April 25, 1979
Page 8578
Mr. DOMENICI. Let me say to my good friend from Nebraska that it has been my pleasure and privilege to get to know him over the weeks of service on the Budget Committee and I commend him for the diligent effort and time spent and the knowledge that he has acquired in this short period of time.
The best I can say is this: If the $9.5 and $10.5 billion or $9 and $11 billion will not have some effect at cushioning our extravagant temptation to cut taxes and create a deficit, then certainly zero in the budget for both years in terms of tax cuts has appreciably more of an incentive built into it to violate the budget.
I cannot predict whether 9 and 11, followed in the outyear by a $25 billion or $30 billion tax cut would be acceptable to this body as an approach to a real balanced budget, instead of breaking it in 1981. But I think it has a lot better chance than none, and that is one point I made early on.
In addition, I do believe that a tax cut is necessary when America's productivity is what it is. I think we are going to find ways at looking at our tax structure and saying "How can we make the economy more productive?"
Those kinds of selective productivity oriented tax cuts are the ones that I personally hope would occur in 1980 and 1981 if the Domenici-Armstrong amendment is passed, with the large personal decline coming later.
We are trying to stimulate growth in this economy, which is what is needed today, and I do not believe we are going to wait. So I do think the 9 and 11 has a far better chance than 0 and 0.
Mr. EXON. I thank the Senator, and I thank him for yielding me time.
Mr. DOMENICI. I believe the Senator has yielded back all the time in opposition.
Mr. BELLMON. Mr. President, I offered to yield back the time and there were no takers. Our chairman is now present, and he may have something further to say.
Mr. MUSKIE. May I have 5 minutes? I do not want to take any more time.
Mr. DOMENICI. Surely.
Mr. MUSKIE. I think I should say a word or two about this amendment, lest Senators will be in doubt about my position.
Basically this amendment raises the same issues as the previous amendment, and that is, it undertakes to cut spending more deeply in both fiscal year 1980 and fiscal year 1981 than the committee proposal; and, second, it proposes in lieu of that, in lieu of the spending cuts, roughly a tax cut of the same proportions.
Does the amendment cover just 2 fiscal years?
Mr. DOMENICI. Yes, it does, I will say to my friend.
Mr. MUSKIE. In those 2 fiscal years the tax cut proposed would total how much, $17.9 billion, and the 1982 year is not used.
Now this compares, Mr. President, with the alternative budget that is on the calendar which the committee proposed pursuant to the mandate of the Senate in the debt ceiling bill a short time ago.
That alternative budget proposed a tax cut of $19 billion in 1981, but it would delay a balanced budget until 1982. The committee unanimously supported the balanced budget in 1981 which foreclosed a tax cut in 1981 unless spending should be reduced further.
Considering the difficulty the Budget Committee faced in cutting spending in 1981, to the extent that it did, I do not regard the proposed cuts by the distinguished Senator from New Mexico as realistic. In the Budget Committee there were two alternative packages of cuts proposed, my own, which included cuts, a combination of cuts, and increases in revenues due to different management policies; and then there was the alternative proposed by Senator BELLMON which, I think, was roughly the same amount, roughly $8 billion.
Those were presented as alternatives. The committee adopted mine.
What the Senator now proposes is to add, in effect, what Senator BELLMON offered in committee as additional cuts to the cuts the committee approved in my package of cuts.
So what you have is a much deeper cut than anybody in the committee proposed at the time of the committee markup, and for a very real reason. As I said a few moments ago in response to the arguments for the Roth amendment, a budget has to be supportable by a majority of both houses of Congress, and it has to be appropriately sensitive to the real needs of the people of this country on the spending side of the budget as well as on the tax side of the budget. I think what the committee has proposed is just that kind of a vehicle.
In this proposal, for example, we have again before us issues we have already decided. There are CETA cuts in this proposal, not as deep as those that were proposed earlier, but, nevertheless, CETA cuts, an issue we have already decided overwhelmingly.
There are food stamp cuts, an issue we debated all morning and rejected overwhelmingly earlier today.
So I ask you, Mr. President, and my colleagues in the Senate, is this a realistic package of cuts? I mean, how many times do we have to raise and debate and resolve these issues before we conclude what the consensus of this Senate is with respect to these cuts? That is the first point I would make, that in order to put together a package of cuts this large the Senators had to include items we have already debated, discussed, and resolved. Of course, we can continue to do that.
Second, the staff has only been able to take a very rough cut at the revenue implications of the Senator's proposal, but the fact is that for 1981 the staff tells me there may not be a balanced budget in 1981 under the Domenici proposal because the effects of feedbacks or reflows are not allowed for. The best tentative estimate we can get is that there would be a resulting deficit of $4 billion in 1981 instead of a balanced budget in 1981. This is the same effect, although a lesser effect, of the kind that I described in connection with the Roth amendment which we decided earlier today.
With that, Mr. President, I do not think the time of the Senate would be usefully employed if I were to go into further detail on the spending cuts. I think that undoubtedly had been discussed earlier while I was absent from the floor, and I see no point in belaboring them.
I think a lot of these cuts were cuts that were considered in committee and resolved by the committee one way or another.
The proposal, I know, is one which is consistent with the position Senator DOMENICI has consistently taken, so I understand his motive in bringing the proposal to the floor. I have valued his contribution to the Budget Committee. But, having said that, I really disagree with the thrust of his amendment, its implications, both economically and budgetwise, and I urge the Senate to reject the amendment.
With that I see no need to add anything further.
Mr. DOMENICI. Mr. President, will the Senator just yield a minute to respond on two technical points?
I would say to the Senator, and he knows the great respect I have for him — I just want to correct an assumption — we did not provide for the effect of reflows for a $20 billion tax cut in arriving at balance in 1981.
Neither did we provide for any negative drag for cutting around $9.5 billion in each year because having cut taxes dollar-for-dollar we could find no formula, so we assumed a wash. I want the Senator to know that. I do not have any renews to arrive at a balance.
Second, Mr. President, I want to say yes, the cuts are basically the cuts that Senator BELLMON offered in committee.But in any function where your final mark provided a cut in whole or in part similar to Senator BELLMON's cut, we have not duplicated the cut. I want the Senator to know that.
Mr. MUSKIE. I understand.
On the question of reflows, I checked that carefully with the staff, and they insist — and I am talking about the staff economists — that dollar-for-dollar spending and tax cuts would not usually wash, that there will be reflows that are not accounted for, and that it is therefore likely there would be a deficit in 1981.
Under accepted CBO methodology, I am told the dollar-for-dollar does not wash. That is not peculiar to the Senator's amendment; it is just that the methodology does not produce a wash, and that is the methodology that CBO consistently uses.
Mr. DOMENICI. How far off is it from washing? Do you happen to have the formula?
Mr. MUSKIE. No, just that it is consistent.
Are you ready to yield back?
Mr. DOMENICI. Yes.
Mr. MUSKIE. Mr. President, do we have the yeas and nays?
Mr. DOMENICI. Yes.
The PRESIDING OFFICER. Yes.