September 19, 1979
Page 25223
Mrs. KASSEBAUM. Mr. President, it is clear from this, I believe, that the Senate can vote on this amendment at its face value. It seeks to portray the budget and the deficit in an accurate fashion. It seeks to instruct the Senate as to the real state of spending so that Congress does not delude itself about our economic posture. I think we can vote on this amendment with those things in mind and without regard to the politics of a windfall profits tax.
Mr. PACKWOOD. Mr. President, I assure the Senator from Kansas, having just come from the Finance Committee meetings this morning, that pretty reasonably and consistently, for the last 2 weeks, we have no intention of enacting a tax for the fun of enacting a tax and then deciding what to do with the revenues, be that a windfall profits tax or any other tax.
Second, as the Senator is aware, there is nothing in the $2 billion that the concurrent resolution asks the Finance Committee to raise saying that it has to come from a windfall profits tax. As a matter of fact, it cannot compel that, and if we choose to raise the amount in some other fashion, a point of order would not lie against it because it did not come from a windfall profits tax.
We will raise the extra $2 billion, but I assure the Senator from Kansas that what we are doing in the Finance Committee is looking at every conceivable form of tax credit that might produce energy or save energy.
We are looking at all the possible forms of taxation on oil — new oil, new new oil, old oil, tertiary oil, small producers, stripper exemptions, and thinking to ourselves how much money each of those would produce if we chose to enact them.
We are going at this on the basis of how much money we need for rational policy, not how much money we can get and then what the rational policy should be.
So that there is no guarantee that this $2 billion is going to come from any particular kind of tax. All I can assure the Senator from Kansas of is that we will do the best we can to bring to this floor a reasonable energy bill and tax package out of the Finance Committee; and if necessary for the revenues, we will enact some form of a windfall profits tax. We are not compelled to do so.
The concurrent resolution does not compel that conclusion. We have not eliminated the possibility of using it, but I would not want the Senator from Kansas to think that we have to use it.
Mr. JAVITS. Mr. President, will the Senator yield me 3 minutes?
Mr. PACKWOOD. I yield.
Mr. JAVITS. Mr. President, I wish at this time to commend the members of the Budget Committee, in particular the chairman, the Senator from Maine (Mr. MUSKIE) and the ranking minority member, the Senator from Oklahoma (Mr. BELLMON) for the diligence and intelligence with which they have discharged their responsibilities in bringing this budget resolution before the Senate.
These are critical times for our country, Mr. President, and for the U.S. Congress, because we are faced with galloping inflation, including energy prices, and, most recently, a deepening recession, the scope of which we may not yet fully appreciate for some months to come.
The Budget Committee projects that in fiscal year 1980 unemployment will rise to 7.2 percent and the inflation rate will be about 9.8 percent. Of course, no one can tell how accurate these projections will prove to be. Inflation could run much higher than the projection, particularly if the dollar continues to slide; and unemployment could run much higher if the drop in production proves to be far deeper than economists now expect.
In addition, Mr. President, this year we have a new situation to accommodate, to wit: The effect of SALT on the defense needs of our country, both as to conventional and strategic weapons. We do not know at this time whether the Senate will ratify SALT, nor what additional real defense outlays that will require.
These economic and national security uncertainties have immensely complicated the work of the Senate Budget Committee in formulating Senate Concurrent Resolution 36. We must have a budget that keeps open our options; our flexibility to deal as appropriate with whatever circumstances our Nation may encounter next year.
We need to continue our efforts to reduce inflationary pressures by restraining the growth of the Federal budget and we need to keep our sights set squarely on the expectation of a balanced Federal budget we plan for fiscal year 1981, and the tax reductions contemplated in the resolution for fiscal year 1982 and beyond. We must try to keep the Federal budget deficit, if at all possible, below $30 billion in fiscal year1980, even while we acknowledge that the deteriorating economic situation has been responsible for the deficit moving upward from $23 billion, adopted in the first budget resolution in May, to $28 billion today.
At the same time, we need to be prepared to act appropriately to mitigate the untoward effects of the current recession — which may turn out to be very serious — however they may manifest themselves, particularly in the older cities of our country and among the economically disadvantaged and minorities.
The adoption of a proper course for Federal fiscal policy during times like these — the balancing of the myriad conflicting priorities and claims on our financial resources — is an exceedingly difficult task; a very heavy burden to place on our Budget Committee. But I believe the committee has done a Herculean job under very perilous circumstances for our country.
Mr. President, I cannot state today that I am pleased with the budget resolution, as reported by the committee. It is not a budget I would have personally preferred to have before the U.S. Senate. But I understand what we must do to have a budget adopted by the Senate. We must all accept an equal share of the sacrifices. The day before yesterday I voted in favor of the Muskie motion to table the McGovern amendment to the committee substitute. The amendment would have restored $100 million to the budget for Federal subsidies for school lunches for non-poor children. For me this was an extremely difficult vote. It is probably one of the only times I have had to vote against an amendment to provide additional funds for a Federal nutrition program — and I deeply regret having to do so. But I realize that given the incredibly uncertain economic circumstances our country has entered upon we must take some measured stand in support of a tight budget.
And, of course, yesterday we had the amendments to increase defense spending by 3 percent in real terms in fiscal year 1980 and by 5 percent in real terms in each of the 2 succeeding fiscal years. I voted in favor of the former, because of our Nation's commitment to NATO, which I believe must be honored. Our NATO allies need to be reassured as to the commitment the President made.
And today we have had the amendments to reduce revenues and Federal spending in contemplation of major income tax reduction in fiscal year 1980. I believe such a step at this time would be premature and potentially highly inflationary due to the very uncertainties I have just described. The current recession may be very shallow and of short duration; yet inflation may worsen. In my judgment it would be unwise now to prejudge our policies for next year's economic situation by committing the Senate today on the basis of what is crystal ball gazing.
We have shown the country in three days of debate on this second budget resolution that we do have a flexible policy making process for the Federal budget. If the need for additional economic stimulus manifests itself I believe we should be able to respond seasonably and correctly to tailor the Federal budget appropriately.
Senate action on Senate Concurrent Resolution 36 is indicative of the ability of Congress to respond appropriately and expeditiously to national and international circumstances. Before fiscal year 1980 is over we may very well need to have a third budget resolution to modify our spending and revenue ceilings, depending on the condition of our economy.
For right now, however, to the extent we can foretell the immediate future, I am satisfied that we have charted about the right course for the Federal budget. Accordingly, I intend to support Senate Concurrent Resolution 36, the second concurrent resolution on the budget for fiscal year 1980, Mr. President, unless there are some untoward amendments; so I expect to be able to support the resolution as it now stands.
Though I am not too satisfied with the way we handled the defense proposition, it is a fact that I think the budget now considers contingencies, if we continue to reject the tax cutting propositions which probably wiil be offered this afternoon.
I yield to no one in my affection and regard for Mrs. KASSEBAUM and for other Senators who are making these requests. However, it seems to me that, with a recession hanging over our heads; with SALT II to be ratified, and the tremendously demanding defense revelations which are coming out in terms of the national security of the United States; with the dollar in great jeopardy because of the rush on gold, which means a dumping of dollars and a vote of no confidence in the dollar, it would be most unwise to make these commitments now.
Therefore, I respect the fortitude, the judgment, and the political courage of the Senators who are handling this bill, and I consider it an honor to be able to support them.
Might I say, too, because I am a politician like everyone else, that I consider it in the highest interest of the 18 million in New York, including the poor, that unless this economy is going to withstand this attack and then be able to recover and move uphill again — because of our determination to improve productivity and improve labor-management relations; and improve our exports; and improve our technology and our research and development; and improve our harmonious interrelation with the other industrial countries of the world; and improve our markets for export and the developing countries' markets for imports, and have the money to pay whatever it is going to take to make synfuels and everything else — I am not going to do any service to the poor of my State. That is why I am taking the position I am, and I thank my colleague for yielding me the time.
Mr. MUSKIE. I express my appreciation to the distinguished Senator from New York for what he has just said for his consistent support of the budget process, its development in the Governmental Affairs Committee, of which he was a constructive contributing member at the time, and for his consistent support since that time. I appreciate particularly what he has said.
Does the Senator from Kansas wish to take the floor?
Mrs. KASSEBAUM. I thank the Senator.
Mr. President, I wish to answer the Senator from Oregon in that I am pleased to hear that the Finance Committee has come up with the proposal in which they anticipate raising the revenue to cover the expenditures to meet our energy program.
I am very supportive of this. It was not that I was quarreling with what we needed to do in this area. It was that I felt it had not been done yet. It had not been structured yet. Therefore, it was misleading to include it in our budget as revenue.
There will undoubtedly be revenue there. But it will also probably be a wash. I am speaking only in terms of what I felt was a sound accounting procedure.
I am hopeful that the Finance Committee will be able to present a plan that is going to structure a tax that will meet our energy production needs. It is not any intention on my part to predict a tax cut, or, as I said, to have a vote on the merits of the windfall profits tax. It is simply what I felt was a sound accounting procedure at this point.
Mr. MUSKIE. Mr. President, I yield myself 5 minutes.
I think the thrust of what I am about to say or what I tried to say is not much different from that of Senator PACKWOOD. And I appreciate what he has had to say.
I think it might be helpful to the distinguished Senator from Kansas if I were to put into the RECORD at this point my concept of what was behind the numbers in the budget resolution, which her amendment would modify. I say at the outset she is a most valued new member of the Budget Committee. She is a regular and conscientious attendant on our meetings. She participates in them. She listens. Obviously, she listens intelligently because she asks intelligent questions. It is a joy to have her, and particularly since she is the only Member of her sex in the Senate to have her on the Budget Committee is a a mark of distinction for our committee. I say that not to try to soften her with respect to her amendment. It is simply to say something that I personally desire to say and this happens to be an opportune time to say it.
With respect to her concerns, may I say that in establishing the second resolution recommendation the Senate Budget Committee was confronted with a dramatic series of events, once again evidencing this Nation's vulnerability to and dependence on imported oil and our need for enhanced energy supplies.
This summer's gas lines and the OPEC price increase from $14.54 per barrel in April to $23.50 per barrel in August led to a whole host of new energy initiatives now pending before Congress.
Included among the new initiatives was the President's $142.2 billion oil import reduction program.
As I say, these new initiatives emerged in the late spring and early summer. The Budget Committee was asked to consider them and what if anything we should do about them in the budget resolution in July.
In response to that new situation, which had not yet crystalized or been resolved in any significant way, the Senate Budget Committee by a vote of 11 to 5 increased the energy supply mission of function 270 by $22.5 billion in budget authority and $400 million in outlays in fiscal year 1980 to accommodate any of the various synfuels and conservation proposals pending before the Senate.
As I put it in my characterization of what the committee did, we simply voted to make room for the debate that obviously and inevitably was going to preoccupy this Senate at some point this year. Now clearly that debate is pending, and we may be on the threshold of it. I would not be one to try to predict with any precision what its outcome might be. So we really voted to make room for the debate.
I have reservations about doing it that way, because, if we make too much room in a budget resolution, we make room for too much spending of it. But with respect to the energy challenge that we faced in July, and the impossibility of trying to anticipate what the final resolution of that challenge or those challenges might be, we undertook — at least that was my motivation — to make sufficient room in the budget resolution to accommodate whatever that final resolution might be.
In fiscal year 1981 outlays in this mission were increased by $900 million and in fiscal 1982 budget authority was increased by $17 billion and outlays by $1.5 billion.
The Senate Budget Committee recommendation recognizes the need for increased domestic energy supply, energy conservation, and for reduction of oil imports. It does not prejudge the outcome of the debate on these issues. So on the spending side of the budget, we certainly did not resolve these subjects by any votes in the committee — all we intended to do was to make room for the Senate to resolve those issues in its own good time.
On the revenue side of the debate, I particularly clearly endorse what Senator PACKWOOD has said so that Senator KASSEBAUM's fears in that respect might be eased. I do not regard the revenue side as mandating a windfall profits tax. I think it mandates an increase in revenues which might conceivably come, depending on what happens to deregulation, from existing tax sources without new revenue legislation, and that possibility has been suggested in the course of the debate on the tax cut amendments that we have debated already this morning.
I do not discount that possibility. I take it into account as a possibility and there are others, including actions by the executive branch, without any new legislative action taken.
So the revenue side of it was not designed to be taken as a signal that we were mandating — we do not have the authority to mandate it anyway — or even seeking to mandate the enactment of a windfall profits tax.
The PRESIDING OFFICER. The Senator's 5 minutes have expired.
Mr. MUSKIE. I yield myself another 15 minutes. I
We take it into account as a possibility for adding revenues, but there are other possibilities.
I would hope that anyone reading the record of what I say on this subject, as well as the record of what Senator KASSEBAUM and Senator PACKWOOD say, would clearly understand that this budget resolution does not mandate the passage of a windfall profits tax. It simply opens up the possibility that additional revenue might come from that source, as it could come from other sources, depending on what the Finance Committee may do, according to the need for revenues presented to it.
Mr. President, I think that covers Senator KASSEBAUM's principal concern. I doubt that what I have to say will persuade her to withdraw her amendment. I have no desire to pressure her one way or the other on that. But I hope that perhaps what I have had to say will somewhat ease her concern.
Mrs. KASSEBAUM. I thank the chairman very much. I appreciate his thoughtful remarks. I must say that such emphatic reassurance is always something one listens to with a bit of suspicion.
I would only like to come back with a quotation from a statement the Senator made yesterday. In commenting on some objections that were being made on the floor, the Senator said we should not assume a penny in extra revenues. This, I think, goes back to something we are assuming at this point which might not be there.
I appreciate the fact that you are trying to allay those suspicions, and would hope that you will be successful, because I do wish to ask for the yeas and nays on this amendment. We took seven votes in the Budget Committee before we finally were able to come up with the figure of the assumption that we did, but it was of concern to many of us that we were somewhat shooting in the dark.
Mr. MUSKIE. Let me make one other observation to the Senator. I felt that we needed to assume additional revenues, and that it was important that we get them in order to hold the deficit down under the deficit for 1979. It was not a casual kind of suggestion or a cosmetic kind of impulse or urge for additional revenue.
I think if we are to deal with inflation, as I stated in my argument here yesterday, that we must make a maximum effort to hold that deficit down, and that not all the burden should fall on the spending side of the budget, but some of it should fall on the revenue side. That was my motivation. I certainly agree with my own statement that the Senator has quoted. As a general statement, I think it is an eminently sound observation, that we ought not to make assumptions on the budget on either the revenue or the spending side we are not prepared to live with. That is really what I was trying to say.
I will be glad to ask for the yeas and nays.
Mrs. KASSEBAUM. I would like to yield time to the Senator from Colorado. Mr.—
MUSKIE. Could we ask for the yeas and nays at this point?
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.