October 14, 1978
Page 37582
Mr. MUSKIE. Mr. President, the Senator from Delaware has raised an issue which I will discuss, but from a different point of view.
This bill which has come to the floor is, as the saying goes, both good news and bad news. I suppose there was no way to avoid that conclusion, from any point of view.
A tax bill, especially one emerging from conference, which considered such a multiplicity of difficult issues, could not conceivably resolve all of those issues and appear as good news to everyone in all respects.
Since I consider it my obligation as chairman of the Budget Committee, I would like first to look at the tax bill from the numbers point of view: Whether or not it falls within not only the fiscal year 1979 revenue floor as established by the second budget resolution, but also long-range out year costs that were of such concern to me, at least by the time the Senate had completed consideration of the bill.
So, from the numbers point of view, may I say at the outset that this bill is much improved compared to the bill which the Senate passed last Tuesday. The revenue reductions provided by this bill are consistent with the second budget resolution.
As I have said, the revenue reductions in the so-called out years, fiscal year 1980 and the following years, have been sharply reduced below the levels approved by the Senate earlier this week.
I want to commend Senator LONG, the chairman of the Finance Committee, Congressman ULLMAN, chairman of the Ways and Means Committee, and all the other conferees for the improvements they have made to the Senate-passed bill.
There is, in my judgment, possibly a serious problem with the bill from the point of view of the Budget Act, which I will explain after I have discussed the numbers aspect of the bill.
The second resolution assumed overall revenue reductions in fiscal year 1979 of $21.9 billion. Congress already has approved miscellaneous legislation since the second resolution that will reduce revenue collections by almost $0.1 billion.
The bill passed earlier this week by the Senate would have reduced fiscal year 1979 collections by $21.7 billion, leaving approximately only $0.1 billion for all other potential major revenue bills, including the energy tax bill, tax relief for Americans living abroad, and new sugar legislation.
The tax conference agreement now before the Senate would reduce fiscal year 1979 receipts by $19.3 billion, leaving $2.6 billion available for other legislation affecting fiscal year 1979 revenue collections, including those revenue bills to which I have just referred.
The conference agreement has sharply reduced the revenue losses provided under the Senate bill for 1980 and later years. The Senate bill provided reductions in fiscal year 1980 of $52 billion rising to $79 billion in fiscal year 1983, not counting the very large contingent reductions provided under the Nunn amendment.
If the spending ceilings set in the Nunn amendment were adhered to, additional reductions would have occurred of approximately $8 billion in fiscal year 1980; rising to $66 billion annually in fiscal year 1983.
Compared to the Senate bill, the conference agreement would reduce fiscal year 1980 taxes by $37 billion and would reduce fiscal year 1983 taxes by $56 billion.
The reductions in the later year revenue costs of the conference agreement compared to the Senate bill result principally from:
Scaling back substantially the general individual rate reductions;
Scaling back the long-run corporate tax rate to 46 percent;
Scaling back the capital gains tax relief ; and
Deletion of the general employment tax credit.
Agree with all of these conference decisions.
I also agree with the conference decisions to delete two Senate-approved provisions that attempted in diametrically opposed ways to establish long term budget spending policies through contingent tax mechanisms.
The Nunn amendment provided large-scale future tax reductions if Congress limited Federal spending to 1 percent plus inflation and the Federal Government share of GNP declined by specified amounts. On the other hand, a provision authored by Senator DANFORTH and approved by the Finance Committee would have imposed a stiff income tax surcharge if Federal spending grew at a rate greater than 2 percent plus inflation.
Both the Nunn and Danforth provisions, while well-intentioned, would have substituted mechanical means to set spending policies for the congressional budget process. I believe this process is clearly the best means Congress now has to restrain Federal spending and to adjust fiscal policies to meet ever-changing economic developments.
After watching closely the developments of this past week, including this tax conference report. I am convinced more than ever that the congressional budget process is the best way to set fiscal and economic policy.
I hope to work with Senators NUNN and DANFORTH and their cosponsors in the future to limit Federal spending as much as is possible. However, I applaud the decisions of the conferees to delete the Nunn and Danforth provisions from the bill.
That is something different from the point of view just expressed by the chairman of the Finance Committee.
Finally, I want to make a few observations with respect to out year revenue losses. First, as in the Senate bill, a number of provisions in the conference agreement still have effective dates intended to minimize their effects on fiscal year 1979 revenue collections..
Second, a number of provisions either first become effective in fiscal year 1980 or are significantly expanded in fiscal year 1980. My colleagues no doubt recall the vote this Chamber took last week during consideration of the tax bill to reverse the Chair's ruling that the Budget Act barred consideration of provisions in the tax bill first effective in fiscal year 1980 without prior consideration, through the Budget Act waiver process, of the implications of such future year revenue changes.
I believe many Senators were not fully informed on the legal and fiscal policy consequences of that issue and that vote. As a consequence, I want to give the Senate notice that I may bring this matter before the Senate again at an appropriate time — and the appropriate time is certainly not now — so that last week's unfortunate vote can be reconsidered.
The decision of the Senate to overrule its parliamentarian on this important Budget Act issue puts the Senate at odds with the law and the interpretation of that law by the other House. The House Rules, contrary to the Senate vote, interpret section 303 to require a waiver of the very tax bill conference agreement now before the Senate for exactly the same reason the Senate parliamentarian ruled that the Budget Act applied. The waiver is needed in the House, just as it should have been required in the Senate, because some of its provisions first become effective in fiscal year 1980, a year for which no first budget resolution is in effect.
The pending conference agreement, while a significant improvement over the Senate bill, is still an excellent example of why we have found the lack of effective control over future year revenue losses to be more and more a major problem. This is a matter that the Budget Committees and the Congress as a whole must address and resolve in the immediate future, if we are to have meaningful restraints to minimize Federal budget deficits.
Mr. President, I now wish to raise an issue which really troubles me.
When I first learned of it during the early morning hours, I called Senator LONG without having the specific language before me and expressed my concerns. He understood my concerns, since we have been through this issue before together, and indeed I think somewhat pursuant to the same goal, although we are not in agreement. This issue has to do, Mr. President, with section 306 of the Congressional Budget Act. I know Senator LONG understands.
Mr. LONG. Mr. President, will the Senator yield?
Mr. MUSKIE. I am not quite ready — first I would like to lay the basis for a few questions that I wish to ask the distinguished chairman.
Section 306 of the Budget Act with which Senator LONG is fully familiar reads as follows:
No bill or resolution, and no amendment to any bill or resolution, dealing with any matter which is within the jurisdiction of the Committee on the Budget of either House shall be considered in that House unless it is a bill or resolution which has been reported by the Committee on the Budget of that House (or from the consideration of which such committee has been discharged) or unless it is an amendment to such a bill or resolution.
Mr. President, I ask unanimous consent that there be printed in the RECORD at this point a memorandum discussing section 306 of the Budget Act and the legislative history which has already been written by Congress in connection with it.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
MEMORANDUM
To Senator Muskie.
From John McEvoy.
Date, October 14, 1978.
Subject: A provision in a revenue bill dealing with spending limitations is subject to a
point of order under the Budget Act.
A provision contained in a Conference Report on a revenue measure concerning spending limits on future fiscal years is subject to a point of order under Section 306 of the Congressional Budget and Impoundment Control Act of 1974 (The Budget Act). Such prohibited provisions of any bill or resolution include any which purport to determine outlay limits for future fiscal years, express the sense of the Congress regarding such limits, or instruct the Budget Committee with regard to such limits.
Section 306 of the Budget Act provides as follows:
No bill or resolution, and no amendment to any bill or resolution, dealing with any matter which is within the jurisdiction of the Committee on the Budget of either House shall be considered in that House unless it is a bill or resolution which has been reported by the Committee on the Budget of that House (or from the consideration of which such committee has been discharged) or unless it is an amendment to such a bill or resolution.
Section 306 flatly prohibits Senate consideration of any bill, resolution, or amendment (including Conference Reports) dealing with any matter within the jurisdiction of the Budget Committee.
(r) (1) Committee on the Budget, to which committee shall be referred all concurrent resolution on the budget (as defined in section 3(a) (4) of the Congressional Budget Act of 1974) and all other matters required to be referred to that committee under Titles III and IV of that Act; and messages, petitions, memorials, and other matters relating thereto.
Title III of the Budget Act deals with the method by which Congress determines outlay, budget authority, deficit, debt and revenue levels for any fiscal year. Title III provides for at least two budget resolutions each year which are to contain, among other things, "the appropriate level of total budget outlays. ..." (Section 301(a)). The first of these resolutions is a target resolution, expressing the sense of the Congress on the appropriate level of spending, revenue, debt and deficit for the fiscal year. The second resolution contains limits on aggregate spending and revenues and provides a point of order as to legislation which would break those limits.
LEGISLATIVE HISTORY
This provision is one of the most clearly defined in the Budget Act. It was contained in virtually its final form in every version of the Budget Act in either House.
The reports of the four Committees which considered the Budget Act in the two Houses are consistent regarding its interpretation. That interpretation was first expressed in the report of the Joint Study Committee on Budget Control, which provided the blueprint for the Budget Act. In the section of its report on "Procedures Under Which Resolutions Relating to Limitations Would be Handled,"the Joint Committee recommended that:
Amendments to the limitations on budget outlays and new budget authority would only be permitted in the concurrent resolutions coming from the Budget Committees and these amendments would be subject to a point of order on any other bill. (Report of the Joint Study Committee on Budget Control, Recommendations for Improving Congressional Control over Budgetary Outlay and Receipt Totals, April 18, 1973, p. 6.)
The Senate Rules Committee explained the meaning of Section 306 as follows:
No bill or resolution dealing with any matter which is within the jurisdiction of the Budget Committees shall be considered unless it has been reported by the Budget Committees. No amendment dealing with matters within the jurisdiction of the Budget Committees shall be considered unless it is an amendment to a bill or resolution reported by the Budget Committees.
It would not be in order, for example, to consider a concurrent resolution on the budget reported by the Appropriations Committee of either House. Nor would it be in order to consider an amendment to the debt ceiling bill which would establish the appropriate level of total outlays for the coming fiscal year. (Senate Rules Committee Report on S. 1541, Senate Report 93-688, March 6, 1974, p. 48; emphasis supplied)
SENATE INTERPRETATION
The Senate has taken a very broad view of the meaning of Section 306. The Chair has ruled out of order legislation which, in one case, only tangentially dealt with a matter within the Budget Committee's jurisdiction.
The Chair has ruled on the application of Section 306 in two separate instances. In each case the ruling was consistent with the interpretation of the Budget Act set forth in this memorandum.
On June 18, 1976, the Chair ruled that an amendment to the Tax Reform Bill which required a spending reduction under certain circumstances was subject to a point of order under the Budget Act. The Roth Amendment provided as follows:
Congress commits itself, under the Congressional Budget Process, that, subject to such adjustments as may be required to reflect changed economic needs or other unforeseen circumstances, any continuation of the credits allowed under Section 42 beyond June 30, 1977, will be accompanied by dollar for dollar reductions in Federal spending during the fiscal year ending September 30, 1977.
Senator Muskie made a point of order against the amendment, which the Chair sustained. (CONGRESSIONAL RECORD, 19096-19097, June 18, 1976) .
On June 21, 1976, the Chair ruled that the following amendment was out of order under Section 306:
Congress having adopted a First Concurrent Resolution for Fiscal Year 1977, pursuant to the Congressional Budget Act hereby determines to extend certain individual excise tax reductions for fiscal year 1977. (CONGRESSIONAL RECORD, 19403, June 21, 1976)
And on December 15, 1975, the Chair advised that an amendment dealing with "a spending limitation" was subject to Section 306, in the following dialogue:
"Mr. LONG. Right. So the Senator from Kansas would then be in a position rather than offering a motion to recommit to simply offer whatever spending limitation amendment he would like to offer as an amendment to the bill before the Senate. Is that not correct?
"The PRESIDING OFFICER. That would be correct, except for the provisions of section 306 of the budget bill which states that no bill or resolution and no amendment to any bill or resolution dealing with any matter which is in the jurisdiction of the Committee on the Budget of either House shall be considered by either House unless it is a bill or a resolution which has been reported by the Committee on the Budget of that House." (CONGRESSIONAL RECORD, December 15, 1976, page 22168)
"SENSE OF THE CONGRESS RESOLUTIONS" ARE SUBJECT TO SECTION 306
Section 306 includes all bills, resolutions and amendments "dealing with any matter which is within the jurisdiction of the Committee on the Budget of either House. Section 306 does not distinguish between operative and hortatory legislation. If the subject matter is within the jurisdiction of the Budget Committee, the bill or resolution is subject to a point of order under Section 306.
CONDITIONAL LANGUAGE IS SUBJECT TO SECTION 306
As noted above, if the subject matter of legislation is within the jurisdiction of the Budget Committee, the form of the language in the particular legislation is immaterial.
In the case of the ruling of the Chair on the Roth amendment, supra, the form of the amendment was expressly conditional. The amendment conditioned the availability of the tax credits provided by the amendment expressly upon "dollar for dollar reductions in federal spending during the fiscal year ending September 30, 1977."
CONFERENCE REPORTS ARE AMENDMENTS
That conference reports are amendments to the legislation in conference is well established and apparent on the face of every conference report. That conference reports are "amendments" within the meaning of the Budget Act is also well established in the precedents and practices of the Senate.
See Ruling of the Chair regarding the Emergency Agriculture Conference Report, April 10, 1978, CONGRESSIONAL RECORD, p. 9382.
SECTION 306 CANNOT BE 'EVADED BY INDIRECTION
Section 306 cannot be evaded by including in a larger bill a section which would be barred from consideration by Section 306 if it were considered as a separate measure. What cannot be done by direction cannot be done by indirection (advice from the Chair in response to the Majority Leader's inquiry regarding a Brooke amendment to the Humphrey/Hawkins bill, Thursday evening, October 12, 1978, CONGRESSIONAL RECORD not available).
The normal rule prescribed by the Legislative Reorganization Act of 1946 for determining jurisdiction — that a matter is to be judged by the subject matter which predominates therein — is qualified by Section 306 in the case of legislation within the jurisdiction of the Budget Committee. If the normal rules of preponderance had been intended to apply to legislation dealing with matters within the jurisdiction of the Budget Committee, there would have been no reason for including Section 306 in the Budget Act and the normal rule of the Reorganization Act would apply.
Section 306 was intended to preclude the enactment of material appropriate to budget resolutions in other legislation. Section 306 would be largely meaningless if it could be evaded by including such limitations as a part of a larger bill dealing with other matters.
The PRESIDING OFFICER. May we have order in the Senate, please?
Mr. MUSKIE. I have sent Senator LONG a copy of that memorandum, but I would not be surprised if in the pressure of the work of the conferees he has not had an opportunity to study the material. However, I am sure he is familiar with its general thrust.
Mr. President, may we have order?
The PRESIDING OFFICER. The Senator's point is well taken. There are a number of conversations going on. Staff is talking. Staff will please be seated and be quiet or get out of the Chamber, please. Will Senators please cooperate with the Chair in maintaining order so Senator MUSKIE may be heard?
May we have order, please? The Senator has asked for order and he deserves it.
Will staff please remove themselves from the Chamber if they are going to talk? Will staff remove themselves from the Chamber if they are going to talk, please?
Mr. MUSKIE. I thank the Chair.
Mr. President, I am not really sure I deserve to be heard.
Second, I understand it is late and it is difficult to avoid talking to discuss this complicated issue.
Mr. President, let me put section 306 of the Budget Act in this context: One month ago Congress adopted the congressional budget for fiscal year 1979. Yesterday the Senate overwhelmingly adopted the Humphrey-Hawkins bill. And I understand the House of Representatives has adopted a rule and will vote on the Humphrey-Hawkins bill shortly.
Both our congressional budget and the Full Employment Act amendments which is what Humphrey-Hawkins is, that we passed yesterday, appear to be at odds with the provisions of this tax bill conference report which deals with Federal outlays.
That language has already been read in the colloquy between Senator CHILES and Senator LONG, but let me read it again in the context of section 306 which I have already read to the Senate.
This conference report reads as follows:
As a matter of national policy the rate of outlays — clearly a budget matter — the rate of outlays, adjusted for inflation; should not exceed one percent per year between fiscal year 1979 and fiscal year 1983; federal outlays as a percentage of gross national product should decline to below 21 percent in fiscal year 1980, 20.5 percent in fiscal year 1981, 20 percent in fiscal year 1982 and 19.5 percent in fiscal year 1983; and the federal budget should be balanced in fiscal years 1982 and 1983.
Those are all budget matters.
The attainment of the GNP share outlays targets in this tax bill conference report is almost certainly inconsistent with the congressional budget and the Full Employment Act amendments which we agreed to yesterday.
Even if Congress enacts tax cuts as large as the tax cuts contemplated by the Nunn-Chiles- Bellmon amendment, the Congressional Budget Office estimates that unemployment will stay at 5.6 percent through 1983 if the GNP share and outlay targets in this conference report are mandated, and my concern is whether or not they are mandated, then surely the objectives of the Full Employment Act cannot be met as stated in that law.
If these GNP share and outlay targets are seriously meant to bind future congressional budgets we face a number of unacceptable consequences.
First, even with tax cuts in future years as large as the Nunn amendment contemplates our economic growth would slow significantly. Meeting these outlay targets would cost an average of 600,000 jobs each year over the next 5 years. These targets would leave more than 1 million extra men unemployed in 1983 compared to the targets of this year's congressional budget and the Full Employment Act for the same period of time.
I cannot believe that the distinguished chairman of the Finance Committee or the conferees on the tax bill intended to repeal the Full Employment Act we passed just yesterday. I cannot believe it is the intention of this conference report to subvert the budget process.
I know Senators are as anxious as I am to pass this bill and go home. As a matter of fact, my own conviction is that the longer we stay here the more bad policy we make. But in any case, I am equally sure they do not intend by passing this bill to repudiate their commitment to the Full Employment Act or to subvert the congressional budget process.
In order to clarify this issue I wish to put a few brief questions to the distinguished chairman, Senator LONG, and I hope that our colloquy can reassure me and, hopefully, the rest of the Senate. on these points.
Mr. CULVER. Mr. President, will the Senator yield for a question?
Mr. MUSKIE. I yield for a question.
Mr. CULVER. Just for a question. I wonder if we could just suggest the absence of a quorum.
Mr. MUSKIE. I have no objection, if I may do so without losing my right to the floor, and I will not take the floor for much more than 3 or 4 minutes more. I wish simply to put some questions to Senator LONG. May we suggest the absence of a quorum without losing my right to the floor?
Mr. BAKER. Mr. President, will the Senator withhold that for just a second?
Mr. CULVER. If the Senator will just yield for 1 minute.
Mr. MUSKIE. Yes.
Mr. CULVER. We have, after 8 hours of meeting with the House conferees, now had an agreement on the conference report on the Endangered Species Act, and it would take just 1 minute to introduce it and bring it up. It is all cleared and all agreed to, but we are concerned that if we do not get it over there ahead of the tax bill, It will not be considered this morning, and the majority leader has requested that we get it up.
Mr. BAKER. I certainly have no objection, but I have an error in the engrossment of a bill that will take 10 seconds. Will the Senator yield for that purpose?
Mr. MUSKIE. I would be happy to yield.
Mr. BAKER. Mr. President, I ask unanimous consent that the Senator from Maine may yield to me without losing his right to the floor.
The PRESIDING OFFICER. Without objection, it is so ordered.