November 7, 1979
Page 31237
SECOND CONGRESSIONAL BUDGET RESOLUTION — CONFERENCE REPORT
Mr. MUSKIE. Mr. President, I submit a report of the committee of conference on Senate Concurrent Resolution 36 and ask for its immediate consideration.
The PRESIDING OFFICER. The report will be stated.
The assistant legislative clerk read as follows:
The committee of conference on the disagreeing votes of the two Houses on the amendment of the House to the concurrent resolution (S. Con. Res. 36) revising the congressional budget for the U.S. Government for the fiscal years 1980, 1981, and 1982,, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses this report, signed by a majority of the conferees.
The PRESIDING OFFICER. Without objection, the Senate will proceed to the consideration of the conference report.
(The conference report is printed in the House proceedings of the RECORD of November 2, 1979.)
Mr. MUSKIE. Mr. President, I ask unanimous consent that the following members of the staff of the Budget Committee be allowed to remain on the floor during consideration of and votes on the conference report on Senate Concurrent Resolution 36: John McEvoy, Karen Williams, Sid Brown, Susan Lepper, George Merrill, Brenda Tremper, John Tillson, Porter Wheeler, Liz Tankersley, Rick Brandon, Jim Capra, Bob Sneed, Bob Boyd, Bob Fulton, Gail She1p, and Carol Cox.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the use of small electronic calculators be permitted on the Senate floor during consideration of and votes on the conference report on Senate Concurrent Resolution 36.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, on September 19, the Senate passed the second budget resolution and sent it to conference. Last Thursday, that conference finished its work after an unprecedented 17 meetings over the course of 23 days.
The conference was prolonged for a number of reasons.
The House failed in its first attempt to pass a budget resolution and had to try a second time.
Once the conference began, the Senate took a hard line on defense and energy expenses and the House resisted it.
And the House demanded more spending for social programs than the Senate had provided and stuck hard by that position. The House made the Senate pay a dollar in social programs for every dollar in defense which divided us.
In the end each House seems to have achieved its own priorities in the conference substitute, even though the House, in dollar terms, went much further toward the defense and energy priorities of the Senate Resolution than the Senate gave up in other domestic programs to the House.
The House also resisted the Senate-passed reconciliation instructions to seven committees to save $3.6 billion. And that resistance, which has not yet been fully resolved, greatly prolonged the conference.
The delay in completing this conference was a serious concern to all conferees. Failure to agree upon a budget resolution began to clog the legislative machinery because committee spending allocations could not be made. Major legislation on energy, including the pending bill, and defense were almost debated before a budget conference agreement was reached.
The conferees took no solace from the fact that the entire spending process is well behind schedule this year. The fact that the appropriations process — which still has weeks to go — should be completed under the Budget Act timetable before the second budget resolution is considered gave us no comfort.
The fact that the other House pursued a schedule which precluded meeting the September 15 deadline for the budget resolution was another misfortune which we must hope is not repeated in future years. And I say that even though the House timetable allowed us additional time for consideration of the budget resolution in the Senate.
Three years out of the past 4 we have met the Budget Act timetable for completing our budget resolutions. We must try to make this year's delay a monument to a singular exception.
The Government should no more enter a fiscal year without a budget resolution firmly in place to guide its spending decisions than it should start that year without its spending and tax bills decided.
So while reasons abound for delay on all sides this year, none excuses the facts. We must do better next year.
And I must report that Senate action on this conference substitute may not be the last action we must take upon it. The resistance on the part of the House to the $3.6 billion in savings incorporated in the reconciliation instructions in this conference substitute was only partly overcome in the conference. When this resolution is put before the House in the coming days, its House managers intend to offer a motion to strike these savings instructions.
If that motion succeeds, the Senate will have to consider its next step.
The irony of the House position is that to a large extent the House version of this budget resolution — like the conference substitute itself — presumes these savings will be made even though few have been made in either House up until now. The House conferees contend that the fact that most of these savings — most of which have been debated for years — have never been made should not dampen our hopes they will be made this year, even without the Senate's reconciliation instructions.
The Senate believes that without these reconciliation instructions — clearly mandated by the Budget Act — other committees simply will not make these savings.
So the fate of these savings provisions will remain in doubt until the House acts.
And if Congress fails to meet these savings, other high priority programs — including defense and energy initiatives — will simply be crowded out. There will not be adequate room within the spending ceilings for both contemplated spending programs and the cost of savings not made.
And let no one be heard to say that a third resolution will then be enacted to allow more spending if the savings are not made. The budget process is not a rubber stamp for spending which would occur without it.
The budget Congress adopts this month must be durable enough to last until next October, in the absence of significant unforeseen events. And excess spending or failure to make savings will not justify a third resolution. All of the spending and tax bills — including supplemental appropriations — must fit within the spending ceiling and revenue floor of this budget resolution.
Let me underscore the meaning of my remarks — and wishful thinkers be on notice — failure to achieve these savings will not justify another budget resolution.
Only unfavorable circumstances seen in the present forecast — could justify a revision of this budget resolution.
And we will exercise great caution about any revisions in this resolution even if the economic outlook appears to deteriorate. Monthly shifts in fiscal policy to accommodate the latest economic forecast would be chaotic and counterproductive.
FISCAL POLICY
The budget for fiscal year 1980 that has been agreed to by the conference committee embodies the same fiscal policy which the Senate endorsed a month and a half ago. This is a fiscal policy of restraint dictated by the continuing need to fight inflation, the Nation's most pressing concern.
Let me give you one measure of that restraint. If the unemployment rate in fiscal year 1980 were to remain at the 5.8 percent rate of fiscal 1979, the deficit in the budget adopted by the conference would be about $8 billion. That would be almost $20 billion below the actual deficit for last year.
The economic outlook is clearly marked by its usual degree of uncertainty. In the month since the Senate passed its budget resolution, there has been a marked tightening of monetary policy and there have been further increases in oil prices. But other incoming data provide no conclusive evidence of any need to relax fiscal restraint.
In fact, the vigor of the economy continues to defy the economic forecasts. Inflation continues to run above the forecast, at a 13 percent annual rate at the end of fiscal year 1979.
And inflation is spreading far beyond the original problem areas where the latest acceleration of prices originated. When you leave out food, energy, and mortgage interest casts, consumer price inflation has accelerated from 7.3 percent early this year to 9.1 percent in September.
Furthermore, output has recovered fully from the decline caused by gas lines last spring. Unemployment in October was 6.0 percent of the labor force — far below the 6.9 percent average forecast by CBO for that period — and total employment is still rising.
Retail sales are up, new orders are up, and there is very little sign of the recession that was expected to start 3 months ago.
Two other economic events since September command our attention.
In response to the high and unrelieved level of inflation, to signs of strength in the economy, and to dangerous signs of weakness in the international position of the dollar, the Federal Reserve undertook a significant tightening of monetary policy on October 6. Since then, interest rates have risen to historic levels with prime rates now in excess of 15 percent and threatening to rise further.
In addition, energy prices seem to be rising even more than was contemplated at midyear, causing more inflation and greater transfers of purchasing power from U.S. consumers to oil producers here and abroad.
In view of these events, forecasters are once again lowering their estimates for next year, predicting a deeper recession than the mild one forecast by CBO at midyear — the forecast on which we based this budget resolution.
No one can say that these pessimistic forecasters are wrong. But neither can we be sure they are right. As Will Rogers said:
An economist is a man who can tell you what can happen under any given conditions, and his guess is liable to be just as good as anybody else's.
After all, these same forecasters told us a few months ago that money was already so tight that housing starts would begin to drop over the summer; that by this time the unemployment rate would be approaching 7 percent; and that consumers would have already started to save more, instead of saving less.
We cannot be sure that these forecasters know more now about the behavior of America's households and businesses then they did at midyear. We all face profound uncertainty about how long interest rates will stay at present levels, about how tight credit will become, and about what economic effects will follow from these recent credit and energy developments.
Meanwhile, inflation is not some hypothetical future problem; it is a problem today. The producer price index figures for October that have just been released offer little prospect for relief. While food prices were unchanged in October, other finished goods prices rose 1.4 percent, the highest rate since 1974.
The conference substitute for fiscal year 1980 can make a significant contribution to winding down this inflation. In spite of the projected slowdown in the economy, it holds the deficit under $30 billion. In 1977 when the unemployment rate was close to that assumed for fiscal year 1980, the budget deficit was $45 billion. We have come a long way since then in exercising restraint — as well we should. The inflation rate in 1977 was half today's rate.
Budgetary restraint cannot, by itself, bring inflation to a halt. Commensurate restraint will be required in all parts of the private sector.
There is no way in which everyone can escape the real costs of OPEC price increases. Those who attempt to do so through price increases or excessive wage gains simply pass the burden to the defenseless — those who do not own property that rises in value, who are not and cannot be in debt, whose bargaining position is weak, and whose jobs are insecure.
But restraint in both the public and the private sector can slow inflation down and contribute to our economic health.
Budget restraint will limit the Federal Government's contribution to demand pressures against the supply capabilities of the economy.
Budget restraint will reduce the pressure on the Federal Reserve and allow interest rates to decline more and sooner than would be the case if we let the deficit rise sharply.
The conference substitute contemplates real growth in outlays of 1.8 percent in 1980, 1.2 percent in 1981, and 0.9 percent in 1982.
There are two principal reasons for this real growth in Federal outlays. First, the increase in defense spending overwhelmingly adopted by the Senate has been largely preserved by the conferees. This increase was expressly designed to raise defense spending significantly above the rate of inflation. Second, the conference substitute provides additional amounts intended for low-income fuel assistance to alleviate undue hardship caused by skyrocketing energy prices, as proposed by the President and endorsed by votes in both Houses. And this outlay growth will be compensated by proceeds from the windfall profit tax bill.
The budget recommended by the conferees continues the objectives of balancing the budget in fiscal year 1981 and providing for substantial tax reduction in fiscal year 1982.
Under the current economic forecast, we can still balance the budget in fiscal year 1982, while giving the American people at least a $55 billion tax cut to restore the purchasing power lost through social security tax increases and the effect of inflation on income tax rates.
Mr. President, the budget recommended by the conferees adopts a reasonable and balanced fiscal posture. It avoids a premature, and possibly totally unnecessary, shift from fiscal restraint to fiscal stimulus. Yet it recognizes that the prospects for some increase in unemployment and only slow progress in lowering inflation must be met. At a time of unusual uncertainties — which will require continued close monitoring of the economy — the conferees stayed on a steady course, refusing to be buffeted by every changing breeze, every new statistic, or every alarming headline. I believe this is a prudent course.
Now let me explain some of the revenue and spending priorities in the conference substitute in greater detail.
REVENUES
The conference substitute anticipates that revenues in fiscal year 1980 will be $517.8 billion. This figure is $3.1 billion higher than the revenue figure in the resolution adopted by the Senate.
There are three basic reasons for this change.
First, the higher outlays contained in the conference substitute will generate somewhat greater economic activity and taxable incomes than were assumed in the budget resolution's original revenue estimates. Second, the current uptrend in oil prices implies higher revenues under current law. Finally, we are assuming $400 million more in revenue-raising legislation — principally through the windfall profits tax — than was assumed in the Senate resolution.
The conference substitute provides that the amount by which net revenues should be raised in fiscal year 1980 is $2.4 billion — a figure which may prove to be quite modest. The conference substitute does not attempt to prejudge the outcome of the debate on the windfall profits tax bill. But the House version of that bill, for example, would raise over $5 billion. I am sure that the conference between the Senate and the House tax-writing committees will come down somewhere close to our figure.
In fiscal year 1982, the Senate continues to assume a major tax cut of at least $55 billion to offset the effect of inflation and social security tax increases.
Turning to the spending side of the budget, I will describe the major conference changes in the functional totals in the budget and the relationship of the reconciliation provisions to those totals.
FUNCTION 050: NATIONAL DEFENSE
Mr. President, the conferees agreed to the full budget authority of $141.2 billion contained in the Senate resolution for the national defense function. This budget authority total is the level contained in the Hollings-Nunn amendment and represents 2.5 percent real growth in defense spending.
The outlay estimate of $129.9 billion in the conference substitute reduces the Senate-passed estimate by $700 million represents only an estimating difference compared to the Senate-passed level.
These outlay amounts will accommodate all known defense funding requirements anticipated throughout fiscal year 1980, including the appropriations committee levels for defense and military construction.
For fiscal year 1981 and 1982 the conference substitute assumes continued real growth in defense spending of 5 percent per year in budget authority.
FUNCTION 150: INTERNATIONAL AFFAIRS
In function 150, international affairs, the conferees agreed to the Senate level of $13.1 billion in budget authority for fiscal year 1980. The conference outlay ceiling is $8.4 billion, an increase of $100 million over the Senate level. These outlays are assumed to be compatible with a program to assist victims of the famine in Cambodia.
For fiscal year 1981 and 1982 the conference substitute generally assumes continuation of current foreign assistance programs, except that refugee assistance is assumed to decrease over the period.
FUNCTION 250: GENERAL SCIENCE, SPACE AND TECHNOLOGY
For general science, space and technology programs the conferees agreed to fiscal year 1980 budget authority of $5.85 billion and outlays of $5.7 billion. The budget authority figure is below the Senate-passed level by $50 million. These levels are consistent with completed action on the major appropriations for the function.
For fiscal year 1981 and 1982 the conference substitute would continue general science and civilian space activities at declining real levels.
FUNCTION 270: ENERGY
For the energy function, the conferees agreed to fiscal year 1980 budget authority of $39.5 billion and outlays of $7.25 billion. The budget authority figure is below the Senate-passed level by $1.5 billion and the outlay figure is above the Senate-passed level by $250 million.
The conference substitute woud accommodate funding for new energy initiatives jointly reported by the Senate Banking, Housing, and Urban Affairs and Energy and Natural Resources Committee.
For fiscal year 1981-82 the conference substitute is consistent with these new Senate energy supply and conservation initiatives. It also assumes that continuing delays will occur in the strategic petroleum reserve program.
FUNCTION 300: NATURAL RESOURCES AND ENVIRONMENT
For natural resources and environment programs, the conferees agreed to fiscal year 1980 budget authority of $12.6 billion and outlays of $11.9 billion. The budget authority level is $100 million lower than the Senate-passed level.
For fiscal years 1981 and 1982, the conference substitute continues the assumptions contained in the Senate-passed resolution, including allowance for establishment of a "superfund" in fiscal year 1981 for cleanup of oil and hazardous substances.
FUNCTION 350: AGRICULTURE
For agriculture, the conferees agreed to fiscal year 1980 ceilings of $5.0 billion in budget authority and $2.55 billion in outlays, $50 million in outlays below the Senate-passed level, reflecting completed action on the agriculture appropriation.
For fiscal years 1981 and 1982, the conference substitute assumes current policy funding for agriculture research and services and would continue other programs at current law levels. Acquisitions for a food security reserve could be accommodated in fiscal year 1981.
FUNCTION 370: COMMERCE AND HOUSING CREDIT
For commerce and housing credit programs the conferees agreed to fiscal year 1980 budget authority of $6.8 billion and outlays of $2.85 billion, $150 million in outlays below the Senate-passed resolution. Though tight, the agreement should accommodate all expected appropriations.
The substitute anticipates that the Postal Service will make steady progress toward financial self-sufficiency. It assumes no funding for two items requested by the President: The home ownership assistance program, and a standby line of credit for the National Credit Union Administration central liquidity facility.
For fiscal years 1981 and 1982, the conference substitute assumes restraint in the overall growth of programs in this function.
FUNCTION 400: TRANSPORTATION
For transportation programs the conferees agreed to fiscal year 1980 budget authority of $19.5 billion and outlays of $18.6 billion the same as the Senate-passed levels.
For fiscal years 1981 and 1982, the conference substitute levels are the same as the Senate-passed resolution, and assume modest growth in transportation programs.
FUNCTION 450: COMMUNITY AND REGIONAL GROWTH
For community and regional development programs the conferees agreed to fiscal year 1980 budget authority of $8.9 billion and outlays of $8.35 billion, $50 million below the Senate-passed outlay level.
Recognizing that these totals must accommodate a number of important priorities, the conferees again reiterate their strong support of legislation to reform the several Federal programs of disaster assistance to reduce their cost.
For fiscal years 1981 and 1982, the conference substitute provides for continued funding for programs in this function at roughly current law levels. However, the recommendations could accommodate increased EDA funding as well as anticipated funding requirements for flood insurance.
FUNCTION 500: EDUCATION, TRAINING, EMPLOYMENT AND SOCIAL SERVICES
For education, training, employment, and social services the conferees agreed to fiscal year 1980 budget authority of $30.9 billion and outlays of $31.0 billion. These levels represent an increase of $1.2 billion in budget authority and $500 million in outlays over Senate-passed levels for the programs in this function. They are below the House levels by $500 million in budget authority and $400 million in outlays.
For fiscal years 1981 and 1982, the conference substitute assumes the continuation of funding for most programs in this function at fiscal year 1980 levels. The only major exception is the CETA countercyclical public service employment program, which is assumed to phase out by the end of fiscal year 1981.
FUNCTION 550: HEALTH
For health programs the conferees agreed to fiscal year 1980 budget authority of $58.8 billion and outlays of $54.45 billion, an outlay increase of $250 million over the Senate-passed level.
The amounts provided for health funding assume enactment of substantial savings pursuant to the budget resolution's instructions to the Committee on Finance to cut $1.4 billion from programs within its jurisdiction. If these savings are not made, current law funding for other health programs and other programs in other areas of the budget will have to be reduced.
For fiscal years 1981 and 1982, the conference substitute assumes continued and growing reductions in the budget from the savings implemented in fiscal year 1980.
FUNCTION 600: INCOME SECURITY
For income security, the conferees agreed to fiscal year 1980 budget authority of $218.5 billion and outlays of $190.0 billion. These amounts increase the Senate-passed levels by $1.9 billion in budget authority and $1.3 billion in outlays.
These targets will permit increased funding for low-income energy assistance, subsidized housing, and cash assistance, subsidized housing, and cash assistance compared to Senate-passed levels.
The Senate conferees intend that these increases will be allocated to such priorities as low- income energy assistance at the levels requested by the President, amendments to food stamp legislation to avoid reduction in benefits, and increases compared to the limits of the Senate- passed resolution for federally assisted housing programs.
Funding for these priorities and others in this budget will have to be reduced below the levels at which they could otherwise be funded unless the savings required by the reconciliation instructions to the Committees on Finance, Governmental Affairs, and Agriculture are made from existing Federal programs.
For fiscal years 1981 and 1982, the conference substitute assumes a funding level consistent with the spending levels recommended for fiscal year 1980. The substitute does allow for the implementation of a welfare reform initiative in fiscal year 1982.
FUNCTION 700: VETERANS BENEFITS AND SERVICES
For veterans programs, the conferees agreed to fiscal year 1980 budget authority of $21.45 billion and outlays of $20.8 billion. These amounts are $250 million in budget authority and $200 million in outlays above the Senate-passed levels.
In agreeing to these higher spending levels, the managers on the part of the Senate stressed their intention that these increases be allocated to the highest priority veterans programs, especially health care. The conference substitute also contains a reconciliation instruction to the Veterans Committee to reduce lower priority spending such as flight training and correspondence school programs to help assure that priority veterans programs are adequately funded.
For fiscal year 1981 and fiscal year 1982, the conference substitute assumes levels recommended for fiscal year 1980.
FUNCTION 750: ADMINISTRATION OF JUSTICE
For administration of justice programs the conferees agreed to fiscal year 1980 budget authority of $4.2 billion and outlays of $4.4 billion, the same as the Senate-passed levels.
For fiscal years 1981 and 1982, the conference substitute assumes restraint it the funding levels of criminal justice assistance programs.
FUNCTION 800: GENERAL GOVERNMENT
For general Government programs the conferees agreed to fiscal year 1980 budget authority of $4.45 billion and outlays of $4.2 billion. The budget authority level is $50 million above the Senate-passed level, but will require continued restraint in the growth of general Government programs.
For fiscal years 1981 and 1982, the conference substitute is the same as passed by the Senate and continues to assume achievement of administrative efficiencies in legislative branch operations.
FUNCTION 850: GENERAL PURPOSE FISCAL ASSISTANCE
For general purpose fiscal assistance programs the conferees agreed to fiscal year 1980 budget authority of $9.05 billion and outlays of $9.05 billion. This represents a reduction of $250 million in both budget authority and outlays below the Senate-passed levels.
The conference substitute is adequate to accommodate funding of general revenue sharing at its current authorization level in fiscal year 1980. The substitute provides for countercyclical fiscal assistance programs requested by the President but assumes a later startup date for those programs.
For fiscal years 1981 and 1982, the conference substitute assumes a significant
reduction in the overall level of general
Purpose fiscal assistance.
FUNCTIONS 900, 920, AND 950: INTEREST, ALLOWANCES, AND UNDISTRIBUTED OFFSETTING RECEIPTS
For interest, in fiscal year 1980, the conference substitute provides budget authority and outlays of $58.1 billion, identical to the amounts in the Senate-passed resolution.
The conference substitute estimates interest of $60.9 billion for fiscal year 1981 and $62.3 billion for fiscal year 1982.
The conference substitute assumes minus $200 million in budget authority and outlays for allowances in fiscal year 1980. This amount assumes $800 million in budget authority and outlays for civilian agency pay raises and savings of $1 billion to be achieved from management savings in such areas as Government travel, procurement, film making, and paperwork.
The conference substitute assumes similar levels of management savings for fiscal year 1981 and fiscal year 1982.
For undistributed offsetting receipts in fiscal year 1980, the House and Senate resolutions and the conference substitute all contain an identical amount of minus $19.7 billion in budget authority and outlays. Increases in the level of receipts are projected for fiscal year 1981 and fiscal year 1982.
FUTURE YEAR BUDGETS
Mr. President, this conference substitute continues the progress the Senate has made toward instituting multiyear budgeting in the Congress.
Last year, we included 5-year budget decisions in our committee reports. In this year's first resolution we included 5 years of decisions in our report and 3 years of budget decisions in the Senate-passed resolution. In the conference on that first resolution, we convinced the House to include aggregate spending numbers for fiscal years 1981 and 1982 in the budget resolution itself.
Now in this resolution we have included not only aggregate spending totals for those future fiscal years, but also the Senate's functional spending numbers.
The House, which has not yet instituted multiyear budgeting, continues to insist on including its own outyear aggregate totals in the resolution as well. Those totals have no functional basis in the resolution and do not represent actual decisions about those years. Instead, they simply represent a projection of the current year spending proposed by the House.
This will be the first budget resolution ever adopted which contains aggregate and functional budget totals for more than 1 fiscal year. We hope the House will move to multiyear budgeting next year to continue this progress toward rational Federal budget making.
RECONCILIATION
I have already described the principal details of the reconciliation instructions in discussing the functional category highlights of the conference substitute. Whether we can implement these reconciliation provisions of the Budget Act this year depends upon Senate resolve and the vote to be taken in the House when the budget resolution is taken up there.
The conference substitute retains the reconciliation instructions to seven committees contained in the Senate resolution. Under the resolution, six committees — including Armed Services, Agriculture, Governmental Affairs, Veterans, Environment and Public Works, and Finance and their counterpart committees in the House, would have to report legislation to save $1.8 billion by changing existing law.
In addition, the Appropriations Committee would be required to rescind any spending which would cause its spending ceiling in this resolution to be exceeded.
The Senate conferees insisted that reconciliation instructions be retained to reflect the 90-to-6 Senate vote in favor of reconciliation and the practical reality that these savings are not likely to be made otherwise.
The reconciliation process is not punitive in character. On the contrary, the reconciliation process is an essential tool provided by the Budget Act for assuring compliance with the spending restraints in the binding budget totals of the second budget resolution.
Without these legislative savings and appropriations restraint, budget costs will rise at least $3.5 billion over the amounts assumed in this resolution.
Senate insistence on the reconciliation provisions represents a conviction that these savings — most of which have been assumed but not realized in Presidential and congressional budgets of this and previous years — will not be made except through this reconciliation process.
Support of the reconciliation instructions in both Houses will be a clear signal to the American public that the Congress is serious about fiscal restraint and is using every legislative tool to control the Federal budget.
THE PARLIAMENTARY SITUATION
The parliamentary situation with respect to this resolution is the same as that of the past when conference reports have been submitted in technical disagreement because of numbers outside of those passed by either House. The parliamentary procedure will be exactly the same: Two votes will be required. The first to adopt the conference substitute in disagreement which is required because of these numbers issues. The second vote will be to adopt the conference substitute which will include all the matters agreed to by the conference as well as the reconciliation instructions to the six authorizing committees and the spending limit instruction to the Appropriations Committee.
Mr. President, let us hope that today's vote will be the last one the Senate need cast on this budget resolution. Let us hope that the House will take the difficult but necessary step of agreeing to this resolution and its reconciliation instructions.
I reserve the remainder of my time for whatever questions may be addressed to me in connection with the conference substitute.
Mr. President, I yield to my good friend and strong sustaining force in the Budget Committee, Senator BELLMON.
Mr. BELLMON. I thank my good friend from Maine.
Mr. President, I doubt that any Member of the Senate fully appreciates the tremendous contribution which Senator MUSKIE has made in making it possible for this conference report to be before the Senate tonight. He put in almost interminable time in the conference, and carried on most of the negotiations on a sort of one-to-one basis which made this agreement possible. It was the most difficult conference in which I have ever participated and without the leadership of the Senator from Maine, we never could have reached this point.
So I would like tonight, on the part of the minority, at least, to thank him for the great contribution he made.
Mr. President, I ask unanimous consent for the following minority staff members of the Senate Budget Committee to have floor privileges during the debate on the conference agreement for the second budget resolution for fiscal year 1980: Robert S. Boyd, Robert Fulton. Gail Shelp, Robert Helm, Carol Cox. Becky Davies, Susan Petrick, Janis Moore, and Tom Sullivan.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BELLMON. Mr. President, the resolution before the Senate is the result of a long and difficult conference. Each House entered the conference with sharply differing priorities. As compared with the House version of the resolution, the Senate-passed resolution contained significantly higher numbers for defense and energy spending and generally lower numbers for social programs. In addition, the House-passed resolution was considerably higher in both aggregate outlays and revenues. The House outlay level was $1.9 billion higher than the Senate, and the revenue level was $4.5 billion higher than the Senate version due largely to a higher House recommendation for revenue raising legislation.
The Senate resolution contained reconciliation and rescission provisions to enforce the spending ceilings. The House resolution contained no such provisions. The Senate resolution provided for a 3-year budget covering fiscal years 1980, 1981, and 1982, while the House resolution covered only fiscal year 1980.
I cannot emphasize too strongly the seriousness of these differences and the enormous difficulty that the conferees faced in resolving them. Again I call attention to the leadership and I might say the diplomacy which was displayed by Senator MUSKIE in this situation. I commend Senator MUSKIE for his leadership. I believe that the Senate, and indeed the country as a whole, is indebted to him for his perseverance during this extended and problem-filled conference.
The conference substitute provides the same budget authority for the Defense function as provided for in the Hollings amendment to the Senate resolution approved overwhelmingly by the Senate. I see the Senator from South Carolina is in the Chamber. The conference substitute also retains most of the Senate's higher figure for Defense outlays.
In the Energy function, the conferees agreed on budget authority of $39.5 billion, $1.5 billion lower than the Senate figure, but still high enough to accommodate the authorization and appropriations bills now pending.
I would point out, however, that the cost of achieving the Senate's goals in these areas was high.
The conference substitute provides for an additional $2.25 billion in outlays for social programs above that provided by the Senate. Nearly half of this increase resulted from the conferees' acceptance of the full $1.6 billion for an expanded, low-income, home heating assistance program. The Senate conferees yielded these additional concessions to the House on human resources spending with great reluctance. These higher human resource spending numbers were forced on the Senate conferees as a tradeoff for House acceptance of higher Defense and Energy levels.
The aggregate outlay ceiling in the conference substitute, $547.6 billion, is $1.3 billion higher than the Senate-passed level. This ceiling, however, is $3.6 billion lower than the current policy level, $551.2 billion, which is the level of spending that would be required if all Federal programs were to be adjusted fully for inflation.
The aggregate revenue floor of the conference substitute is $517.8 billion. Although this revenue floor is $3.1 billion higher than proposed by the Senate, the increase is due almost entirely to projected increases in the general revenue base as a result of higher inflation and higher oil prices. The net policy change in the revenue base is $2.4 billion, which is slightly above the $2.0 billion in the Senate-passed resolution.
The critical issue of reconciliation was not totally resolved. The conference report includes the reconciliation instruction contained in the Senate-passed resolution. However, the chairman of the House Budget Committee has indicated his intent to move the strike reconciliation on the House floor.
The House conferees did not reject the principle of reconciliation. Rather, they maintained that adoption of a reconciliation instruction at this time would be inconsistent with their efforts to encourage authorizing committees to enact legislative savings voluntarily. The House conferees could give no assurance, however, that legislative savings needed to achieve the spending limits provided for in the conference substitute would be passed without reconciliation. In my view, few of these savings will materialize in fiscal year 1980 from the House's voluntary approach.
The most the House conferees would accept relative to reconciliation was to give the full House an opportunity to vote on reconciliation. Unfortunately, the effort by Chairman GIAIMO to strike reconciliation will present this issue to the House in a most negative way. Nevertheless, I expect the effort to strike to be unsuccessful in the House.
The next move on reconciliation, however, is here in the Senate. By approving the Conference substitute, we will endorse Reconciliation. I urge that the Senate do this. It may put us back in Conference, but it's vital that the Senate stand by its position and press the House to go along.
Despite the increase in the aggregate spending level and the differences with the House on the use of the reconciliation instruction, I am encouraged by the willingness of both Houses to reject even higher spending increases or tax reductions at this time. I have noted with interest recent interviews with former Treasury Secretary Michael Blumenthal and former Commerce Secretary Juanita Kreps, both of whom admitted that the major policy mistake of the past 3 years was the fiscal year 1977 fiscal stimulus package. In their opinion, this effort to stimulate the economy at a time when, in retrospect, the economy was growing rapidly was the result of a preoccupation with unemployment and a clear failure to see the dangers of rising inflation.
There are those in Congress who would make that mistake again. In the present highly inflationary environment, Congress has to face the fact that additions to spending or significant tax reductions will put fiscal policy into conflict with monetary policy, will lead to higher interest rates, and will increase the risk of a deep recession.
Mr. President, in concluding my remarks, I would like to briefly comment on the implication of this year's budget and appropriation experience for the future of these processes. All of us should be concerned about the extent to which deadlines in the Budget Act for budget resolutions and appropriations bills have been breached this year. I am a member of both the Budget and the Appropriations Committee and I am personally aware and frankly embarrassed that we have been so tardy and have fallen so far behind in both our budget resolutions and the appropriations bills.
We are already 6 weeks into the new fiscal year and Congress has not yet approved a second budget resolution for fiscal year 1980. We are now almost 2 months behind the September 15 deadline for the second budget resolution.
Furthermore, although the Budget Act provides that all regular appropriations bills be passed 7 days after Labor Day, prior to the time Congress acts on the second budget resolution, as of September 15 this year only two conference reports on appropriations bills had been approved. Even now, in November, the Congress has yet to take final action on 6 of the 13 appropriations bills.
Mr. President, in all honesty and in all candor, much of this delay is due to the persistent efforts to legislate on appropriations bills. This is a problem that I believe the Senate is going to have to address directly.
I will have other comments on that at a later time.
Although the slippage of deadlines is very disturbing, I continue to believe that the budget process provides our only real means of achieving fiscal discipline. Through the budget process the Congress has succeeded in reducing growth in spending and the level of the deficit. Equally important, the budget process has provided a vehicle through which Congress establishes policy goals and ultimately can be held accountable for the achievement of these goals by the general public. However, it may be time to consider ways to improve the overall budget and appropriations processes, especially in the context of the enormous and growing legislative agenda which Congress faces each year.
Mr. President, I believe it is important to call attention to the fact that the adoption of this budget resolution keeps Congress on the path to a balanced budget in fiscal year 1981. Some may not accept that. They may frankly disbelieve it, but there is a chart on page 19 of our report that makes this path plain.
There is one big if in this proposition. We can have a balanced budget in fiscal year 1981 if we have no tax cut in 1980. If we have a tax cut in 1980 we will simply add to our deficits, increase inflationary pressures, and produce additional economic pressures, such as high interest rates.
Members of the Senate should look carefully at the plan the budget resolution has set that will give us a balanced budget in 1981. This path will make room for a very sizable tax reduction in 1982, as the chart shows. We can have a tax reduction in 1982 of about $55 billion without creating another deficit. These projections are based upon certain assumptions, such as some growth in our economy, which I think are not unrealistic. But I would like to point out that, if we do intend to have a balanced budget in 1981 which I feel is absolutely essential, and if we are going to stabilize the economy of this country, then there are certain tests we have to meet and certain temptations we simply must reject.
So, Mr. President, in conclusion, I again urge the adoption of the conference substitute. Although I would have preferred that the spending ceilings and deficit were somewhat lower, I am convinced this is the best result we could achieve in the present environment.
Again I would like to compliment and congratulate our chairman for his success in achieving agreement on what at times seemed to be impossible differences, and again to pay tribute to the leadership he has given this budget process since its inception 5 years ago.
The PRESIDING OFFICER. The Senator from Maine.
Mr. MUSKIE. Mr. President, I thank my friend for his statement. I just want to make this comment, that I want to reemphasize it is very easy to be patient and enduring with HENRY BELLMON at your side. At this point I yield to my good friend from South Carolina, Senator HOLLINGS.