September 17, 1979
Page 24781
SECOND CONCURRENT RESOLUTION ON THE BUDGET
The PRESIDING OFFICER. Under the previous order, the Senate will now resume consideration of the pending business, Senate Concurrent Resolution 36, which the clerk will state by title.
The legislative clerk read as follows:
Senate Concurrent Resolution 36 revising the congressional budget for the U.S. Government for fiscal years 1980, 1981, and 1982.
The Senate resumed consideration of the concurrent resolution.
Mr. MUSKIE. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the following members of the staff of the Committee on the Budget be allowed to remain on the floor during consideration of and votes on Senate Concurrent Resolution 36:
John McEvoy, Karen Williams, Sid Brown, Susan Lepper, Cornie Motheral, George Merrill, Brenda Tremper, John Tillson, Liz Tankersley, Bob Sneed, Jim Capra, Eric Hemel, Tom Sliter, Martin Kress, Joe Ridge, Jim Conroy, Jack Con-way, Charlie Flickner, Chuck Riemenschneider, Porter Wheeler, Allan Mandel, Ann Hadley, Ann Erfle, John Nelson, Gina Knoll, Mark Bobseine, Bob Boyd, Carol Cox, Becky Davies, Bob Fulton, Bob Helm, Janis Moore, Susan Petrick, Joyce Purcell, Tom Sullivan, Gail Shelp, Jill Wissler, and Steve Bell.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. I ask unanimous consent that the use of small electronic calculators be permitted on the floor during the consideration of Senate Concurrent Resolution 36.
The PRESIDING OFFICER. Without objection, it is so ordered.
UP AMENDMENT NO. 554
(Purpose: Complete substitute to reflect compromise proposal)
Mr. MUSKIE. Mr. President, I have an amendment at the desk which I call up at this time.
The PRESIDING OFFICER. The amendment will be stated.
The second assistant legislative clerk read as follows:
The Senator from Maine (Mr. MUSKIE, for himself,. Mr. BELLMON, Mr. HOLLINGS, Mr.
CHILES, Mr. BIDEN, Mr. JOHNSTON, Mr. SASSER, Mr. HART, and Mr. EXON) proposes an unprinted amendment numbered 554.
Mr. MUSKIE. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
Strike all after the resolving clause and insert the following:
"Sec. 1. That the Congress hereby determines and declares, pursuant to subsection 310 of the Congressional Budget Act of 1974,that in order to achieve a balanced budget in fiscal year 1981 and deficit reductions in fiscal year 1980, the following reconciliation instruction is appropriate:
(a) The allocation pursuant to section 302 (a) of the Budget Act to the Committee on Appropriations for all legislation within its jurisdiction shall not exceed $383.6 billion in budget authority and $338.4 billion in outlays as assumed in this budget resolution. If some rescission of appropriations proves necessary to prevent any regular or supplemental appropriation for fiscal year 1980 exceeding the ceilings provided in this section, the Committee on Appropriations shall report legislation to rescind the necessary amounts.
Pursuant to section 310 of the Congressional Budget Act of 1974, the Committees on Agriculture shall reduce spending for fiscal year 1980 in reported or enacted laws,bills, and resolutions by $100,000,000 in budget authority and $100,000,000 in outlays and are instructed to report promptly their recommendations for changes in new budget authority for fiscal year 1980, budget authority initially provided for prior fiscal years, and new spending authority which is to become effective during fiscal year 1980 contained in reported or enacted laws, bills, and resolutions within the jurisdictions of those committees sufficient to accomplish the reduction required by this section.
Pursuant to section 310 of the Congressional Budget Act of 1974, the Committees on Armed Services shall reduce spending for fiscal year 1980 in reported or enacted laws,bills, and resolutions by $100,000,000 in budget authority and $100,000,000 in outlays and are instructed to report promptly, their recommendations for changes in new budget authority for fiscal year 1980, budget authority initially provided for prior fiscal years, and new spending authority which is to become effective during fiscal year 1980 contained in reported or enacted laws, bills, and resolutions within the jurisdiction of those committees sufficient to accomplish the reduction required by this section.
Pursuant to section 310 of the Congressional Budget Act of 1974, the Senate Committee on Environment and Public Works and the House Committee on Public Works and Transportation shall reduce spending for fiscal year 1980 in reported or enacted laws, bills, and resolutions by $250,000,000 in budget authority and are instructed to report promptly, recommendations for changes in new budget authority for fiscal year 1980, budget authority initially provided for prior fiscal years, and new spending authority which is to become effective during fiscal year 1980 contained in reported or enacted laws, bills, and resolutions within the jurisdictions of those committees sufficient to accomplish the reduction required by this section.
Pursuant to section 310 of the Congressional Budget Act of 1974, the Senate Committee on Finance and the House Committee on Ways and Means shall reduce spending for fiscal year 1980 in reported or enacted laws, bills, and resolutions by $300,000,000 in budget authority and $1,400,000,000 in outlays and are instructed to report promptly recommendations for changes in new budget authority for fiscal year 1980, budget authority initially provided for prior fiscal years, and new spending authority which is to become effective during fiscal year 1980 contained in reported or enacted laws, bills, and resolutions within the jurisdictions of those committees sufficient to accomplish the reduction required by this section.
Pursuant to section 310 of the Congressional Budget Act of 1974, the Senate Committee on Governmental Affairs and the House Committee on Government Operations shall reduce spending for fiscal year 1980 in reported or enacted laws, bills, and resolutions by $100,000,000 in outlays and are instructed to report promptly recommendations for changes in new budget authority for fiscal year 1980, budget authority initially provided for prior fiscal years, and new spending authority which is to become effective during fiscal year 1980 contained in reported or enacted laws, bills, and resolutions within the jurisdictions of those committees sufficient to accomplish the reduction required by this section.
Pursuant to section 310 of the Congressional Budget Act of 1974, the Committees on Veterans Affairs shall reduce spending for fiscal year 1980 in reported or enacted laws, bills, and resolutions by $100,000,000 in budget authority and $100,000,000 in outlays and are instructed to report promptly recommendations for changes in new budget authority for fiscal year 1980, budget authority initially provided for prior fiscal years, and new spending authority which is to become effective during fiscal year 1980 contained in reported or enacted laws, bills, and resolutions within the jurisdictions of those committees sufficient to accomplish the reduction required by this section.
Pursuant to sections 300 and 310 of the Congressional Budget Act of 1974, the committees specified herein shall report the recommendations required by this resolution within thirty days after Congress completes action on this resolution, but not later than November 1, 1979.
"Sec. 2. The following budgetary levels are appropriate for the fiscal years beginning on October 1, 1979, October 1, 1980 and October 1, 1981:
(a) the recommended level of Federal revenues is as follows:
Fiscal year 1980: $514,700,000,000;
Fiscal year 1981: $603,600,000,000;
Fiscal year 1982: $658,400,000,000;
and the amount by which the aggregate levels of Federal revenues should be increased or decreased is as follows:
Fiscal year 1980: +$2,000,000,000;
Fiscal year 1981: +$9,700,000,000;
Fiscal year 1982: —$38,700,000,000;
(b) the appropriate level of total new budget authority is as follows:
Fiscal year 1980: $632,200,000,000;
Fiscal year 1981: $649,200,000,000;
Fiscal year 1982: $722,600,000,000;
(c) the appropriate level of total budget Outlays is as follows:
Fiscal year 1980: $543,100,000,000;
Fiscal year 1981: $589,500,000,000;
Fiscal year 1982: $634,700,000,000;
(d) the amount of the deficit or surplus in the budget which is appropriate in the light of economic conditions and all other relevant factors is as follows:
Fiscal year 1980: – $28,400,000,000;
Fiscal year 1981: +$14,100,000,000;
Fiscal year 1982: +$23,700,000,000;
(e) the appropriate level of the public debt is as follows:
Fiscal year 1980: $887,500,000,000;
Fiscal year 1981: $906,300,000,000;
Fiscal year 1982: $921,800,000,000;
the amount by which the temporary statutory limit on such debt should be accordingly increased is as follows:
Fiscal year 1980: $57,500,000,000;
Fiscal year 1981: $76,300,000,000;
Fiscal year 1982: $91,800,000,000.
"SEC. 3. Based on allocations of the appropriate level of total new budget authority and of total budget outlays as set forth in paragraphs (b) and (c) of the preceding subsection of this resolution, the Congress hereby determines and declares pursuant to subsection 310(a) of the Congressional Budget Act of 1974 that, for the fiscal years beginning on October 1, 1979, October 1, 1980, and October 1, 1981, the appropriate level of new budget authority and the estimated budget outlays for each major functional category are respectively as follows:
(a) National Defense (050):
Fiscal year 1980:
(A) New budget authority, $136,800,000,-000;
(B) Outlays, $127,400,000,000.
Fiscal year 1981:
(A) New budget authority, $147,300,000,-000;
(B) Outlays, $138,300,000,000.
Fiscal year 1982:
(A) New budget authority, $159,000,000,-000;
(B) Outlays, $148,900,000,000.
(b) International Affairs (150):
Fiscal year 1980:
(A) New budget authority, $13,100,000,000;
(B) Outlays, $8,800,000,000.
Fiscal year 1981:
(A) New budget authority, $14,000,000,000;
(B) Outlays, $8,700,000,000.
Fiscal year 1982:
(A) New budget authority, $14,900,000,000;
(B) Outlays, $8,700,000,000.
(c) General Science, Space, and Technology (250):
Fiscal year 1980:
(A) New budget authority, $5,900,000,000;
(B) Outlays, $5,700,000,000.
Fiscal year 1981:
(A) New budget authority, $5,900,000,000;
(B) Outlays, $5,800,000,000.
Fiscal year 1982:
(A) New budget authority, $5,600,000,000;
(B) Outlays, $5,700,000,000.
(d) Energy (270) :
Fiscal year 1980:
(A) New budget authority. $41,000,000,000;
(B) Outlays, $7,000,000,000.
Fiscal year 1981:
(A) New budget authority, $4,700,000,000;
(B) Outlays, $7,800,000,000.
Fiscal year 1982:
(A) New budget authority, $24,200,000,000;
(B) Outlays, $9,500,000,000.
(e) Natural Resources and Environment (300):
Fiscal year 1980:
(A) New budget authority, $12,700,000,000;
(B) Outlays, $11,900,000,000.
Fiscal year 1981:
(A) New budget authority, $13,400,000,000;
(B) Outlays, $12,700,000,000.
Fiscal year 1982:
(A) New budget authority, $14,100,000,000;
(B) Outlays, $13,500,000,000.
(f) Agriculture (350);
Fiscal year 1980:
(A) New budget authority, $5,000,000,000;
(B) Outlays, $2,600,000,000.
Fiscal year 1981:
(A) New budget authority, $4,800,000,000;
(B) Outlays, $3,200,000,000.
Fiscal year 1982:
(A) New budget authority, $3,900,000,000;
(B) Outlays, $3,800,000,000.
(g) Commerce and Housing Credit (370):
Fiscal year 1980:
(A) New budget authority, $6,800,000,000;
(B) Outlays, $3,000,000,000.
Fiscal year 1981:
(A) New budget authority, $5,900,000,000;
(B) Outlays, $3,500,000,000.
Fiscal year 1982:
(A) New budget authority, $6,200,000,000;
(B) Outlays, $3,200,000,000.
(h) Transportation (400) :
Fiscal year 1980:
(A) New budget authority, $19,500,000,000;
(B) Outlays, $18,600,000,000.
Fiscal year 1981:
(A) New budget authority, $21,700,000,000;
(B) Outlays, $19,800,000,000.
Fiscal year 1982:
(A) New budget authority, $20,400,000,000;
(B) Outlays, $20,800,000,000.
(f) Community and Regional Development (450):
Fiscal year 1980:
(A) New budget authority,
(B) Outlays, $8,400,000,000. Fiscal year 1981:
(A) New budget authority,
(B) Outlays, $9,200,000,000. Fiscal year 1982:
(A) New budget authority,
(B) Outlays, $9,600,000,000.
(j) Education, Training, Employment, and Social Services (500):
Fiscal year 1980:
(A) New budget authority, $29,700,000,000;
(B) Outlays, $30,500,000,000.
Fiscal year 1981:
(A) New budget authority, $30,400,000,000;
(B) Outlays, $30,000,000,000.
Fiscal year 1982:
(A) New budget authority, $30,300,000,000;
(B) Outlays, $30,000,000,000.
(k) Health (550):
Fiscal year 1980:
(A) New budget authority, $58,800,000,000;
(B) Outlays, $54,200,000,000.
Fiscal year 1981:
(A) New budget authority, $70,500,000,000;
(B) Outlays, $61,100,000,000.
Fiscal year 1982:
(A) New budget authority, $82,100,000,-000;
(B) Outlays, $68,100,000,000.
(1) Income Security (600) :
Fiscal year 1980;
(A) New budget authority, $216,600,000,-000;
(B) Outlays, $188,700,000,000.
Fiscal year 1981:
(A) New budget authority, $242,200.000,-000;
(B) Outlays, $211,300,000,000,
Fiscal year 1982:
(A) New budget authority, $273,400,000,000;
(B) Outlays, $234,700,000,000.
(m) Veteran Benefits and Services (700):
Fiscal year 1980:
(A) New budget authority, $273,400,000,000;
(B) Outlays, $20,600,000,000.
Fiscal year 1981:
(A) New budget `authority, $21,900,000,-000;
(B) Outlays, $21,400,000,000.
Fiscal year 1982:
(A) New budget authority, $22,800,000,-000;
(B) Outlays, $22,700,000,000.
(n) Administration of Justice (750): Fiscal year 1980:
(A) New budget authority, $4,200,000,000;
(B) Outlays, $4,400,000,000.
Fiscal year 1981:
(A) New budget authority, $4,400,000,000;
(B) Outlays, $4,500,000,000.
Fiscal year 1982:
(A) New budget authority, $4,500,000,000;
(B) Outlays, $4,500,000,000.
(o) General Government (800) :
Fiscal year 1980:
(A) New budget authority, $4,400,000,000;
(B) Outlays, $4,400,000,000.
Fiscal year 1981:
(A) New budget authority, $4,700,000,000;
(B) Outlays, $4,400,000,000.
Fiscal year,1982:
(A) New budget authority, $4,900,000,000;
(B) Outlays, $4,800,000,000.
(p) General Purpose Fiscal Assistance (850) :
Fiscal year 1980:
(A) New budget authority, $9,300,000,000;
(B) Outlays, $9,300,000.000.
Fiscal year 1981:
(A) New budget authority, $8,200,000,000;
(B) Outlays, $8,600,000,000.
Fiscal: year 1982:
(A) New budget authority, $8,200,000,000;
(B) Outlays, $8,200,000,000.
(q) Interest (900): Fiscal year 1980:
(A) New budget authority, $58,100,000,000;
(B) Outlays, $58,100,000,000.
Fiscal year 1981:
(A) New budget authority, $60,900,000,000;
(B) Outlays, $60,900,000,000.
Fiscal year 1982:
(A) New budget authority, $82,300,000,000;
(B) Outlays, $62,300,000,000.
(r) Allowances (920):
Fiscal year 1980:
(A) New budget authority, —$100,000,000;
(B) Outlays, —$100,000,000.
Fiscal year 1981:
(A) New budget authority, —$100,000,000;
(B) Outlays, —$100,000,000.
Fiscal year 1982:
(A) New budget authority, $0;
(B) Outlays, $0.
(s) Undistributed Offsetting Receipts (950):
Fiscal year 1980:
(A) New budget authority, —$19,700,000,000;
(B) Outlays, —$19,700,000,000.
Fiscal year 1981:
(A) New budget authority, $21,500,000,000;
(B) Outlays, —$21,500,000,000.
Fiscal year 1982:
(A) New budget authority, —$23,900,000,000;
(B) Outlays, —$23,900,000,000.
Mr. MUSKIE. Mr. President, I yield myself such time as I may consume, and ask unanimous consent that it be taken from the time on the concurrent resolution.
The PRESIDING OFFICER. The Senator has that right.
Mr. MUSKIE. Mr. President, just 4 months ago, the Senate agreed to the most thoroughly considered and stringent spending plan in the history of the budget process. It answered the need for a fiscal policy to help control inflation and the public demand that we scale down Federal spending.
Those needs and the goal of a balanced Federal budget have not changed since we approved the first resolution 100 days ago.
The budget we adopted to meet those goals included savings in every significant area of Federal activity. It assumed outlay reductions of $5.6 billion below current law. It projected a balanced budget in 1981.
The Senate adopted that anti-inflationary plan by a 2 to 1 margin.
The country and the world are watching to see if we stand by that commitment.
The world and our fellow citizens are watching to see if we can actually bring the budget under control.
They are skeptical about our intentions and our will.
Confidence in America's ability to control its own economic future has eroded badly. We need only look to the soaring price of gold and the declining value of the dollar for evidence of that.
Twenty-nine States have asked Congress to call a Constitutional Convention to force a balanced budget because they have lost faith that we can do it ourselves.
In public opinion polls, inflation ranks highest among American concerns and Congress ranks lowest in public confidence to deal with it.
Senate adoption of this binding second budget resolution and its instructions to reduce spending by $4 billion will give a clear answer to this deep public skepticism.
This resolution continues the orderly plan Congress has pursued for 5 years to reduce Federal spending and the deficit each year as a percentage of gross national product.
Despite inflation and recession, this budget forces the deficit for 1980 below the deficit for 1979.
This budget will help restore public confidence that Congress can respond to public needs. It responds to citizen demands for a more frugal fiscal policy.
It will give some assurance that progress is being made toward fiscal stability, at a time when other facts of economic life seem to be out of control.
Central to any such reassurance, however, is the adoption of the savings provisions — the so-called reconciliation instructions — of this resolution.
There is nothing new about these savings. They are the same savings the Senate approved last spring when it adopted the first budget resolution for 1980, which set the spending targets for the year. They are the savings upon which the totals in both resolutions have been based.
These savings, and the committees responsible for them, were explicitly spelled out in the report and the debate on that resolution.
The excerpts from that report on the first budget resolution describing those savings,and the committees responsible for them have been reprinted in the report on the second budget resolution. I ask unanimous consent that they be printed in the RECORD at the conclusion of these remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. MUSKIE. These savings and the committees responsible for them were also spelled out in the debate on the first budget resolution. I ask that a portion of that debate discussing those savings be reprinted in the RECORD at the conclusion of these remarks.
(See exhibit 2.)
Mr. MUSKIE. When the Budget Committee reported the second budget resolution for 1980 last month. we advised the Senate that most of these savings had not been made.
We pointed out that unless concrete action was taken promptly to reduce spending under already enacted legislation, the deficit for 1980 would rise more than $2 billion higher than the deficit for 1979.
The Budget Committee recommended that reconciliation legislation be adopted under the Budget Act to reduce spending by $4 billion in savings to control the deficit.
The reconciliation recommendation by the Budget Committee is based upon the explicit provisions of the Budget Act, But they had rarely been employed before.
A number of committees and Senators had concerns and questions about the implications of our recommendations. Before the Senate debated that recommendation, it was appropriate for Members of both parties to thoroughly understand what we had recommended and why we had done so, for the Senate alone can determine whether the Budget Committee's recommendation should be adopted.
As a result of thorough consultation with the Members on both sides of the aisle, an agreement was reached last week to modify an important but limited part of the reconciliation instructions.
The principal modification will be to symbolize that the social security and veterans income programs need not be reexamined or reduced as a result of this reconciliation process.
So we propose to reduce the spending , to be saved by the reconciliation instruction in the case of the Committee on Finance from $1.7 billion in outlays to $1.4 billion and in the case of the Veterans' Committee from $200 million in outlays to $100 million:
The remaining savings will need to be achieved from other programs, not from social security or veterans income programs.
The second modification is to set a ceiling for the Appropriations Committee into which all appropriations bills for1980 must be fit. If any appropriation bill would exceed that total ceiling, the Appropriations Committee will agree to report a rescission of other spending to avoid a breach of the ceiling.
This change recognizes that the appropriations process has missed the deadline provided for it in the Budget Act. This ceiling replaces the immediate rescission called for in the budget resolution as it was reported, so that the Appropriations Committee can enact all of its regular bills before determining where appropriations spending needs to be cut. If the committee stays within the ceiling, no further cuts will be necessary.
At the same time, the total allocated to the Appropriations Committee under this provision will be no greater than if spending were actually reduced now by that committee by the $2.5 billion in outlays proposed in the reconciliation instructions originally reported by the Budget Committee.
No similar problem exists for the authorizing committees involved in the budget reconciliation process.
No need exists to vary the instructions proposed in the budget resolution for those committees, except, as I have mentioned, to eliminate the need to look at the social security and veterans' income programs for savings.
But the compromise we have reached recognizes the fact that reconciliation has not previously been undertaken by the Senate. Several committees asked for more time to make the required legislative changes. So in the modification upon which we will vote, the period of time to recommend changes in legislation to achieve these savings has been extended to 30 days after adoption of the conference report on the budget resolution.
The net result of all these changes is to reduce the savings under the reconciliation instructions by $400 million. The deficit will be $28.4 billion, $1.5 billion below the deficit for 1979.
I recognize that we face a hard choice on the reconciliation issue. If the choice were easy, these savings would already have been made. We would not be talking about them today.
I know that some powerful lobbies have combined forces to increase spending and the deficit by striking the reconciliation instructions.
They are opposed to saving this money.
These lobbyists do not share our view that we should try to keep the 1980 deficit below the deficit for 1979. As one of them said, "We want a bigger deficit."
Well, if the reconciliation instructions are defeated, these lobbyists will get that bigger deficit.
And all of our people will have to pay for it in higher taxes and greater inflation.
And that is really the issue, isn't it? The question is not one committee's interests or another's. The question is the public interest.
The question is not the merits of the specific savings our committee has proposed. Under the Budget Act, any committee can use its own judgment as to where to make the savings as long as the savings are actually made with its own plan.
The simple fact is that Congress approved a fiscal plan last spring which included these savings. Now we must ask whether the Congress will stick with that plan.
These lobbies have been telephoning and writing Senate offices against saving these $4 billion. We have all heard from them. I have heard from them. Unfortunately, their arguments contain a lot more fiction than fact.
Rather than addressing the need to reduce spending, the lobbyists are whispering that the reconciliation is an "undesirable precedent," and a "power grab"by the Budget Committee.
Actually, the undesirable precedent — as far as many of these lobbyists are concerned — is the Budget Act, passed almost unanimously 5 years ago to bring exactly this kind of budget control into effect.
The Budget Act expressly provided the reconciliation process to deal with what we know is a predictable occurrence — spending after the first budget resolution which unjustifiably exceeds the targets of that resolution.
Actually, the wonder is that reconciliation has not been necessary in previous years, not that it is being invoked now.
To argue that Congress should abandon the reconciliation process is to assert that budget chaos is preferable to orderly budget reductions to reduce deficit spending.
When Congress enacted the Budget Act, it assigned certain responsibilities to the Budget Committee for the reconciliation process, including recommending when it should be employed.
But the Budget Committee only recommends congressional action, it cannot force it. The same Congress which passed the Budget Act must approve each congressional budget. Congress alone, not the Budget Committee, must decide whether these savings should occur.
And after all, who is the Budget Committee? The 20 members of the Budget Committee are Members of this same Senate, to which all Senators belong. In fact, they constitute a full fifth of the Senate's membership.
Budget Committee members serve on nearly all the Senate's committees. We are happy to number among our Members two members of the Committee on Finance and six members of the Committee on Appropriations, including its chairman, four Appropriations Subcommittee chairmen, and one ranking Appropriations Subcommittee member.
So we are not from Mars, although I know that charge has been made. Senators sitting as members of the Budget Committee are just as sensitive to the needs the Federal Government is called upon to meet as when they sit as members of the other committees on which they serve.
We represent many of the same States as other Senate Members represent. We talk to the same administration and the same Governors, mayors, union leaders, businessmen, and other citizens as other Senators do.
And we should like to be as generous in meeting the demands for higher spending and lower taxes as any other Senator.
But the Budget Committee would have failed in its responsibility to the Senate had we not recommended reconciliationto keep the 1980 deficit from rising over the deficit for 1979.
So when these lobbyists accuse them of reaching for the power — power grab is what they call it — what they are really objecting to is that the Budget Committee has to put the issue where the public can see it and where the power of the public opinion can be brought to bear upon the issue.
That is what they complain about. They would prefer it if the Budget Committee had glossed it over, covered it up, hidden it, and somehow tried at the same time to convince the public that this budget represents restraint.
As one member of the Budget Committee, I could not take that coverup road, and I take it that neither could a majority on the Budget Committee, and I do not intend to do so today.
Another argument being made is that many of these savings — which total less than 1 percent of the budget — 1 percent of the budget — might threaten important national priorities and vital programs. Well, that is just not the fact.
First of all, the committees responsible for making these savings have total latitude about what to recommend to the Senate to achieve these savings. They can take these savings from the lowest priority programs.
Savings of at least these amounts were included in the President's budget. All were clearly identified in the report and debate on the first budget resolution. The committees asked to make the savings were named and examples of how the savings could be made were given. No one offered an amendment to eliminate any of these savings in the debate on the first concurrent resolution. And the budget resolution was enacted by a vote of morethan 2 to 1.
And why not? This is not a "liberal" or "conservative" issue. Enacting these savings will impair neither our defense nor our priority domestic programs.
In fact, this budget resolution contains nearly $11.0 billion more in outlays than the first resolution, mostly for such programs.
But failure to enact these savings will require cutting both domestic and defense programs, if we want to hold the 1980 deficit below 1979.
Another argument we will be hearing during this debate is that we should not be cutting spending in time of recession. The fact is that this budget includes extra funds to help those affected by the recession. For example, it assumes enactment of $500 million in countercyclical fiscal assistance for 1980 not contained in the first resolution.
It contains more job-related funds for 1980 than we included in the budget for 1979. I ask unanimous consent that a table setting forth these job-related funds be printed at this point in the
RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. Mr. President, that table will reveal that the second concurrent resolution provides $56.2 billion in 1980 compared to $49.3 billion for fiscal year 1979.
This budget will produce a balance in 1981 and record-high tax cuts in 1982.
This budget also balances the need to alleviate the hardships of recession with the need to provide leadership in inflation control to the Nation and the rest of the world. For while unemployment rises, the worst inflation of modern times also erodes the welfare of the poor and the jobless as well as the 94 percent of all Americans who remain employed.
The restraint incorporated in this budget is endorsed by the President, the Federal Reserve Board, and the Congressional Budget Office.
They agree it is the appropriate response to runaway inflation at this time.
Economists in and out of Government continue to predict that the current recession will be both so shallow and so brief that Federal fiscal action to deal with it could come too late to help much with unemployment, but could seriously fuel inflation.
We should stay on the course we charted last spring to balance the budget. We should stick by this budget.
In the next few days we will have to dispose of a number of amendments to this budget resolution. Some will be designed to increase the deficit by increasing spending or deleting some of the savings provisions the resolution contains.
At least one will propose a major increase in the defense budget.
I will have more to say about each of these amendments when they are offered. But I want to make some general observations about amendments designed to cushion the defense budget against inflation.
This budget provides more than the Defense Subcommittee of the Senate Appropriations Committee requested last spring. It also provides sufficient additional funding for all the strategic weapons systems which the administration has recommended.
And this resolution increases defense outlays by $3 billion, compared to the first budget resolution.
And yet amendments will be offered to increase this defense spending.
I want to make this point as clearly as I can: To the extent that inflation is used as an argument for increasing the defense function, it affects the entire budget. If that case is reasonable for defense, it will be argued, patiently and eloquently by those concerned about domestic programs, that it ought to be applied there as well.
So once we begin to move in that direction I do not know what the deficit will turn out to be.
My own feeling is that we have not suddenly, since May 15, reached an Armageddon with respect to defense.
The argument for restraint in Government spending we made then was based on the very real problem of inflation to which every arm of government here and abroad has given priority.
The Federal Government has got to swallow some inflation, in my judgment, in order to set an example, in order to communicate to the country our concern that restraint be practiced not only in the Federal Government but across the board.
And I do not know how we are going to achieve that if now we panic and begin to add to Government programs on the argument that we must cushion them against inflation.
It is that argument, used by every segment of our economy, that underlies the inflationary expectations which, as much as any other force, have been driving the inflation rate upward over the last year or two.
But amendments will be offered to increase the defense budget still further to compensate for inflation.
I believe it ought to be possible to live for 1 fiscal year with the numbers of the second resolution in the interests of making some gains on the inflation fight. I believe that strongly, Mr. President.
The decisions the Senate makes in the defense function and the reconciliation instructions will send an unmistakable message to the American people.
Both the proposed defense budget increase and these reconciliation savings instructions involve relatively modest amounts of outlays. Each involves only about 1 percent of the budget.
We are talking about reducing the budget by less than 1 percent in the reconciliation instructions. We are talking about increasing defense by about the same amount. Yet there is a large proportion of the Senate who may resist even a 1-percent discipline.
I find it hard to believe that a 1-percent overall increase in spending is going to dramatically change our national security posture, or the largesse with which the Federal budget deals with domestic problems.
But if no one is willing to accept even that amount of discipline, then controlling the deficit is surely impossible.
That is the significance of the test we face this week, and the world and our fellow citizens will be watching.
Until this year, we have had the benefit of shortfalls between the first budget resolution and the second budget resolution to absorb increases in spending, when committees failed to make savings.
Those shortfalls permitted us to go to the Senate with a lower deficit in the fall than we estimated in the spring.
So the budget process was easy. We voted for budgets because we lowered deficits. Now, for the first time, there are no shortfalls, no shortfalls at all.
There has been no dramatic change in the economic or defense picture since May to affect that budget except in the direction of more inflation.
All we are asking the Senate to do is to reaffirm what the Senate agreed to on May 15, under the threat of inflation. And that is the test.
As one Senator, I welcome the test. Because I think for the first time since the budget process has been in effect, the Senate is being forced to consider whether it is willing to accept even a little restraint; and obviously a lot of Senators are not. And if they are not, the Senate ought to say so; the country ought to understand it.
Even if Senator BELLMON and I are the only two Senators to vote to support the resolution, I intend to do so, because I think that is what the economy requires.
And I think that is what the country expects. And I think the country has every right to expect it.
So the issue, Mr. President, is a simple one. Will the Senate reaffirm its determination to balance the budget, reduce lower priority spending programs, and make good on its commitment to the people?
Or will we abandon that commitment and betray the hope of fiscal responsibility which we have held out to our constituents?
The time has come for that basic decision to be made. It will be made here and now.
Failure to achieve these savings in these reconciliation instructions will frustrate the fiscal plan we adopted in May and demoralize our people in the face of what threatens to become runaway inflation.
That fiscal plan responds constructively to the American public's desire for tight control of Federal spending and a balanced budget as soon as possible.
At the same time, it provides measured relief to those actually affected by increased joblessness.
This second resolution, as did the first, provides for a balanced budget in fiscal year 1981.
This second resolution, as did the first, contemplates a record large general tax reduction, amounting to at least $55 billion in fiscal year 1982.
By that time, it is hoped that economic growth and spending restraint will permit tax cuts without jeopardizing budget balance and sound fiscal policy.
But is fiscal restraint still the order of the day? Should tax cuts be postponed? Could not more countercyclical money be included in the resolution? What about changing economic circumstances?
The economic outlook has become somewhat gloomier since the first resolution. Rapidly rising OPEC prices have drained purchasing power from the American public.
The outlook now — as it was last spring — is for a rise in unemployment.
But the outlook is also for continued high inflation. Inflation at the 13 percent annual rate of July, or of more than 9 percent most analysts expect for next year, is the most urgent problem we confront.
Although much of the devastating acceleration in inflation this year is attributable to food and energy prices which cannot be directly reversed by fiscal policy, fiscal restraint can set the tone for winding down inflation.
By demonstrating that the Federal Government is willing to absorb some inflation in many programs and activities, the Government can encourage private citizens and firms to restrain their wage demands and price decisions. To an important extent, the strength of our economy will depend on the cooperation of the Government and the private sector in jointly exercising restraint.
If the public believes their Government is out of control, why should they restrain themselves?
Surely, a sympathetic case can be made for adding more jobs money to this budget, even though it contains as much for jobs as we provided last year. No Senator has been more active in designing and arguing for antirecession aid programs than I have been.
But a shift from restraint to stimulus seriously risks raising demand for skilled labor and industrial capacity which is in short supply. It would surely worsen the prospects for inflation, eroding income, savings, and pensions, straining the social fabric, distorting investment incentives, and jeopardizing the international position of the dollar.
We may be in a period of recession, but those who have studied business cycles intensively are more cautious. As one of them told our committee, "I have now lived long enough to see half the recessions of my lifetime eliminated by subsequent revisions of the data."
Despite the difficulties in the automobile industry, the number of Americans employed continued to rise through July, and although employment declined slightly in August, it remained above the second quarter average.
The 6 percent unemployment rate for August remains well below the 6.3-percent rate forecast by CBO as an average for the current quarter.
Thus we are in a situation where unemployment is, so far, rising less rapidly than many have forecast — and less rapidly than might be expected on the basis of sales and production.
Meanwhile, inflation remains higher than many had predicted just a few months ago.
This is not an environment in which a convincing case can be made for shifting fiscal policy.
Mr. President, it is true that unemployment remains tragically high among some groups in the labor force.
We have increased funding in the budget for structural unemployment programs designed to reach these especially disadvantaged citizens.
We urgently need the cooperation of the private sector in this endeavor. It now appears, for example, that the targeted employment tax credit may be underutilized this year relative to our budget projections. I very much hope that that turns out not to be the case.
But, at the same time, unemployment among many groups of experienced workers remains low. In August, the unemployment rate for white-collar workers was 3.6 percent and for skilled blue-collar workers was 4.9 percent.
Similarly, unemployment is higher in some parts of the country than in others. In States as seemingly similar as Ohio and Michigan, unemployment rates this year have differed by 2 percentage points.
It is important to help those areas actually in need. The Senate has passed, and we have assumed in the budget resolution, a program of targeted fiscal assistance that can be funded if unemployment worsens.
But nationwide, untargeted measures not tied to local needs or unfolding events will unacceptably increase inflationary demand pressures in still prosperous industries and localities.
There is another reason why we should not rush to fiscal stimulus. We cannot leave the entire responsibility for fighting inflation to the Federal Reserve System.
Any move to stimulate the economy in present circumstances will raise inflationary psychology here and abroad, sending the value of our dollar down.
It will also force the Federal Reserve to raise interest rates even further. The higher they are forced to push interest rates, the more disastrous it will be for housing and other investment. Any prospects for easing pressures in financial markets depend on the measured fiscal restraint in this budget.
Mr. President, no one can say with certainty what is just exactly the right amount of fiscal restraint for the coming 12 months.
But the proposed budget does provide reasonable fiscal restraint: It will contribute to an environment in which inflation can be reduced while providing for the needs of hard-pressed citizens and localities; it will permit responsible progress toward a balanced budget without the jarring consequences of a possibly futile attempt to achieve that goal immediately; it will set the stage for a time 2 years hence when sizable tax reduction can benefit the economy in both the short and long run.
Now, turning to revenue matters, the budget resolution recommends a revenue floor of $514.7 billion for fiscal year 1980, $603.6 billion for fiscal year 1981, and $658.4 billion for fiscal year 1982.
The revenue floor for fiscal year 1980 assumes that legislation will be enacted. to raise net revenues by $2.0 billion above projections under current law. This revenue increase could be accomplished through enactment of a windfall profit tax. Alternatively, other proposals such as the cash management legislative initiatives proposed by the President in January could raise this amount if enacted this fall. And smaller revenue raising legislation such as restrictions on tax exempt housing bonds could contribute to the achievement of the revenue floor.
The assumption that the net effect of legislation in fiscal year 1980 will be to increase revenues by $2.0 billion does not necessarily preclude later enactment of some minor revenue-reducing legislation. Such legislation could be adopted if offset elsewhere in the revenue total.
The revenue floor for fiscal year 1982 will accommodate a major tax cut. The revenue floor assumes that legislation will reduce revenues by at least the $55 billion general tax cut in fiscal year 1982 that was proposed in the first resolution.
The committee gave careful consideration to the arguments for an immediate tax cut, advancing part or all of the major fiscal year 1982, 1983, and 1984 tax cuts proposed in the budget resolutions finally reported.
But any short term benefits from advancing the effective date of part or all of the 1982, 1983, and 1984 tax cuts proposed in this budget must be weighed against the possible negative effects of accelerating these cuts.
Unfortunately, in the present environment, a significant tax cut will aggravate.inflation unless a recession at least as severe as the one many economists forecast actually occurs.
Such a tax cut would also reverse our goal of steady deficit reduction and could postpone the goal of a balanced budget. For example, a $20 billion tax cut now would also increase the fiscal year 1980 deficit to a level of as much as $40 billion or more. It would produce a deficit of $5 billion in 1981, instead of a balanced budget.
Finally, unless a recession at least as severe as the one forecast actually occurs, a tax cut could undermine the dollar and our country's world leadership position.
The United States cannot formulate macroeconomic policy in isolation from the policies of our major trading partners. In moving to tighten their monetary policies, other nations have recently indicated clear intentions to restrain inflationary pressures including those emanating from OPEC price increases.
Very serious uncertainties arose in foreign exchange markets about the capability of the U.S. economy to contain those inflationary pressures following thelatest OPEC price rise.
These uncertainties contributed to a decline in the exchange value of the dollar, wiping out most of the gains made since last November.
Indications of a premature shift in fiscal policy could contribute to further uncertainties and downward pressures on the dollar. This would be likely to result in further monetary restraint which would blunt both the expansionary effect of tax reduction and, in particular, its benefit as an investment incentive.
We do not foreclose timely action on the economy if the present outlook changes.
As the committee report makes clear, the committee will closely monitor economic conditions as events unfold and is prepared to reconsider revenue policy, if and when the need arises.
Now let me discuss some of the spending priorities in this budget.
NATIONAL SECURITY
Mr. President, the committee's recommendation for national defense reflects the spending targets established by the Congress in the first budget resolution plus economic and technical adjustments of previous estimates. The committee recommends $136.8 billion in budget authority and $127.4 billion in outlays for fiscal year 1980, $147.3 billion in budget authority and $138.3 billion in outlays for fiscal year 1981, and $159.0 billion in budget authority and $148.9 billion in outlays for fiscal year 1982. It is anticipated that defense spending will total $806 billion in budget authority and $748.0 billion in outlays over the fiscal year 1980-84 period.
The committee's position continues to be that, in order to fight the ravages of inflation, all areas of Federal spending must be rigorously pruned. Although the first concurrent resolution approved by the Congress provided 1-percent real growth in defense spending, inflation has reduced that growth to 0.3 percent. If the Congress is to meet its budget goals we cannot increase this level. If inflation is to be conquered, defense spending, at least in 1980, must be held down.
As part of its anti-inflation effort, the committee's recommendation continues the policies embodied in the first budget resolution which accepts the President's recommendations for a pay cap on the anticipated fiscal year 1980 pay raise for civilian and military employees of the Department of Defense and other Federal agencies. However, the 7-percent pay cap level recommended by the President on August 31 is 1.5 percent higher than the recommendation in his January budget and in the reported resolution. The committee retains its earlier recommendations and assumes that Federal agencies will absorb the difference through savings in other activities.
The committee also recommends a number of management initiatives including greater efficiency in defense operation and maintenance activities, and adjustment of military and civilian retired pay on an annual rather than a semiannual basis in order to make these procedures compatible with social security procedures.
FUNCTION 150 INTERNATIONAL AFFAIRS
Mr. President, for international affairs, the committee recommends $13.1 billion in budget authority and $8.3 billion in outlays for fiscal year 1980, $14.0 billion in budget authority and $8.7 billion in outlays for fiscal year 1981, and $14.9 billion in budget authority and $8.7 billion in outlays for fiscal year 1982. The committee's recommendation is essentially that contained in the first budget resolution, as adjusted by CBO technical reestimates, plus an allowance to cover the President's request for the resettling of Indochinese refugees.
The committee's recommendation retains the first budget resolution assumptions for providing the funding levels of the President's request for the Middle East peace treaty, for requiring a reduction in the President's request for international development programs, and by requiring that other international programs be held constant in real terms over the fiscal year 1979 levels.
HUMAN RESOURCES
For human resources programs, the committee recommends $326.3 billion in budget authority and $293.6 billion in outlays for fiscal year 1980. For fiscal year 1981, the recommendation is for $365.0 billion in budget authority and $323.0 billion in outlays. For fiscal year 1982, it is $408.5 billion in budget authority and $353.6 billion in outlays.
For education and social services programs, the committee's recommended ceilings accommodate the Labor/HEW appropriation conference report. In addition, the committee recommendation assumes that the permanent title XX ceiling will be increased to $2.7 billion rather than the $2.9 billion level assumed in the first resolution.
For training and employment programs, the committee recommendation continues the assumption of the first budget resolution that the work incentives (WIN) program will be reduced by half by the end of fiscal year 1981 and that CETA countercyclical public service employment program (title VI) will be phased out by the end of fiscal year 1981.
In health programs, the committee remains concerned about the rapid escalation in health care costs.
Voluntary efforts to curb hospitalization costs, initiated by the hospital industry, have been gratifying. According to a recent CBO study these efforts were successful in holding down the rise in hospital costs by 1.1 percentage points in 1978. In 1979, CBO estimates that these efforts will reduce the increase in costs by 1.9 percentage points.
But that is not good enough. Even with this voluntary effort, hospital costs rose by 12.8 percent in 1978. CBO estimates that they will increase by another 14.5 percent in 1979. Such increases in the cost of a vital service such as health care simply cannot be tolerated.
Therefore, the committee recommends that the Federal Government undertake a strong initiative in controlling hospital costs. The Federal savings to be reaped from such an initiative are reflected in the committee's budget recommendations, as are the savings which thecommittee expects to accrue from other efforts to curb the costs of the medicare and medicaid programs.
The committee also recommends that a reduction and refocusing of Federal assistance for health manpower be made to solve the problems of geographic and specialty maldistribution that now plague this country.
Funding is assumed to expand medicaid benefits to low income children and pregnant women.
In the income security area, the committee recommendations assume an increase to take account of the President's decision to admit an additional 7,000 Indochinese refugees a month. Also assumed is additional funding for energy assistance for low income families.
The committee also recommends legislative savings in a number of income security programs — social security, civil service retirement, assisted housing and AFDC and nutrition programs. These same legislative savings were assumed for the first resolution but the great majority have not been achieved to date.
Reform of our Nation's welfare system is assumed to begin in fiscal year 1982.
In veterans programs, the committee recommendation provides funding for cost-of-living increases in both the veterans disability compensation program and the GI bill program. Programs for flight training and correspondence school training are eliminated because available evidence indicates that they do not effectively lead to full time employment.
Legislation is assumed that will enable the VA to collect from private insurers the costs of medical care provided to veterans with private insurance coverage.
Savings are also assumed from legislation eliminating duplicate Federal burial benefits to certain veterans and reducing the GI bill eligibility period for certain veterans.
NATURAL RESOURCES
Mr. President, for natural resources programs, the committee recommends $64.6 billion in budget authority and $27.2 billion in outlays for fiscal year 1980. For fiscal year 1981, the recommendation is $28.8 billion in budget authority and $29.3 billion in outlays. For fiscal year 1982, it is $47.8 billion in budget authority and $32.3 billion in outlays.
The committee recommendation would continue science activities at a constant real level through fiscal year 1980, but at declining levels in subsequent years. The recommendation would allow for increased funding for civilian space activities beginning in fiscal year 1980 and continuing through 1982. This would maintain the pace of development of the space shuttle program required to meet civilian and military needs.
For energy, the committee recommends increased funding above the first budget resolution levels beginning in fiscal year 1980.
There are now before Congress numerous proposals aimed at the reduction of oil imports. Reductions would be achieved by various means including increased production of synthetic fuels and new conservation initiatives.
The committee recommendation would accommodate any one of the proposals. It in no way prejudges the outcome of the debate on these complicated issues. The committee also recommends further reductions in fiscal year 1981-82 below the first budget resolution for the strategic petroleum reserve. The recommendation assumes continuing program delays and reflects the administration's recent commitment to limit oil imports. The recommendation would accommodate real growth in energy conservation programs and in the regulatory activities of the Department of Energy.
For natural resources and environment programs, the committee recommends funding at levels slightly higher than provided for in the first budget resolution. Higher outlays for water resources, resulting from inflation and severe flooding, and for forest and land management are partially offset by reduced spending for EPA construction grants.
For agriculture, the committee recommendation for the second budget resolution reflects continued strong Federal support for the agricultural sector, but acknowledges the significant improvements in farm prices and income that have occurred since the first budget resolution. In recognition of the improved agricultural economic conditions, outlays for farm price supports were reduced. The resolution includes an allowance for a crop insurance initiative but delays acquisitions for a food security reserve until fiscal year 1981. Allowances for higher export credit sales and for constant real levels of agricultural research and services assumed in the first budget resolution were maintained.
COMMERCE AND COMMUNITY DEVELOPMENT
For programs involving commerce and community development, the committee recommends $53.1 billion in budget authority and $47.9 billion in outlays for fiscal year 1980. For fiscal year 1981, the recommendation is $54.8 billion in budget authority and $49.9 billion in outlays. For fiscal year 1982, it is $53.8 billion in budget authority and $50.9 billion in outlays.
For commerce and housing credit, the first and second budget resolution policy assumptions are identical. The committee recommendation generally assumes continued support for existing housing and thrift insurance programs at a current law level. While housing assistance for the elderly and handicapped could rise with inflation, net funding is below current law levels due to the use of recaptured budget authority for GNMA and anticipation of reduced losses in the FHA mortgage insurance programs. The recommendation does not assume 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.
The Federal payment to the Postal Service is continued in accordance with existing law, which anticipates that the Postal Service will make steady progress toward financial self-sufficiency.
In the area of transportation the recommendation is similar to the first resolution and reflects continued high levels of assistance. It is unchanged for air and other transportation programs and would permit small increases in airport development programs funded by the airport and airway trust fund.
The recommendation is adequate to accommodate expected funding for railroad programs and provides an allowance of $0.1 billion above the President's request for increased Amtrak funding consistent with the Senate-passed authorization bill.
The recommendation could accommodate increased funding above the first resolution targets for existing mass transit authorizations, in keeping with the President's newly proposed energy initiatives. Also, the recommendation assumes that the Appropriations Committees will, as they have indicated they intend, cancel existing "old" interstate transfer contract authority and substitute "new" appropriated budget authority over a 3-year period, fiscal years 1980-82, resulting in technical accounting changes that would not affect the program level.
As in the first resolution, savings in transportation programs reflect an equitable distribution of expected budgetary sacrifices. The committee recommends that highway funding increases enacted last year be reduced by $250 million in fiscal year 1980 and again in fiscal year 1981.
This still represents a significant increase over fiscal year 1979 funding but is adequate to accommodate only limited funding for appropriated highway programs.
As in the first budget resolution, the recommendation for community and regional development reflects the high priority that the Congress attaches to Federal assistance to encourage economic development in urban and rural areas that are not sharing fully in the Nation's economic progress.
Funding for the President's requested increase for urban development action grants and for an expansion of EDA economic development programs at the level of Senate-passed legislation could be accommodated. For fiscal year 1981 and 1982 the recommendation could accommodate increased EDA funding at the level of the President's request.
In addition, the recommendation was increased to accommodate funding for the SBA disaster loan program at a level estimated by CBO to be required in a normal disaster year under the provisions of the Senate-passed version of SBA authorizing legislation now in conference. The recommendation therefore assumes that all but a small portion of agricultural disaster lending will be carried out by the Farmers Home Administration, which has traditionally provided financing for this purpose.
For administration of justice, the first and second budget resolutions accommodate the administration request for judicial action and law enforcement activity by the Department of Justice and other agencies to control organized crime, public corruption, drug trafficking and illegal immigration, and to prevent racial and ethnic discrimination. The budget assumes that aid to State and local governments through LEAA will be reduced to $0.4 billion in budget authority in fiscal year 1980 and future years.
For general Government, the second budget resolution policy assumptions are the same as those in the first resolution, and would allow continuation of the current level of program activity for the legislative and executive branches.
The committee recommendation assumes continued funding for revenue sharing at current law levels, and provides an allowance for programs of temporary or standby countercyclical fiscal assistance to State and local governments, as authorized in legislation passed by the Senate.
FUNCTIONS 900, 920, AND 950
FUNCTION 900:INTEREST
For function 900, interest, both budget authority and outlays for fiscal year 1980 have increased by $2.1 billion since the first budget resolution as a result of higher estimates of interest rates and technical reestimates of interest on the public debt.
FUNCTION 920:ALLOWANCES
For function 920, allowances, the committee recommendation for fiscal year 1980 is identical to the first budget resolution. The recommendation assumes funding for a cap of 5.5 percent on the October 1979 pay raise, and absorption of the remaining costs to reach the 7 percent level recommended by the President by the civilian agencies through savings in other activities.
The committee recommendation assumes management savings in fiscal year 1980 and succeeding years through reductions in Government travel and transportation costs, film making, procurement of supplies and materials, and consulting contracts, the same as the first budget resolution.
FUNCTION 950:UNDISTRIBUTED OFFSETTING RECEIPTS .
For function 950, undistributed offsetting receipts, collections from rents and royalties have been estimated downward to reflect recent sales and changes in the timing of proposed sales. These reductions are offset by higher estimates of interest collections by trust funds as a result of higher estimates of trust fund balances which are invested in Government securities.
Much more detail on all these issues is contained in our committee report. But all the issues in this budget resolution — savings, tax cuts and defense spending — really boil down to one question. Can we deal with inflation?
I think that takes priority over tax cuts, over increases this year in the defense budget, or increases this year in other spending.
I think that this fiscal year we ought to demonstrate to the people of this country that we believe inflation is the number one enemy and that we believe the Government must restrain its spending all across the board to set an example and to reduce its own impact on the economy.
I believe that very deeply. If we can get the economy under control, if we can stabilize the rising inflation rate and begin to cut it down, then all of us will benefit — defense requirements, the requirements of other government programs, and, of course, our citizens in their day-to-day lives.
Inflation control must be our number one priority. I put that at the top of the list.
I will oppose a premature tax cut, which would greatly increase the deficit.
I will oppose any increases this year in defense. We did, in this budget, provide for increases in the next five years that go to the issues raised by the SALT hearings. I will support those significant defense spending increases. They are adequate to fund every strategic system the President has proposed.
But for this fiscal year 1980, I think we should hold the line across the board on Government spending and on tax cuts.
We should concentrate on driving toward a balanced budget and doing what we can by that effort to deal with inflation.
I am confident that we will have the support of the U.S. Senate in that effort.
EXHIBIT 1
EXCERPTS ON SAVINGS ASSUMPTIONS FROM THE REPORT ON THE FIRST CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1980 (S. REPT. 96-68)
CHAPTER I. INTRODUCTION
(Pages 4-7)
"The Budget Resolution recommended by the Committee establishes a watershed in the recent history of the Senate's fiscal policymaking.
"The Committee concluded that fiscal policy at this time must be characterized by a significant degree of restraint incorporated in a plan to achieve a balanced budget in the shortest practicable and reasonable time. The budget plan recommended by the Committee responds forthrightly to that challenge.
"In recent decades, increasingly higher levels of Federal spending in real terms have been a fixture of American Government. But this First Resolution on the Budget calls for fiscal 1980 outlays below current law. It allows no real growth in overall Government outlays. In fact, this budget requires significant reductions in spending under current law, amounting to $5.2 billion in each of the fiscal years 1980 and 1981, and $6.0 billion in fiscal 1982. Compared to the cost of continuing current Federal policy at the levels required to offset inflation, this budget reduces outlays by $11.7 billion in FY 1980, $21.6 billion in FY 1981, and $35.0 billion in FY 1982.
"Last January, the President proposed a fiscal 1980 budget which was characterized as exceptionally "lean and austere."But the Committee recommends a fiscal 1980 budget which contains a deficit $11.8 billion lower than the President's proposal (on a comparable basis). Stated on the President's basis, the Committee has recommended a budget which contains a deficit of $19.7 billion.
"The recommended budget reduces the outlay levels recommended by the Senate's authorizing committees by $14.3 billion. It is lower than the recommendation of the Appropriations Committee — $1.1 billion lower. This budget contemplates room for only a few of the new initiatives proposed by the President, unless other programs now in law are reduced or eliminated.
"The Committee recommends the imposition of rigorous restraint, spread widely across the gamut of Federal activity. Under the Committee's recommendations, even the highest priority programs have not been spared a share of the pain. This is highly disciplined recommendation. But it is an equitable one. Neither defense, nor public welfare programs, nor any of the Federal Government's other major enterprises are spared a share of the burden which must be borne if this Congress is to balance the budget in 1981.
"The Committee was not confronted solely with the task of separating unworthy Federal programs from the others. For the most part, it has also been necessary to choose among the good ones. It has been necessary to face up to some very painful realities.
"The Members and committees of Congress must be willing to accept that same discipline if Congress is to meet its obligation to produce a restrained and prudent budget commensurate with the character of our national economic needs.
"The following is only a partial listing of some of the key cuts and assumptions which the Committee's plan requires:
"Defense.— Limit military and civilian pay raises; adjust military and civilian retired pay annually instead of semiannually; phase out the military and commissary subsidy.
"Other Federal Employment.— Limit pay raises and establish once-yearly adjustment of retirement benefits.
"Energy.— Cut the FY 1980 level of Strategic Petroleum Reserve storage from 84 million barrels to 20 million; reduce funding for breeder rector programs; allow long term research and development to decline in real terms.
"Natural Resources and Environment.— Cut funding for new park acquisition; eliminate the Youth Conservation Corps; reduce budget authority for EPA's construction grant program.
"Agriculture.— Reduce CCC price supports beginning in FY 1981 through greater use of acreage set-aside; reduce dairy price supports beginning in FY 1982; disallow the President's proposal to fund all-risk crop insurance.
"Transportation.— Reduce Federal-aid highway funding; restrain Amtrak to the levels requested by the President which would eliminate rail passenger service in many States.
"Education, Training, Employment, and Social Services.— Phase out the countercyclical public service jobs program; cut summer youth jobs; forgo increases in social services funding.
"Health.— Allow for only a portion of the President's proposed child health assessment program; save substantial amounts in medicare and medicaid; reduce assistance to medical schools and students.
"Income Security.— Achieve savings in the social security and AFDC programs; delay implementation of welfare reform.
"Veterans Benefits.— Enact cost saving reforms in veterans income security programs; eliminate flight training and correspondence courses from the G.I. bill; enact legislation to collect benefits for VA medical care from private companies which insure veterans.
"Administration of Justice.— Reduce LEAA funding by almost half; require Federal law enforcement agencies to absorb inflation costs.
"General Government.— Require Congressional operations to absorb inflation costs.
"General Purpose Fiscal Assistance.— Deny funding for targeted temporary and stand-by countercyclical assistance.
"In order to meet the targets proposed in the Committee's recommended spending plan, other committees of Congress must recommend legislation to change existing law.
"— The Finance Committee must report legislation to make changes in existing health and welfare programs to save nearly $3 billion.
"— The Environment and Public Works Committee must produce a rescission of spending authority for the highway program by a half billion dollars for each of the next 2 years.
"— The Appropriations Committee must rescind funds for the Strategic Petroleum Reserve.
"— The Commerce Committee must approve the Presidents proposal to reduce Amtrak's support to levels consistent with a 43 percent reduction in passenger route mileage.
"— The Small Business Committee must terminate SBA disaster loans for crop losses which are eligible for FmHA assistance.
"— The Agriculture Committee must report legislation to reduce spending for CCC programs.
"— The Veterans Committee must report legislation requiring private insurers to reimburse the Veterans Administration for care provided to policyholders who go to VA hospitals.
"— The Governmental Affairs and Armed Services Committees must provide for once a year increases in retirement benefits, Instead of the current twice a year increases.
"To the extent that any committee does not change existing law as contemplated in this budget, it must make other changes or other committees will be forced to make up the difference."
FUNCTION 050:NATIONAL DEFENSE SAVINGS
(050) Mission 4: Other national defense programs
(Page 80)
"The Committee's recommendation assumes a slight reduction in the level of the President's request for other national defense programs. This reduction results from revising the coat-of-living adjustments for military retired pay from a semi-annual to an annual basis."
FUNCTION 300:NATURAL RESOURCES AND ENVIRONMENT SAVINGS
(300) Mission 1: Water resources
(Page 115)
"The Committee recommendation does not provide for full funding of new water resource construction projects."
(300) Mission 2: Conservation and land management
(Page 116)
"The Committee assumes that programs for conservation of agricultural land would be consolidated as requested in the President's budget and would focus on long term, enduring practices to control soil erosion."
FUNCTION 400:TRANSPORTATION SAVINGS
(400) Mission 1: Highways
(Page 144)
"The Committee recommendation assumes that direct spending authorizations for Federal-aid highways will be limited to approximately the FY 1979 level. Realization of this target would require changes in existing legislation to reduce budget authority already enacted by $0.5 billion in both FY 1980 and FY 1981."
FUNCTION 500:EDUCATION, TRAINING, EMPLOYMENT, AND SOCIAL SERVICES SAVINGS
(500) Mission 4: Training and employment
(Page 173)
"The Committee's recommendations assume that the CETA Title VI countercyclical public service employment program will be phased out by the end of FY 1981, with the program reaching a level of 100,000 jobs by the end of FY 1980. The Committee's recommendation also assumes a reduction in FY 1980 budget authority for CETA public service jobs below the President's request, on account of the large amounts of unspent funds remaining from prior year appropriations. The Committee's recommendation assumes that these unspent funds — except the minimum amount necessary for program stability — will be used in lieu of new budget authority. The Committee recommends that the Work Incentive (WIN) program be phased out by the end of FY 1981, that funding be provided in FY 1980 for the CETA private sector initiative, and that the President's levels for the summer youth employment program be accepted."
FUNCTION 550:HEALTH SAVINGS
( 550) Mission 1: Health care services
(Page 182)
"The Committee recommendation anticipates savings of $0.3 billion in budget authority and $2.0 billion in outlays in the medicaid and medicare programs compared to the current law level through the adoption of several legislative initiatives suggestedby the Finance Committee in its March 15 report to the Budget Committee, and from the maximum level of savings obtainable through the Administration's hospital cost containment initiatives presently being considered by the Finance and the Labor and Human Resources Committees."
FUNCTION 600:INCOME SECURITY SAVINGS
(600) Mission 1: General retirement and disability insurance
(Page 195)
"The Committee recommendation assumes actions by the Congress to achieve outlay savings beginning in FY 1980 and FY 1981 in social security programs, but not necessarily those proposed by the President."
(600) Mission 2: Federal employee retirement and disability
(Page 196)
"The Committee recommendation assumes that outlay savings will be achieved starting in FY 1980 from instituting an annual, rather than the current semiannual, cost-of-living adjustment for beneficiaries of these programs."
(600) Mission 4: Public assistance
(Page 201)
"The Committee recommendation assumes savings from benefit reductions and better management in the AFDC program."
(600) Mission 5: Nutrition programs
(Page 202)
"The Committee assumes enactment of the recommendations of both the President and the Agriculture Committee to achieve savings in the special milk, summer food, and WIC programs. Additional savings recommended by the President are assumed from reducing the Federal subsidy provided to students from non-poor families who participate In the school lunch and breakfast programs"
(600) Mission 6: Housing assistance
(Page 205)
"The Committee recommendation assumes a reduction from the current law level of funding for subsidized housing to allow annual commitments on 250,000 additional units per year beginning In FY 1980, with 50% allocated to existing housing. The Committee also assumes that the maximum rent in assisted housing will be increased from 25 to 30% of a tenant's income."
FUNCTION 700:VETERANS BENEFITS AND SERVICES SAVINGS
(700) Mission 1: Income security for veterans
.(Page 214)
"The Committee's recommendation anticipates a cost of living increase in FY 1980 of 8.3% in veterans compensation benefits. This increase would be partially offset by cost-saving reforms in veterans' income security programs."
(700) Mission 2: Veterans education, training, and rehabilitation
(Page 216)
"The Committee recommendation assumes a 7% increase in the level of veterans readjustment benefits. This increase would be partially offset by legislation reducing the period of eligibility for GI bill benefits for certain veterans and eliminating payments for flight training and correspondence courses, as proposed by the President. The President proposed eliminating these courses because of abuses in these programs as well as concern that the courses do not lead to employment for veterans. Additional savings could be achieved by tightening program requirements, as proposed by the Veterans Affairs Committee."
(700) Mission 3: Hospital and medical care for veterans
(Page 218)
"The Committee recommendation assumes savings of $0.2 billion in budget authority and outlays from the President's proposal under which private insurers would be required to cover the cost of hospitalization in a veterans hospital for certain veterans with private insurance coverage. The Committee is concerned that Federal funds which could be used for other purposes are spent to provide health care which should be covered by private insurance paid for by veterans."
FUNCTION 750: ADMINISTRATION OF JUSTICE SAVINGS
(750) Mission 2: Criminal justice assistance
(Pages 226-27)
"The Committee recognizes that its recommendation assumes a significant reduction in funding for LEAA. One method the Committee discussed for achieving such a reduction would be to place less emphasis on diffuse grants to State and local governments and relatively more emphasis on Federal research and data dissemination activities.
"The 5-year recommendation would hold the program constant at FY 1980 budget authority levels, resulting in a gradual reduction in annual outlays over the 5-year period."
EXHIBIT 2
SUMMARY
The Budget Committee's recommended restraints on Federal spending will do more than merely pinch. They will hurt. Some programs will be eliminated entirely and others will be drastically curtailed. But a multibillion dollar deficit cannot be promptly wiped out without inflicting pain.
We cannot achieve a balanced budget without accepting these consequences. But the consequences of forgoing that achievement would be far more distasteful.
Until quite recently, Federal deficits have reflected continued slack in the economy and had little if any impact on inflation. But conditions are changing. The economy is moving toward full capacity. In this situation, deficits could indeed induce additional inflation.
Mr. President, we simply cannot afford that. In this 5th year of economic recovery, a sound fiscal plan must be a restrained plan.
There is no room in a sound economic future for Federal initiatives which contribute needlessly to the fueling of inflation.
Consistent with principles of humane and prudent Government administration, the deficit should be squeezed down and out as soon as possible. In the end, that is in the interest of all Americans.
This year's budget recommendation establishes a watershed in the recent history of fiscal policymaking. A few weeks ago, Congress instructed the Budget Committees of both Houses to prepare two alternative plans — one producing a balanced budget in fiscal 1981, and one producing a balanced budget in fiscal 1982. Your committee has responded aggressively to that mandate. It is now up to Congress as a whole to reciprocate.
Adoption of this plan to achieve a balanced budget could well be the most important step in responsible fiscal management since the adoption of the Budget Act Itself.
In recent decades, increasingly higher levels of real Federal spending have been a fixture of American Government. But this first resolution on the budget calls for fiscal 1980 outlays below current law. It allows for no real growth in overall Government spending. It would reduce spending below current law levels by $5.2 billion in each of the fiscal years 1980 and 1981, and by $6 billion in 1982.
Compared to the cost of continuing current Federal policy at levels required to fully offset inflation, this budget reduces outlays by $11.7 billion in fiscal 1980, by $21.6 billion in fiscal 1981, and by $35 billion in fiscal 1982.
The deficit contained in this budget is $28.8 billion. If the budget prepared by the House Budget Committee were restated to reflect the economic and program assumptions of the Senate, their deficit would be $32.4 billion. On the same basis, the President's would be $40.6 billion.
Stated in the President's terms, the committee has recommended a budget which contains a deficit of $19.7 billion in fiscal year 1980. That has been accomplished at a time when many have insisted that a deficit goal of $30 billion was unrealistically low.
We have met that goal and gone further, and we have done so while using the most unflinching and objective economic forecast available. There are no smoke screens or mirrors in this committee's recommendations.
The recommended budget reduces spending proposed by Senate authorizing committees by $14.3 billion.
The budget is $1.1 billion lower than the proposal of the appropriations committee. The appropriation committee proposal would be several billion dollars higher if restated on a basis comparable with the budget committee figures.
In the committee's view, there is little room in the budget for new programs. This budget contemplates allowances for only a few of the new initiatives proposed by the President. Only by reducing or eliminating existing programs can room be made for innovations.
This very stringent budget path has not been easy to construct. It has been necessary to swallow hard before endorsing many of the cuts and restraints which the committee recommends. None of these proposals has been casually considered. The committee is fully aware of the penalties inherent in a disciplined course of fiscal policy; and these recommendations are highly disciplined indeed.
But if these restraints are harsh, it must also be said that they are equitable. The burden is widely distributed. None of the Federal Government's major enterprises is spared a share of the sacrifice.
The report details the extent to which the committee has distributed the weight of responsibility.
Let me touch on some items which demonstrate the diversity of restraint.
In the Department of Defense, the committee recommends efficiencies in operations costs totaling a $300 million savings in fiscal 1980. These savings are not achieved in readiness-related operations. Another $100 million is saved in fiscal 1980 by phasing out the commissary subsidy.
For all Federal employees — civilians and military — the committee recommends a cap on pay raises. For retirees, the committee recommends once-yearly cost of living adjustments rather than twice yearly ones. These actions will save $4 billion in 1980.
The committee has found room for restraint in the energy field. Storage levels would decline for the strategic petroleum reserve based on likely fill rates. Savings there will be $1 billion. Funding for breeder reactor programs would be reduced by $200 million, and long term R. & D. would decline in real terms.
In the area of health care, the recommendations would allow for only $200 million of the President's proposed medicaid benefit expansions. No allowance is made for a program of national health insurance. Net savings of $1.8 billion are assumed in medicaid and medicare; and support for medical schools and students is cut back by $100 million.
In the field of transportation, the federal-aid highway program would be reduced by $500 million and restraint in funding for Amtrak would end passenger service in many of our states.
Cuts of $400 million would be made in public welfare programs and reform of the welfare system would have to be delayed until 1982.
Some price supports would be reduced for farmers in future years. And there is no room for the President's proposal to fund all-risk crop insurance.
And in the area of employment the countercyclical public service jobs program would be phased out entirely by fiscal year 1981 — for a reduction in fiscal year 1980 of $1.8 billion — and summer youth jobs would be cut back with fiscal year 1980 savings of $200 million.
There is scarcely a constituency in the United States which will not be touched in some
significant way by the imposition of these and other sacrifices.
There is no satisfaction in that with the subcommittee or, I am sure, with the Senate. But neither is there any chance to make good on our duty to manage the public purse in a prudent and responsible manner unless we are willing to pay the price.
Some may ask, if the budget can be balanced in 1981, why not in 1980? That would require a fundamental change in the role of Government in America — or a tax increase of great proportions.
Mr. President, at this point I ask unanimous consent to insert a table in the RECORD in order to indicate what would be required. Federal outlays would have to be cut by another $38.3 billion — or $43.5 billion below current law in order to achieve a balanced budget in 1980.
When one considers the kinds of cuts I have already described we have in 1980, pointing to a balance in 1981, Senators may get some faint notion of the enormity of that challenge.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. Total outlays would be $491.1 billion, allowing no increase at all over fiscal 1979. That is true despite the fact that increased case loads, spend-outs from prior commitments, and inflation adjustments required by law will inevitably drive the totals up.
The free lunch is as scarce in 1979 as it has ever been. And those who demand a stringent spending diet must not forget that the cost of Government can be reduced but not eliminated.
No tax cut would be provided under the recommended budget until fiscal 1982. But there would be a $55 billion cut in that year, to be followed by even more substantial reductions — $75 billion in fiscal 1983, and $100 billion in fiscal 1984.
The reality is that a balanced budget requires attention to both sides of the scales. We cannot achieve that balance solely through Draconian spending cuts.
On both sides of the ledger — in spending cuts and in tax proposals — the Budget Committee has faced up firmly to the requirements of fiscal integrity. But those commitments will have no value unless they are reflected in the decisions of other congressional committees and in roll call votes on the floor.
For example, in order to meet the budget resolution targets, other committees must recommend the following changes in existing law to achieve savings or make other cuts of equal magnitude.
The Finance Committee must save nearly $3 billion by recommending changes in existing health and welfare programs.
The Environment and Public Works Committee must produce a rescission of spending authority for the highway program — a rescission of half a billion dollars in each of the next 2 years.
The Appropriations Committee must rescind $1 billion of funds for the strategic petroleum reserve.
The Commerce Committee must approve the President's proposal to reduce Amtrak's support to levels consistent with a 43-percent reduction in passenger route mileage.
The Small Business Committee must terminate SBA disaster loans for crop losses which are eligible for FmHA assistance.
The Veterans' Committee must report legislation requiring private insurers to reimburse the Veterans' Administration for care provided to policyholders who go to VA hospitals.
The Governmental Affairs and Armed Services Committees must provide for once yearly increases in retirement benefits instead of the current twice yearly adjustments.
These will not be easy votes to cast. They were not easy to cast in the Budget Committee. They will not attract an eager flock of enthusiastic supports. Indeed, the Budget Committee's proposals for such sacrifices are anything but gleeful. Unfortunately, our fiscal dilemma is a sobering one.
FISCAL POLICY
In theory, fiscal restraint should be a popular course of action. The public has demonstrated its general support for shrinkage in the size and scope of Government. And the popularity of lower taxes is no recent development.
In reality, however, no meaningful spending cuts will ever be imposed without producing howls of outrage from those who suffer the consequences. Therein lies the challenge to us who make this Nation's fiscal policy — because the budget is a political document as well as a fiscal plan.
But fiscal restraint is made necessary by the overwhelming importance of the fight against inflation.
The success of our past efforts to stimulate the economy has added over 12 million jobs. The gap has been substantially narrowed between what the economy can produce and what it in fact produces.
Serious attention is still required to the plight of the structurally unemployed. But with inflation currently running close to a double-digit rate, the time has come to end general fiscal stimulus.
The Congress can only make a meaningful contribution to the battle against inflation if we approve a budget which avoids excessive strains on our productive capacity.
We must send a signal to the American people. We are not oblivious to the rages of inflation. We must set an example for sacrifices in both the public and private sectors which can bring inflation down.
Weighing the need to support public programs against the need to restrain public spending, a well-contributed budget can play an important role in shrinking inflation and in moving our economy in a more positive direction. The committee has recommended such a budget.
But important though a balanced budget is, it is not enough. Its impact will be blunted if wage settlements continue to break through the bounds of reasonableness.
Its moderating influence will be meaningless unless profit growth is no more than reasonable and prices are held down.
The committee has told the Senate with this budget that government must swallow some inflation if we are ever to return to a healthy balance of wages and prices. But the bitter taste of that sacrifice must also be absorbed in the private sector.
Federal budgets are not the sole source of inflation — far from it. And there are even limits on the impact which our private sector decision makers can have. Judgments made in Iran, in Saudi Arabia, and even in Japan or in West Germany can have as big an impact on the course of our inflation as any made here at home.
But Congress cannot dodge its responsibilities by pointing to those who must also contribute. We must carefully evaluate measures that have an inflationary impact by directly adding to the cost and price of goods and services. In a few cases, that may be necessary to accept such measures when overriding needs cry out to be served. But we must be aware of the consequences for inflation. We must be sure that every inflationary cost is balanced by a commensurate benefit.
The establishment of a new inflation monitoring capability at CBO has helped. We have already seen it working. We now know the inflationary implications of every major bill we consider. And those implications must weigh heavily as we make our choices and cast our votes.
Mr. MUSKIE. Mr. President, at this time I yield to my goad friend, the distinguished Senator from Oklahoma who has been a partner in this budget effort f or some 5 years now, a partnership which I value as much as any experience in my public life.