November 27, 1979
Page 33582
The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
Mr. BELLMON. Mr. President, I support the Magnuson amendment as strongly as I can. Each time we discuss the balanced budget and fiscal responsibility we point out that three-fourths of the Federal budget is now uncontrollable through the appropriations process. H.R. 3919, as reported, would create over $80 billion in new uncontrollable spending over the next 5 years.
This amendment makes almost all that spending subject to control through the appropriations process. The Magnuson amendment gives Congress the opportunity to do more than moan and groan about the uncontrollability of Federal spending.
This amendment does not deal with the question of whether or not there should be a windfall profits tax. Nor does it change any of the exclusions in the reported bill. There are a variety of opinions on these issues among the cosponsors of the amendment. The amendment deals with one question of critical importance, however, on which Senators with a wide variety of positions on other issues are agreed. We should not now be placing outside the regular budget and appropriations processes a new, very large, slice of Federal spending.
H.R. 3919, as reported, includes two new entitlement programs. This amendment converts those entitlements to authorizations for appropriations.
The reported bill includes new and expanded refundable tax credits. The refundable portions of tax credits are, in reality, entitlement spending. The recipients of these refunds have no tax liability — or tax liability less than the amount of their credits — so that they receive a payment in lieu of a tax credit. With respect to tax credits targeted on individuals, it is sometimes argued that making them refundable is the only way to insure that our poorest citizens share in the benefits. In the case of the credits included in this bill, however, sponsors do not have that argument in their favor. These credits are targeted on businesses, not individuals. They are also, in every instance, duplicated by authorizations for appropriations which just passed the Senate as part of S. 932. This amendment eliminates the refundable parts of these credits.
The so-called trust funds, in the reported bill, bear no resemblance to any trust funds now in place. These so-called trust funds are nothing more than an earmarking of future revenues, for very specific purposes. The result of such earmarking is to make those future revenues unavailable for any other purpose. I just do not think we are smart enough to sit here, in 1979, and decide the appropriate distribution of funds among competing priorities 5 years into the future. Nor do I think that individual committees of Congress should be able to reserve future Federal revenues for legislation not yet even drafted. This would deny other committees — and indeed the entire Congress the opportunity to propose other priorities for the use of those revenues.
Even though the administration proposed a trust fund concept, when it sent up its version of the windfall profit tax bill, the administration does not support the so-called trust funds in the Finance Committee bill. This amendment strikes two of the three so-called trust funds in the reported bill. The effect would be to hold off until later the decision about spending revenues generated by the new tax provided for in this bill. Future Congresses can decide on the appropriate levels of funding for various programs through the annual budget and appropriations processes.
Let me discuss for a moment, Mr. President, the so-called taxpayer trust fund — the only one of the funds which would not be eliminated by the Magnuson amendment. This trust fund would not receive revenues from the windfall profit tax. Rather it would receive "general revenues resulting from the decontrol of oil prices," to quote the Finance Committee report. And for what would the trust fund resources, be used? Again let me quote from page 4 of the Finance Committee report:
... to assure that adequate resources are available to Congress for action it may wish to take next year to provide relief to taxpayers who face the combined impact of higher prices as well as a result of oil decontrol and a substantial increase in social security taxes.
Mr. President, the Congress will have considerably more flexibility to deal with future needs if it does not handcuff itself to a trust fund, the size and use of which is highly conjectural at this point.
I regret that this amendment does not strike this trust fund as well as the others and thus completely fulfill its objective of removing all new uncontrollable spending from the committee bill.
But the amendment does eliminate $75 billion in new uncontrollable spending over the next 5 years — and this is an admirable move in the right direction.
Let me say again, Mr. President, this amendment does nothing more than require that any revenues raised by the enactment of this legislation be treated equally with other Federal resources — that is that we enact authorizing and appropriations legislation before we spend them. It makes no judgments about the advisability of a windfall profit tax, nor does it change any programs in the bill. The whole point is to give Congress better control over the Federal budget.
This is a result I strongly support.
UP AMENDMENT NO. 845
(Purpose: To strike the so-called "Taxpayers Trust Fund" and to ensure that no new uncontrollable spending is created by this bill)
Mr. BELLMON. Mr. President, I have an amendment which I send to the desk which will help strengthen this concept. I ask that the amendment be reported.
The PRESIDING OFFICER. The amendment will be stated. The assistant legislative clerk read as follows:
The Senator from Oklahoma (Mr. BELLMON) proposes an unprinted amendment numbered 845:
Strike all from page 1, line 1, through page 3, line 15, and insert:
"On page 91, beginning with line 16, strike out all through line 16 on page 96."
Mr. BELLMON. Mr. President, the effect of this amendment is to strike the so-called "taxpayers trust fund," which is the last piece of new uncontrollable spending included in the reported bill, except for the McGovern amendment, and which is left untouched by the Magnuson amendment.
As I said before, I wholeheartedly support the purpose of the Magnuson amendment, which is to reserve for future years and future Congresses decisions about the relative importance of competing proposals for Federal spending and tax cuts. That is why I offer this amendment at this time.
The so-called "taxpayers trust fund" should better be called the "Taxpayers Mortgage," for that is what it really is. It is an attempt to mortgage future revenues for a very specific purpose, namely, a reduction in social security taxes.
The PRESIDING OFFICER. The Chair would have to rule, in this instance, that the amendment would not be in order at this time, because it is a motion to strike and we have pending a motion to strike and insert, which takes precedence, under the rules. A motion to strike could not be acted upon as long as there is a motion to strike and insert pending.
TAXPAYER TRUST FUND
Mr. BELLMON. Mr. President, I take it I still have the floor?
The PRESIDING OFFICER. The Senator has the floor.
Mr. BELLMON. Mr. President, I would like to enter into a colloquy with the distinguished Senator from Delaware about the terms of the so-called taxpayer trust fund. I would like to make a couple of comments and then ask him a question.
This is not a trust fund, Mr. President. It is, purely and simply, a set-aside. Its purpose is to set aside a pot of money, even before it is collected, for a very specific tax cut. I shall say more in a minute about the wisdom — or lack of it — of deciding the issue of that tax cut now; but first let me point out; the so-called windfall profit tax — which would more accurately be called the domestic crude oil excise tax — is not even the source of revenues for this so-called trust fund.
These revenues would come from the increases in corporate taxes generated by the decontrol of domestic oil. That is right, Mr. President, general revenues not raised by this proposed new tax at all, would be funneled into the so-called taxpayers trust fund.
I understand that creation of this reserve will not represent a final decision about a cut in social security taxes — that all this bill does is set money aside for that purpose. But let us be honest with ourselves, Mr. President. If we set money aside for this purpose, and we do not set money aside for other competing purposes such as general tax deductions to stimulate capital formation and investment, or to boost consumer purchasing power — or for that matter for spending proposals, such as welfare reform or health care — or even decisions to forego both tax cuts and increased spending in favor of a balanced budget, what do you think will happen in the future?
I predict, Mr. President, that setting this money aside will guarantee its use for the purpose for which it was placed in the so-called trust fund in the first place. Let me then comment briefly on the merits of approaching the question of reductions in the social security tax in this manner.
Mr. President, the large social security tax increase which is scheduled to take effect in January of 1981 is of major concern to all of us. I recall the debate in 1977 when we approved a major part of that tax increase. At that time, I argued that Congress was taking precipitous action to raise payroll taxes without having made the kind of review of the benefits side of social security that was essential. Frankly, I am dismayed that we seem to be heading down the same road again.
The bill before us creates a reserve to alleviate the pressure on social security financing without any assurance that we are going to first examine social security benefits, and achieve economies wherever we can.
H.R. 3236, dealing with the disability insurance part of social security, has been passed by the House and a different version has been reported by the Senate Finance Committee. Both versions of that bill would achieve significant savings. But those savings are still relatively modest given the rapid growth of disability benefits and the repeated reports of poor administration and overgenerous benefits for some recipients. The Finance Committee's version would save only about half the money that the House version would save. I hope we can tighten up that bill before final Senate action on it. At least Congress is looking at the benefit side of the disability insurance part of social security. As far as I know we have absolutely nothing moving relative to the much larger retirement part of social security and other costly and questionable features such as student benefits.
Mr. President, I am very fearful that Congress will stampede again next year into a "quick fix" on the financing of social security without having discharged its responsibility to look closely at ways to achieve economies in the program. This so-called taxpayers trust fund is the first step in that direction.
Both President Ford and President Carter have recommended major adjustments in social security benefits to save money by changing features which are not central to the basic retirement and disability protections of the program. Those proposals, except for the recent work on disability insurance, have not received the attention they deserve. Other ideas which would save substantial sums of money have surfaced. For instance, we need to look closely at possible changes in cost-of-living indexing of the program. The current approach will cause the cost of the program to go up by at least $12 billion in 1980. This increase will be compounded in the years ahead.
Mr. President, the creation of the taxpayers trust fund is also troubling because it would represent an explicit decision to introduce general revenue financing into the social security system. The Finance Committee 2 years ago rejected that idea even though it had been recommended by President Carter. Now the Finance Committee is asking the Senate to endorse the use of general revenues, which it expects to be generated from decontrol, to finance part of the social security system.
But those are general revenues, the same as all other money that comes into the Treasury and they are going to use it to finance part of the social security system. Congress may wish to make the changes but it seems to me we ought not do it in this precipitous manner.
Congress may wish to decouple medical benefits costs from the payroll tax. Creation of a taxpayer trust fund would reduce the likelihood of a careful review of the social security system.
Senators do not need to be reminded that one of the major arguments against using general revenues in social security is that it would take away the discipline Congress faces when it considers increases in social security benefits. As things now stand, Congress must not only deal with the benefit question but also must face the problem of raising payroll taxes to pay for those benefits. If we did not have the discipline of the payroll tax, I am concerned that it would become far too politically attractive to raise benefits again and again. I believe the chairman of the Finance Committee himself has made that argument a number of times in the past.
In short, Mr. President, this proposal to set aside general revenues to help pay for social security benefits is being presented prematurely and it raises critically important problems. We need to look hard at possible benefit reductions that would permit some reduction of the payroll tax increases now scheduled. We also need to give the most careful attention to various alternatives for dealing with social security financing problems, without introducing general revenue financing into the picture.
One more point which needs to be made, Mr. President, is that nothing now proposed will alter the basic dilemma this Congress will face next year: Whether to cut taxes or to balance the fiscal year 1981 budget. Setting revenues aside in a so-called trust fund will not reduce the budgetary impact of a social security tax cut.
When we adopted the first and second budget resolutions this year, we promised the American taxpayer a balanced 1981 budget. I believe that promise is at least as important as any proposal to cut taxes; and I believe our constituents agree with me on this point. Economic circumstances may force us to reconsider our decisions next year; but I am not ready to abandon the promise of a balanced budget and I hope the Senate will not abandon this important goal at this time.
Let me take a moment now, Mr. President, to commend my esteemed colleague from Washington, the chairman of the Appropriations Committee, Mr. MAGNUSON. He understands as well as any of us the problems we create when we tie our own hands, when we pass legislation making spending decisions which bind us for many years into the future. Each year, when he sits down with the Appropriations Committee, he confronts the reality that at least 70 percent of the Federal budget is already mortgaged by spending decisions made in prior years, and is unreachable through the regular appropriations process; 70 percent equals almost $350 billion.
I congratulate Senator MAGNUSON, on having convinced Senator LONG that the original Magnuson amendment was three-quarters right — that we should eliminate at least three-quarters of the new uncontrollable spending which would have resulted under the committee reported bill.
I hope I can convince both Senator MAGNUSON and Senator LONG that Senator MAGNUSON was 100 percent right in the first place. The issue is not the worthiness of the purpose for which we set out to create new uncontrollable spending — but whether we should be creating new uncontrollable spending at this time at all.
I do not believe we should, and I urge the adoption of the amendment to insure that we do not.
Mr. President, the question I would like to ask the Senator from Delaware is whether or not this is intended to permanently relieve Congress of the necessity of reviewing the social security system and making whatever changes are indicated.
Mr. ROTH. No, that is not the intent of the taxpayer trust fund. The purpose of the taxpayer trust fund is to provide the funds for a 1-year freeze, to give the Finance Committee and Congress itself time to consider what long-range steps should be taken. What we are basically doing under this proposal is paving the way for a rollback of the scheduled payroll tax increase for this 1 year.
That means in 1981 or in 1982 Congress can then work its will as to what needs to be done.
We had a long discussion, I would point out to the distinguished Senator from Oklahoma, on this matter. It is the intent of the chairman of the Subcommittee on Social Security to hold hearings so that we can decide what steps need to be taken, long-range, to make the social security program viable.
What my proposal does is to provide the funds for 1 year in order to pave the way for a freeze on the social security increase that would otherwise go into effect.
Mr. BELLMON. If the Senator will yield for another question, this means, then, that this issue will be back before the Senate sometime during the calendar year 1980?
Mr. ROTH. Yes, that is correct. The distinguished Senator from Wisconsin plans to hold hearings no later than, as I recall, early January as to what steps should be taken. I would expect sometime early next year the matter will be before the Senate again.
I yield to the distinguished Senator from Wisconsin on this question.
Mr. NELSON. May I say to the Senator from Oklahoma when this issue was raised in the Finance Committee, I stated to the Senator from Delaware that we planned to have hearings early next year on the status of the social security fund, and, in fact, if I can arrange it, we may be able to hold them yet in December, although I think that is doubtful. In any event, they will come some time in January.
The problem we face is that at the time we passed the new base rates and the new tax rates in 1977, we passed those based upon actuarial assumptions which were far too conservative.
The actuarial assumption upon which we passed the new base and rate increases as to inflation was an inflation rate of 5.75 percent. Now we are up to 14 percent, or thereabouts, as an inflation rate.
Since the retirement benefits for those who are drawing benefits who retire is tied directly to the inflation rate, and their benefits are increased in proportion to the inflation rate, obviously the assumptions we made were far too conservative in order to meet the outgo of the retirement fund.
Mr. PICKLE, on the House side, has been conducting hearings for some time now. We will conduct them on the Senate side in the Finance Committee and get all the basic facts to determine whether or not additional funds have to be put into the social security fund on top of the rate base increase already legislated for 1981, with further increases occurring in 1985.
So the argument that we made in the Finance Committee was not to earmark the money to social security as the Senator from Delaware proposed, but to set it aside, to give us a chance to have hearings, and then let us come back to the Congress. At that time the Congress can make its decision by the appropriate action following the legislative process to decide whether or not we need to put any of this money or some other moneys into the social security fund.
I was opposed, in the Finance Committee, to making that decision at that time, to put the money in the social security fund. The compromise was that it would be put in limbo, so to speak, as a taxpayers' trust fund and then Congress could dispose of that money by returning it to the general fund or placing some in the social security fund if the facts justified it at that time, which I personally think is going to be the case.
Mr. BELLMON. Mr. President, the effect of this action is that these funds are not necessarily earmarked for social security.
They are to be disposed of as the Congress decides at some future date, is that correct?
Mr. ROTH. That is right. The trust fund is set up to pave the way to give some relief to the social security system, if it is necessary, but Congress has to make that decision.
Mr. BELLMON. But before the Congress makes the decision, we will be hearing further about the social security system, with regard to the question of reforming the system or providing additional funds, or not.
Mr. ROTH. The Senator is correct. That is the purpose of the trust fund. Hearings will be held next year.
Mr. BELLMON. Mr. President, I am willing to withdraw the amendment.
Mr. NELSON. May I make one additional comment? I did not read the language, but the history in the committee was that the proposal by the Senator from Delaware was to earmark the money for the social security fund. We finally agreed that that would not be done. The staff was instructed to draft legislation that did not earmark it for anything, that set it aside as a taxpayers' trust fund, for the decision to be made subsequently, after the hearings, as to whether or not Congress itself wanted to or needed to allocate this money to the trust fund or let it go on into the general fund.
Mr. BELLMON. I thank the distinguished Senator from Delaware and the Senator from Wisconsin.
Mr. MUSKIE. Will the Senator yield?
Mr. BELLMON. I yield.
Mr. MUSKIE. Mr. President, I want to express my appreciation to Senator BELLMON and Senator ROTH and my good friend from Wisconsin for stating the situation as I understood it to be when I was asked whether or not I would agree to excepting the taxpayers' fund from the Magnuson amendment. The presentation made this afternoon, I think, has clarified the RECORD for all concerned. I think it is a very useful addition to the RECORD and I compliment my friend for bringing it forth.