March 24, 1980
Page 6283
Mr. BELLMON. Mr. President. I see that the chairman of the committee, the floor manager of the bill, is about to leave the Chamber. I should like to ask him some questions before he leaves. I will try to be very brief.
I am serious in trying to understand what the conference had in mind and what effect it will have on those of us who deal with appropriations and budget questions. I can submit these questions in writing, in case the chairman has to leave.
If the President and Congress were unable to agree on a plan which disposed of the funds collected in the year in which collected, would not these funds then constitute an "overhang" over the budget for the next year? In other words, if we do not spend the money in the year it comes in—
Mr. LONG. The answer is "no."
Mr. BELLMON. Assume for a moment that $5 billion were available for the Energy/ Transportation Sub-account in a given year but that the Secretary of the Treasury determined that none of these reserved funds actually was used in that year. Would not the Budget Committee have difficulty in deciding whether it had to build into the next budget resolution a "catchup" spending increase? If we do not spend the $5 billion in 1 year, do we have to spend the $10 billion the next year?
Mr. LONG. No.
Mr. BELLMON. Then you have $5 billion in the Treasury, and when does it get spent?
Mr. LONG. It probably would not make any difference. It would neither increase nor decrease the deficit. It is the spending that makes the deficit, not the question of whether it is the one account or the other account.
I read from the conference report:
Further legislation is needed to use the money raised by the tax for any purpose specified above. Failure to enact such legislation, of course, would mean that the revenue from the tax would have the effect of reducing the Federal debt.
Mr. BELLMON. I realize that this is not a trust fund; but if we have money in the highway trust fund that is not spent, it stays there until it is spent for highways.
Mr. LONG. That is a trust fund. This is not a trust fund.
Mr. BELLMON. I cannot quite understand what this is. It allocates the money to be used
Mr. LONG. It is a column of figures on the Treasury books.
Mr. BELLMON. As long as those figures are there, the money has to be used for those purposes; otherwise, it is not spent?
Mr. LONG. If you have a column of figures on the books — how much you raise from this particular tax — and you have a column somewhere else that says how much money you spent, it does not make any difference what you said the money is spent for. If it is spent, it is gone; and that reduces your surplus or increases your deficit by that much.
Mr. BELLMON. The Senator makes it sound as though this means nothing.
Mr. LONG. As I said, it is a hope.
Mr. BELLMON. It is a hope that is also the law.
Mr. LONG. That would not be the first time somebody put a hope into a law.
Mr. BELLMON. I suppose all laws represent hopes of one kind or another, but they are binding on those of us who have to deal with the dollars. It seems to me that we are about to get our hands tied here so that we will not be able to do anything to shape our budget to meet the needs of the country.
Let me ask one other question: Could the President simply file a plan which says that he does not intend to use any of the revenues until several years later and thereby build up a reserve for future use, perhaps in an election year?
Mr. LONG. It is just that there is required to be an account in the Treasury that says how much money was raised by this tax, and there is a statement here that the conferees would like to see it spent in certain ways. But there is nothing binding to prevent the Congress from spending it any way it wishes or from not spending it; and if the Congress does not spend it, it will help reduce the national debt.
Mr. BELLMON. Was the conference unanimous in its interpretation of this language?
Mr. LONG. I cannot speak for that. That is how I understand it, and I do not know of anybody who understands it differently.
Mr. BELLMON. If the President files a plan which said he intended to use the transportation and low-income assistance money to finance ongoing programs, would that be acceptable to the Senator from Louisiana?
Mr. LONG. The President can recommend whatever he wants to recommend, and that is his privilege.
If the Senator will forgive me, I have something else to do. If he wants to submit some other questions, I will be happy to receive them.
Mr. BELLMON. I have other questions which I will submit to the staff.
I thank the Senator from Louisiana. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BELLMON. 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. BELLMON. Mr. President, in connection with the debate that has been going on this afternoon between the Senator from Louisiana and myself about the earmarking provisions of this bill, I ask unanimous consent that the statements by Mr. MAGNUSON and Mr. MUSKIE, chairmen of the Appropriations and Budget Committees, that were made during earlier debate on the windfall profit tax bill be printed in the RECORD.
There being no objection, the statements were ordered to be printed in the RECORD, as follows :
STATEMENTS BY SENATORS MAGNUSON AND MUSKIE
Mr. MAGNUSON. Mr. President, the amendment I have offered, along with 38 cosponsors, will accomplish three very important objectives that will strengthen the ability of the Congress to control Federal spending.
First, the amendment converts new entitlements to authorizations for appropriations. This removes the provisions in the bill that would establish new uncontrollable expenditures. It does not eliminate any of those programs, but makes them subject to authorizations for appropriations.
Second, the amendment eliminates the refundable portions of the new and expanded tax credits. Refundable tax credits are entitlement spending that once in place remains outside the control of Congress. Many of those refundable programs in this bill are duplicative of authorizations in S. 932, the recently passed synthetic fuels bill.
Third, the amendment eliminates the creation of two new trust funds.
The two trust funds created in this bill and funded from the windfall profits tax set aside significant amounts of Federal money for very specific purposes.
The "low-income energy assistance fund" would get at least half of the net receipts from the windfall profit tax, as much as $40 billion for the next 5 years.
The "transportation trust fund," which is a different trust item, would get up to $15 billion in windfall profits tax revenue. That is the reasonable estimate.
If these two trust funds were to be established, decisions about the use of the funds would be outside the control of the congressional authorizing and appropriating committees and process, creating another uncontrollable spending device.
As a compromise with the Finance Committee, this amendment would retain the small "taxpayers trust fund."
We are making a distinction because: Revenue for this fund will come from increased corporate taxes as a result of the decontrol of crude oil;
The funds are set aside for only 3 years; And, most importantly, the fund is subject to the control anyway of the authorizing and appropriations committees. Congress will be able to control how much money will go to social security tax relief and how much should go to other purposes. That remains a decision and an option that will be up to the Appropriations Committee and the authorizing committee, also.
There has been a great deal of talk around this body and the House of Representatives concerning the ability of Congress to establish priorities for Federal spending.
There is equal concern — very deep concern — among Members of Congress who want to bring the Federal budget into balance.
Right now, over 74 percent of the entire Federal budget is uncontrollable through the regular annual budget and appropriations process.
Over 74 percent is uncontrollable — not just by the appropriations or budget committees, but it is uncontrollable by the entire Congress. The entire Congress could not act to control these entitlements.
This bill, without our amendment, would add to that uncontrollable part of the budget.
Over the next 5 years, this bill would add over $80 billion in uncontrollable spending. There are various estimates, but the best estimate we have is about $80 billion in uncontrollable items.
This bill contains the worst kind of spending, spending that mortgages the future, spending that prevents any future Congress having any leeway and it is the type of spending that must be stopped, if Congress is ever to achieve some kind of balance in the Federal budget.
What we are proposing in our amendment is:
First, to convert new entitlements to authorizations that are subject to appropriations;
Second, to eliminate refundable portions of new and expanded tax credits, which would include the windfall profit tax; and
Third, to eliminate the new windfall profit trust funds. This will insure that the Congress does have the leeway to control the expenditure of significant amounts of Federal taxes.
And Congress will be able — this is important — to exercise that power every year. If the Senate accepts this amendment then Congress can review things as they are each year and in the light of current events and circumstances.
If necessary, Congress could set new priorities — or reorder priorities — if that be the will of Congress to keep pace with rapidly changing events in any area.
Our amendment does not tie the hands of this Congress — during the next session — when we will have a much better idea of just what this bill does bring in revenues.
Our amendment does not tie the hands of any future Congress.
Our amendment does not eliminate those programs from future funding or remove any support for any programs or foreclose any options the Congress might want to exercise in the future.
The major thrust of our amendment is that it retains in the hands of the entire Congress the responsibility to control Federal spending.
I yield to the Senator from Maine.
Mr. MUSKIE. I thank the distinguished chairman of the Appropriations Committee, Senator MAGNUSON, for yielding.
Mr. President, the distinguished Senator from Washington has already made the case for this amendment. What I have to say about it will really reemphasize what he has already said.
I cannot resist commenting upon the action which the Senate just took on the McGovern amendment in the context of the pending Magnuson amendment, the purpose of which is to eliminate trust funds created in the reported bill.
The ingenuity of the Senate has devised a new way of creating uncontrollable spending in the name of reservations now. We set aside revenues which cannot be tapped for any other purpose except the purpose for which the reservation is made.
The interesting thing is that the McGovern amendment which mandates the Secretary of the Treasury to set aside $1 billion for railroads finds itself in this position.
The bill, as it came out of the Finance Committee, left only $600 million untapped by trust funds, entitlements, or tax credits. If the bill passed as reported by the Finance Committee, there would be no $1 billion available for the McGovern amendment. In other words, the committee bill created uncontrollable spending to such an extent that a new form of uncontrollable spending in the form of the McGovern amendment cannot be honored unless the Senate adopts the Magnuson amendment, the purpose of which is to eliminate uncontrollable spending from the committee bill.
So the Senate finds itself in the position of having done an inconsistent act. It created a new form of uncontrollable spending — which the Finance Committee did not — in the form of a reservation; the next step will be to eliminate the uncontrollable spending created by the committee bill in order to make room for the new form of uncontrollable spending created by the McGovern amendment. If ever there was a useless act, that is it.
The other observation I would like to make is this: If the Magnuson amendment is approved — and I take it those prospects are very bright, we will have made room not only for reservations like the McGovern amendment but others. What is to prevent other Senators from moving into the vacuum which will be created by the Magnuson amendment and create other reservations of funds for other worthwhile purposes?
Mr. President, although I am enthusiastically a supporter and cosponsor of the Magnuson amendment, I am becoming cynical enough to believe that the Senate, with its monumental capacity for ingenuity, will find other ways to get around the strictures of the Magnuson amendment if it is adopted. In any case, I would like to help make the case for the Magnuson amendment.
The Magnuson amendment would convert the bill's entitlements to authorizations for appropriations, eliminate the so-called "trust funds" established from windfall profit revenues, and eliminate the refundable portion of several tax credits in the bill, which are duplicative of spending programs authorized in the omnibus synfuels bill.
This amendment is necessary in order to restore fiscal control to the many uncontrollable spending provisions in this bill. Otherwise, billions of tax dollars will be earmarked for special uses — some of which are not even determined by this bill — and will be spent, without ever being authorized or appropriated. Congress will literally lose its power over a huge portion of the purse if H.R. 3919 is enacted as reported.
Mr. President, as Senator Magnuson pointed out, three-fourths of the Federal budget is already uncontrollable. The reported bill includes over $70 billion of new spending in the next decade that would not be subject to budget and appropriations control.
The Magnuson amendment will prevent further erosion of congressional control over spending in several important ways:
First, it would eliminate two new so-called "trust funds" established in H.R. 3919 which are intended to be the financing mechanism for special spending programs.
Mr. President, these are not trust funds in any sense of the word.
Under basic principles of Federal budgeting, revenues are raised from various sources and distributed among programs based on a congressional determination of national need. The trust funds concept is an exception to the basic rule. In the past, real trust funds have been established when Congress determined that if it was appropriate to give special benefits for programs, such as highways, airports, and social security, it was also appropriate to tax the users to pay for the special benefits. No such purpose is served by these so-called trust funds that collect the windfall tax from the oil companies and make payments from those receipts to unrelated but worthy beneficiaries. Indeed, there is nothing to distinguish the proposed scheme from the normal budget principle and, therefore, no reason to divorce the revenue and payments scheme from the normal congressional procedures.
Moreover, in any real trust fund the amount collected bears a relationship to the amount spent. Here the amount collected from the windfall profit bears no relationship to the amount that should be spent on energy initiatives.
For example, the congressional budget for fiscal year 1980 provides $19.5 billion for transportation programs. This is the amount Congress believes will be necessary to meet the national transportation needs; $2.3 billion of the total transportation allocation is expected to be spent for mass transit programs.
What relationship does the existing transportation spending endorsed by Congress bear to the so-called transportation trust fund?
Mr. President, I respectfully suggest that there is no rationality to this figure or to any of the amounts allocated from the windfall profit tax into these so-called trust funds.
The establishment of the so-called trust funds raises some very fundamental questions about our contract with the American people as elected officials.
When the tax expires at the end of the coming decade and the country is hooked on massive spending for energy programs that has been determined without a rational priorities debate, what Senator at that time will stand up to say "this assistance should be reduced or eliminated?" I doubt seriously if anyone will. The real difficulty will be that Congress will have no ability to taper down spending as the trust fund runs out. The result will be that excessive energy spending will continue to be funded out of general revenues, undermining congressional efforts to balance the Federal budget and squeezing out other priority programs.
Let no one doubt, Mr. President, that this squeeze will be real and not imagined. The demands of the eighties on Federal revenues will be enormous. Efforts to improve our energy security, as well as military security and new initiatives like catastrophic health insurance and welfare reform to enhance the quality of life, will be expensive propositions. Revenues will be needed to meet these demands.
The earmarking of revenues, and the establishment of spending levels independent of any rational priorities debate through budget and appropriations action, undermines congressional control of spending and the ability to reorder priorities to meet emerging needs. Earmarking funds for a few special programs requires other worthwhile programs which may have an equal claim on our resources to compete for funding out of remaining general revenues.
Mr. President, some have argued that the language in the Finance Committee bill providing for subsequent appropriations actions or authorization for expenditures in some cases brings the bill into compliance with the budget and appropriations process.
There is no truth to that argument. Money appropriated into the trust fund is isolated from general revenues. Worthwhile spending programs for purposes other than those identified in the bill would not be eligible to compete for over $70 billion that are involved. If the transit and low-income programs are worthwhile, the Congress will authorize and appropriate funds to meet that national need.
We have already seen an example of congressional recognition of such a need in the development of a substantial synthetic fuels program which has been authorized and appropriated by the Congress in the last 6 months. No trust fund was provided. Congress acted through the regular congressional budget process and the normal authorization and appropriations processes to address a clear national need.
This is the proper approach. This is the approach sanctioned by the Magnuson amendment.
Mr. President, let me mention briefly my concerns about the taxpayer's fund, which is not affected by this amendment. I am keenly aware of the taxpayer's cry for relief from mounting tax burdens. I favor tax cuts at the right time. The Budget Committee favors tax cuts. Indeed the fiscal year 1980 congressional budget provides for major tax cuts beginning in fiscal year 1982.
Mr. President, in developing the second budget resolution for fiscal year 1980, the Budget Committee carefully weighed the arguments for an immediate tax relief and concluded the need for fiscal restraint outweighed the need for advancing the tax cut at this time.
Mr. President, the reservations of about $16 billion in the Finance Committee's taxpayer's fund reflects that committee's judgment that the tax relief action may be necessary earlier than anticipated in the congressional budget and that funds should be available to assure prompt action at the appropriate time for a maximum of 3 years.
Mr. President, the Congress will have an opportunity to reconsider this issue in the coming months. I urge my colleagues to carefully evaluate the loud public demand for fiscal restraint and a balanced Federal budget as we proceed with the tax relief debate.
Second, the Magnuson amendment would eliminate the refundable portion of the business tax credits for the use and production of alternative energy sources and for utilities impacted by conservation.
With a refundable tax credit, the taxpayer is entitled to receive a direct cash payment from the Treasury for the amount by which the credit exceeds his tax liability. Under the Senate precedents, these refundable credits provide spending authority as defined in the Budget Act.
Thus the refundable part of a tax credit is an entitlement spending program, not a tax credit.
The Magnuson amendment would eliminate this entitlement spending which is duplicative of spending programs authorized in energy legislation (S. 932) already passed by the Senate.
Although there is some duplication between the tax credits and the authorizations, the Magnuson amendment does not prejudge the merits of the credit approach, but only eliminates the refundable portions which would require a second check from the Treasury.
Mr. President, let me briefly describe the refundable portions of the credits and the reasons for their elimination.
The first is the wind and solar refundable credit. H.R. 3919 increases the rate of the refundable energy credit for commercial solar or wind property from 10 percent to 20 percent.
There is currently a debate as to whether federally subsidized low-interest loans or tax credits are a better financial incentive to stimulate commercial utilization of solar and wind systems. S. 932, the omnibus energy bill, authorizes $575 million for the loan approach which has a broad range of eligibility and allows the cost of the project to be spread out over time.
Irrespective of the relative merits of the loan versus the tax credit approach, there is no need for two spending programs for the same purpose. The Magnuson amendment therefore eliminates the spending portion of the tax credit which overlaps the spending program authorized by S. 932.
Second is the refundable tax credit for public utilities to defray the impact of residential conservation. H.R. 3919 is duplicative of the public utilities compensation grant program found in the Senate-passed version of S. 932.
In light of Senate action on S. 932 the refundable portion of the public utilities credit represents an unnecessary, and duplicative expenditure.
Third is the refundable tax credit for alcohol fuel production. H.R. 3919 would, in effect, provide a Federal subsidy for domestically produced and used alcohol of 40 cents per gallon to make gasohol competitive in price with gasoline. This subsidy on the output of alcohol fuel projects would overlap directly with the price and purchase guarantees for gasohol in title II of S. 932.
The grants, direct loans, and loan guarantees for the construction of biomass and alcohol fuel projects in S. 932 also provide a type of subsidy on alcohol fuel by lowering its cost of production and hence increasing its price competitiveness with gasoline. Financial assistance in S. 932 totaling $5.4 billion is available to all biomass or alcohol producers including State and local governments and other tax-exempt organizations.
The Magnuson amendment would eliminate the spending portion of the credit which overlaps with the spending programs authorized in S. 932.
Finally, Mr. President, the Magnuson amendment would further strengthen Congressional control over spending by converting entitlement programs in H.R. 3919 to authorizations for appropriations.
Under the reported bill, tax-exempt governmental and other institutions would be entitled to payments of 40 cents per gallon of alcohol produced. The Magnuson amendment would convert this entitlement program to an authorization for appropriations.
In addition, the Magnuson amendment would assure that funding for the low-income fuel assistance grant program in title III is authorized to be appropriated, so that the amounts provided each year can be determined through the normal priorities debate.
Mr. President, I urge my colleagues to support this amendment which is cosponsored as I understand by 40 Members of the Senate. This strong bipartisan coalition believes that budgetary and appropriations control over the new massive revenues raised by this bill are vital.
Later in the day, Mr. President, I hope to address the windfall profit tax bill that is pending before us from the perspective of the budget demands for the eighties. But for the time being I yield the floor.
Mr. BELLMON. Mr. President, I wish to quote from first the statement by Senator MAGNUSON in which he says:
This bill contains the worst kind of spending, spending that mortgages the future, spending that prevents any future Congress having any leeway and it is the type of spending that must be stopped if Congress is ever to achieve some kind of balance in the Federal budget.
And then Senator MUSKIE in his statement had this to say:
The ingenuity of the Senate has devised a new way of creating uncontrollable spending in the name of reservations now. We set aside revenues which cannot be tapped for any other purpose except the purpose for which the reservation is made.
Mr. President, it seems to me that both those statements are as pertinent now relating to the conference report and the language in section 102 as they were at the time they were made during the debate on the Magnuson amendment which struck that provision or similar provision from the Senate version of the windfall profit tax bill.
I am hopeful that both Senator MAGNUSON and Senator MUSKIE will take note of the fact that that which we thought we accomplished in passing the Magnuson amendment has now been put back in the bill by the action of the conferees.