December 3, 1979
Page 34317
Mr. MUSKIE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. BOREN) . Without objection, it is so ordered.
BUDGET DEMANDS FOR THE 1980's: CRITIQUE AND REBUTTAL
Mr. MUSKIE. Mr. President, on Tuesday, I made a statement on the Senate floor which appears in the RECORD at pages 33588 to 33599 for November 27. In my remarks I attempted to set the present debate on the windfall profit tax in the context of the budget demands for the 1980's.
After that statement and the colloquies which followed it, a number of Senators commented on various aspects of that statement. I believe the following is a valid summary of their critiques:
Senator DOMENICI challenged the idea that windfall profit tax revenues should be used to help balance the budget. He argued that they should be given back entirely in tax cuts. He also questioned how budget prospects would look if we had not had control and therefore had no windfall profits to tax.
Senator LONG cited, as a major contribution to meeting budget demands, the large increase in current law revenues that is alleged to come from oil companies under decontrol. He also emphasized the need to cut outlays to balance the budget while pointing to the potential difficulty of doing so.
Senator HATCH pointed to the significant effective tax increases from social security taxes and the effects of the inflation that are occurring and are expected to occur in the next few years. He argued that tax reduction is necessary to increase economic growth. Through this route, he argued that a balanced budget could be achieved.
Senator McCLURE argued that balancing the budget must be done by reducing the size of Government, not by raising windfall profit tax revenues to finance growth in Government.
Unfortunately, I was unable to be present to discuss these points at that time. So I would like to make the following responses now:
First, a number of these comments seem to proceed on the assumption that the revenues projected for the 1980's are somehow adequate — enough to finance the programs already called for by congressional action and to keep up with inflation — without any windfall profit tax.
Mr. President, I ask unanimous consent to have printed in the RECORD at this point the table I used in my earlier presentation.
There being no objection, the table was ordered to be printed in the RECORD, as follows :
[Table omitted]
Mr. MUSKIE. Mr. President, this table shows that both windfall profit tax revenues and budgetary restraint will be required in the decade ahead. Let me remind the Senate, Mr. President, that the congressional budget adopted just a few weeks ago — a budget which assumes substantial restraint on spending by the Congress in order to achieve small budget margins in fiscal year 1981 and fiscal year 1982 — also assumed windfall profit tax revenues.
Indeed, it assumed even greater windfall revenues than in the Finance reported bill, despite the fact that the Budget Committee wished to leave ample room for a free and full debate on this important issue.
Next, let me note that the tax cuts included in the projections for the 1980's are significantly larger than the windfall profit tax revenues. It is no one's objective to raise windfall profit tax revenues in order to lock them up or use them only to finance added outlays. Rather, I suggested that windfall profit tax revenues can help to meet the Nunn-Chiles-Bellmon objective of substantial tax cuts and balanced budgets.
In addition, it should be noted that if we had not had the recent OPEC oil price increases — and all of their consequences including decontrol — we would have lower inflation and a stronger economy now and for the next year or so. And we would have no need for the additional spending for energy initiatives and low-income fuel assistance that were built into our projections, with lower inflation and no need for the energy initiatives outlays would be lower — $5 billion, to $15 billion later in the decade, less for indexed programs and $3 to $6 billion less for energy-related spending. Yes, lower inflation also means lower revenues. But this revenue effect must take into account the fact that OPEC price increases do not provide tax revenues from the oil bill paid to OPEC. When we allow for that, we find that it would be slightly easier to balance the budget without OPEC price increases and decontrol — easier by perhaps $1 or $2 billion per year.
Third, the assertions about higher current law revenues from decontrol must be challenged. It is easy to point to the higher current law revenues to be obtained from the oil companies under decontrol. But there are other considerations: Higher OPEC prices are initially a drain on the economy. While the oil companies have higher taxable profits other firms have less. And consumers have less real earnings to spend. If inflation is to come down, higher oil prices must be offset by lower prices and wages elsewhere in the economy. Thus, higher taxes from oil companies will be offset by lower taxes from the rest of the economy. Of course, we can hope to have higher real growth and tax revenues as we expand domestic energy production but that is the only genuine lasting source of revenue gains.
To those who would say that tax cuts are necessary to spur economic growth, it should be said again that the budget projections for the 1980's include large tax cuts. But tax cuts do not help to balance the budget, by themselves, even after allowing for the growth they induce.
Finally, in regard to holding down spending, I would like to note that Senator LONG's concern with cutting spending is welcome; his recognition of the political difficulty of doing so is shared.
And to those who say that we must curb the growth of Government in order to balance the budget, I would like to say two things: The projections for the 1980's were indeed intended as a challenge to use the windfall profit tax to recycle oil company revenues — to reimburse the consumers who pay the higher prices through tax cuts and public services. But the projections were also intended as a challenge to the Congress to weigh priorities carefully and to control spending diligently.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The second assistant legislative clerk proceeded to call the roll.
Mr. ROBERT C. BYRD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.