters.
It is a fact that the favorable balance in arms strength enjoyed by the United States and its allies since the end of World War II is threatened by the significant increases in defense spending levels by the Soviet Union. These spending increases have resulted in the Warsaw Pact nations improving significantly the capabilities of their conventional forces that confront the NATO alliance.
It is also anticipated that Soviet ICBM gains may jeopardize the survivability of the U.S. ICBM force by 1983 to 1985. The Budget Committee's recommendations for fiscal year 1979 and the 5-year projections through fiscal year 1983 recognize this deterioration in the United States/ Western Europe defense position. The committee seeks to rectify the situation by insuring that priorities are assigned for maintaining an overall military balance with our adversaries that is at least as favorable as the present balance.
Second. The defense programs which would be affected by the amendment include the following: The MX and ICBM technology improvements; sea warfare force modernizations such as Aegis ships; general R. & D. and O. & M. activities; the U.S. NATO force levels and rate of NATO force modernization; the sea-launched cruise missile; and the nuclear-attack submarine program.
Without specifically addressing each of these items, it should be stressed that the Budget Committee's recommendation is based on concerns and priorities that directly conflict with the meaning of the transfer amendment.
I repeat that the committee is concerned that the strategic warfare and tactical warfare missions deserve priority because of the probable vulnerability of the U.S. ICBM force in a few years and the need to counterbalance the growth in Warsaw Pact conventional arms capabilities. It is not possible to focus on these priorities and accept the amendment simultaneously.
Third. The budget functions dealing with domestic needs which would be modified by the transfer amendment include energy, transportation, community and regional development, education, training, employment, and social services. These functions have been recommended for increases by the Budget Committee of 24 percent from fiscal year1978 to fiscal year 1979 — with an allowance for inflation, this represents approximately a 17 percent increase in real terms. The Budget Committee recommendation for national defense is for 3-percent real growth from fiscal year 1978 to fiscal year 1979.
The committee recommendation provides for over $84 billion in Federal aid to State and local governments. This represents a $5.1 billion increase from fiscal year 1978 to fiscal year 1979. Moreover, the committee projects a $28 billion increase in this activity from fiscal year 1979 to fiscal year 1983.
Fourth. Supporters of the transfer amendment argue that it would stimulate the economy and create thousands of additional jobs. This argument is deficient on at least three counts:
First, transferring spending within the budget is not an effective instrument of macroeconomic policy, and should not be used as such. Government spending programs should be evaluated on their merits, both in relation to each other and in relation to alternative private sector uses of the same resources.
The size and distribution of Federal spending should be determined by national priorities and congressional decisions respecting the overall size of government. The level of economic stimulus may then be adjusted if necessary, as it has been historically, by changes in tax rates and in monetary policy.
The PRESIDING OFFICER (Mrs. HUMPHREY). The Senator's 15 minutes have expired.
Mr. MUSKIE. I yield myself another 5 minutes, Madam President.
If Congress wants more economic stimulus, it can enact more economic stimulus. If Congress wants more jobs programs, it can enact more jobs programs. But let us not pretend it is necessary to have transfer amendments, and to cut spending on national security, in order to conduct macroeconomic policy.
Second, the immediate economic impact of transferring spending from national defense to other areas would probably be to reduce stimulus and employment rather than to increase it. This is because there are inevitably lags and administrative delays in committing and spending new budget authority on new or rapidly increasing programs.
We have observed this recently in the persistence of the Federal spending "shortfall." We observe it also in the large surpluses currently being run by many State and local governments.
Transferring spending from existing programs to new initiatives in any portion of the budget is likely to result in reduced fiscal stimulus in the short run.
Finally, even in the longer run, no significant increase in employment would result from such a transfer of spending authority.
A significant portion of Federal grants to State and local governments will simply substitute for spending by these authorities in the longer term. Therefore $2 billion of outlays for economic conversion and jobs programs would certainly have much less than a $2 billion net impact on spending in the economy.
Additional spending on energy research and development, whatever its merits in terms of national needs, would certainly not appear to be a very labor-intensive activity.
Again, let me say if the Congress wants more economic stimulus it should enact more economic stimulus. But let us not confuse the setting of national priorities with the setting of appropriate macroeconomic policies.
Madam President, in closing my remarks, I would like to restate my respect for the aims of this amendment. I wholeheartedly support the cause of improving the general welfare of U.S. citizens. I have stood before my colleagues innumerable times speaking out against human injustices and for the basic human dignities that this amendment addresses.
I would like to support this amendment, but I am not convinced that it solves our problems.
But, Madam President, this body must make choices. We cannot afford to commit the Federal budget in every direction at once. There are continually many attractive alternatives before us. It is up to us to determine our national priorities and to provide for our general welfare and security both here at home and abroad.
Let me illustrate my concern about some of the spending increases reflected in this transfer amendment in terms of specifics.
The transfer amendment would increase the function 450 targets by $0.3 billion in budget authority and $0.1 billion in outlays to accommodate a substantial expansion of "Title Nine" economic adjustment programs of the Economic Development Administration. These increases would help local communities adjust to the closing of military bases and defense plants.
Let us look at that justification.
Adoption of this amendment would result in a massive increase in EDA economic adjustment activities. In.fiscal year 1978, this program is funded at about $63 million. The Senate Budget Committee's recommended targets already could accommodate the President's request to expand the program to over $450 million in fiscal year 1979. That would be a seven-fold increase in 1 year. Senator McGOVERN's amendment assumes the program would expand to about $730 million in fiscal year 1979. That would be almost a 12-fold increase. Clearly the program could not expand that rapidly without undermining program efficiency and effectiveness and theBudget Committee took that into account in justifying the increase from $63 to $450 million as representing the amount that could be efficiently used for this purpose in fiscal year 1979.
Let us look at the purposes for which this increase is justified by the transfer amendment.
The PRESIDING OFFICER. The Senator's 5 minutes have expired.
Mr. MUSKIE. I yield myself 2 additional minutes, Madam President.
Even if the Congress decides to reduce military spending in the amounts recommended by Senator MCGOVERN, heavy spending for economic adjustment would not occur for a number of months. For instance, large bases are not closed until an environmental impact statement is prepared — a process which takes about a year. During this time, only planning money would be necessary and this involves only about 3 to 5 percent of total spending on an average project. The increases suggested in the transfer amendment would not be needed by EDA in fiscal year 1979.
So with respect to this particular increase in domestic spending, the budget resolution makes adequate provision, increased the provision over 1978, and could not efficiently use the added amounts presented by the transfer amendment.
In summarizing, Madam President, I repeat that the procedure adopted by the Senate Budget Committee has been to go through each of the 19 functions of the budget carefully, without carrying any total target for spending, to establish and to address needs, not only in terms of current law and the impact of inflation, but in terms of the additional recommendations we have been asked to consider.
Each function's total and, indeed, the missions within each function, are addressed in that fashion. There is no arbitrary ceiling imposed on domestic spending. There is an honest attempt to address legitimate needs in each function. I think the budget resolution does that.
When one takes into account additionally the threat to inflation represented by excessive spending or spending above actual needs, the pressures ought to be to reduce the deficit and not to increase domestic spending.
At this time, I reserve the remainder of my time and yield to my good friend from Oklahoma.