April 23, 1979
Page 8251
Mr. MUSKIE. Mr. President, the distinguished Senator from Wisconsin, to my regret, apparently feels he is the only Senator interested in cutting the budget and holding down spending. At least, that is the implication of most of what he has said today.
I think the record I have already made today indicates that the Budget Committee has, in a responsible way, made deep cuts in programs in 1980 and especially deep cuts in 1981.
Second, he makes the argument that since his cut is only 5 percent it should not hurt anybody very much. Then I suppose one could argue that after one reaches his outlay level one could cut another 5 percent — after all it is only 5 percent — and that should not hurt anyone.
Then after arriving at that level, why not cut another 5 percent?
In other words, as long as we do it only 5 percent at a time we can cut as deeply as we wish and not hurt anyone. That seems to be the crux of that argument.
But then there is the question of how much of a cut the distinguished Senator from Wisconsin proposes.
He said it is 5 percent below the committee. Well, our calculator shows it is 5.4 percent in absolute terms, and in terms of current policy it is 7.4 percent. In terms of current law it is 6.3 percent.
But then there is another point about it all which the Senator ignores, and he is a good economist. If we cut just $28.8 billion, which is the amount of the Budget Committee's recommended 1980 budget deficit, we will not get a balance, because the reduction in outlays will result in an increase in unemployment. What we actually end up with when we cut outlays deep enough to balance the budget is a reduction in revenues, from $503.6 to $494.1.
That means that you have a $9.5 billion reduction in revenues below the level in the committee's 1980 budget recommendation.
In other words, the Senator from Wisconsin would cut the committee's outlays and insist that we can still have the same revenues that the Budget Committee projects. That simply is not the case. You would have $9.5 billion less in revenues.
That means that you would have to cut outlays by $38.3 billion in order to get to a zero deficit or a balanced budget in 1980.
If we take that figure, that amounts to a 7.4 percent cut in outlays in the committee's budget, a 9.2 percent cut under current policy, and an 8.1 percent cut in current law.
Those are not insignificant cuts. I recommend to the Senator that he should have been at the markup session when we reduced the 1981 budget to balance. After we had gone through the budget functions and cut wherever we could, and we have some pretty conservative members on the Budget Committee, we were still almost $9 billion short of our goal. We had to cut deeply into programs before we could get that 1981 balance. We had to exclude any tax cut at all to compensate for the increase in social security taxes and for fiscal drag. It was really tough reaching balance in 1981.
The Senator from Wisconsin said we were not trying. He says all you have to do is take another 5 percent off. You do not have to worry about where it comes from. After PROXMIRE passes his amendment, then you in the Budget Committee have to cut another $38 billion from the 1980 budget.
Well, I have asked the staff to put together a list of cuts that would total $38 billion. I do not have the Senator's list. He does not want me to have it, because if I have his list, then I shall notify people who have a particular interest in a particular program. He knows if I do that, I shall begin to erode the support for his amendment. He does not want that. It is so much easier to take this across-the-board cut. Then nobody knows where it is going to hit.
It is always easy to vote to require somebody else to cut. It is when you have to make actual cuts that it becomes tough. So he knows very well — that is why he has not submitted his list to me — that if he specifies the functions in which the cuts ought to be made, he begins to lose votes right and left, and justifiably so.
I have a possible allocation by functions of the $38.3 billion that we actually have to cut in order to reach his balanced budget goal in 1980. It shows national defense cut by $9.4 billion. There are not many places in the budget where you can cut $9.4 billion.
The list shows $13.8 billion cut in income security. There are not many budget functions that are that large. So you do not have much choice but to cut something like $13.8 billion in income security.
We have a $4 billion cut in health. There are not many places you can cut $4 billion. So I think this list that I have is a pretty realistic list of the places where you would have to find that $38 billion in cuts in order to get at that balanced budget in 1980.
I ask unanimous consent that that table be printed in the RECORD.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. I do not pretend that this is the only mix we do have. We could have many of them. But if we look at the big items in the budget, there are national defense; education, training, employment, and social services, $29 billion; health, $53 billion; income security, $183 billion; interest, $56 billion, which we cannot very well cut because it is a contractual obligation. There will be some reduction in interest payments if we reduce spending by $38 billion, but that is only $1.1 billion.
So we have to cut in those big items I have mentioned, then spread a lot of cuts through a lot of small items. There is no other way to do it.
If you do not think those will hurt, you ought to read some of the letters I am getting from committee chairmen about some of the cuts we have already made in 1980, about some of the impossible hardships we are imposing upon people whose needs ought to be looked at at a time of high structural unemployment in the economy and the energy crisis. All of that, we ignore. All we have to do is cut $38 billion more than the committee has cut.
We have cut $14 billion from the authorizing committee requests. So what the Senator from Wisconsin is talking about is over $50 billion below what the authorizing committees have requested in order to balance the budget. It may or may not be possible, from a program point of view, without creating very real and conscience-striking cuts that are going to hurt people.
I do not mean hurt the rich. I am talking about hurting people who have nothing else except what they get through the Federal budget. If you do not think that will happen, you ought to sit through a full markup session of the Budget Committee and get the facts.
The next point made is the Senator says it would have no countercyclicaleffect. I would not want to take that chance. I am no economist, although I have listened to economists for 5 years. I have not heard any economist who says you can take that kind of cut without taking very high risks of a much deeper recession than some of them already predict.
The Senator from Wisconsin may, maybe because he does not believe he is going to carry the vote. But if you carry the responsibility for recommending to the Senate a fiscal policy and monetary policy that will slow down the economy in order to wash away some part of inflation without pushing the economy into a deep recession, which would unbalance the budget in very short order, you do not support his amendment. The precipitous cuts the Senator from Wisconsin recommends could indeed precipitate a deep recession, according to the testimony of distinguished economists.
The Senator from Wisconsin may be right. There is only one way, I guess, to prove him wrong.
That is to let him have his way. But I am afraid I do not have the courage to let him have his way. I cannot influence his vote. He has already made up his mind.
Is the Senator looking for a vote tonight?
Mr. PROXMIRE. No, it will be fine with me if we vote tomorrow. I would like a roll call on the amendment, but we can do that tomorrow.
Mr. MUSKIE. Let me just summarize. The cut proposed by the Senator from Wisconsin is an inadequate cut to balance the budget because reducing outlays reduces GNP and, in turn, reduces revenues. It could be necessary to cut outlays by $38.3 billion to balance the budget in fiscal 1980, as I said in my opening statement.
Second, balancing the budget in fiscal year 1980 would raise unemployment by .4 percentage points to 7.2 in fiscal year 1980. This would add $2 billion to unemployment compensation and other unemployment-related outlays. This .4 percentage point increase in unemployment amounts to 400,000 to 410,000 fewer jobs.
Three, the unemployment and job loss would persist in fiscal year 1981. Furthermore, an additional cut of $8.4 billion in outlays from the committee recommendation for fiscal year 1981 would be required to balance the budget in that year. I have already described how difficult it was to cut the last $8 billion or $9 billion in 1981 in order to get to a balanced budget in 1981. This would add another $8.4 billion cut in that fiscal year.