October 9, 1978
Page 34814
Mr. BENTSEN. Mr. President, I think that the gentlemen who have offered these amendments have rendered a service.
The PRESIDING OFFICER. Will the Senator suspend until we can get order in the Chamber? The Senator will please suspend until the Chamber is quiet.
The Senator may proceed.
Mr. BENTSEN. Mr. President, I think that in suggesting these amendments the coalition and Senator HART have rendered a real service. I think what they have proposed is an intriguing idea.
I am for reducing the budget, and I am for trying to put some limits on the percentage of expenditures of GNP by the Government. I am for reducing the taxes as far down as we can go. But I have heard so many questions concerning what the Senators are trying to accomplish; I hear the Senator from Massachusetts trying to decide, if the Bumpers-Kennedy correlation of taxes up and down that rate structure is carried through, whether it is permanent legislation.
What we are having proposed tonight is one of the most profound things that has been done in the tax structure in a long time, and one I do not know how many economists have been involved in. I do not know how many hearings have been held on it. I am not sure whether labor has made its contribution to this discussion, or whether business has, or whosoever has had a part in this decision.
For that reason, since I think there are so many questions still left unanswered in spite of some rather laudatory objectives, I am going to have to vote against it, and frankly, I think if it is passed in this body I do not see how it can possibly survive the conference.
But again, in spite of my opposition, I think those gentlemen have made a fine contribution.
Mr. NUNN. Mr. President, I can understand the Senator's feelings in this matter. Let me say I have such confidence in the vast ability of the Finance Committee, in conference, to achieve any kind of oversight or change or additional goal, that I have the greatest confidence in their ability to carry out our instructions.
Mr. BENTSEN. Mr. President, I am glad for that, but my confidence in the Finance Committee is so meager I cannot support the amendment.
Several Senators addressed the Chair.
The PRESIDING OFFICER. Just a minute. The Senator from Maine has asked for recognition. The Chair recognizes the Senator from Maine.
Mr. MUSKIE. Mr. President, first of all I would like to compliment the Senator from Colorado and my colleagues on the Budget Committee, Mr. BELLMON and Mr. CHILES, and Mr. NUNN, who has been a member of the Budget Committee, for their efforts.
But, you know, I have lived with these 5-year projections for a long time. We have those projections in the Senate report on the second budget resolution this year.
But these projections, on which so much discussion has been based, were based upon moderate assumptions of what is going to happen to the economy in the next 5 years; and they anticipate a continuation of the current economic expansion for the next 5 years.
If we were to get that kind of real world for the next 5 years, it would be without precedent in the country's history. So when we talk about these projections, about what unemployment will be in 1983, what the inflation rate will be in 1983, and what spending will be in 1983, we are making very unreal projections in terms of what the real world is likely to produce. So to gear tax reductions and spending levels on any such 5-year projection, I happen to think, is a very unwise thing to do.
Now, with respect to the Budget Committee's projections, we, for example, anticipate assuming a moderate expansion for that 5-year period on top of the expansion we have had, so that we would have a total cumulative $128 billion available for additional spending or tax cuts in that period.
Now, the Hart amendment and the Bellmon-Chiles-Nunn amendment use that $128 billion in different ways. In the case of the Hart amendment, he would use it totally for mandated tax reductions, that is, mandated under the formula of this bill, tax reductions leaving no room for additional spending beyond current policy.
BELLMON, CHILES, and NUNN would use that $128 billion in a different way. They would advance the year for achieving a balanced budget by 1 year, and so they would not use it all for a tax reduction.
That is an oversimplified comparison of the two. What I do not like about either of them is that each is an attempt to reach conclusions about revenue aggregates and spending aggregates 5 years in advance.
The goals that they talk about are goals that are consistent with those that the Budget Committee has established for its own policies for this budget resolution, and I think our record demonstrates that we have worked persistently and effectively to reduce spending, to reduce deficits, and to try to stimulate moderate and wise changes in the revenue code.
I think that has to be done on a flexible basis as we move through this period. The reason we have 5-year projections in this document is so that we can hold them up to the Senate year by year as the plan to which we are committed as we adopt each budget resolution.
To freeze ourselves into mandated tax cuts or mandated spending levels without being able to really anticipate economic conditions, I think, is to tighten up our budget process to the point of inflexibility, and that is what troubles me about either of these proposals.
If we have to have one or the other, I know which one I would choose, although I would not say. I might choose one of these. But I do not really choose any of them, from the Kemp-Roth amendment to Hart to Bellmon-Chiles-Nunn, and I am very fond of all these gentlemen and have worked with them in one way or the other on matters affecting the budget.
But I really think we are taking a bill like this, or others produced by other econometric models, and undertaking topredict in advance what we can prudently produce in revenues and what we can prudently produce for outlays, and undertaking to budget 5 years in advance, with those constraints with which the Budget Committees and Congress will have to live.
For that reason, Mr. President,I am inclined, with all due respect and appreciation for the very intelligent efforts which have been made, to vote against both of these proposals.
The PRESIDING OFFICER. The Senator from Maryland.
Mr. SARBANES. Mr. President, I share the views of the Senator from Texas and the Senator from Maine. No GNP forecaster would, for a moment, in appearing before a congressional committee to testify, assert that his forecasts, projected out over a 5-year period, constitutes an adequate basis for the formulation of policy in the sense being proposed in these amendments.
The question being put by the amendments is, of course, a basic question, and one which we have to answer. But we have to answer within the context of the best facts we can have and a time frame which is as good as we can get in terms of making projections. The budget process, coupled with the work of the Appropriations and Finance Committees, now gives us a chance to do that. In the use of that process in this year alone we have gone from a $60 billion deficit which the President had projected in the budget he submitted to the Congress at the beginning of the year, to a $38 billion deficit projected in the second concurrent resolution. But we are able to make those judgments in the light of where the economy is and how it is moving.
To move into this situation, leaving aside some of the questions about 1-percent increase in spending and what you do with the defense budget — which, it is my understanding, increased by more than 1 percent this year in real terms, and if that is the case in one area of spending what happens in other areas of spending — leaving aside those questions, the model of the Chase econometrics people is resting on certain assumptions about where the economy is going to go.
Those are assumptions not only about Government spending and taxing, but assumptions about business investment, assumptions about consumer spending, assumptions about consumer saving, assumptions about the actions of the Federal Reserve Board with respect to the money supply and the interest rate.
You cannot make these kinds of projections without building certain assumptions into that econometric model which covers all of those variable factors in terms of how this very complex economy works.
To come on the floor at this point and to, in effect, legislate as these two amendments propose to do — I grant there is a little movement in there — really into a fairly rigid spending revenue connection out over a 3- to 5-year period, in my view is not the way to make policy. I think we would be better advised, having benefited from the thrust of this discussion, from a very basic question which has been put, not to accept these amendments and then to go on and pursue the issues they raise in a more orderly fashion over time in which we can develop the sort of backup information which these proposals require.
I would support the Senator from Maine and the Senator from Texas.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. I would like to join with my colleagues from Maine, Texas, and Maryland. I will make five points.
First, these proposals would constitute the single most important change in the American political economy since the introduction of the unified Federal budget under President Harding. One might find it ineptly pursued in thecentrally planned economies of the Soviet bloc, but no democracy has tried it. And it would certainly be a profound and significant change that merits more than a single evening's debate.
Second, the fundamental proposal sets fixed limits with respect to the growth of expenditures. It is important to recognize that we would be setting these limits at a time when the future is less than certain. For example, we are now in the 14th quarter of consecutive economic growth.
It is probable, based on normal business cycle conditions, that we will begin to experience a downturn in economic performance. Hence, it would become difficult to project with any degree of certainty.
Third, the President has just brought forward one of the truly great diplomatic triumphs, and opportunities, in the post war world — peace in the Middle East.
If this condition is to be consolidated it will almost certainly require great American expenditures. What that expenditure will be we do not know, but certainly we ought not to limit that possibility.
Fourth, the President is about to come forward with a strategic arms limitation treaty. We can not yet know exactly what that will entail either. But, it is almost certain that it will involve some changes in our conventional forces, it could involve greater expenditure. And, if a trade between strategic weapons and conventional ones is necessary, then our negotiators ought to have the flexibility to accomplish it.
Mr. NUNN. Will the Senator yield for a brief comment? I think the Senator missed the earlier part of the debate.
Mr. MOYNIHAN. I am happy to yield.
The PRESIDING OFFICER. The Chair will remind Members of the Senate that under the rules of cloture one Senator cannot yield to another.
Mr. NUNN. If the Senator will yield on my time
Mr. MOYNIHAN. My final point is that there is something fundamentally fearful about this effort to bind ourselves to future limitations. We have been governing this Nation for almost two centuries on the basis of the free choices of successive Congresses. I see nothing in our past record to make us fearful of our future performance.
The President, in his economic report this last January raised an important concept — that of our expenditures as a proportion of our GNP. He suggested that it be reduced to 21 percent. This is a basic idea, and a good one. But it is one that would be carried out by future Congresses. We need not fear an inability to accomplish this, we have performed well in the past, and will continue to do so in the future. I thank the Chair.