March 19, 1980
Page 5820
THE BALANCED BUDGET
Mr. ROBERT C. BYRD. The days following the announcement of the President's and the Federal Reserve's new economic initiatives have been filled with a variety of reactions.
Some quarters have criticized the President's program of budget balancing, credit restrictions, and energy conservation as too little, too late.
Others have denounced the initiatives as too restrictive, and predict that they will induce a recession. We are, talking about the credit restrictions, energy conservation proposals, and so on.
As one who has been very active in the formulation of the balanced budget strategy, I am reassured by the diversity of the criticism. The fact that some argue that we have cut the budget too much, and others argue that we did not cut deeply enough indicates to me that we are probably on the right course.
I believe we must balance the budget. As I have said on many occasions, it is an important symbol — it demonstrates that we are not adrift and that someone is at the helm of our economic ship. In cooperation with Democratic chairmen and the Republican leadership, I will continue to work to assure that we do balance the budget.
No one can deny that a large element in our current inflation is due to energy prices, interest rates, and, to a lesser extent, wage pressures. But clearly the ephemeral element of inflationary expectations is currently playing a major role in fueling the price rise. Unless we disabuse ourselves of the assumption that prices are always going to go up then, of course, they will continue to skyrocket.
The wails of pain and horror over particular budget cuts have just begun. The simple fact is, no one wants to have this program cut. In normal times, I certainly do not want to see mine cut.
But these are not normal times. These are times which demand statesmanship. These are times which require coordination and cooperation, not carping and nitpicking. Every Senator and Congressman — every group of constituents is going to lose something as a result of fiscal belt tightening. However, unless we each sacrifice a little, we will all lose a great deal more.
For millennia, man has struggled to devise economic systems which maximize production of goods and services. In some of those systems, the basic ingredient is directive — people are told what to produce, where to produce it, and so forth.
In our economic system, on the other hand, the basic ingredient is confidence. Our system depends on a belief that savings today, and investment in the future, will pay off.
But we cannot expect the people of this country to develop a sense of confidence — a positive view of the future — unless their political leaders exude confidence themselves about what must be done.
This is not to suggest that we should abandon a healthy political dialog or simply accept the President's package chapter and verse. And, by the way, I think the President ought to get his package up here. I do not think there should be further delay. We went through this exercise for seven solid long days. I can understand why it takes a little while to put 25,000 or 30,000 line items together. But not all of those line items are going to be changed, and I think the administration ought to get its package out, made public and before Congress as soon as possible so that the work can begin. The Budget Committees — the House Budget Committee has begun its work, the Senate Budget Committee will begin its work next week — should not have to proceed without the President's proposals. I urge the administration to get its proposed revised budget up to Congress as soon as possible.
Mr. President, unfortunately, those who get the most attention are those who are busy loosening the rails — trying to insure that efforts to slow inflation through a combination of budget balancing and credit restraint will come untracked.
It is easy to criticize. Anybody can do that. I can do that without a moment's aforethought.
But I say that it is time for the nay sayers and the critics and the cynics to get off the sidelines and put their hands to the oars and start helping to row the boat upstream. It is going to take everybody's efforts. And this means we are all going to have to sacrifice some.
I cannot have it all my way, but the American people are entitled to a dedicated effort on the part of their leaders to bring inflation under control and the starting point has to be a balanced budget. That is not all by any means.
But there are those who say it will not work. Well, it cannot work in 24 hours. It cannot work in 48 hours. It is going to take weeks for this budgetary process, appropriations process, to run its course. But unless we work together, it is not going to work. And it ought to be given an opportunity to work. The cynics ought to quit nitpicking and trying to destroy it and tear it apart before it has a chance to work.
I say if we all quit nitpicking and criticizing and finding fault with the effort and join in, perhaps those who would be critics can improve it. There is room for improvement in this package. It is not the alpha and the omega, nor is it expected to be a perfect package.
But I say, let the critics give it a chance to work, join in and assist in balancing the budget. I for one, am committed to seeing that this train has a chance to get to the next depot. I am committed to helping get the balanced budget train out of the station. The American people are watching our efforts with a healthy skepticism. But we need to get about the business of making it work, Mr. President.
And for those who hope to be a part of the solution, it is time to get on board, not stand along the sidelines and find fault and criticize and say: "Oh, it won't work. It's not enough. It's too much." I say let them quit criticizing and start exuding confidence.
I always start with the assumption that we are going to succeed when we try to do something. I never start on the assumption that we are going to fail. But, apparently, that is the way some people approach matters in this country. They start with the assumption that everything is going to fail. And it will — unless we all put our shoulders to the wheel together.
SENATOR MUSKIE'S COMMENTS ON THE BALANCED BUDGET
Mr. ROBERT C. BYRD. Mr. President, I would like to bring to the Senate's attention the remarks of the distinguished Senator from Maine, Mr. MUSKIE, which he recently gave before the National Association of Counties. Mr. MUSKIE has once again forthrightly explained the painful realities the Congress must soon face in the efforts to balance the Federal budget.
His analysis is concise and hard hitting. He talks of the obvious truth that the budget will not be balanced by cutting one program or on the philosophy that "you can cut any program but mine."
He discusses the use of "mirrors" and "magic" and how they will be no excuse for real cuts in real programs. He points to prioritizing and the "art of compromise" as the vehicles for sharing the resources and carrying the weight of fiscal restraint. If not, we face the real possibility that our efforts will be in vain.
As usual, Mr. MUSKIE's comments are enlightening. As chairman of the Senate Budget Committee and as an active participant in the recent conferences with the administration on balancing the 1981 budget, he continues to make an outstanding contribution on matters relating to the Federal budget and the national economy.
I urge my colleagues in the Senate to take note of Mr. MUSKIE's remarks. I believe they may be helpful in formulating their thinking on the budget issues ahead and in preparing themselves for the difficult task of saying "No."
I ask unanimous consent that the comments of Mr. MUSKIE be printed hi the RECORD.
There being no objection, the remarks were ordered to be printed in the RECORD, as follows :
REMARKS OF SENATOR EDMUND S. MUSKIE
A few weeks ago, a newspaper cartoon featured a poll-taker interviewing a housewife at her doorstep.
"No," the lady says, "I'm not mad at Congress. If I had six hundred billion dollars to spend, I'd be irresponsible too."
Unfortunately for the public standing of Congress as an institution, not all Americans are so forgiving; nor should they be. The image of an irresponsible Congress is not without foundation.
While the cameras roll in the press galleries, Senators and Congressmen are eager volunteers in the war against inflation. But when the battles are fought on the floor, the desertion rate is high.
Just last week, 43 Senators joined in sponsoring a resolution to limit Federal spending to 21 percent of the gross national product. Its implementation would entail a budget cut of something between 30 and 35 billion dollars in fiscal 1981.
That made for a nice little news conference. But no one suggested where the 35 billion cut would be made.
Just one month ago, 34 of those same 43 Senators voted to break the budget for veterans programs. Twenty-six of them did the same for disability insurance. None of them held a news conference to draw attention to that.
The man in the street doesn't hold news conferences; but he does vote. He looks at the cost of living. He looks at the Federal deficit. He looks with disfavor on those who are responsible for it.
But he also looks at his own private slice of the pie; and he expects his representatives to see that it keeps on coming.
Ironically enough, public demands for Federal largesse are a prominent reason why public demands for a balanced budget have not yet been met.
The same paradox goes far in explaining why some politicians talk in frugal generalities and vote for specific excesses.
The term, "special interest group" summons up an image of self-serving operators plundering the public purse. We all belong to associations, unions, chambers of commerce, and organizations of county officials, but none of us would be caught dead associating with special interest groups.
They are someone else.
But we all know who they are. They gather each spring in Washington — where the weather is usually good and the climate for spending is even better. This year, though, a chill is in the air.
The word "crisis" has perhaps been overworked in recent months. But the crisis of confidence in the future of our economy is very real and very sobering. And there is very little sunshine in the report I will deliver to you today.
Inflation accelerated to an 18-percent annual rate in January, according to the consumer price index. The more volatile producer price index rose at a staggering annual rate of 21 percent.
In some parts of the country, the price of home heating oil has broken the dollar per gallon mark; and the price indicators on gasoline pumps are being changed from gallons to liters.
On top of it all, unemployment rose to 6.2 percent in January, with 7 million Americans out of work. The situation is likely to worsen.
A long time ago, someone observed that "nothing so wonderfully concentrates the mind as the prospect of hanging." For federal policy-makers, the current economic crisis has provoked some serious concentration.
Dramatically radical policies which were unthinkable even a year ago are suddenly serious options.
The Federal Reserve once nibbled at inflation with fractional increases in the discount rate.
Recently, for the second time in two months, the rate went up a full point to 13 percent. The prime lending rate is up to 16 and three quarters percent.
The energy crisis has rendered respectable a number of ideas which were once confined to the fringe. Rationing or a gas tax increase are no longer inconceivable.
And despite the fact that those 43 sponsors of a GNP spending limit have not produced a $30 billion cut list, the next budget mark-up will not be limited to delicate trimming.
It would be useful to speak here to the formula spending limits and constitutional amendments which are now so widely supported. There are some very important reasons why those initiatives deserve very careful attention.
But whether or not a formula is imposed — whether or not the states force us into a constitutional convention — whether restraints are imposed by law or imposed by political and economic realities — one thing is certain. Unprecedented restraints must indeed be imposed.
In the course of their debate in Des Moines last month, the Republican candidates for president were asked a very good question. We are facing a heady combination of demands for tax cuts, for huge increases in military spending, and for a balanced federal budget. How can those demands be accommodated in one federal plan?
John Anderson's reply was characteristically straightforward — "with mirrors."
Magicians' tricks won't balance the budget. The best efforts of legislators may also fail. But be assured that we will exert a mighty effort. And the only hope for success lies in imposing real sacrifices across the board.
Last year's rhetoric called for giving up luxuries. But that won't get the job done now. There isn't enough fat to cut, even if we could find it all. And one person's "fat" is another's "vital interest."
The budget can't be balanced on the back of a single program. Various interests cannot go on demanding frugality at anyone else's expense.
Every program will be scrutinized — some more intensely than others. Foreign aid, trade adjustment assistance, full indexing of federal pensions and social security to the consumer price index — these are all vulnerable programs. Each of them is important. None of them are casually dispensable. But all of them may suffer.
We know why programs should not be cut. But we may also need to know how best to cut them. And if the affected groups and associations cannot escape the knife, they can best serve their interests by showing us how to minimize the pain.
My support for federal aid to state and local government is well known to you. I am familiar with the arguments supporting the programs you hold dear. I developed more than one of these arguments in Congress. I was the founder of some of the programs and a central figure in the development of others.
But the field of battle this spring will demand a new strategy. Do not dilute your resources. Do not impair your credibility. Do not insist that every line item is vital to the welfare of every local community. Fall back to the defense of those which really are.
A few days ago, NACO joined with allied groups in sending a letter to Congressional conferees. The subject was H.R. 3434, a bill concerning social and child services. That letter argued for the highest-cost options right down the line.
"We unanimously oppose placing a ceiling on AFDC Federal foster care funding." "We unanimously oppose retaining the AFDC amendments added to the bill in the Senate."
"We strongly support the increase in the title XX ceiling to $3.1 billion for FY 1980 as passed by the House."
"We support the Senate provision converting title IV-B to an advance funding basis."
"Passage of the adoption assistance program is extremely important and should include the abuse provisions assuring that the program is permanent and implemented nationwide."
Now, it comes as no surprise that NACO and like-minded groups should make such recommendations. Certainly, programs designed to help needy children are unequaled as worthy recipients of support.
But in that letter to the conferees, there is no ranking of some provisions as more important than others. There is no willingness to accept any sacrifice in the face of fiscal restraint. There is no hint of compromise in a message sent to a group of legislators whose mission is one of compromise.
Compromise is indeed the key word. Any Member of Congress could balance the budget if left to his or her devices. Given a level of revenues, none of us would be too hard pressed to cut in one place and expand in another without breaking into the red.
But Congress consists of 535 people with 535 assessments of priorities.
In the setting of that reality, the art of compromise is essential to success. Too often, we have compromised upward. If one group objects to generous farm subsidies, their resentments are assuaged by more help for the cities. If another group is scandalized by the cost of the space shuttle program, another billion for education goes far in tempering their outrage.
When those sorts of solutions resolve a conference deadlock, everyone leaves the chamber happy. The deficit reflects the price. It's a price we can no longer afford.
With no enthusiasm for the role of bearing bad tidings, I must tell you as a friend that local government will not be immune from a share of the burden; nor should it be. The price of fiscal discipline must be widely shared.
You and I are well aware of how much the federal system has changed since it was mapped out in Philadelphia in 1787. From the construction of the county courthouse to the wages of the people who mow the lawn, costs once borne solely by you have been shared and sometimes even completely absorbed by the Federal Government.
As a consequence, local levels of Government have been insulated to a greater or lesser degree from the real costs of the services they provide to their constituents.
Some of this aid is no luxury. In some localities, it makes the difference between solvency and bankruptcy. But the sad reality is that this year's budget cuts will not be confined to frills. That is why we need your guidance as to where we can look for savings that can minimize the pain.
The list of federal programs supporting local needs — AFDC, UMTA, LEAA, CETA, and others, has grown longer and longer over the years.
None of them will escape strict scrutiny in the course of this year's budget review. I cannot promise that any of them will be spared from surgery. I ask for your help in dealing with those who insist on using a meat ax instead of a scalpel. We simply must decide where to achieve the most savings with the least pain.
Let me focus on a few of the more important programs and on the vulnerabilities to which they are exposed.
The urban development action grant program has just recently been broadened to deal with "pockets of poverty" in otherwise healthy cities.
But UDAG's recent expansion may prove to be short lived. At a time of budgetary stringency, many members of Congress will be wondering why Federal funds are needed to supplement anti-poverty efforts in communities with good financial health.
The Congressional budget office estimates that elimination of this UDAG expansion could save $500 million in Federal funds over the next five years.
Is that the sort of savings that makes sense in the present environment? If not, why not? Where else can we look for savings if we don't look there?
Another item which will come under review is the community development block grant program.
I know that this is a popular item. Few strings are attached. Its formula-based grants to cities have helped rehabilitate public facilities, provide important social services, and support planning and management.
But every city in America receives a share of these funds, regardless of need, regardless of local resources. Many millions could be saved by targeting funds toward cities that really need them while cutting back in others.
It is argued with some force that grant programs like this one should be based on formulas more closely oriented toward the needs of the recipients. Too many grant formulas are based on the need to obtain 51 votes on the Senate floor.
Is that the kind of savings that makes sense in the present environment? If not, why not? Where else can we look for savings if we don't look here?
Of course, general revenue sharing is the main event. This year, the program is up for reauthorization — a fact which has not escaped your notice.
Let me say at the outset that the program is one of the best of its kind. It deserves continued support.
Grant consolidation is a favorite means for reducing federal outlays and maximizing efficiency. And revenue sharing is the ultimate grant consolidation. It is flexible. It is bound up in very little red tape.
Like the other 534 Members of Congress, I am convinced that the best and most deserving programs should be spared from major reductions. But my definitions of "best" and "deserving" are not universally shared. Revenue sharing is not universally admired.
The likelihood is that the revenue sharing program will be renewed in 1980. But not without compromise — and perhaps not intact in its various parts.
Two main points will be raised. First, the states receive a full one third of all revenue sharing funds; and the States, in general, are in sound fiscal condition. They are running an aggregate surplus. Many are cutting taxes.
In 1978, the states ran a combined surplus of $29 billion. One year later, the budget adopted by Congress contained a deficit of almost exactly that amount. It also contained more than eighty billion dollars in state and local government grants.
Some of the same state legislators who balance their books with the help of federal dollars are leading the charge for a new constitutional amendment — one which would compel the Federal government to balance its budget.
During its 1975-76 session, the Pennsylvania legislature passed a resolution calling for enactment of the constitutional amendment. That was resolution 236. Resolution 235 demanded a renewal of general revenue sharing.
It is not surprising that revenue sharing for the States is not uniformly popular in Congress.
In short, the State is vulnerable. Is that the kind of savings that makes sense in the present environment? If not, why not? Where else can we look for savings if we don't look here?
The second vulnerability in the revenue sharing program is its very basis of funding. Allocations bear little relation to real needs.
A few years ago, the suburban community of Redding, Connecticut, faced a perplexing dilemma. Should their revenue sharing funds be devoted to a new dog pound, to tennis courts, or to a bridle path?
There are many Senators and Congressmen who would like to spare such communities these painful decisions.
Instead of spreading scarce resources over 39,000 units of Government, it is said, funds should be targeted to those most in need. Communities with poorly paved roads should not be treated in the same manner as communities with poorly paved tennis courts.
Is that the kind of savings that makes sense in the present environment? If not, why not? Where else can we look for savings if we don't look here?
I ask these questions not because I am eager to trim these and other programs, but because others are eager to dismantle them.
I ask these questions not because I relish the prospect of cutting back on programs I helped bring into being, but because fiscal realities may leave us with no choice.
I hope very sincerely that you will consider where savings can best be made even as you work to preserve adequate funding. If you don't make those tough choices, others will make them for you.
If you don't give us guidance as to which of the programs are more important than others the essentials may suffer along with the extras.
In the end, of course, no level of Government, Federal, State or local, can ignore the implications of runaway inflation. For its part, the Federal Government must exercise the budget restraint which minimizes public sector demand on the economy.
State and local government share that burden and that responsibility.
In the Spanish American War, history says the enemy fleet was destroyed in Manila Bay because it was too weak to fight and too slow to run away.
We must be strong enough to fight inflation by absorbing some of its pain. None of us is fast enough to run away.