October 9, 1978
Page 34802
Mr. NUNN. The Senator is wrong on that, unless we have high inflation. If we have high inflation, the Senator from Colorado's amendment is more restrictive.
Mr. PROXMIRE. If you have inflation, you have a rapidly rising GNP, and if you have a rapidly rising GNP, the percentage of GNP to Federal spending would have to be declining.
Mr. NUNN. When is the last time the percentage of Federal spending as compared to the gross national product went down?
Mr. PROXMIRE. Well, it would go down under the Hart amendment.
Mr. CHILES. No, there is no requirement that it goes down under the Hart amendment. Only under our amendment does it go down. It would go down whenever the gross national product rises at more than 1 percent in real terms.
Mr. PROXMIRE. That has been true in every year, with one or two exceptions, for the last 20 years.
Mr. CHILES. It has not been true for the last 5 or 6 years.
Mr. PROXMIRE. It was true last year, the year before, 1975, 1976, and 1977, and it will be true in 1978.
Mr. CHILES. No. it is not.
Mr. PROXMIRE. Yes, it did. The gross national product went up every one of those years.
Mr. CHILES. Yes, but Federal spending also went up every one of those years.
Mr. PROXMIRE. That is what the Hart amendment would control. The Hart amendment would not let it go up more than 1 percent.
Mr. CHILES. No, it says Federal spending cannot go up more than 1 percent over the inflation.
Mr. PROXMIRE. That is right.
Mr. CHILES. Prior to the recession in 1970, we were spending about 20 percent of the GNP for Federal expenditures. Last year we spent 22 percent. During that time, we had some of the highest inflation we have ever had. So we had high inflation and took in more money, as the Senator is pointing out. But we still, on top of that, were spending more than 20 percent of our GNP for Federal expenditures. So it is a double whopper.
Mr. PROXMIRE. Let me interrupt the Senator. You say every one of those years you were increasing spending more rapidly than three-quarters of 1 percent above the inflation rate?
Mr. CHILES. Yes, sir. We were.
Mr. PROXMIRE. And that would be restricted by the Hart amendment.
Mr. CHILES. But in any one of those years, if we had had an amendment that said, "You cannot increase Federal spending as a percentage of GNP, but you must decrease it," then your Government spending would have had to go down. But it did not. So what we did in the past was increase the deficit.
Mr. PROXMIRE. But the fact is that if the Hart amendment had been in effect for the last 15 years, you would have had a sharp reduction in the spending we had.
Mr. CHILES. And the fact is that had the Nunn-Chiles-Bellmon-Roth amendment been in effect, you would have had a sharper decline.
Mr. PROXMIRE. I would like to see the tables that prove that. I am sure the Senator believes that is true, but I think it is probably wrong.
In any event, you would have had a sharp reduction with the Hart amendment in effect.
Mr. CHILES. I agree.
Mr. PROXMIRE. You agree? Thank you.
Mr. CHILES. And the Senator from Georgia is right when he says any time inflation was leveling off, then certainly holding spending to three-quarters of a percent over real growth means you would get more restraint in the Hart amendment. But any time inflation is running rapidly, as it happens to be now, you would not, because you could have a higher percentage of the GNP go for Federal expenditures. It depends on how you want to buy your insurance. Our set of three constraints together in a way that no one constraint can do.
Mr. PROXMIRE. I would like to ask the Senator when, in the last 10 years, it would have been realistically effective.
Mr. CHILES. It would have been realistically effective in 1970, 1971, 1972, 1973, 1974, 1975, in 1976, and in 1977.
Mr. PROXMIRE. I think the Senator is wrong in every year except 1974.
The PRESIDING OFFICER (Mr. MATSUNAGA) . The Chair will remind the Senator from Georgia that this is all out of his time.
Mr. NUNN. The Chair is very considerate of the Senator from Georgia in giving him that reminder. How much time do I have left?
The PRESIDING OFFICER. The Senator has 44 minutes remaining.
Mr. NUNN. I would just like to say to the Senator from Wisconsin that basically the GNP, if you look at the percentage of GNP in 1969, it was — well, if you look at it in 1966, the percent of Federal spending compared to gross national product was 18.7 percent. If you look at it now, it is 22.5 percent. Over that period of time it has steadily come up. There have been years when it went down, about 3 or 4 years in a 12-year period when it went down; in the other years it went up. The trend is straight up.
Mr. PROXMIRE. But in every one of those years, if the Hart amendment had been in effect, you would not have had that rise; spending would have been at that 18 percent level or below it.
Mr. NUNN. I have already said that if we did not have a better alternative I would be in favor of the Hart amendment.
Mr. HART. You can have them both.
Mr. NUNN. I know the Senator from Wisconsin is aiming at a balanced budget in 1982. There is nothing in the Hart amendment that requires a balanced budget. The Hart amendment does provide greater tax cuts, but there is no concern for a balanced budget, that is why I favor this amendment, and I would think the Senator from Wisconsin would want a balanced budget also.
Mr. HART. Mr. President, may I respond to the question of the Senator from Wisconsin?
The PRESIDING OFFICER. The Senator from Colorado.
Mr. HART. The Hart-Church-Proxmire-Bumpers amendment requires—
Mr. Mr. NUNN. We are both claiming the Senator from Wisconsin as a cosponsor. I am glad to have him on mine also.
Mr. HART. My amendment has a greater reduction in the ratio of Federal spending to GNP than does the Nunn amendment, year by year.
Mr. NUNN. That is in the Senator's economic projection, not a part of his amendment.
Mr. HART. This change will result mathematically by lower spending. It is the same result as in the Senator's amendment, is it not?
Mr. NUNN. We have it written into our amendment.
Mr. HART. The fact of the matter is that the result of passing the Hart amendment would reduce the percent of GNP which Federal spending occupies at a faster rate. That is a fact.
Mr. NUNN. We have an analysis from both the CBO and Chase Econometrics Survey. I would disagree with the Senator, but I do not have his analysis. If he has that analysis, I would like to have it. If he does not have it, there is no way I can argue with it as a claim; I do not believe he has an analysis to back it up.
Mr. HART. It is already in the RECORD. I submitted it for the RECORD previously.
Mr. NUNN. If it is in the CONGRESSIONAL RECORD, an econometrics analysis—
Mr. HART. It is the computer print-out from the econometric analysis that is in the RECORD.
Mr. BIDEN. Mr. President, this debate is a somewhat unusual debate, I think. We have the proponents of the so-called coalition amendment, of which I am one, and the proponents of the Hart amendment essentially agreeing that both amendments are substantially better than anything that the Senate is likely to have an opportunity to vote on between now and the end of the session. The Senator from Colorado and the Senator from Georgia mentioned that one of the dilemmas here appears to be the question of pride of authorship. It seems to me that the only essential thing is that we get an amendment of this consequence passed, and that we do it as rapidly as we can before we find ourselves in a box that may be produced before the evening is over.
I would like to suggest that the opponents and proponents of the Hart amendment yield back their time and we vote on it, vote up or down. If that fails, then we would move to the so-called coalition amendment.
All the people who have spoken so far here tonight are all saying that essentially what we must do is we must tie the growth of Government to the tax cuts or the lack of growth of Government to the tax cuts and we need substantial tax cuts.
I have the greatest regard for the Senator from Maine, who is not in the Chamber right now, and I also have tremendous regard for the parliamentary and intellectual capabilities of the magician from Louisiana, the chairman of the full committee.
While we are all here and we all essentially seem to agree to get on with the vote in the interest of both the proponents of the Hart amendment and the proponents of the coalition amendment, I suggest maybe we do that and move on rapidly before we are foreclosed somehow.
Mr. NUNN. I agree with the Senator from Delaware.
Mr. MUSKIE. Mr. President, although I appreciate the effort that Senator HART has put into this amendment I must rise in opposition to it.
Mr. President, the Hart amendment was written in a manner consistent with the Senate Budget Committee's 5-year projections. The Hart amendment would provide future tax reductions only if Federal spending in future years is tightly controlled. For this reason the Hart amendment would not fuel inflation and would not add substantially to the budget deficit.
In this respect the Hart amendment represents a far more responsible approach to multiyear tax cuts than the Roth-Kemp proposal.
The Hart amendment does, however, have several flaws. First, the amendment would unnecessarily complicate the process of putting the budget together each year.
Second, the amendment could force tax cuts in a future year when tax reduction might not be appropriate.
Third, the amendment fails to affect the basic source of high spending and large budget deficits — congressional decisions on individual spending and revenue bills.
Mr. President, the Hart amendment would complicate the work of the Budget Committee and the Congress because revenue reductions could be triggered automatically by outlay changes. That would mean that each time the Budget Committee or the Congress considered a spending program the revenue effect of that spending provision would have to be considered, because each spending program affects the aggregate level of outlays, and the aggregate level of outlays influences the tax reduction under the Hart amendment.
In fact, under the Hart amendment we might not know what the revenue floor would be until early or mid-September when the House-Senate conferees agree on the level of outlays provided in the second budget resolution. The full consideration of tax legislation would therefore be blocked until only a few weeks before the new fiscal year was to begin.
My second concern with the Hart amendment is that it may result in a significant tax cut in a year when a tax cut would not be desirable. For example, if it appeared next year that the pace of the current economic expansion was going to pick up rapidly in 1980, then an appropriate fiscal and budgetary policy for that year might be to increase outlays only as rapidly as the projected inflation rate but not to reduce taxes. The Hart amendment, however, might require a tax reduction in 1980 if outlays, adjusted for inflation, are held constant.
The Hart amendment therefore might result in increasing inflationary pressures precisely when a budget surplus is required.
My final concern with the Hart amendment is that it addresses the symptoms of a budget problem, that is, taxes and budget deficits, but it fails to address the underlying problem — the need for congressional discipline in decisions on specific spending bills. Congress must have the fortitude to vote responsibly on each spending bill if we hope to achieve the goals of budgetary balance and a lighter burden.
Mr. CHILES. Mr. President, I am pleased to be one of the original cosponsors of the coalition amendment to reduce Federal taxes and spending and achieve a balanced budget by 1982. This amendment follows in general the plan I offered as an amendment to the Second Budget Resolution.
ECONOMIC NEED FOR TAX AND. SPENDING REDUCTION
Mr. President, we are out of the recession, we have come down from over 9 percent unemployment to less than 6 percent, so we no longer need big deficits to create employment; what we need now is to cut back the "temporary" anti-recession spending and move as quickly as possible to a balanced budget.
To reduce 1 to 2 percent of excess unemployment, we need business investment and consumer confidence.
This means we need a firm commitment to balance the budget, reduce inflation and cut taxes. Our amendment provides that commitment.
Inflation is our biggest problem now — inflation impedes economic growth by driving up interest rates and discouraging investment. Greater certainty and stable economic conditions would provide the kind of encouragement people need at this point in time. Our amendment sets forth a plan for that kind of stability.
ECONOMIC FEASIBILITY OF AMENDMENT
We asked the Congressional Budget Office to run our numbers through their economic models, and they told us that if we cut both spending and taxes by the amounts we propose, we will get a balanced budget in 1982 without hurting either unemployment or inflation.
To quote a letter from Dr. Alice Rivlin, Director of the Congressional Budget Office:
In particular, this analysis shows that the revenues you propose would be consistent with a balanced Federal budget by 1982 and a continuation of the real economic growth assumed for the 1979 second budget resolution.
Chase Econometrics goes even further and says that by stimulating investment we will create an extra 1 million jobs by 1983.
In either case, it is clear that we have worked out a responsible, feasible combination of tax and spending reductions.
Mr. President, I ask unanimous consent that a table showing the effect of our amendment on Federal spending, taxes and deficit appear in the RECORD at this point in my remarks.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]