THE BALANCED BUDGET AMENDMENT
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THE BALANCED BUDGET AMENDMENT
(Senate - March 02, 1995)
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THE BALANCED BUDGET AMENDMENT
protection from big spenders? the people lost by one vote
Mr. HELMS. Mr. President, there are two disappointing things to
mention today. The first is my regular daily report on the latest
available disclosure of the total Federal debt, this time as of the
close of business yesterday, Wednesday, March 1, stood at
$4,848,389,816.26.
If this debt were to be paid off today, with every man, woman, and
child in the country paying his or her proportionate share, each of us
would have to fork over $18,404.57. Of course, since millions of
Americans pay no taxes at all, the average share of the Federal debt
would be far greater than the per capita amount referred to above.
The other sad thing? It is, of course, the Senate's failure today to
approve a constitutional amendment requiring Congress to balance the
Federal budget. If just one more Senator had voted today in favor of
the amendment, it would have been approved by 67 Senators, exactly
enough to pass the amendment and send it to the 50 States for
ratification.
Don't look for a balanced Federal budget anytime soon. But one day it
will come. The American people will demand it.
REDUCE THE DEFICIT WITHOUT AMENDING THE CONSTITUTION
Mr. WELLSTONE. Mr. President, over the course of the last 3 weeks, we
have heard many arguments for and against the proposed balanced budget
amendment to the Constitution. Those arguments were made in good faith,
and I know they reflect a broad commitment by those on both sides of
this question to bringing the deficit down to reasonable levels. But
the balanced budget amendment is an empty promise, not a policy. It has
little immediate political cost and very high poll ratings--hence its
popularity. But enacting it would be a serious mistake. We should
reject it in favor of a real, long-term deficit reduction program.
Since 1936, when Minnesota's own Harold Knutson revived the idea of a
balanced budget constitutional amendment that has been originally
rejected by the Constitution's Framers, Congress has debated various
versions. The real question before us today, as it was 50 years ago, is
whether we should weld onto the Founding document of our democracy, the
U.S. Constitution, a budget gimmick that would do more harm than good
to the economic well-being of our Nation, and our citizens.
As I have consistently argued, in my judgment we do not need to amend
the U.S. Constitution to balance the Federal budget. Instead, we must
continue to make tough choices on actual legislative proposals, as I
have done, to cut wasteful and unnecessary post-cold-war defense
spending, to continue to reduce low priority domestic spending, to
completely restructure the way we finance and deliver health care in
this country--in both the public and private sector--and to scale back
special tax breaks for very wealthy interests in our society who have
for a long time not been required to pay their fair share. That
approach is the only responsible, fair way to bring our annual Federal
deficits, and the much larger Federal debt, under control.
For the last 15 years or so, that is what the Congress has been
unwilling to do, and that is the source of a lot of frustration in the
country. Congress has been unable to muster and sustain a majority to
make difficult budget choices. We have seen illustrated here in the
Senate over and over again a central problem: The political gap between
the promise to cut spending, and actual followthrough on that promise.
I make this point because I want to underscore that many of those who
have been beating their chests the hardest about a balanced budget
amendment have often been among those who have consistently voted
against these actual deficit reduction proposals. We cannot give over
our budget-balancing responsibilities to a machine, a mechanism. That
responsibility is ours.
Of course, I support balancing the Federal budget in a responsible,
fair way. Despite all of the rhetoric today, we all at least agree on
that basic goal. That's why some of us have voted consistently to
reduce actual Federal spending when we've had the chance over the last
few years on this floor. Not gimmicks, not smoke and mirrors, not
deficit reduction formulas that never identify precise cuts, but actual
reductions in Federal spending contained in actual amendments to
appropriations bills. Votes on those proposed cuts have been important
indicators of our willingness to make tough choices. This is where the
budget rubber has met the road.
The President's $500 billion deficit reduction package in the 103d
Congress, which I supported and which was approved without a single
Republican vote, was a major downpayment toward balancing the budget.
But Democrats had to do it alone. When we cut, the Republicans ran.
While we acted, they talked. Still, much more must be done.
But now, instead of real budget choices we are presented with a
gimmick that I do not believe will work to balance the budget, and that
if it does work as it's designed, could do serious harm to the U.S.
economy. It will also serve to reduce pressure in the next few years to
actually reduce the deficit further, allowing Members of Congress to
declare a temporary victory without cutting significantly from the
Federal deficit. And then the reckoning will come, when we are up
against the wall at the end of this century and have to balance the
budget in just a few short years with massive spending cuts in all
Federal spending, including Social Security and Medicare.
[[Page
S3326]] If that's true, then why is the amendment so popular,
at least in the abstract? In recent years, the borrow-and-spend
policies of the 1980's and early 1990's have come home to roost,
rekindling public support for drastic measures. But just so that we
don't lose our historical perspective in this debate, I think it's
important to recognize that the problem of huge Federal budget deficits
is a relatively recent one, going back only to the early 1980's. It's
just not true, as some amendment proponents imply, that the Federal
Government has been spending way beyond its means for decades.
The Reagan and Bush administrations gave America by far its 10
largest budget deficits in our history. The huge tax cuts and large
defense increases of that era are still costing us. Whatever your party
affiliation or perspective on enacting this amendment, that is
indisputable. If it were not for the interest costs on the debt
accumulated during the 1981-92 period, the Federal budget would be in
balance in 1996 and headed toward surplus thereafter.
I am not trying to explain away large deficits over the last decade
or so, but simply to point out that they are, more than anything else,
a direct result of the misguided and now thoroughly discredited fiscal
policy called supply side economics. Despite the urgings of some of our
colleagues in the new House leadership, and some of the provisions of
the Republican Contract for America, we must not turn down that supply-
side road again.
Opposing the amendment has not been easy, or politically popular. But
since I have spoken several times on various amendments that have been
proposed over the course of the last few weeks, let me try to
summarize one last time my major reasons for voting against this
amendment.
americans have a right to know how the amendment will affect them
Throughout this debate, I've argued that the people of Minnesota--and
all Americans--have an enormous stake in the outcome of this debate,
and that they have a right to know how the spending cuts required by
the amendment could affect them and their families. I offered an
amendment to one of the first bills before the Senate this year urging
proponents of the constitutional amendment to detail the over a
trillion dollars in cuts they would make to balance the budget by 2002,
before it is sent to the States for ratification. This is simple
``truth-in-budgeting;'' it's the least we could have expected from
proponents.
Indeed, the Minnesota State Legislature and Governor Carlson agree.
And they sent a Minnesota mandate to Washington to prove the point. The
legislature recently passed overwhelmingly a resolution, signed by the
Governor, urging those of us here in Congress to continue our efforts
to reduce the Federal budget deficit, and requesting financial
information on the impact the balanced budget amendment would have on
our State. By rejecting the amendment, which I introduced to provide
the information to all the States that the Minnesota Legislature was
seeking, the Senate sent States a chilling message.
Another major right-to-know amendment, offered by Senator Daschle,
was also defeated. Despite the straightforward logic of this approach,
these amendments were rejected on virtual party-line votes.
And so if we pass this constitutional amendment today, we would be
sending it to the State legislatures for ratification without giving
them, or the millions of American families whom they represent in each
State, any idea of how we intend to cut over a trillion dollars from
the Federal budget between now and the year 2002, or how it will affect
their lives and the lives of their children and grandchildren. Families
will not be told how deep the Medicare, Medicaid, school lunch, higher
education, or Social Security cuts will be; at least not before we vote
on the amendment.
That is, I think, a gross abdication of our sworn responsibility to
serve those we represent, and a slap in the face to those who count on
us for truth-in-budgeting. Recent polls show that over 80 percent of
Americans believe we should be straight with them about how we intend
to balance the budget under this amendment before we act on it. Even
so, balanced budget proponents have rejected the right-to-know and
instead offered Americans a ruse, an exercise in budget deception. In
so doing, they have seriously breached the standard of public
accountability that Americans should be able to expect from their
leaders. In addition, there are a number of sound fiscal policy
arguments against the amendment; I will raise just two examples.
amendment would deepen economic recessions and worsen disasters
Consider the potential risk that the spending cuts required by the
amendment could push soft economy into a recession, or in a worse case,
deepen an existing recession and push us into a depression. Now when
the economy slips into recession, Federal spending helps to cushion the
fall by increasing unemployment insurance and other assistance programs
for low- and moderate-income people. At the same time, income tax
collections drop because people and businesses are making less money in
a recession.
But under the amendment, Congress would be forced, perversely, to do
the opposite: raise taxes, cut spending, and push the economy into an
economic freefall. The so-called automatic economic stabilizers like
unemployment insurance that have proven so useful in recent decades
would be gone, and we would instead effectively enshrine in the
constitution the economic policies of Herbert Hoover. With fiscal
policy enjoined by the amendment, sole responsibility for stabilizing
the economy would rest with the Federal Reserve. And with their almost
exclusive focus on fighting inflation these days, more often than not
they end up protecting Wall Street investors--not average working
families.
As I have suggested, the amendment is an attempt to enshrine an
economic dogma which would cripple our ability to offer pragmatic
responses to changing economic conditions. Because our efforts to
change the balanced budget amendment to take this problem into account
also failed, this serious flaw remains.
Coupled with the absence of any exception for emergency disaster
spending, that was included in a proposed amendment defeated last week,
the lack of economic foresight this reflects is almost breathtaking to
me. In just a few days, we will consider an emergency spending bill to
help pay the Federal share of the California earthquake last year. The
cost of this disaster is now up to $15 billion.
In the last two decades, the Federal Government has spent $134
billion in Federal disaster relief, including $33 billion in the last 5
years alone. Under a balanced budget requirement, what would we do in
the face of a huge flood, earthquake, or other disaster that cost
scores of billions of dollars in relief aid? How long would it take to
garner the three-fifths votes necessary in both Houses to pay for it?
And what special legislative prizes would opponents require for their
votes? Those are all open to questions.
amendment could put federal deposit insurance at risk
Another open question is the impact of the amendment on bank
deposits. I am sure balanced budget amendment supporters don't intend
to put the life savings of American families at risk, or to threaten
the stability of the banking system. And yet that is precisely what
this amendment would do. Since the Depression, the FDIC has insured
depositors against bank failures. That limit is now up to $100,000 per
account. And right now those guarantees cover private savings of about
$2.7 trillion--that's a whole lot of money that's guaranteed by
the U.S. Government. Some have observed that the balanced budget
amendment could put the full faith and credit of the United States
embodied in such guarantees at risk.
amendment does not separate day-to-day expenses from investments
Most Americans believe that a balanced budget, like a balanced
checkbook, is a good idea. They argue that America, like a family,
should always balance its budget. But this overlooks a key fact: The
household budgets of most middle class Americans have substantial debt,
either for a car, a home, or a college education for their kids.
This reflects a central problem with the amendment. It ignores the
difference between two different types of spending: investments for the
future,
[[Page
S3327]] and ``operating,'' or day-to-day, spending. Taking out a
mortgage on a home is investing in your family's future; taking one out
to pay for next year's vacation is not. This is acknowledged by most
State governments, many of whom are required to balance their operating
budgets--but not their investment budgets.
American business agrees; incurring debt to invest and expand a
business has long been a hallmark of business strategies for sustained
growth. With governments, as with families or businesses, borrowing
isn't inherently bad; it depends what you're borrowing for. With
families, businesses or State governments, the central question is:
Will the debt we incur improve our long-term economic prospects? If
this principle applies to household or business budgets, why shouldn't
it apply to the Federal budget? Nonetheless, an amendment to address
this problem was rejected.
No protections for the social security trust funds
This balanced budget amendment fails to protect the Social Security
trust funds from being raided to balance the Federal budget. We tried
to make sure that for the purpose of calculating the deficit under the
balanced budget amendment, the huge surpluses in the Social Security
trust fund would not be counted. In that effort, too, we failed; our
proposed Social Security amendment was defeated. Make no mistake what
this means: Despite the promises of the proponents that they will not
balance the budget on the backs of Social Security recipients, they
have refused to explicitly protect this program in the language of the
constitutional amendment itself. In fact, they fought hard to defeat
our Social Security amendment. That is as good an indication of their
future intentions regarding Social Security as anything we have seen.
A shell game that will require states to raise taxes
There is another problem with this constitutional amendment. For many
in Minnesota, it will likely mean an increase in personal income,
sales, and property taxes needed to offset the loss in Federal aid from
crime control to higher education, roads and bridges to farm programs,
rural economic development to Medicare. This shell game, in
which costs are simply shifted from the Federal Government onto the
States, would force Minnesota to fund these efforts on its own. A
recent Treasury Department study concluded that an increase of between
9 and 13 percent in Minnesota taxes would be required to make up the
difference. In reality, a vote for the balanced budget amendment is
really a vote for a trickle-down tax increase.
a standard of fairness
I think it's a simple question of fairness. If this constitutional
amendment passes, in the next 7 years we are going to have to make
$1.48 trillion in spending cuts and other policy changes--assuming that
we enact Republican-proposed tax cuts for the wealthy and defense
increases. If we don't, we'll still have to make about $1.2 trillion in
cuts. If we make these cuts to meet the balanced budget amendment
requirement and timetable, then we should make sure that wealthy
interests in our society, those who have political clout, those who
hire lobbyists to make their case every day here in Washington, will be
asked to pay their fair share. At least they should bear as much of the
burden as regular middle class folks that we represent, who receive
Social Security or Medicare or Veterans benefits, or who receive
student loans to send their kids to college and offer them a better
future.
That's just common sense, and I had hoped that during this debate we
would signal that we would apply such a standard of fairness. For
example, too often in discussions about low-priority Federal spending
which ought to be cut, one set of expenditures has been notoriously
absent. That is tax breaks for wealthy and well-positioned special
interests. But that, too, was rejected by the constitutional
amendment's proponents when I offered an amendment urging simply that
we make sure such special tax breaks are on the table as we move
forward in our deficit reduction efforts. Tax subsidies are heavily
skewed to corporations and the relatively few people with very high
incomes, while Government benefits and services go in far larger
proportions to the middle class and the poor.
In the last few weeks, this issue of fairness has emerged more and
more clearly to me, more by its absence than by its presence. It looks
to me as though the current standard, at least as it has been applied
so far in the published plans of balanced budget proponents, will not
require much, if any, sacrifice from special interests in our society
who have enjoyed certain tax breaks, benefits, preferences, deductions
and credits that most regular middle-class taxpayers don't enjoy.
efforts to scrutinize tax breaks for wealthy blocked
But while the constitutional amendment's proponents don't seem to
mind that it could require States to raise State taxes by large
margins, they are adamantly opposed to making sure that wealthy
corporations and others pay their fair share of the deficit reduction
burden.
It is a fact, often overlooked, that we can spend money just as
easily through the Tax Code, through what are called ``tax
expenditures,'' as we can through the normal appropriations process.
Spending is spending, whether it comes in the form of a government
check or in the form of a tax break for some special purpose, like a
subsidy, a credit, a deduction, or accelerated depreciation for this
type of investment or that. These tax expenditures--in some cases they
are tax loopholes--allow some taxpayers to escape paying their fair
share, and thus make everyone else pay at higher rates. These arcane
tax breaks are simply special exceptions to the normal rules, rules
that oblige all of us to share the burdens of citizenship by paying our
taxes.
The General Accounting Office issued a report last year titled, ``Tax
Policy: Tax Expenditures Deserve More Scrutiny.'' It makes a compelling
case for subjecting these tax expenditures to greater congressional and
administration scrutiny, just as direct spending is scrutinized. The
GAO noted that most of these tax expenditures currently in the Tax Code
are not subject to any annual reauthorization or other kind of
systematic periodic review. They observed that many of these special
tax breaks were enacted in response to economic conditions that no
longer exist. In fact, they found that of the 124 tax expenditures
identified by the committee in 1993, about half were enacted before
1950. Now that does not automatically call them into question. It just
illustrates the problem of their not being very carefully looked at in
any systematic way over very long periods of time. Many of these
industry-specific breaks get embedded in the Tax Code, and are not
looked at again for years. And yet we refused by roll call vote to even
commit to consider them as we move forward in our efforts to balance
the Federal books.
When we begin to weigh, for example, scaling back the special
treatment for percentage depletion allowances for the oil and gas
industry against cutting food and nutrition programs for hungry
children, we may come out with quite different answers than we have in
the past about whether we can still afford to subsidize this industry.
The nonpartisan Congressional Budget Office estimates that eliminating
this particular tax break would save $4.9 billion in Federal revenues
over 5 years.
And this is not an isolated example. The Congressional Joint Tax
Committee has estimated that tax expenditures cost the U.S. Treasury
over $420 billion every single year. And they estimate that if we don't
hold them in check, that amount will grow by $60 billion to over $485
billion by 1999. Now some tax expenditures serve important public
purposes, like supporting charitable organizations, and should be
retained. But many of these must be on the table along with other
spending as we look for places to cut the deficit.
I could not find any hint of interest in cutting corporate tax breaks
in the Republican contract, I think because many of the benefits of
these tax breaks go to very high-income people with wealth and power
and clout in our society, and to corporations with high-powered
lobbyists. They're the ones for whom the contract provides an
estimated $169 billion windfall that would resurrect the tax-shelter
industry and effectively slash corporate rates.
At a time when we are talking about potentially huge spending cuts in
meat inspections designed to insure against
[[Page
S3328]] outbreaks of disease; or in higher education aid for
middle class families; or in protection for our air, our lakes, and our
land; or in highways; or in community development programs for States
and localities; or in sewer and water projects for our big cities; or
in safety net programs for vulnerable children, we should be willing to
weigh these cuts against special tax loopholes on which we spend
billions each year. And yet we could not even agree to put these on the
table along with everything else as we move forward in our efforts to
reduce the deficit.
ENSHRINES MINORITY RULE
Constitutional and congressional scholars have observed that the
balanced budget amendment gives a veto power to a small minority of
either the House or the Senate in key budget decisions, a profoundly
antidemocratic shift away from our proud, 200-year-old tradition of
majority rule. The need to win approval from three-fifths of both
Houses to waive the balanced budget requirement in a recession would
give added power to members whose votes might be needed to avoid
plunging the country into a deeper downturn.
Thus, the price of an agreement to let the Government run even a
modest deficit during a recession, and to provide recession-related
unemployment benefits, might be a capital gains cut or other tax break
touted by its backers as a ``growth incentive.'' As we saw in the
1980's, these tax breaks usually prove to lose revenues and increase
the deficit over the long term, which in turn could lead to additional
program cuts in subsequent years to bring the budget back into balance.
WEAKENS OUR ABILITY TO INVEST
As I have observed, the balanced budget amendment would largely deny
to the Federal government a basic practice that most businesses,
families, and States and local governments use--borrowing to finance
investments with a long-term payoff. Borrowing to finance new
investments is standard business practice. A business that failed to
modernize because it could not borrow would soon be left behind.
We must continue to invest in our people. Our economy is creating new
jobs at a near-record pace--over 5 million in the last 2 years alone--
yet it doesn't give much help to those ordinary working families who
are at the bottom, or in the struggling middle class. As one Iron
Ranger in Minnesota recently told me, ``All these jobs being created
doesn't do me much good if I have to hold three of them to keep my
family together.'' His comment reflects the anger and economic
insecurity many Americans feel because their personal economic
experience doesn't jibe with what Government statistics tell them--that
unemployment is down, inflation is in check, and economic growth
and productivity are booming. Despite these statistics, standards of
living and real wages of workers remain flat, or in slight decline;
many are just one downsizing away from layoff, and feel less secure. We
must invest in the skills and futures of our people if we are going to
turn this situation around.
The amendment would force a scaling back of Government investment in
areas where economists stress more investment is needed:
infrastructure, education and training, early intervention programs for
children, research and development. There is growing evidence we invest
too little in these areas and that such under-investment has
contributed to our Nation's weak economic performance in recent years.
It is true that for too long the Federal Government has been
undisciplined in its borrowing, and that is what threatens our fiscal
future. We have a responsibility to future generations to get our
fiscal house in order, and to do it the Federal Government has to
reprioritize spending in relation to this central question of
investment, by re-examining programs across the board and eliminating
or scaling back those that are wasteful and unnecessary. We must
redesign cumbersome Federal structures to meet the challenges of the
information age, of rapidly changing demographics, of our decaying
inner cities. We should do this in a way that's fair, open and
accountable, without the budget smoke and mirrors that have too often
fogged the real choices facing voters.
Let me say a word about the impact that systematic disinvestment
would have on working families, children and the elderly in my State,
because ultimately that is what this whole debate is about.
the impact of the amendment on minnesota families
Throughout this debate, I have tried to ask myself basic questions
about the impact of this balanced budget amendment on the families in
Minnesota whom I represent. I think it would inflict on Minnesotans
serious harm, and that is why I cannot in good conscience support it.
That is ultimately the deciding factor for me.
I've already talked about the shell game that this amendment would
require by shifting the costs of government from the Federal to the
State level, and forcing States to raise income, property and sales
taxes--in Minnesota's case by about 13 percent, according to the
Treasury Department. But what about the actual spending cuts? How would
they be distributed? Who would have to sacrifice, and who would
benefit?
Over 7 years, under the balanced budget amendment and accompanying
Republican proposals, Minnesota would lose nearly $5.9 billion in
Federal Medicare funds, Medicaid cuts would total nearly $3.7 billion,
elementary and secondary education would lose $1.5 billion, and Federal
law enforcement would lose $143.7 million. Minnesota farmers also would
likely lose billions in farm payments, causing a serious decrease in
family farm income. And it's not just rural areas
that would be hit. The two largest urban counties in my State,
Hennepin and Ramsey Counties, would alone lose about $10.3 billion in
total Federal aid over 7 years.
In addition, despite Republican promises to temporarily protect this
program, large cuts in Social Security benefits to Minnesotans--an
estimated $2,000 annually per beneficiary--should also be expected if
this program is slated for across-the-board cuts.
These are very large cuts, and they will have a major impact on the
people of my State. I have heard from elderly couples in Minnesota on
fixed incomes, terrified about the impact of the amendment on their
Medicare funding. And they have reason to be fearful. I have sat with
homeless men and women, Medicaid recipients, who are threatened with
going without even the most basic health care under the amendment.
Instead of this approach, we owe it to these people to do real
comprehensive health care reform.
Despite the claims of some that opponents of the amendment are
exaggerating the threat posed by these huge spending cuts, this is for
real. I am not making this up. In fact, just the other day, Finance
Committee Chairman Packwood said that he thought we would have to make
up to $550 billion in cuts in Medicare alone to meet its requirements--
not to mention the huge cuts in Medicaid he acknowledged would be
necessary. And it could go much higher than that, depending on budget
decisions made in other areas.
Finally, let me say a word about the process by which this amendment
has been considered. In recent weeks, balanced budget amendment
proponents have rejected virtually every single good faith effort to
improve the constitutional amendment. Amendments to prevent a raid of
the Social Security trust funds, to exempt earned veteran's benefits,
to strike the majority requirements, to prevent harm to hungry and
homeless children, to separate investment from day-to-day operating
budgets, to provide for exceptions for major disasters and economic
recessions--and many others--were defeated.
I believe that if the Senate passes this amendment today, as we look
back on this debate from the midst of a serious recession, major
disaster, or even undeclared national security emergency, this
unwillingness by proponents to accept even modest, reasonable changes
in the amendment will prove seriously misguided.
While at first look this amendment appears to make sense and is
widely popular, amending our Constitution in this way would be a
mistake with potentially serious fiscal, economic, and social
consequences and would seriously alter our democratic process. We can
and should balance the budget without gimmicks and without changing the
Constitution. I intend to continue to vote to do that. I urge my
colleagues to join me in that effort, and to
[[Page
S3329]] vote no on the balanced budget amendment. I yield the
floor.
Mr. LEVIN. Mr. President, I want deficit reduction and I am willing
to work for it. That is why I supported the President's deficit
reduction package in the last Congress. But while I have stood up for
real deficit reduction, what I am not prepared to do is to write into
the Constitution language that is more likely to lead to
disillusionment and constitutional crisis than to a balanced budget.
I see five flaws in the proposed amendment. First, the proposed
amendment would not balance the budget, it would just say that a future
Congress has to pass a law to enforce a balanced budget. Why wait?
Unless and until we make the tough choices needed to cut spending or
raise revenues, we will not have a balanced budget, whether or not we
pass the proposed constitutional amendment and whether or not the
States ratify it. We will instead have passed what could turn out to be
a cynicism-deepening illusion.
The proposed constitutional amendment says that starting no earlier
than 2002, Congress has to have a law enacted which enforces a balanced
budget. Why wait? Why wait to do the hard work of passing implementing
laws and doing the actual budgeting? That's a dodge which allows some
to say we are cured before we have taken the medicine. It puts a giant
loophole in the Constitution to cover over congressional weakness.
In May 1992, Robert Reischauer, the Director of the nonpartisan
Congressional Budget Office, testified before the House Budget
Committee that a balanced budget amendment is not a solution; it is
``only a repetition in an even louder voice of an intention that has
been stated over and over again during the course of the last 50
years.'' Dr. Reischauer stated:
It would be a cruel hoax to suggest to the American public
that one more procedural promise in the form of a
constitutional amendment is going to get the job done. The
deficit cannot be brought down without making painful
decisions to cut specific programs and raise particular
taxes. A balanced budget amendment in and of itself will
neither produce a plan nor allocate responsibility for
producing one.
Dr. Reischauer further stated:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
The public understands this. They know the difference between
promises and action. Let me tell you what some of the commentators are
saying about the balanced budget amendment back in my home State. Here
is what the Detroit Free Press said on January 15:
You wouldn't take seriously any politician who promised to
be faithful to his spouse, beginning in 2002, so why do so
many people take seriously the proposed balanced-budget
amendment?
It's the same kind of empty promise to be good--not now,
but later. Putting it in the Constitution isn't likely to
confer on Congress the spine or the wisdom to fulfill it.
* * * [T]he way to cut the budget is to cut the budget, not
to promise to do it sometime in the future. * * * Gluing a
balanced budget amendment onto the Constitution only
postpones the moment of truth.
And here is what the Battle Creek Enquirer said on January 29:
If a balanced budget is such a good idea, we say to
Congress: ``Just do it!'' After all, waiting until a
constitutional amendment mandates it will just delay a
balanced budget--perhaps by years.
This Congress isn't likely to give the nation a balanced
budget, that's for certain. But, by touting the need for this
amendment, it sure can talk like a Congress that already has
* * * [I]t's all an illusion.
``Just do it!'' That's what the American people want, Mr. President.
They know the difference between promises and action, and they want the
latter. A constitutional amendment can promise a balanced budget, but
it cannot deliver a balanced budget. Only concrete action by the
Congress can do that.
Put another way, Mr. President, the proposed constitutional amendment
has no effective enforcement mechanism. The amendment relies on a
future Congress to act to implement and enforce it. That is the bottom
line. This is the same reed that proved so weak in the 1980's when the
President and the Congress quadrupled the national debt from $1
trillion to $4 trillion.
The argument has been made that we have tried everything else, why
not a constitutional amendment. We can't depend on legislation, the
argument goes, so let's try a constitutional amendment.
So what does this amendment do? It depends on the same kind of
legislation to be enacted which its sponsors say has not previously
been effective.
When we were debating this amendment in 1986, Senator Hatch
acknowledged the following:
[T]here is no question that Congress would have to pass
implementing legislation to make it effective. * * * It would
be the obligation of Congress, after the amendment is passed
by both Houses and ratified by three-quarters of the states
to * * * enact legislation that would cause this to come
about.
And again, CBO Director Reischauer pointed out that:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
Just a few weeks ago, on January 30, Senator Hatch stated:
``* * * [U]nder section 6 of the amendment, Congress must--
and I emphasize must--mandate exactly what type of
enforcement mechanism it wants, whether it be sequestration,
rescission, or the establishment of a contingency fund.
In fact, the committee report accompanying this constitutional
amendment itself states that it ``* * * must be supplemented with
implementing legislation''.
Mr. President, I have offered an amendment to the constitutional
amendment to require this Congress to address this issue by adopting
legislation to implement and enforce a balanced budget requirement now.
Without my amendment, there are no real teeth in the promise of a
balanced budget contained in the proposed amendment.
Alexander Hamilton states in Federalist Paper No. 15, ``If there be
no penalty annexed to disobedience, the resolutions or commands which
pretend to be laws will, in fact, amount to nothing more than advice or
recommendation.''
If congressional weakness is the reason for this amendment--and it
is--then Congress will use the loopholes in this amendment to evade the
responsibility which it sets forth. My fear is that this amendment will
give us an excuse to duck the hard choices, as Congress has often
chosen to do, until it would become effective in 2002--at the earliest.
I am afraid that upcoming Congresses will say ``the balanced budget
amendment will take care of our problems, so we don't need to address
them now.''
Dr. Reischauer, in hi
s 1992 testimony, listed a number of loopholes
that Congress could use to get around an apparently rigid balanced
budget rule:
Using timing mechanisms and other budget gimmicks to achieve short-
run budget targets, including such actions as shifting pay dates
between fiscal years, accelerating or delaying tax collections,
delaying needed spending until future fiscal years, and selling
government assets;
Basing the budget on overly optimistic economic and technical
assumptions; and
Creating off-budget agencies that would have authority to borrow and
spend but whose transactions would not be directly recorded in the
budget.
That is what we did in the 1980's. We used optimistic estimates or
``rosy scenarios''. Here are some of those estimates. In 1981, our
estimates were off by $58 billion. In 1982, our estimates were off by
$73 billion. In 1983, our estimates were off by $91 billion, and on and
on. In 1991, they were off by $119 billion--$119 billion in 1 year. You
talk about a loophole. This one is big enough to drive a $119 billion
deficit through. That is how big this loophole is.
The sponsors of the amendment say that the real enforcement mechanism
is in section 2. That section provides that it will take 60 percent of
the votes, a supermajority, to increase the debt ceiling. So if our
estimates are too rosy--if, for instance, we follow the 1980's model of
estimates in order to evade the constitutional requirement, then, we
are told, we can fall back on
[[Page
S3330]] the requirement that the debt limit can only be
increased by a 60 percent vote in each House.
As Senator Graham of Florida has pointed out, however, the so-called
debt limitation provision in the proposed amendment would allow us to
run deficits in the first decade and a half of the next century of as
much as $120 billion a year, masked by taking that money from the
Social Security trust fund, without that counting toward the deficit.
The proposed amendment applies the 60-vote requirement to ``the limit
on the debt of the United States held by the public''. So the debt held
by the Social Security Administration isn't covered and the usual
majority rule would apply to raising that debt limit.
In any case, history has proven the debt limit is a weak reed to rely
on, because when you vote on whether or not to increase the debt limit,
you are voting whether or not to bring down the Government of the
United States. We have to pay our legitimate debts, however many votes
it may take. If we don't do that, we are finished economically. To make
that point, let me quote from a July 8, 1987 letter from Secretary of
the Treasury James A. Baker III to the Chairman of the Senate Finance
Committee:
I cannot overemphasize the damage that would be done to the
United States' credit standing in the world if the Government
were to default on its obligations, nor the unprecedented and
catastrophic repercussions that would ensue. Market chaos,
financial institution failures, higher interest rates, flight
from the dollar and loss of confidence in the certainty of
all United States Government obligations would produce a
global economic and financial calamity. Future generations of
Americans would have to pay dearly for this grave breach of a
200-year-old trust.
Mr. President, we are not going to achieve a balanced budget by
threatening not to raise the debt ceiling, because that is a nuclear
weapon aimed at the economy of this country. You don't balance the
budget by threatening suicide, and that is what a failure to pay our
debts would be. If we do not pay our debts, this country's economy is
finished. So whether it takes the usual majority or 61 votes, it
doesn't matter. We will have to increase the debt ceiling, because
after the debts have been incurred, we won't have any choice.
Mr. President, my second problem with the amendment is that if a
later Congress does adopt effective enforcement legislation, it would
be putting in the hands of a minority of Senators, representing as
little as 15 percent of the population, critical decision-making power
over the economy of this Nation. Under the proposed amendment, it is
intended that outlays not exceed receipts, and the debt limit not be
increased, unless three-fifths of both Houses of the Congress agreed.
The economic future of our country should not be put in the hands of a
minority by a constitutional amendment which would be so difficult to
change if it went awry.
My third problem with the amendment is that it would put the Social
Security trust fund at risk. By my count, during this debate the Senate
has rejected at least three amendments to protect the Social Security
trust fund. As the senior Senator from Florida explained, Mr.
President, that means that we will continue running deficits of at
least $120 billion a year for more than a decade after this amendment
would go into effect, and will conceal these deficits by taking the
money from the Social Security trust fund. The money in that trust fund
is exactly that--money that we have collected in trust. I cannot vote
for a constitutional amendment which allows the use of that money to
cover up huge deficit spending. That's simply wrong.
My fourth problem with the amendment is that, if effectively
implemented, it would preclude the use of deficit spending to cushion
the impact of a recession. A balanced budget amendment would force the
Federal Government to raise taxes and cut spending in recessions, to
offset the loss of revenue caused by declining income. These policies
would deepen the impact of a recession and could even turn a mild
recession into a depression.
Indeed, the Treasury Department has done a study showing that, were
it not for countercyclical deficit spending, roughly one and a half
million more people would have been unemployed in the 1991-92
recession. Mr. President, we should not ignore the real world hardships
caused by recessions and we should not act in a way which could cause
millions of Americans to lose their jobs.
Finally, Mr. President, I am troubled by the fact that the proposed
amendment is intentionally ambiguous on the role of the President in
carrying out the amendment. The resolution of this crucial issue will
determine how the amendment will affect the checks and balances placed
in the Constitution by our Founding Fathers.
With regard to Presidential impoundment, the Senator from Utah,
Senator Hatch, says the President would have no power to impound funds
unless expressly granted by Congress, but the sponsors refuse to make
this explicit in the amendment itself.
There are some, including Members of this Senate, who already believe
that the President has inherent impoundment powers under article II of
the Constitution. Would not that argument be reinforced by a
constitutional amendment prohibiting outlays from exceeding receipts,
in view of the President's duty to preserve, protect, and defend the
Constitution?
Former Reagan administration Solicitor General Charles Fried has
testified that such a power would exist. He stated:
Now, the command of section 1 is very unqualified. Total
outlays shall not exceed total receipts unless you have the
three-fifths vote. It seems to me that command
would give the President--any President--a far better claim
to impound funds than that which was asserted some years
ago by President Nixon, because the President's warrant
would not be drawn from, as President Nixon said it was,
inherent powers of the Presidency. He could point to the
Constitution itself. He would say that they shall not
exceed, and he swears an oath to see that the laws are
faithfully executed, and I would think his claim to
impound would be very strong. Not only his claim, but he
would argue with considerable plausibility his duty to do
so.
So again, the record is, at best, unclear.
The question whether the President could enforce the amendment by
impoundment would not be an insurmountable problem, had the majority
not chosen to make it so. For instance, when we approved a balanced
budget amendment in the Senate in 1982, we included language proposed
by the Senator from New Mexico, Mr. Domenici, to ensure that the
amendment could not be construed to grant the President impoundment
powers.
This year, however, the sponsors of the amendment decided to remain
silent on this issue. That is not the way we should address the
question of amending the Constitution. This is the Constitution we are
talking about, and we need to know what the amendment we are
considering means in this critical area.
In conclusion, Mr. President, the proposed amendment provides too
easy an excuse for Congress not to act now to reduce the deficit and it
doesn't force congressional action later either.
It lets us off the hook now, and there is no hook later.
It's based on the argument that a constitutional amendment is needed
because previous laws calling for a balanced budget didn't work. But
its success, by its own terms in section 6, is dependent upon a future
Congress enacting a similar law.
The amendment before us, in other words, is unlikely to reduce the
deficit, but is likely to increase public cynicism about the willpower
of Congress to act.
We can and we should adopt enforcement legislation to achieve a
balanced budget now, with or without a constitutional amendment.
There is only one way to balance the budget now, or in 2002--and that
is with the willpower to make the tough choices. I hope we will defeat
this constitutional amendment and instead show the will power to make
the tough choices and enact enforcement legislation actually needed to
balance the budget.
Mrs. MURRAY. Mr. President, I voted against House Joint Resolution 1,
the so-called balanced budget amendment.
I voted no because this amendment is a 10-second political sound bite
with decades of economic implications. It will handcuff future
generations to an
[[Page
S3331]] economic blueprint this Congress dictates in 1995. And,
worst of all, it makes a mockery of the most important document this
country has ever produced.
I am a member of the Budget Committee. When I came to the Congress 2
years ago, I faced the largest debt ever amassed by any country in the
history of civilization. More debt was created during the 12 years of
Republican administrations in the 1980's and early 1990's than in the
entire 200 years preceding them.
I strongly support putting this country's economic house in order.
Mr. President, I support a balanced Federal budget. The people of this
Nation deserve nothing less. But this amendment does not get us there.
Words on a piece of paper cannot balance the budget, only legislators
like you and I can.
We have to make tough choices as we correct the fiscal mismanagement
of the 1980's. We have to balance the budget with surgical cuts; with a
scalpel, not a meat cleaver.
Mr. President, we have made some very tough decisions. I was one
Member of this body who voted for a plan--a plan with specific cuts and
common sense--which reduces the deficit by $505 billion over 5 years.
Program-by-program, cut-by-cut. Most of the Members of the Senate who
voted against the deficit reduction plan now support this
constitutional amendment.
Mr. President, where are the specifics? What will they cut? Which
taxes will they raise? Who will be hurt? The American people have a
right to know. Under this amendment, we have no idea.
For example, will they cut out funding for the Federal Government's
obligation to clean-up the Hanford Nuclear Reservation in my home State
of Washington? Will they eliminate the home mortgage deduction? Will
they cut Head Start, or WIC, or Ryan White? Will they stop guaranteeing
student loans? Will they block further assistance to our depressed
timber communities, or job training for laid-off aerospace workers?
Mr. President, just this week, we have seen some examples of how
careless cuts can be when they are made with a meat cleaver. The
rescissions package coming before the Senate soon is a mean-spirited
and irrational piece of legislation. As nasty as those cuts are, they
still do not get us to a balanced budget. Instead, they damage those we
can least afford to harm: our children.
If this body is serious about deficit reduction, we should resume the
debate on health care reform. Even cutting every discretionary program
will not get us to a balanced budget. We must control the growth of
health care costs. I find it ironic that many of the same Senators who
opposed the health care reform bill last year now support this
constitutional amendment.
This so-called balanced budget amendment is dangerous. It will remove
all our flexibility in dealing with emergencies--economic troubles like
recessions, or even natural disasters like volcanic eruptions,
earthquakes, flooding, hurricanes, and massive fires. My home State has
experienced many such disasters recently. If this amendment had been
part of the Constitution, how would my friends and neighbors have
coped?
Mr. President, I believe many of our colleagues would want to help in
these emergency situations. That is why the Congress is the proper
venue for deciding these issues--our Founding Fathers thought so, too.
This constitutional amendment throws our responsibility to the
courts. The courts will decide if funding is appropriate. Supreme Court
justices are not responsible to the people of my home State; they are
not elected by anyone. They are not sent to the Nation's capital to
tend to the needs of my constituents.
Mr. President, we have amended the Constitution only 17 times since
we adopted the Bill of Rights. We have never changed the Constitution
lightly. With each previous amendment, the American people voted to
expand rights and outline responsibilities--we have never inserted an
economic plan into the Constitution. This amendment sets a terrible
precedent.
I voted in favor of several amendments to the House Joint Resolution
1. I could see that the resolution had considerable support, and I
wanted to make sure that if it did indeed pass, we protected our most
vulnerable populations; that we maintained the integrity of the Social
Security trust fund; that we continued our fight against violent crime;
that we respected our veterans; and that we exempt natural disasters
from cuts.
I also believe that we should display common sense and work to reduce
the massive deficit before we enacted sweeping, across-the-board tax
cuts.
These safeguards all failed--every one of them. All attempts at
tempering the resolution, or placing some sensible priorities into the
legislation, were killed.
Mr. President, this is bad policy, and I cannot support any measure
that will handcuff our country's economic policy. When I stand in this
Chamber, I remember that I am not only a U.S. Senator but also a
mother.
It might be popular to vote yes, but I won't worry about my own
personal popularity until I know my children's economic future is safe.
I do not believe we should trivialize our Constitution in order to give
politicians a reason to make the kind of choices they should be making
anyway.
This resolution will hurt our country and handcuff future
generations. Amending the U.S. Constitution is not worth the gamble.
For these reasons, Mr. President, I did not support House Joint
Resolution 1.
Mr. PRESSLER. Mr. President, since 1981, there have been eight
balanced budget amendment measures that have been approved by the
Senate Judiciary Committee and reported to the Senate. Three of these
measures have received floor consideration.
In 1982, the Senate passed Senate Joint Resolution 58 by a 69-to-31
vote. This marked the first time either House of Congress had approved
such a measure. Although a substantial majority of the House of
Representatives voted in favor of a counterpart of Senate Joint
Resolution 58, the 236-to-187 margin fell short of the necessary two-
thirds vote.
In 1986, the Senate rejected a balanced budget amendment (
S.J. Res.
225) by a vote of 66-to-34, thus failing to achieve the necessary two-
thirds majority by a single vote.
Then during 1994, the Senate defeated Senate Joint Resolution 41 by a
vote of 63-to-37, 4 votes short of the two-thirds necessary for
adoption.
Since coming to the Senate in 1979, I consistently have cosponsored
and supported balanced budget amendment measures, and have voted for
adoption of these measures at each and every opportunity. I strongly
support the proposed amendment before us which was approved by the
House of Representatives. With our vote today, the Senate will choose
between a failed status quo or a new road toward true fiscal
accountability.
Mr. President, there is compelling need for a balanced budget
amendment to the Constitution. The Federal Government has run deficits
for 23 years in a row and for 54 of the last 62 years. As a result, our
national debt has spiraled to more than $4.8 trillion. The gross annual
interest on the debt exceeds $300 billion.
Moreover, if we maintain the status quo--as reflected in the
President's budget request for fiscal year 1996--the national debt
would increase to more than $6.7 trillion in 2000. Mr. President, is
this the kind of legacy we want to impose upon our children and
grandchildren?
The harsh fact is that up until now we have tried every legislative
means possible to lower deficit spending and achieve tax revenues in
excess of outlays. In the past 10 years, we have seen Gramm-Rudman,
Gramm-Rudman II, the 1990 budget amendment, and the failed 1993 budget
plan. These well-intended measures have failed to move us closer to a
balanced budget. Even if it were to succeed for one budgetary cycle,
what assurances are there for continued balanced budgets and surpluses
sufficient to eliminate our national debt?
There must be a measure beyond Federal statute and outside the
present legislative process that would require continued balanced
Federal budgets. That is why a constitutional measure is necessary.
The constitutional amendment before the Senate today would prohibit
deficit spending except during any fiscal year in which a declaration
of war
[[Page
S3332]] is in effect or when the country is engaged in an urgent
national security crisis. Also, the limit on deficit spending and the
limit on the national debt may be waived by a recorded vote of three-
fifths of the whole number of each House.
It seems that if the limits on deficit spending and the national debt
could be waived by a simple majority vote of the House and the Senate,
the purpose of the constitutional amendment would be nullified. It is
clear more than a majority should be required to waive the amendment.
Year after year huge deficits have been incurred by simple majority
votes.
Requiring a supermajority vote is not unique. The Constitution
currently has nine supermajority requirements on specific actions or
measures. These supermajorities include: ratification of treaties; veto
overrides; expulsion of a Member of the Senate or the House;
impeachment of the President, Vice President, and other Federal civil
officers and judges; waiver of disability of certain persons who
engaged in rebellion against the United States; election of a Vice
President by the Senate; and amendment of the Constitution. Also,
supermajorities are provided for in each House under its constitutional
right to determine the rules of its proceedings.
Measures such as a declaration of war or an amendment to the
Constitution were rightly considered by the framers to be the most
serious of policy commitments. They believed a broader consensus was
needed for these beyond a simple majority. The framers also imposed
supermajority requirements to ensure that the fundamental rights of
individuals were not overrun by the tyranny of a majority. Mr.
President, we have reached a point in our history that any serious
thought of further mortgaging the future of our children and
grandchildren should require a broader consensus than a simple
majority. It is for them that we must get our fiscal house in order. It
is for them that we must pass this balanced budget amendment.
The proposed amendment would take effect within 2 years after
ratification by three-fourths of the States, or by 2002, whichever
comes later. It is significant that 48 States, including my home State
of South Dakota, have constitutional provisions limiting their ability
to incur budget deficits. Such constraints have proven workable in the
States.
It is not surprising that a large majority of persons throughout the
country who have been polled on this issue support a balanced budget
amendment. Certainly, a large majority of South Dakotans from whom I
have heard and with whom I have met urge that this resolution be
adopted. They know it is the only way to achieve balanced Federal
budgets and reduction of the national debt. I hope, Mr. President, our
colleagues will bring that about.
Mr. LEAHY. Mr. President, during the past few days, I have been
dismayed at the attempts of the proponents of this constitutional
amendment to find a fix to pick up a vote or two in order to obtain
passage. It may make for high drama, but it also makes for bad law.
This is the United States Constitution that they are seeking to amend
and its provisions should be carefully crafted, studied and considered.
Back rooms and political dealmaking have no place in amending the
Constitution.
At the center of these desperate negotiations has apparently been a
belated effort to jerryrig some type of budget resolution or
implementing legislation to protect the Social Security trust fund from
being used to balance the budget under this so-called balanced budget
amendment. This is absurd.
The language of House Joint Resolution 1 is very clear. Section 1
states: ``Total outlays for any fiscal year shall not exceed total
receipts for that fiscal year.* * *'' And section 7 states: ``Total
receipts shall include all receipts of the U.S. Government except those
derived from borrowing. Total outlays shall include all outlays of the
U.S. Government except for those for repayment of debt principal.'' The
undisputed reading of this language is that the Social Security trust
fund will be covered by this constitutional amendment.
In addition to the unambiguous language of the constitutional
amendment itself, the legislative history of House Joint Resolution 1
makes it clear that the Social Security trust fund is not protected. In
fact, the proponents have fought back all efforts in the Senate
Judiciary Committee to amend the same language in Senate Joint
Resolution 1 and all amendments offered here on the Senate floor over
the past month.
During Senate Judiciary Committee consideration of this
constitutional amendment, Senator Feinstein offered an amendment to
exclude funds going in and out of the Social Security trust fund from
the definition of total receipts and total outlays. Unfortunately, a
majority of members of the Senate Judiciary Committee tabled Senator
Feinstein's amendment by a vote of 10 to 8 on January 18, 1995.
During the Senate debate on House Joint Resolution 1, Democrats
offered two separate amendments to take Social Security off the table.
Senator Reid offered an amendment to this constitutional amendment that
would have legally protected the
Social Security trust fund by excluding it from the definitions of
total outlays and total receipts in section 7 of House Joint Resolution
1. But that amendment was tabled by a vote of 57 to 41 on February 14,
1995.
Just a few days ago, Senator Feinstein offered a substitute balanced
budget amendment that again would have legally protected the Social
Security trust fund by excluding it from the definitions of total
outlays and total receipts in the substitute amendment. Again, the
proponents of this constitutional amendment tabled the Feinstein
substitute amendment by a vote of 60 to 39. Whether the Tennessee
Valley Authority is exempted and placed ``off budget'' may be in doubt,
but there is no doubt that the Social Security trust fund is included
by the proponents of this constitutional amendment.
Trying to
Major Actions:
All articles in Senate section
THE BALANCED BUDGET AMENDMENT
(Senate - March 02, 1995)
Text of this article available as:
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[Pages
S3325-S3366]
THE BALANCED BUDGET AMENDMENT
protection from big spenders? the people lost by one vote
Mr. HELMS. Mr. President, there are two disappointing things to
mention today. The first is my regular daily report on the latest
available disclosure of the total Federal debt, this time as of the
close of business yesterday, Wednesday, March 1, stood at
$4,848,389,816.26.
If this debt were to be paid off today, with every man, woman, and
child in the country paying his or her proportionate share, each of us
would have to fork over $18,404.57. Of course, since millions of
Americans pay no taxes at all, the average share of the Federal debt
would be far greater than the per capita amount referred to above.
The other sad thing? It is, of course, the Senate's failure today to
approve a constitutional amendment requiring Congress to balance the
Federal budget. If just one more Senator had voted today in favor of
the amendment, it would have been approved by 67 Senators, exactly
enough to pass the amendment and send it to the 50 States for
ratification.
Don't look for a balanced Federal budget anytime soon. But one day it
will come. The American people will demand it.
REDUCE THE DEFICIT WITHOUT AMENDING THE CONSTITUTION
Mr. WELLSTONE. Mr. President, over the course of the last 3 weeks, we
have heard many arguments for and against the proposed balanced budget
amendment to the Constitution. Those arguments were made in good faith,
and I know they reflect a broad commitment by those on both sides of
this question to bringing the deficit down to reasonable levels. But
the balanced budget amendment is an empty promise, not a policy. It has
little immediate political cost and very high poll ratings--hence its
popularity. But enacting it would be a serious mistake. We should
reject it in favor of a real, long-term deficit reduction program.
Since 1936, when Minnesota's own Harold Knutson revived the idea of a
balanced budget constitutional amendment that has been originally
rejected by the Constitution's Framers, Congress has debated various
versions. The real question before us today, as it was 50 years ago, is
whether we should weld onto the Founding document of our democracy, the
U.S. Constitution, a budget gimmick that would do more harm than good
to the economic well-being of our Nation, and our citizens.
As I have consistently argued, in my judgment we do not need to amend
the U.S. Constitution to balance the Federal budget. Instead, we must
continue to make tough choices on actual legislative proposals, as I
have done, to cut wasteful and unnecessary post-cold-war defense
spending, to continue to reduce low priority domestic spending, to
completely restructure the way we finance and deliver health care in
this country--in both the public and private sector--and to scale back
special tax breaks for very wealthy interests in our society who have
for a long time not been required to pay their fair share. That
approach is the only responsible, fair way to bring our annual Federal
deficits, and the much larger Federal debt, under control.
For the last 15 years or so, that is what the Congress has been
unwilling to do, and that is the source of a lot of frustration in the
country. Congress has been unable to muster and sustain a majority to
make difficult budget choices. We have seen illustrated here in the
Senate over and over again a central problem: The political gap between
the promise to cut spending, and actual followthrough on that promise.
I make this point because I want to underscore that many of those who
have been beating their chests the hardest about a balanced budget
amendment have often been among those who have consistently voted
against these actual deficit reduction proposals. We cannot give over
our budget-balancing responsibilities to a machine, a mechanism. That
responsibility is ours.
Of course, I support balancing the Federal budget in a responsible,
fair way. Despite all of the rhetoric today, we all at least agree on
that basic goal. That's why some of us have voted consistently to
reduce actual Federal spending when we've had the chance over the last
few years on this floor. Not gimmicks, not smoke and mirrors, not
deficit reduction formulas that never identify precise cuts, but actual
reductions in Federal spending contained in actual amendments to
appropriations bills. Votes on those proposed cuts have been important
indicators of our willingness to make tough choices. This is where the
budget rubber has met the road.
The President's $500 billion deficit reduction package in the 103d
Congress, which I supported and which was approved without a single
Republican vote, was a major downpayment toward balancing the budget.
But Democrats had to do it alone. When we cut, the Republicans ran.
While we acted, they talked. Still, much more must be done.
But now, instead of real budget choices we are presented with a
gimmick that I do not believe will work to balance the budget, and that
if it does work as it's designed, could do serious harm to the U.S.
economy. It will also serve to reduce pressure in the next few years to
actually reduce the deficit further, allowing Members of Congress to
declare a temporary victory without cutting significantly from the
Federal deficit. And then the reckoning will come, when we are up
against the wall at the end of this century and have to balance the
budget in just a few short years with massive spending cuts in all
Federal spending, including Social Security and Medicare.
[[Page
S3326]] If that's true, then why is the amendment so popular,
at least in the abstract? In recent years, the borrow-and-spend
policies of the 1980's and early 1990's have come home to roost,
rekindling public support for drastic measures. But just so that we
don't lose our historical perspective in this debate, I think it's
important to recognize that the problem of huge Federal budget deficits
is a relatively recent one, going back only to the early 1980's. It's
just not true, as some amendment proponents imply, that the Federal
Government has been spending way beyond its means for decades.
The Reagan and Bush administrations gave America by far its 10
largest budget deficits in our history. The huge tax cuts and large
defense increases of that era are still costing us. Whatever your party
affiliation or perspective on enacting this amendment, that is
indisputable. If it were not for the interest costs on the debt
accumulated during the 1981-92 period, the Federal budget would be in
balance in 1996 and headed toward surplus thereafter.
I am not trying to explain away large deficits over the last decade
or so, but simply to point out that they are, more than anything else,
a direct result of the misguided and now thoroughly discredited fiscal
policy called supply side economics. Despite the urgings of some of our
colleagues in the new House leadership, and some of the provisions of
the Republican Contract for America, we must not turn down that supply-
side road again.
Opposing the amendment has not been easy, or politically popular. But
since I have spoken several times on various amendments that have been
proposed over the course of the last few weeks, let me try to
summarize one last time my major reasons for voting against this
amendment.
americans have a right to know how the amendment will affect them
Throughout this debate, I've argued that the people of Minnesota--and
all Americans--have an enormous stake in the outcome of this debate,
and that they have a right to know how the spending cuts required by
the amendment could affect them and their families. I offered an
amendment to one of the first bills before the Senate this year urging
proponents of the constitutional amendment to detail the over a
trillion dollars in cuts they would make to balance the budget by 2002,
before it is sent to the States for ratification. This is simple
``truth-in-budgeting;'' it's the least we could have expected from
proponents.
Indeed, the Minnesota State Legislature and Governor Carlson agree.
And they sent a Minnesota mandate to Washington to prove the point. The
legislature recently passed overwhelmingly a resolution, signed by the
Governor, urging those of us here in Congress to continue our efforts
to reduce the Federal budget deficit, and requesting financial
information on the impact the balanced budget amendment would have on
our State. By rejecting the amendment, which I introduced to provide
the information to all the States that the Minnesota Legislature was
seeking, the Senate sent States a chilling message.
Another major right-to-know amendment, offered by Senator Daschle,
was also defeated. Despite the straightforward logic of this approach,
these amendments were rejected on virtual party-line votes.
And so if we pass this constitutional amendment today, we would be
sending it to the State legislatures for ratification without giving
them, or the millions of American families whom they represent in each
State, any idea of how we intend to cut over a trillion dollars from
the Federal budget between now and the year 2002, or how it will affect
their lives and the lives of their children and grandchildren. Families
will not be told how deep the Medicare, Medicaid, school lunch, higher
education, or Social Security cuts will be; at least not before we vote
on the amendment.
That is, I think, a gross abdication of our sworn responsibility to
serve those we represent, and a slap in the face to those who count on
us for truth-in-budgeting. Recent polls show that over 80 percent of
Americans believe we should be straight with them about how we intend
to balance the budget under this amendment before we act on it. Even
so, balanced budget proponents have rejected the right-to-know and
instead offered Americans a ruse, an exercise in budget deception. In
so doing, they have seriously breached the standard of public
accountability that Americans should be able to expect from their
leaders. In addition, there are a number of sound fiscal policy
arguments against the amendment; I will raise just two examples.
amendment would deepen economic recessions and worsen disasters
Consider the potential risk that the spending cuts required by the
amendment could push soft economy into a recession, or in a worse case,
deepen an existing recession and push us into a depression. Now when
the economy slips into recession, Federal spending helps to cushion the
fall by increasing unemployment insurance and other assistance programs
for low- and moderate-income people. At the same time, income tax
collections drop because people and businesses are making less money in
a recession.
But under the amendment, Congress would be forced, perversely, to do
the opposite: raise taxes, cut spending, and push the economy into an
economic freefall. The so-called automatic economic stabilizers like
unemployment insurance that have proven so useful in recent decades
would be gone, and we would instead effectively enshrine in the
constitution the economic policies of Herbert Hoover. With fiscal
policy enjoined by the amendment, sole responsibility for stabilizing
the economy would rest with the Federal Reserve. And with their almost
exclusive focus on fighting inflation these days, more often than not
they end up protecting Wall Street investors--not average working
families.
As I have suggested, the amendment is an attempt to enshrine an
economic dogma which would cripple our ability to offer pragmatic
responses to changing economic conditions. Because our efforts to
change the balanced budget amendment to take this problem into account
also failed, this serious flaw remains.
Coupled with the absence of any exception for emergency disaster
spending, that was included in a proposed amendment defeated last week,
the lack of economic foresight this reflects is almost breathtaking to
me. In just a few days, we will consider an emergency spending bill to
help pay the Federal share of the California earthquake last year. The
cost of this disaster is now up to $15 billion.
In the last two decades, the Federal Government has spent $134
billion in Federal disaster relief, including $33 billion in the last 5
years alone. Under a balanced budget requirement, what would we do in
the face of a huge flood, earthquake, or other disaster that cost
scores of billions of dollars in relief aid? How long would it take to
garner the three-fifths votes necessary in both Houses to pay for it?
And what special legislative prizes would opponents require for their
votes? Those are all open to questions.
amendment could put federal deposit insurance at risk
Another open question is the impact of the amendment on bank
deposits. I am sure balanced budget amendment supporters don't intend
to put the life savings of American families at risk, or to threaten
the stability of the banking system. And yet that is precisely what
this amendment would do. Since the Depression, the FDIC has insured
depositors against bank failures. That limit is now up to $100,000 per
account. And right now those guarantees cover private savings of about
$2.7 trillion--that's a whole lot of money that's guaranteed by
the U.S. Government. Some have observed that the balanced budget
amendment could put the full faith and credit of the United States
embodied in such guarantees at risk.
amendment does not separate day-to-day expenses from investments
Most Americans believe that a balanced budget, like a balanced
checkbook, is a good idea. They argue that America, like a family,
should always balance its budget. But this overlooks a key fact: The
household budgets of most middle class Americans have substantial debt,
either for a car, a home, or a college education for their kids.
This reflects a central problem with the amendment. It ignores the
difference between two different types of spending: investments for the
future,
[[Page
S3327]] and ``operating,'' or day-to-day, spending. Taking out a
mortgage on a home is investing in your family's future; taking one out
to pay for next year's vacation is not. This is acknowledged by most
State governments, many of whom are required to balance their operating
budgets--but not their investment budgets.
American business agrees; incurring debt to invest and expand a
business has long been a hallmark of business strategies for sustained
growth. With governments, as with families or businesses, borrowing
isn't inherently bad; it depends what you're borrowing for. With
families, businesses or State governments, the central question is:
Will the debt we incur improve our long-term economic prospects? If
this principle applies to household or business budgets, why shouldn't
it apply to the Federal budget? Nonetheless, an amendment to address
this problem was rejected.
No protections for the social security trust funds
This balanced budget amendment fails to protect the Social Security
trust funds from being raided to balance the Federal budget. We tried
to make sure that for the purpose of calculating the deficit under the
balanced budget amendment, the huge surpluses in the Social Security
trust fund would not be counted. In that effort, too, we failed; our
proposed Social Security amendment was defeated. Make no mistake what
this means: Despite the promises of the proponents that they will not
balance the budget on the backs of Social Security recipients, they
have refused to explicitly protect this program in the language of the
constitutional amendment itself. In fact, they fought hard to defeat
our Social Security amendment. That is as good an indication of their
future intentions regarding Social Security as anything we have seen.
A shell game that will require states to raise taxes
There is another problem with this constitutional amendment. For many
in Minnesota, it will likely mean an increase in personal income,
sales, and property taxes needed to offset the loss in Federal aid from
crime control to higher education, roads and bridges to farm programs,
rural economic development to Medicare. This shell game, in
which costs are simply shifted from the Federal Government onto the
States, would force Minnesota to fund these efforts on its own. A
recent Treasury Department study concluded that an increase of between
9 and 13 percent in Minnesota taxes would be required to make up the
difference. In reality, a vote for the balanced budget amendment is
really a vote for a trickle-down tax increase.
a standard of fairness
I think it's a simple question of fairness. If this constitutional
amendment passes, in the next 7 years we are going to have to make
$1.48 trillion in spending cuts and other policy changes--assuming that
we enact Republican-proposed tax cuts for the wealthy and defense
increases. If we don't, we'll still have to make about $1.2 trillion in
cuts. If we make these cuts to meet the balanced budget amendment
requirement and timetable, then we should make sure that wealthy
interests in our society, those who have political clout, those who
hire lobbyists to make their case every day here in Washington, will be
asked to pay their fair share. At least they should bear as much of the
burden as regular middle class folks that we represent, who receive
Social Security or Medicare or Veterans benefits, or who receive
student loans to send their kids to college and offer them a better
future.
That's just common sense, and I had hoped that during this debate we
would signal that we would apply such a standard of fairness. For
example, too often in discussions about low-priority Federal spending
which ought to be cut, one set of expenditures has been notoriously
absent. That is tax breaks for wealthy and well-positioned special
interests. But that, too, was rejected by the constitutional
amendment's proponents when I offered an amendment urging simply that
we make sure such special tax breaks are on the table as we move
forward in our deficit reduction efforts. Tax subsidies are heavily
skewed to corporations and the relatively few people with very high
incomes, while Government benefits and services go in far larger
proportions to the middle class and the poor.
In the last few weeks, this issue of fairness has emerged more and
more clearly to me, more by its absence than by its presence. It looks
to me as though the current standard, at least as it has been applied
so far in the published plans of balanced budget proponents, will not
require much, if any, sacrifice from special interests in our society
who have enjoyed certain tax breaks, benefits, preferences, deductions
and credits that most regular middle-class taxpayers don't enjoy.
efforts to scrutinize tax breaks for wealthy blocked
But while the constitutional amendment's proponents don't seem to
mind that it could require States to raise State taxes by large
margins, they are adamantly opposed to making sure that wealthy
corporations and others pay their fair share of the deficit reduction
burden.
It is a fact, often overlooked, that we can spend money just as
easily through the Tax Code, through what are called ``tax
expenditures,'' as we can through the normal appropriations process.
Spending is spending, whether it comes in the form of a government
check or in the form of a tax break for some special purpose, like a
subsidy, a credit, a deduction, or accelerated depreciation for this
type of investment or that. These tax expenditures--in some cases they
are tax loopholes--allow some taxpayers to escape paying their fair
share, and thus make everyone else pay at higher rates. These arcane
tax breaks are simply special exceptions to the normal rules, rules
that oblige all of us to share the burdens of citizenship by paying our
taxes.
The General Accounting Office issued a report last year titled, ``Tax
Policy: Tax Expenditures Deserve More Scrutiny.'' It makes a compelling
case for subjecting these tax expenditures to greater congressional and
administration scrutiny, just as direct spending is scrutinized. The
GAO noted that most of these tax expenditures currently in the Tax Code
are not subject to any annual reauthorization or other kind of
systematic periodic review. They observed that many of these special
tax breaks were enacted in response to economic conditions that no
longer exist. In fact, they found that of the 124 tax expenditures
identified by the committee in 1993, about half were enacted before
1950. Now that does not automatically call them into question. It just
illustrates the problem of their not being very carefully looked at in
any systematic way over very long periods of time. Many of these
industry-specific breaks get embedded in the Tax Code, and are not
looked at again for years. And yet we refused by roll call vote to even
commit to consider them as we move forward in our efforts to balance
the Federal books.
When we begin to weigh, for example, scaling back the special
treatment for percentage depletion allowances for the oil and gas
industry against cutting food and nutrition programs for hungry
children, we may come out with quite different answers than we have in
the past about whether we can still afford to subsidize this industry.
The nonpartisan Congressional Budget Office estimates that eliminating
this particular tax break would save $4.9 billion in Federal revenues
over 5 years.
And this is not an isolated example. The Congressional Joint Tax
Committee has estimated that tax expenditures cost the U.S. Treasury
over $420 billion every single year. And they estimate that if we don't
hold them in check, that amount will grow by $60 billion to over $485
billion by 1999. Now some tax expenditures serve important public
purposes, like supporting charitable organizations, and should be
retained. But many of these must be on the table along with other
spending as we look for places to cut the deficit.
I could not find any hint of interest in cutting corporate tax breaks
in the Republican contract, I think because many of the benefits of
these tax breaks go to very high-income people with wealth and power
and clout in our society, and to corporations with high-powered
lobbyists. They're the ones for whom the contract provides an
estimated $169 billion windfall that would resurrect the tax-shelter
industry and effectively slash corporate rates.
At a time when we are talking about potentially huge spending cuts in
meat inspections designed to insure against
[[Page
S3328]] outbreaks of disease; or in higher education aid for
middle class families; or in protection for our air, our lakes, and our
land; or in highways; or in community development programs for States
and localities; or in sewer and water projects for our big cities; or
in safety net programs for vulnerable children, we should be willing to
weigh these cuts against special tax loopholes on which we spend
billions each year. And yet we could not even agree to put these on the
table along with everything else as we move forward in our efforts to
reduce the deficit.
ENSHRINES MINORITY RULE
Constitutional and congressional scholars have observed that the
balanced budget amendment gives a veto power to a small minority of
either the House or the Senate in key budget decisions, a profoundly
antidemocratic shift away from our proud, 200-year-old tradition of
majority rule. The need to win approval from three-fifths of both
Houses to waive the balanced budget requirement in a recession would
give added power to members whose votes might be needed to avoid
plunging the country into a deeper downturn.
Thus, the price of an agreement to let the Government run even a
modest deficit during a recession, and to provide recession-related
unemployment benefits, might be a capital gains cut or other tax break
touted by its backers as a ``growth incentive.'' As we saw in the
1980's, these tax breaks usually prove to lose revenues and increase
the deficit over the long term, which in turn could lead to additional
program cuts in subsequent years to bring the budget back into balance.
WEAKENS OUR ABILITY TO INVEST
As I have observed, the balanced budget amendment would largely deny
to the Federal government a basic practice that most businesses,
families, and States and local governments use--borrowing to finance
investments with a long-term payoff. Borrowing to finance new
investments is standard business practice. A business that failed to
modernize because it could not borrow would soon be left behind.
We must continue to invest in our people. Our economy is creating new
jobs at a near-record pace--over 5 million in the last 2 years alone--
yet it doesn't give much help to those ordinary working families who
are at the bottom, or in the struggling middle class. As one Iron
Ranger in Minnesota recently told me, ``All these jobs being created
doesn't do me much good if I have to hold three of them to keep my
family together.'' His comment reflects the anger and economic
insecurity many Americans feel because their personal economic
experience doesn't jibe with what Government statistics tell them--that
unemployment is down, inflation is in check, and economic growth
and productivity are booming. Despite these statistics, standards of
living and real wages of workers remain flat, or in slight decline;
many are just one downsizing away from layoff, and feel less secure. We
must invest in the skills and futures of our people if we are going to
turn this situation around.
The amendment would force a scaling back of Government investment in
areas where economists stress more investment is needed:
infrastructure, education and training, early intervention programs for
children, research and development. There is growing evidence we invest
too little in these areas and that such under-investment has
contributed to our Nation's weak economic performance in recent years.
It is true that for too long the Federal Government has been
undisciplined in its borrowing, and that is what threatens our fiscal
future. We have a responsibility to future generations to get our
fiscal house in order, and to do it the Federal Government has to
reprioritize spending in relation to this central question of
investment, by re-examining programs across the board and eliminating
or scaling back those that are wasteful and unnecessary. We must
redesign cumbersome Federal structures to meet the challenges of the
information age, of rapidly changing demographics, of our decaying
inner cities. We should do this in a way that's fair, open and
accountable, without the budget smoke and mirrors that have too often
fogged the real choices facing voters.
Let me say a word about the impact that systematic disinvestment
would have on working families, children and the elderly in my State,
because ultimately that is what this whole debate is about.
the impact of the amendment on minnesota families
Throughout this debate, I have tried to ask myself basic questions
about the impact of this balanced budget amendment on the families in
Minnesota whom I represent. I think it would inflict on Minnesotans
serious harm, and that is why I cannot in good conscience support it.
That is ultimately the deciding factor for me.
I've already talked about the shell game that this amendment would
require by shifting the costs of government from the Federal to the
State level, and forcing States to raise income, property and sales
taxes--in Minnesota's case by about 13 percent, according to the
Treasury Department. But what about the actual spending cuts? How would
they be distributed? Who would have to sacrifice, and who would
benefit?
Over 7 years, under the balanced budget amendment and accompanying
Republican proposals, Minnesota would lose nearly $5.9 billion in
Federal Medicare funds, Medicaid cuts would total nearly $3.7 billion,
elementary and secondary education would lose $1.5 billion, and Federal
law enforcement would lose $143.7 million. Minnesota farmers also would
likely lose billions in farm payments, causing a serious decrease in
family farm income. And it's not just rural areas
that would be hit. The two largest urban counties in my State,
Hennepin and Ramsey Counties, would alone lose about $10.3 billion in
total Federal aid over 7 years.
In addition, despite Republican promises to temporarily protect this
program, large cuts in Social Security benefits to Minnesotans--an
estimated $2,000 annually per beneficiary--should also be expected if
this program is slated for across-the-board cuts.
These are very large cuts, and they will have a major impact on the
people of my State. I have heard from elderly couples in Minnesota on
fixed incomes, terrified about the impact of the amendment on their
Medicare funding. And they have reason to be fearful. I have sat with
homeless men and women, Medicaid recipients, who are threatened with
going without even the most basic health care under the amendment.
Instead of this approach, we owe it to these people to do real
comprehensive health care reform.
Despite the claims of some that opponents of the amendment are
exaggerating the threat posed by these huge spending cuts, this is for
real. I am not making this up. In fact, just the other day, Finance
Committee Chairman Packwood said that he thought we would have to make
up to $550 billion in cuts in Medicare alone to meet its requirements--
not to mention the huge cuts in Medicaid he acknowledged would be
necessary. And it could go much higher than that, depending on budget
decisions made in other areas.
Finally, let me say a word about the process by which this amendment
has been considered. In recent weeks, balanced budget amendment
proponents have rejected virtually every single good faith effort to
improve the constitutional amendment. Amendments to prevent a raid of
the Social Security trust funds, to exempt earned veteran's benefits,
to strike the majority requirements, to prevent harm to hungry and
homeless children, to separate investment from day-to-day operating
budgets, to provide for exceptions for major disasters and economic
recessions--and many others--were defeated.
I believe that if the Senate passes this amendment today, as we look
back on this debate from the midst of a serious recession, major
disaster, or even undeclared national security emergency, this
unwillingness by proponents to accept even modest, reasonable changes
in the amendment will prove seriously misguided.
While at first look this amendment appears to make sense and is
widely popular, amending our Constitution in this way would be a
mistake with potentially serious fiscal, economic, and social
consequences and would seriously alter our democratic process. We can
and should balance the budget without gimmicks and without changing the
Constitution. I intend to continue to vote to do that. I urge my
colleagues to join me in that effort, and to
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S3329]] vote no on the balanced budget amendment. I yield the
floor.
Mr. LEVIN. Mr. President, I want deficit reduction and I am willing
to work for it. That is why I supported the President's deficit
reduction package in the last Congress. But while I have stood up for
real deficit reduction, what I am not prepared to do is to write into
the Constitution language that is more likely to lead to
disillusionment and constitutional crisis than to a balanced budget.
I see five flaws in the proposed amendment. First, the proposed
amendment would not balance the budget, it would just say that a future
Congress has to pass a law to enforce a balanced budget. Why wait?
Unless and until we make the tough choices needed to cut spending or
raise revenues, we will not have a balanced budget, whether or not we
pass the proposed constitutional amendment and whether or not the
States ratify it. We will instead have passed what could turn out to be
a cynicism-deepening illusion.
The proposed constitutional amendment says that starting no earlier
than 2002, Congress has to have a law enacted which enforces a balanced
budget. Why wait? Why wait to do the hard work of passing implementing
laws and doing the actual budgeting? That's a dodge which allows some
to say we are cured before we have taken the medicine. It puts a giant
loophole in the Constitution to cover over congressional weakness.
In May 1992, Robert Reischauer, the Director of the nonpartisan
Congressional Budget Office, testified before the House Budget
Committee that a balanced budget amendment is not a solution; it is
``only a repetition in an even louder voice of an intention that has
been stated over and over again during the course of the last 50
years.'' Dr. Reischauer stated:
It would be a cruel hoax to suggest to the American public
that one more procedural promise in the form of a
constitutional amendment is going to get the job done. The
deficit cannot be brought down without making painful
decisions to cut specific programs and raise particular
taxes. A balanced budget amendment in and of itself will
neither produce a plan nor allocate responsibility for
producing one.
Dr. Reischauer further stated:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
The public understands this. They know the difference between
promises and action. Let me tell you what some of the commentators are
saying about the balanced budget amendment back in my home State. Here
is what the Detroit Free Press said on January 15:
You wouldn't take seriously any politician who promised to
be faithful to his spouse, beginning in 2002, so why do so
many people take seriously the proposed balanced-budget
amendment?
It's the same kind of empty promise to be good--not now,
but later. Putting it in the Constitution isn't likely to
confer on Congress the spine or the wisdom to fulfill it.
* * * [T]he way to cut the budget is to cut the budget, not
to promise to do it sometime in the future. * * * Gluing a
balanced budget amendment onto the Constitution only
postpones the moment of truth.
And here is what the Battle Creek Enquirer said on January 29:
If a balanced budget is such a good idea, we say to
Congress: ``Just do it!'' After all, waiting until a
constitutional amendment mandates it will just delay a
balanced budget--perhaps by years.
This Congress isn't likely to give the nation a balanced
budget, that's for certain. But, by touting the need for this
amendment, it sure can talk like a Congress that already has
* * * [I]t's all an illusion.
``Just do it!'' That's what the American people want, Mr. President.
They know the difference between promises and action, and they want the
latter. A constitutional amendment can promise a balanced budget, but
it cannot deliver a balanced budget. Only concrete action by the
Congress can do that.
Put another way, Mr. President, the proposed constitutional amendment
has no effective enforcement mechanism. The amendment relies on a
future Congress to act to implement and enforce it. That is the bottom
line. This is the same reed that proved so weak in the 1980's when the
President and the Congress quadrupled the national debt from $1
trillion to $4 trillion.
The argument has been made that we have tried everything else, why
not a constitutional amendment. We can't depend on legislation, the
argument goes, so let's try a constitutional amendment.
So what does this amendment do? It depends on the same kind of
legislation to be enacted which its sponsors say has not previously
been effective.
When we were debating this amendment in 1986, Senator Hatch
acknowledged the following:
[T]here is no question that Congress would have to pass
implementing legislation to make it effective. * * * It would
be the obligation of Congress, after the amendment is passed
by both Houses and ratified by three-quarters of the states
to * * * enact legislation that would cause this to come
about.
And again, CBO Director Reischauer pointed out that:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
Just a few weeks ago, on January 30, Senator Hatch stated:
``* * * [U]nder section 6 of the amendment, Congress must--
and I emphasize must--mandate exactly what type of
enforcement mechanism it wants, whether it be sequestration,
rescission, or the establishment of a contingency fund.
In fact, the committee report accompanying this constitutional
amendment itself states that it ``* * * must be supplemented with
implementing legislation''.
Mr. President, I have offered an amendment to the constitutional
amendment to require this Congress to address this issue by adopting
legislation to implement and enforce a balanced budget requirement now.
Without my amendment, there are no real teeth in the promise of a
balanced budget contained in the proposed amendment.
Alexander Hamilton states in Federalist Paper No. 15, ``If there be
no penalty annexed to disobedience, the resolutions or commands which
pretend to be laws will, in fact, amount to nothing more than advice or
recommendation.''
If congressional weakness is the reason for this amendment--and it
is--then Congress will use the loopholes in this amendment to evade the
responsibility which it sets forth. My fear is that this amendment will
give us an excuse to duck the hard choices, as Congress has often
chosen to do, until it would become effective in 2002--at the earliest.
I am afraid that upcoming Congresses will say ``the balanced budget
amendment will take care of our problems, so we don't need to address
them now.''
Dr. Reischauer, in hi
s 1992 testimony, listed a number of loopholes
that Congress could use to get around an apparently rigid balanced
budget rule:
Using timing mechanisms and other budget gimmicks to achieve short-
run budget targets, including such actions as shifting pay dates
between fiscal years, accelerating or delaying tax collections,
delaying needed spending until future fiscal years, and selling
government assets;
Basing the budget on overly optimistic economic and technical
assumptions; and
Creating off-budget agencies that would have authority to borrow and
spend but whose transactions would not be directly recorded in the
budget.
That is what we did in the 1980's. We used optimistic estimates or
``rosy scenarios''. Here are some of those estimates. In 1981, our
estimates were off by $58 billion. In 1982, our estimates were off by
$73 billion. In 1983, our estimates were off by $91 billion, and on and
on. In 1991, they were off by $119 billion--$119 billion in 1 year. You
talk about a loophole. This one is big enough to drive a $119 billion
deficit through. That is how big this loophole is.
The sponsors of the amendment say that the real enforcement mechanism
is in section 2. That section provides that it will take 60 percent of
the votes, a supermajority, to increase the debt ceiling. So if our
estimates are too rosy--if, for instance, we follow the 1980's model of
estimates in order to evade the constitutional requirement, then, we
are told, we can fall back on
[[Page
S3330]] the requirement that the debt limit can only be
increased by a 60 percent vote in each House.
As Senator Graham of Florida has pointed out, however, the so-called
debt limitation provision in the proposed amendment would allow us to
run deficits in the first decade and a half of the next century of as
much as $120 billion a year, masked by taking that money from the
Social Security trust fund, without that counting toward the deficit.
The proposed amendment applies the 60-vote requirement to ``the limit
on the debt of the United States held by the public''. So the debt held
by the Social Security Administration isn't covered and the usual
majority rule would apply to raising that debt limit.
In any case, history has proven the debt limit is a weak reed to rely
on, because when you vote on whether or not to increase the debt limit,
you are voting whether or not to bring down the Government of the
United States. We have to pay our legitimate debts, however many votes
it may take. If we don't do that, we are finished economically. To make
that point, let me quote from a July 8, 1987 letter from Secretary of
the Treasury James A. Baker III to the Chairman of the Senate Finance
Committee:
I cannot overemphasize the damage that would be done to the
United States' credit standing in the world if the Government
were to default on its obligations, nor the unprecedented and
catastrophic repercussions that would ensue. Market chaos,
financial institution failures, higher interest rates, flight
from the dollar and loss of confidence in the certainty of
all United States Government obligations would produce a
global economic and financial calamity. Future generations of
Americans would have to pay dearly for this grave breach of a
200-year-old trust.
Mr. President, we are not going to achieve a balanced budget by
threatening not to raise the debt ceiling, because that is a nuclear
weapon aimed at the economy of this country. You don't balance the
budget by threatening suicide, and that is what a failure to pay our
debts would be. If we do not pay our debts, this country's economy is
finished. So whether it takes the usual majority or 61 votes, it
doesn't matter. We will have to increase the debt ceiling, because
after the debts have been incurred, we won't have any choice.
Mr. President, my second problem with the amendment is that if a
later Congress does adopt effective enforcement legislation, it would
be putting in the hands of a minority of Senators, representing as
little as 15 percent of the population, critical decision-making power
over the economy of this Nation. Under the proposed amendment, it is
intended that outlays not exceed receipts, and the debt limit not be
increased, unless three-fifths of both Houses of the Congress agreed.
The economic future of our country should not be put in the hands of a
minority by a constitutional amendment which would be so difficult to
change if it went awry.
My third problem with the amendment is that it would put the Social
Security trust fund at risk. By my count, during this debate the Senate
has rejected at least three amendments to protect the Social Security
trust fund. As the senior Senator from Florida explained, Mr.
President, that means that we will continue running deficits of at
least $120 billion a year for more than a decade after this amendment
would go into effect, and will conceal these deficits by taking the
money from the Social Security trust fund. The money in that trust fund
is exactly that--money that we have collected in trust. I cannot vote
for a constitutional amendment which allows the use of that money to
cover up huge deficit spending. That's simply wrong.
My fourth problem with the amendment is that, if effectively
implemented, it would preclude the use of deficit spending to cushion
the impact of a recession. A balanced budget amendment would force the
Federal Government to raise taxes and cut spending in recessions, to
offset the loss of revenue caused by declining income. These policies
would deepen the impact of a recession and could even turn a mild
recession into a depression.
Indeed, the Treasury Department has done a study showing that, were
it not for countercyclical deficit spending, roughly one and a half
million more people would have been unemployed in the 1991-92
recession. Mr. President, we should not ignore the real world hardships
caused by recessions and we should not act in a way which could cause
millions of Americans to lose their jobs.
Finally, Mr. President, I am troubled by the fact that the proposed
amendment is intentionally ambiguous on the role of the President in
carrying out the amendment. The resolution of this crucial issue will
determine how the amendment will affect the checks and balances placed
in the Constitution by our Founding Fathers.
With regard to Presidential impoundment, the Senator from Utah,
Senator Hatch, says the President would have no power to impound funds
unless expressly granted by Congress, but the sponsors refuse to make
this explicit in the amendment itself.
There are some, including Members of this Senate, who already believe
that the President has inherent impoundment powers under article II of
the Constitution. Would not that argument be reinforced by a
constitutional amendment prohibiting outlays from exceeding receipts,
in view of the President's duty to preserve, protect, and defend the
Constitution?
Former Reagan administration Solicitor General Charles Fried has
testified that such a power would exist. He stated:
Now, the command of section 1 is very unqualified. Total
outlays shall not exceed total receipts unless you have the
three-fifths vote. It seems to me that command
would give the President--any President--a far better claim
to impound funds than that which was asserted some years
ago by President Nixon, because the President's warrant
would not be drawn from, as President Nixon said it was,
inherent powers of the Presidency. He could point to the
Constitution itself. He would say that they shall not
exceed, and he swears an oath to see that the laws are
faithfully executed, and I would think his claim to
impound would be very strong. Not only his claim, but he
would argue with considerable plausibility his duty to do
so.
So again, the record is, at best, unclear.
The question whether the President could enforce the amendment by
impoundment would not be an insurmountable problem, had the majority
not chosen to make it so. For instance, when we approved a balanced
budget amendment in the Senate in 1982, we included language proposed
by the Senator from New Mexico, Mr. Domenici, to ensure that the
amendment could not be construed to grant the President impoundment
powers.
This year, however, the sponsors of the amendment decided to remain
silent on this issue. That is not the way we should address the
question of amending the Constitution. This is the Constitution we are
talking about, and we need to know what the amendment we are
considering means in this critical area.
In conclusion, Mr. President, the proposed amendment provides too
easy an excuse for Congress not to act now to reduce the deficit and it
doesn't force congressional action later either.
It lets us off the hook now, and there is no hook later.
It's based on the argument that a constitutional amendment is needed
because previous laws calling for a balanced budget didn't work. But
its success, by its own terms in section 6, is dependent upon a future
Congress enacting a similar law.
The amendment before us, in other words, is unlikely to reduce the
deficit, but is likely to increase public cynicism about the willpower
of Congress to act.
We can and we should adopt enforcement legislation to achieve a
balanced budget now, with or without a constitutional amendment.
There is only one way to balance the budget now, or in 2002--and that
is with the willpower to make the tough choices. I hope we will defeat
this constitutional amendment and instead show the will power to make
the tough choices and enact enforcement legislation actually needed to
balance the budget.
Mrs. MURRAY. Mr. President, I voted against House Joint Resolution 1,
the so-called balanced budget amendment.
I voted no because this amendment is a 10-second political sound bite
with decades of economic implications. It will handcuff future
generations to an
[[Page
S3331]] economic blueprint this Congress dictates in 1995. And,
worst of all, it makes a mockery of the most important document this
country has ever produced.
I am a member of the Budget Committee. When I came to the Congress 2
years ago, I faced the largest debt ever amassed by any country in the
history of civilization. More debt was created during the 12 years of
Republican administrations in the 1980's and early 1990's than in the
entire 200 years preceding them.
I strongly support putting this country's economic house in order.
Mr. President, I support a balanced Federal budget. The people of this
Nation deserve nothing less. But this amendment does not get us there.
Words on a piece of paper cannot balance the budget, only legislators
like you and I can.
We have to make tough choices as we correct the fiscal mismanagement
of the 1980's. We have to balance the budget with surgical cuts; with a
scalpel, not a meat cleaver.
Mr. President, we have made some very tough decisions. I was one
Member of this body who voted for a plan--a plan with specific cuts and
common sense--which reduces the deficit by $505 billion over 5 years.
Program-by-program, cut-by-cut. Most of the Members of the Senate who
voted against the deficit reduction plan now support this
constitutional amendment.
Mr. President, where are the specifics? What will they cut? Which
taxes will they raise? Who will be hurt? The American people have a
right to know. Under this amendment, we have no idea.
For example, will they cut out funding for the Federal Government's
obligation to clean-up the Hanford Nuclear Reservation in my home State
of Washington? Will they eliminate the home mortgage deduction? Will
they cut Head Start, or WIC, or Ryan White? Will they stop guaranteeing
student loans? Will they block further assistance to our depressed
timber communities, or job training for laid-off aerospace workers?
Mr. President, just this week, we have seen some examples of how
careless cuts can be when they are made with a meat cleaver. The
rescissions package coming before the Senate soon is a mean-spirited
and irrational piece of legislation. As nasty as those cuts are, they
still do not get us to a balanced budget. Instead, they damage those we
can least afford to harm: our children.
If this body is serious about deficit reduction, we should resume the
debate on health care reform. Even cutting every discretionary program
will not get us to a balanced budget. We must control the growth of
health care costs. I find it ironic that many of the same Senators who
opposed the health care reform bill last year now support this
constitutional amendment.
This so-called balanced budget amendment is dangerous. It will remove
all our flexibility in dealing with emergencies--economic troubles like
recessions, or even natural disasters like volcanic eruptions,
earthquakes, flooding, hurricanes, and massive fires. My home State has
experienced many such disasters recently. If this amendment had been
part of the Constitution, how would my friends and neighbors have
coped?
Mr. President, I believe many of our colleagues would want to help in
these emergency situations. That is why the Congress is the proper
venue for deciding these issues--our Founding Fathers thought so, too.
This constitutional amendment throws our responsibility to the
courts. The courts will decide if funding is appropriate. Supreme Court
justices are not responsible to the people of my home State; they are
not elected by anyone. They are not sent to the Nation's capital to
tend to the needs of my constituents.
Mr. President, we have amended the Constitution only 17 times since
we adopted the Bill of Rights. We have never changed the Constitution
lightly. With each previous amendment, the American people voted to
expand rights and outline responsibilities--we have never inserted an
economic plan into the Constitution. This amendment sets a terrible
precedent.
I voted in favor of several amendments to the House Joint Resolution
1. I could see that the resolution had considerable support, and I
wanted to make sure that if it did indeed pass, we protected our most
vulnerable populations; that we maintained the integrity of the Social
Security trust fund; that we continued our fight against violent crime;
that we respected our veterans; and that we exempt natural disasters
from cuts.
I also believe that we should display common sense and work to reduce
the massive deficit before we enacted sweeping, across-the-board tax
cuts.
These safeguards all failed--every one of them. All attempts at
tempering the resolution, or placing some sensible priorities into the
legislation, were killed.
Mr. President, this is bad policy, and I cannot support any measure
that will handcuff our country's economic policy. When I stand in this
Chamber, I remember that I am not only a U.S. Senator but also a
mother.
It might be popular to vote yes, but I won't worry about my own
personal popularity until I know my children's economic future is safe.
I do not believe we should trivialize our Constitution in order to give
politicians a reason to make the kind of choices they should be making
anyway.
This resolution will hurt our country and handcuff future
generations. Amending the U.S. Constitution is not worth the gamble.
For these reasons, Mr. President, I did not support House Joint
Resolution 1.
Mr. PRESSLER. Mr. President, since 1981, there have been eight
balanced budget amendment measures that have been approved by the
Senate Judiciary Committee and reported to the Senate. Three of these
measures have received floor consideration.
In 1982, the Senate passed Senate Joint Resolution 58 by a 69-to-31
vote. This marked the first time either House of Congress had approved
such a measure. Although a substantial majority of the House of
Representatives voted in favor of a counterpart of Senate Joint
Resolution 58, the 236-to-187 margin fell short of the necessary two-
thirds vote.
In 1986, the Senate rejected a balanced budget amendment (
S.J. Res.
225) by a vote of 66-to-34, thus failing to achieve the necessary two-
thirds majority by a single vote.
Then during 1994, the Senate defeated Senate Joint Resolution 41 by a
vote of 63-to-37, 4 votes short of the two-thirds necessary for
adoption.
Since coming to the Senate in 1979, I consistently have cosponsored
and supported balanced budget amendment measures, and have voted for
adoption of these measures at each and every opportunity. I strongly
support the proposed amendment before us which was approved by the
House of Representatives. With our vote today, the Senate will choose
between a failed status quo or a new road toward true fiscal
accountability.
Mr. President, there is compelling need for a balanced budget
amendment to the Constitution. The Federal Government has run deficits
for 23 years in a row and for 54 of the last 62 years. As a result, our
national debt has spiraled to more than $4.8 trillion. The gross annual
interest on the debt exceeds $300 billion.
Moreover, if we maintain the status quo--as reflected in the
President's budget request for fiscal year 1996--the national debt
would increase to more than $6.7 trillion in 2000. Mr. President, is
this the kind of legacy we want to impose upon our children and
grandchildren?
The harsh fact is that up until now we have tried every legislative
means possible to lower deficit spending and achieve tax revenues in
excess of outlays. In the past 10 years, we have seen Gramm-Rudman,
Gramm-Rudman II, the 1990 budget amendment, and the failed 1993 budget
plan. These well-intended measures have failed to move us closer to a
balanced budget. Even if it were to succeed for one budgetary cycle,
what assurances are there for continued balanced budgets and surpluses
sufficient to eliminate our national debt?
There must be a measure beyond Federal statute and outside the
present legislative process that would require continued balanced
Federal budgets. That is why a constitutional measure is necessary.
The constitutional amendment before the Senate today would prohibit
deficit spending except during any fiscal year in which a declaration
of war
[[Page
S3332]] is in effect or when the country is engaged in an urgent
national security crisis. Also, the limit on deficit spending and the
limit on the national debt may be waived by a recorded vote of three-
fifths of the whole number of each House.
It seems that if the limits on deficit spending and the national debt
could be waived by a simple majority vote of the House and the Senate,
the purpose of the constitutional amendment would be nullified. It is
clear more than a majority should be required to waive the amendment.
Year after year huge deficits have been incurred by simple majority
votes.
Requiring a supermajority vote is not unique. The Constitution
currently has nine supermajority requirements on specific actions or
measures. These supermajorities include: ratification of treaties; veto
overrides; expulsion of a Member of the Senate or the House;
impeachment of the President, Vice President, and other Federal civil
officers and judges; waiver of disability of certain persons who
engaged in rebellion against the United States; election of a Vice
President by the Senate; and amendment of the Constitution. Also,
supermajorities are provided for in each House under its constitutional
right to determine the rules of its proceedings.
Measures such as a declaration of war or an amendment to the
Constitution were rightly considered by the framers to be the most
serious of policy commitments. They believed a broader consensus was
needed for these beyond a simple majority. The framers also imposed
supermajority requirements to ensure that the fundamental rights of
individuals were not overrun by the tyranny of a majority. Mr.
President, we have reached a point in our history that any serious
thought of further mortgaging the future of our children and
grandchildren should require a broader consensus than a simple
majority. It is for them that we must get our fiscal house in order. It
is for them that we must pass this balanced budget amendment.
The proposed amendment would take effect within 2 years after
ratification by three-fourths of the States, or by 2002, whichever
comes later. It is significant that 48 States, including my home State
of South Dakota, have constitutional provisions limiting their ability
to incur budget deficits. Such constraints have proven workable in the
States.
It is not surprising that a large majority of persons throughout the
country who have been polled on this issue support a balanced budget
amendment. Certainly, a large majority of South Dakotans from whom I
have heard and with whom I have met urge that this resolution be
adopted. They know it is the only way to achieve balanced Federal
budgets and reduction of the national debt. I hope, Mr. President, our
colleagues will bring that about.
Mr. LEAHY. Mr. President, during the past few days, I have been
dismayed at the attempts of the proponents of this constitutional
amendment to find a fix to pick up a vote or two in order to obtain
passage. It may make for high drama, but it also makes for bad law.
This is the United States Constitution that they are seeking to amend
and its provisions should be carefully crafted, studied and considered.
Back rooms and political dealmaking have no place in amending the
Constitution.
At the center of these desperate negotiations has apparently been a
belated effort to jerryrig some type of budget resolution or
implementing legislation to protect the Social Security trust fund from
being used to balance the budget under this so-called balanced budget
amendment. This is absurd.
The language of House Joint Resolution 1 is very clear. Section 1
states: ``Total outlays for any fiscal year shall not exceed total
receipts for that fiscal year.* * *'' And section 7 states: ``Total
receipts shall include all receipts of the U.S. Government except those
derived from borrowing. Total outlays shall include all outlays of the
U.S. Government except for those for repayment of debt principal.'' The
undisputed reading of this language is that the Social Security trust
fund will be covered by this constitutional amendment.
In addition to the unambiguous language of the constitutional
amendment itself, the legislative history of House Joint Resolution 1
makes it clear that the Social Security trust fund is not protected. In
fact, the proponents have fought back all efforts in the Senate
Judiciary Committee to amend the same language in Senate Joint
Resolution 1 and all amendments offered here on the Senate floor over
the past month.
During Senate Judiciary Committee consideration of this
constitutional amendment, Senator Feinstein offered an amendment to
exclude funds going in and out of the Social Security trust fund from
the definition of total receipts and total outlays. Unfortunately, a
majority of members of the Senate Judiciary Committee tabled Senator
Feinstein's amendment by a vote of 10 to 8 on January 18, 1995.
During the Senate debate on House Joint Resolution 1, Democrats
offered two separate amendments to take Social Security off the table.
Senator Reid offered an amendment to this constitutional amendment that
would have legally protected the
Social Security trust fund by excluding it from the definitions of
total outlays and total receipts in section 7 of House Joint Resolution
1. But that amendment was tabled by a vote of 57 to 41 on February 14,
1995.
Just a few days ago, Senator Feinstein offered a substitute balanced
budget amendment that again would have legally protected the Social
Security trust fund by excluding it from the definitions of total
outlays and total receipts in the substitute amendment. Again, the
proponents of this constitutional amendment tabled the Feinstein
substitute amendment by a vote of 60 to 39. Whether the Tennessee
Valley Authority is exempted and placed ``off budget'' may be in doubt,
but there is no doubt that the Social Security trust fund is included
by the proponents of this constitutional amendment.
Amendments:
Cosponsors:
THE BALANCED BUDGET AMENDMENT
Sponsor:
Summary:
All articles in Senate section
THE BALANCED BUDGET AMENDMENT
(Senate - March 02, 1995)
Text of this article available as:
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[Pages
S3325-S3366]
THE BALANCED BUDGET AMENDMENT
protection from big spenders? the people lost by one vote
Mr. HELMS. Mr. President, there are two disappointing things to
mention today. The first is my regular daily report on the latest
available disclosure of the total Federal debt, this time as of the
close of business yesterday, Wednesday, March 1, stood at
$4,848,389,816.26.
If this debt were to be paid off today, with every man, woman, and
child in the country paying his or her proportionate share, each of us
would have to fork over $18,404.57. Of course, since millions of
Americans pay no taxes at all, the average share of the Federal debt
would be far greater than the per capita amount referred to above.
The other sad thing? It is, of course, the Senate's failure today to
approve a constitutional amendment requiring Congress to balance the
Federal budget. If just one more Senator had voted today in favor of
the amendment, it would have been approved by 67 Senators, exactly
enough to pass the amendment and send it to the 50 States for
ratification.
Don't look for a balanced Federal budget anytime soon. But one day it
will come. The American people will demand it.
REDUCE THE DEFICIT WITHOUT AMENDING THE CONSTITUTION
Mr. WELLSTONE. Mr. President, over the course of the last 3 weeks, we
have heard many arguments for and against the proposed balanced budget
amendment to the Constitution. Those arguments were made in good faith,
and I know they reflect a broad commitment by those on both sides of
this question to bringing the deficit down to reasonable levels. But
the balanced budget amendment is an empty promise, not a policy. It has
little immediate political cost and very high poll ratings--hence its
popularity. But enacting it would be a serious mistake. We should
reject it in favor of a real, long-term deficit reduction program.
Since 1936, when Minnesota's own Harold Knutson revived the idea of a
balanced budget constitutional amendment that has been originally
rejected by the Constitution's Framers, Congress has debated various
versions. The real question before us today, as it was 50 years ago, is
whether we should weld onto the Founding document of our democracy, the
U.S. Constitution, a budget gimmick that would do more harm than good
to the economic well-being of our Nation, and our citizens.
As I have consistently argued, in my judgment we do not need to amend
the U.S. Constitution to balance the Federal budget. Instead, we must
continue to make tough choices on actual legislative proposals, as I
have done, to cut wasteful and unnecessary post-cold-war defense
spending, to continue to reduce low priority domestic spending, to
completely restructure the way we finance and deliver health care in
this country--in both the public and private sector--and to scale back
special tax breaks for very wealthy interests in our society who have
for a long time not been required to pay their fair share. That
approach is the only responsible, fair way to bring our annual Federal
deficits, and the much larger Federal debt, under control.
For the last 15 years or so, that is what the Congress has been
unwilling to do, and that is the source of a lot of frustration in the
country. Congress has been unable to muster and sustain a majority to
make difficult budget choices. We have seen illustrated here in the
Senate over and over again a central problem: The political gap between
the promise to cut spending, and actual followthrough on that promise.
I make this point because I want to underscore that many of those who
have been beating their chests the hardest about a balanced budget
amendment have often been among those who have consistently voted
against these actual deficit reduction proposals. We cannot give over
our budget-balancing responsibilities to a machine, a mechanism. That
responsibility is ours.
Of course, I support balancing the Federal budget in a responsible,
fair way. Despite all of the rhetoric today, we all at least agree on
that basic goal. That's why some of us have voted consistently to
reduce actual Federal spending when we've had the chance over the last
few years on this floor. Not gimmicks, not smoke and mirrors, not
deficit reduction formulas that never identify precise cuts, but actual
reductions in Federal spending contained in actual amendments to
appropriations bills. Votes on those proposed cuts have been important
indicators of our willingness to make tough choices. This is where the
budget rubber has met the road.
The President's $500 billion deficit reduction package in the 103d
Congress, which I supported and which was approved without a single
Republican vote, was a major downpayment toward balancing the budget.
But Democrats had to do it alone. When we cut, the Republicans ran.
While we acted, they talked. Still, much more must be done.
But now, instead of real budget choices we are presented with a
gimmick that I do not believe will work to balance the budget, and that
if it does work as it's designed, could do serious harm to the U.S.
economy. It will also serve to reduce pressure in the next few years to
actually reduce the deficit further, allowing Members of Congress to
declare a temporary victory without cutting significantly from the
Federal deficit. And then the reckoning will come, when we are up
against the wall at the end of this century and have to balance the
budget in just a few short years with massive spending cuts in all
Federal spending, including Social Security and Medicare.
[[Page
S3326]] If that's true, then why is the amendment so popular,
at least in the abstract? In recent years, the borrow-and-spend
policies of the 1980's and early 1990's have come home to roost,
rekindling public support for drastic measures. But just so that we
don't lose our historical perspective in this debate, I think it's
important to recognize that the problem of huge Federal budget deficits
is a relatively recent one, going back only to the early 1980's. It's
just not true, as some amendment proponents imply, that the Federal
Government has been spending way beyond its means for decades.
The Reagan and Bush administrations gave America by far its 10
largest budget deficits in our history. The huge tax cuts and large
defense increases of that era are still costing us. Whatever your party
affiliation or perspective on enacting this amendment, that is
indisputable. If it were not for the interest costs on the debt
accumulated during the 1981-92 period, the Federal budget would be in
balance in 1996 and headed toward surplus thereafter.
I am not trying to explain away large deficits over the last decade
or so, but simply to point out that they are, more than anything else,
a direct result of the misguided and now thoroughly discredited fiscal
policy called supply side economics. Despite the urgings of some of our
colleagues in the new House leadership, and some of the provisions of
the Republican Contract for America, we must not turn down that supply-
side road again.
Opposing the amendment has not been easy, or politically popular. But
since I have spoken several times on various amendments that have been
proposed over the course of the last few weeks, let me try to
summarize one last time my major reasons for voting against this
amendment.
americans have a right to know how the amendment will affect them
Throughout this debate, I've argued that the people of Minnesota--and
all Americans--have an enormous stake in the outcome of this debate,
and that they have a right to know how the spending cuts required by
the amendment could affect them and their families. I offered an
amendment to one of the first bills before the Senate this year urging
proponents of the constitutional amendment to detail the over a
trillion dollars in cuts they would make to balance the budget by 2002,
before it is sent to the States for ratification. This is simple
``truth-in-budgeting;'' it's the least we could have expected from
proponents.
Indeed, the Minnesota State Legislature and Governor Carlson agree.
And they sent a Minnesota mandate to Washington to prove the point. The
legislature recently passed overwhelmingly a resolution, signed by the
Governor, urging those of us here in Congress to continue our efforts
to reduce the Federal budget deficit, and requesting financial
information on the impact the balanced budget amendment would have on
our State. By rejecting the amendment, which I introduced to provide
the information to all the States that the Minnesota Legislature was
seeking, the Senate sent States a chilling message.
Another major right-to-know amendment, offered by Senator Daschle,
was also defeated. Despite the straightforward logic of this approach,
these amendments were rejected on virtual party-line votes.
And so if we pass this constitutional amendment today, we would be
sending it to the State legislatures for ratification without giving
them, or the millions of American families whom they represent in each
State, any idea of how we intend to cut over a trillion dollars from
the Federal budget between now and the year 2002, or how it will affect
their lives and the lives of their children and grandchildren. Families
will not be told how deep the Medicare, Medicaid, school lunch, higher
education, or Social Security cuts will be; at least not before we vote
on the amendment.
That is, I think, a gross abdication of our sworn responsibility to
serve those we represent, and a slap in the face to those who count on
us for truth-in-budgeting. Recent polls show that over 80 percent of
Americans believe we should be straight with them about how we intend
to balance the budget under this amendment before we act on it. Even
so, balanced budget proponents have rejected the right-to-know and
instead offered Americans a ruse, an exercise in budget deception. In
so doing, they have seriously breached the standard of public
accountability that Americans should be able to expect from their
leaders. In addition, there are a number of sound fiscal policy
arguments against the amendment; I will raise just two examples.
amendment would deepen economic recessions and worsen disasters
Consider the potential risk that the spending cuts required by the
amendment could push soft economy into a recession, or in a worse case,
deepen an existing recession and push us into a depression. Now when
the economy slips into recession, Federal spending helps to cushion the
fall by increasing unemployment insurance and other assistance programs
for low- and moderate-income people. At the same time, income tax
collections drop because people and businesses are making less money in
a recession.
But under the amendment, Congress would be forced, perversely, to do
the opposite: raise taxes, cut spending, and push the economy into an
economic freefall. The so-called automatic economic stabilizers like
unemployment insurance that have proven so useful in recent decades
would be gone, and we would instead effectively enshrine in the
constitution the economic policies of Herbert Hoover. With fiscal
policy enjoined by the amendment, sole responsibility for stabilizing
the economy would rest with the Federal Reserve. And with their almost
exclusive focus on fighting inflation these days, more often than not
they end up protecting Wall Street investors--not average working
families.
As I have suggested, the amendment is an attempt to enshrine an
economic dogma which would cripple our ability to offer pragmatic
responses to changing economic conditions. Because our efforts to
change the balanced budget amendment to take this problem into account
also failed, this serious flaw remains.
Coupled with the absence of any exception for emergency disaster
spending, that was included in a proposed amendment defeated last week,
the lack of economic foresight this reflects is almost breathtaking to
me. In just a few days, we will consider an emergency spending bill to
help pay the Federal share of the California earthquake last year. The
cost of this disaster is now up to $15 billion.
In the last two decades, the Federal Government has spent $134
billion in Federal disaster relief, including $33 billion in the last 5
years alone. Under a balanced budget requirement, what would we do in
the face of a huge flood, earthquake, or other disaster that cost
scores of billions of dollars in relief aid? How long would it take to
garner the three-fifths votes necessary in both Houses to pay for it?
And what special legislative prizes would opponents require for their
votes? Those are all open to questions.
amendment could put federal deposit insurance at risk
Another open question is the impact of the amendment on bank
deposits. I am sure balanced budget amendment supporters don't intend
to put the life savings of American families at risk, or to threaten
the stability of the banking system. And yet that is precisely what
this amendment would do. Since the Depression, the FDIC has insured
depositors against bank failures. That limit is now up to $100,000 per
account. And right now those guarantees cover private savings of about
$2.7 trillion--that's a whole lot of money that's guaranteed by
the U.S. Government. Some have observed that the balanced budget
amendment could put the full faith and credit of the United States
embodied in such guarantees at risk.
amendment does not separate day-to-day expenses from investments
Most Americans believe that a balanced budget, like a balanced
checkbook, is a good idea. They argue that America, like a family,
should always balance its budget. But this overlooks a key fact: The
household budgets of most middle class Americans have substantial debt,
either for a car, a home, or a college education for their kids.
This reflects a central problem with the amendment. It ignores the
difference between two different types of spending: investments for the
future,
[[Page
S3327]] and ``operating,'' or day-to-day, spending. Taking out a
mortgage on a home is investing in your family's future; taking one out
to pay for next year's vacation is not. This is acknowledged by most
State governments, many of whom are required to balance their operating
budgets--but not their investment budgets.
American business agrees; incurring debt to invest and expand a
business has long been a hallmark of business strategies for sustained
growth. With governments, as with families or businesses, borrowing
isn't inherently bad; it depends what you're borrowing for. With
families, businesses or State governments, the central question is:
Will the debt we incur improve our long-term economic prospects? If
this principle applies to household or business budgets, why shouldn't
it apply to the Federal budget? Nonetheless, an amendment to address
this problem was rejected.
No protections for the social security trust funds
This balanced budget amendment fails to protect the Social Security
trust funds from being raided to balance the Federal budget. We tried
to make sure that for the purpose of calculating the deficit under the
balanced budget amendment, the huge surpluses in the Social Security
trust fund would not be counted. In that effort, too, we failed; our
proposed Social Security amendment was defeated. Make no mistake what
this means: Despite the promises of the proponents that they will not
balance the budget on the backs of Social Security recipients, they
have refused to explicitly protect this program in the language of the
constitutional amendment itself. In fact, they fought hard to defeat
our Social Security amendment. That is as good an indication of their
future intentions regarding Social Security as anything we have seen.
A shell game that will require states to raise taxes
There is another problem with this constitutional amendment. For many
in Minnesota, it will likely mean an increase in personal income,
sales, and property taxes needed to offset the loss in Federal aid from
crime control to higher education, roads and bridges to farm programs,
rural economic development to Medicare. This shell game, in
which costs are simply shifted from the Federal Government onto the
States, would force Minnesota to fund these efforts on its own. A
recent Treasury Department study concluded that an increase of between
9 and 13 percent in Minnesota taxes would be required to make up the
difference. In reality, a vote for the balanced budget amendment is
really a vote for a trickle-down tax increase.
a standard of fairness
I think it's a simple question of fairness. If this constitutional
amendment passes, in the next 7 years we are going to have to make
$1.48 trillion in spending cuts and other policy changes--assuming that
we enact Republican-proposed tax cuts for the wealthy and defense
increases. If we don't, we'll still have to make about $1.2 trillion in
cuts. If we make these cuts to meet the balanced budget amendment
requirement and timetable, then we should make sure that wealthy
interests in our society, those who have political clout, those who
hire lobbyists to make their case every day here in Washington, will be
asked to pay their fair share. At least they should bear as much of the
burden as regular middle class folks that we represent, who receive
Social Security or Medicare or Veterans benefits, or who receive
student loans to send their kids to college and offer them a better
future.
That's just common sense, and I had hoped that during this debate we
would signal that we would apply such a standard of fairness. For
example, too often in discussions about low-priority Federal spending
which ought to be cut, one set of expenditures has been notoriously
absent. That is tax breaks for wealthy and well-positioned special
interests. But that, too, was rejected by the constitutional
amendment's proponents when I offered an amendment urging simply that
we make sure such special tax breaks are on the table as we move
forward in our deficit reduction efforts. Tax subsidies are heavily
skewed to corporations and the relatively few people with very high
incomes, while Government benefits and services go in far larger
proportions to the middle class and the poor.
In the last few weeks, this issue of fairness has emerged more and
more clearly to me, more by its absence than by its presence. It looks
to me as though the current standard, at least as it has been applied
so far in the published plans of balanced budget proponents, will not
require much, if any, sacrifice from special interests in our society
who have enjoyed certain tax breaks, benefits, preferences, deductions
and credits that most regular middle-class taxpayers don't enjoy.
efforts to scrutinize tax breaks for wealthy blocked
But while the constitutional amendment's proponents don't seem to
mind that it could require States to raise State taxes by large
margins, they are adamantly opposed to making sure that wealthy
corporations and others pay their fair share of the deficit reduction
burden.
It is a fact, often overlooked, that we can spend money just as
easily through the Tax Code, through what are called ``tax
expenditures,'' as we can through the normal appropriations process.
Spending is spending, whether it comes in the form of a government
check or in the form of a tax break for some special purpose, like a
subsidy, a credit, a deduction, or accelerated depreciation for this
type of investment or that. These tax expenditures--in some cases they
are tax loopholes--allow some taxpayers to escape paying their fair
share, and thus make everyone else pay at higher rates. These arcane
tax breaks are simply special exceptions to the normal rules, rules
that oblige all of us to share the burdens of citizenship by paying our
taxes.
The General Accounting Office issued a report last year titled, ``Tax
Policy: Tax Expenditures Deserve More Scrutiny.'' It makes a compelling
case for subjecting these tax expenditures to greater congressional and
administration scrutiny, just as direct spending is scrutinized. The
GAO noted that most of these tax expenditures currently in the Tax Code
are not subject to any annual reauthorization or other kind of
systematic periodic review. They observed that many of these special
tax breaks were enacted in response to economic conditions that no
longer exist. In fact, they found that of the 124 tax expenditures
identified by the committee in 1993, about half were enacted before
1950. Now that does not automatically call them into question. It just
illustrates the problem of their not being very carefully looked at in
any systematic way over very long periods of time. Many of these
industry-specific breaks get embedded in the Tax Code, and are not
looked at again for years. And yet we refused by roll call vote to even
commit to consider them as we move forward in our efforts to balance
the Federal books.
When we begin to weigh, for example, scaling back the special
treatment for percentage depletion allowances for the oil and gas
industry against cutting food and nutrition programs for hungry
children, we may come out with quite different answers than we have in
the past about whether we can still afford to subsidize this industry.
The nonpartisan Congressional Budget Office estimates that eliminating
this particular tax break would save $4.9 billion in Federal revenues
over 5 years.
And this is not an isolated example. The Congressional Joint Tax
Committee has estimated that tax expenditures cost the U.S. Treasury
over $420 billion every single year. And they estimate that if we don't
hold them in check, that amount will grow by $60 billion to over $485
billion by 1999. Now some tax expenditures serve important public
purposes, like supporting charitable organizations, and should be
retained. But many of these must be on the table along with other
spending as we look for places to cut the deficit.
I could not find any hint of interest in cutting corporate tax breaks
in the Republican contract, I think because many of the benefits of
these tax breaks go to very high-income people with wealth and power
and clout in our society, and to corporations with high-powered
lobbyists. They're the ones for whom the contract provides an
estimated $169 billion windfall that would resurrect the tax-shelter
industry and effectively slash corporate rates.
At a time when we are talking about potentially huge spending cuts in
meat inspections designed to insure against
[[Page
S3328]] outbreaks of disease; or in higher education aid for
middle class families; or in protection for our air, our lakes, and our
land; or in highways; or in community development programs for States
and localities; or in sewer and water projects for our big cities; or
in safety net programs for vulnerable children, we should be willing to
weigh these cuts against special tax loopholes on which we spend
billions each year. And yet we could not even agree to put these on the
table along with everything else as we move forward in our efforts to
reduce the deficit.
ENSHRINES MINORITY RULE
Constitutional and congressional scholars have observed that the
balanced budget amendment gives a veto power to a small minority of
either the House or the Senate in key budget decisions, a profoundly
antidemocratic shift away from our proud, 200-year-old tradition of
majority rule. The need to win approval from three-fifths of both
Houses to waive the balanced budget requirement in a recession would
give added power to members whose votes might be needed to avoid
plunging the country into a deeper downturn.
Thus, the price of an agreement to let the Government run even a
modest deficit during a recession, and to provide recession-related
unemployment benefits, might be a capital gains cut or other tax break
touted by its backers as a ``growth incentive.'' As we saw in the
1980's, these tax breaks usually prove to lose revenues and increase
the deficit over the long term, which in turn could lead to additional
program cuts in subsequent years to bring the budget back into balance.
WEAKENS OUR ABILITY TO INVEST
As I have observed, the balanced budget amendment would largely deny
to the Federal government a basic practice that most businesses,
families, and States and local governments use--borrowing to finance
investments with a long-term payoff. Borrowing to finance new
investments is standard business practice. A business that failed to
modernize because it could not borrow would soon be left behind.
We must continue to invest in our people. Our economy is creating new
jobs at a near-record pace--over 5 million in the last 2 years alone--
yet it doesn't give much help to those ordinary working families who
are at the bottom, or in the struggling middle class. As one Iron
Ranger in Minnesota recently told me, ``All these jobs being created
doesn't do me much good if I have to hold three of them to keep my
family together.'' His comment reflects the anger and economic
insecurity many Americans feel because their personal economic
experience doesn't jibe with what Government statistics tell them--that
unemployment is down, inflation is in check, and economic growth
and productivity are booming. Despite these statistics, standards of
living and real wages of workers remain flat, or in slight decline;
many are just one downsizing away from layoff, and feel less secure. We
must invest in the skills and futures of our people if we are going to
turn this situation around.
The amendment would force a scaling back of Government investment in
areas where economists stress more investment is needed:
infrastructure, education and training, early intervention programs for
children, research and development. There is growing evidence we invest
too little in these areas and that such under-investment has
contributed to our Nation's weak economic performance in recent years.
It is true that for too long the Federal Government has been
undisciplined in its borrowing, and that is what threatens our fiscal
future. We have a responsibility to future generations to get our
fiscal house in order, and to do it the Federal Government has to
reprioritize spending in relation to this central question of
investment, by re-examining programs across the board and eliminating
or scaling back those that are wasteful and unnecessary. We must
redesign cumbersome Federal structures to meet the challenges of the
information age, of rapidly changing demographics, of our decaying
inner cities. We should do this in a way that's fair, open and
accountable, without the budget smoke and mirrors that have too often
fogged the real choices facing voters.
Let me say a word about the impact that systematic disinvestment
would have on working families, children and the elderly in my State,
because ultimately that is what this whole debate is about.
the impact of the amendment on minnesota families
Throughout this debate, I have tried to ask myself basic questions
about the impact of this balanced budget amendment on the families in
Minnesota whom I represent. I think it would inflict on Minnesotans
serious harm, and that is why I cannot in good conscience support it.
That is ultimately the deciding factor for me.
I've already talked about the shell game that this amendment would
require by shifting the costs of government from the Federal to the
State level, and forcing States to raise income, property and sales
taxes--in Minnesota's case by about 13 percent, according to the
Treasury Department. But what about the actual spending cuts? How would
they be distributed? Who would have to sacrifice, and who would
benefit?
Over 7 years, under the balanced budget amendment and accompanying
Republican proposals, Minnesota would lose nearly $5.9 billion in
Federal Medicare funds, Medicaid cuts would total nearly $3.7 billion,
elementary and secondary education would lose $1.5 billion, and Federal
law enforcement would lose $143.7 million. Minnesota farmers also would
likely lose billions in farm payments, causing a serious decrease in
family farm income. And it's not just rural areas
that would be hit. The two largest urban counties in my State,
Hennepin and Ramsey Counties, would alone lose about $10.3 billion in
total Federal aid over 7 years.
In addition, despite Republican promises to temporarily protect this
program, large cuts in Social Security benefits to Minnesotans--an
estimated $2,000 annually per beneficiary--should also be expected if
this program is slated for across-the-board cuts.
These are very large cuts, and they will have a major impact on the
people of my State. I have heard from elderly couples in Minnesota on
fixed incomes, terrified about the impact of the amendment on their
Medicare funding. And they have reason to be fearful. I have sat with
homeless men and women, Medicaid recipients, who are threatened with
going without even the most basic health care under the amendment.
Instead of this approach, we owe it to these people to do real
comprehensive health care reform.
Despite the claims of some that opponents of the amendment are
exaggerating the threat posed by these huge spending cuts, this is for
real. I am not making this up. In fact, just the other day, Finance
Committee Chairman Packwood said that he thought we would have to make
up to $550 billion in cuts in Medicare alone to meet its requirements--
not to mention the huge cuts in Medicaid he acknowledged would be
necessary. And it could go much higher than that, depending on budget
decisions made in other areas.
Finally, let me say a word about the process by which this amendment
has been considered. In recent weeks, balanced budget amendment
proponents have rejected virtually every single good faith effort to
improve the constitutional amendment. Amendments to prevent a raid of
the Social Security trust funds, to exempt earned veteran's benefits,
to strike the majority requirements, to prevent harm to hungry and
homeless children, to separate investment from day-to-day operating
budgets, to provide for exceptions for major disasters and economic
recessions--and many others--were defeated.
I believe that if the Senate passes this amendment today, as we look
back on this debate from the midst of a serious recession, major
disaster, or even undeclared national security emergency, this
unwillingness by proponents to accept even modest, reasonable changes
in the amendment will prove seriously misguided.
While at first look this amendment appears to make sense and is
widely popular, amending our Constitution in this way would be a
mistake with potentially serious fiscal, economic, and social
consequences and would seriously alter our democratic process. We can
and should balance the budget without gimmicks and without changing the
Constitution. I intend to continue to vote to do that. I urge my
colleagues to join me in that effort, and to
[[Page
S3329]] vote no on the balanced budget amendment. I yield the
floor.
Mr. LEVIN. Mr. President, I want deficit reduction and I am willing
to work for it. That is why I supported the President's deficit
reduction package in the last Congress. But while I have stood up for
real deficit reduction, what I am not prepared to do is to write into
the Constitution language that is more likely to lead to
disillusionment and constitutional crisis than to a balanced budget.
I see five flaws in the proposed amendment. First, the proposed
amendment would not balance the budget, it would just say that a future
Congress has to pass a law to enforce a balanced budget. Why wait?
Unless and until we make the tough choices needed to cut spending or
raise revenues, we will not have a balanced budget, whether or not we
pass the proposed constitutional amendment and whether or not the
States ratify it. We will instead have passed what could turn out to be
a cynicism-deepening illusion.
The proposed constitutional amendment says that starting no earlier
than 2002, Congress has to have a law enacted which enforces a balanced
budget. Why wait? Why wait to do the hard work of passing implementing
laws and doing the actual budgeting? That's a dodge which allows some
to say we are cured before we have taken the medicine. It puts a giant
loophole in the Constitution to cover over congressional weakness.
In May 1992, Robert Reischauer, the Director of the nonpartisan
Congressional Budget Office, testified before the House Budget
Committee that a balanced budget amendment is not a solution; it is
``only a repetition in an even louder voice of an intention that has
been stated over and over again during the course of the last 50
years.'' Dr. Reischauer stated:
It would be a cruel hoax to suggest to the American public
that one more procedural promise in the form of a
constitutional amendment is going to get the job done. The
deficit cannot be brought down without making painful
decisions to cut specific programs and raise particular
taxes. A balanced budget amendment in and of itself will
neither produce a plan nor allocate responsibility for
producing one.
Dr. Reischauer further stated:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
The public understands this. They know the difference between
promises and action. Let me tell you what some of the commentators are
saying about the balanced budget amendment back in my home State. Here
is what the Detroit Free Press said on January 15:
You wouldn't take seriously any politician who promised to
be faithful to his spouse, beginning in 2002, so why do so
many people take seriously the proposed balanced-budget
amendment?
It's the same kind of empty promise to be good--not now,
but later. Putting it in the Constitution isn't likely to
confer on Congress the spine or the wisdom to fulfill it.
* * * [T]he way to cut the budget is to cut the budget, not
to promise to do it sometime in the future. * * * Gluing a
balanced budget amendment onto the Constitution only
postpones the moment of truth.
And here is what the Battle Creek Enquirer said on January 29:
If a balanced budget is such a good idea, we say to
Congress: ``Just do it!'' After all, waiting until a
constitutional amendment mandates it will just delay a
balanced budget--perhaps by years.
This Congress isn't likely to give the nation a balanced
budget, that's for certain. But, by touting the need for this
amendment, it sure can talk like a Congress that already has
* * * [I]t's all an illusion.
``Just do it!'' That's what the American people want, Mr. President.
They know the difference between promises and action, and they want the
latter. A constitutional amendment can promise a balanced budget, but
it cannot deliver a balanced budget. Only concrete action by the
Congress can do that.
Put another way, Mr. President, the proposed constitutional amendment
has no effective enforcement mechanism. The amendment relies on a
future Congress to act to implement and enforce it. That is the bottom
line. This is the same reed that proved so weak in the 1980's when the
President and the Congress quadrupled the national debt from $1
trillion to $4 trillion.
The argument has been made that we have tried everything else, why
not a constitutional amendment. We can't depend on legislation, the
argument goes, so let's try a constitutional amendment.
So what does this amendment do? It depends on the same kind of
legislation to be enacted which its sponsors say has not previously
been effective.
When we were debating this amendment in 1986, Senator Hatch
acknowledged the following:
[T]here is no question that Congress would have to pass
implementing legislation to make it effective. * * * It would
be the obligation of Congress, after the amendment is passed
by both Houses and ratified by three-quarters of the states
to * * * enact legislation that would cause this to come
about.
And again, CBO Director Reischauer pointed out that:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
Just a few weeks ago, on January 30, Senator Hatch stated:
``* * * [U]nder section 6 of the amendment, Congress must--
and I emphasize must--mandate exactly what type of
enforcement mechanism it wants, whether it be sequestration,
rescission, or the establishment of a contingency fund.
In fact, the committee report accompanying this constitutional
amendment itself states that it ``* * * must be supplemented with
implementing legislation''.
Mr. President, I have offered an amendment to the constitutional
amendment to require this Congress to address this issue by adopting
legislation to implement and enforce a balanced budget requirement now.
Without my amendment, there are no real teeth in the promise of a
balanced budget contained in the proposed amendment.
Alexander Hamilton states in Federalist Paper No. 15, ``If there be
no penalty annexed to disobedience, the resolutions or commands which
pretend to be laws will, in fact, amount to nothing more than advice or
recommendation.''
If congressional weakness is the reason for this amendment--and it
is--then Congress will use the loopholes in this amendment to evade the
responsibility which it sets forth. My fear is that this amendment will
give us an excuse to duck the hard choices, as Congress has often
chosen to do, until it would become effective in 2002--at the earliest.
I am afraid that upcoming Congresses will say ``the balanced budget
amendment will take care of our problems, so we don't need to address
them now.''
Dr. Reischauer, in hi
s 1992 testimony, listed a number of loopholes
that Congress could use to get around an apparently rigid balanced
budget rule:
Using timing mechanisms and other budget gimmicks to achieve short-
run budget targets, including such actions as shifting pay dates
between fiscal years, accelerating or delaying tax collections,
delaying needed spending until future fiscal years, and selling
government assets;
Basing the budget on overly optimistic economic and technical
assumptions; and
Creating off-budget agencies that would have authority to borrow and
spend but whose transactions would not be directly recorded in the
budget.
That is what we did in the 1980's. We used optimistic estimates or
``rosy scenarios''. Here are some of those estimates. In 1981, our
estimates were off by $58 billion. In 1982, our estimates were off by
$73 billion. In 1983, our estimates were off by $91 billion, and on and
on. In 1991, they were off by $119 billion--$119 billion in 1 year. You
talk about a loophole. This one is big enough to drive a $119 billion
deficit through. That is how big this loophole is.
The sponsors of the amendment say that the real enforcement mechanism
is in section 2. That section provides that it will take 60 percent of
the votes, a supermajority, to increase the debt ceiling. So if our
estimates are too rosy--if, for instance, we follow the 1980's model of
estimates in order to evade the constitutional requirement, then, we
are told, we can fall back on
[[Page
S3330]] the requirement that the debt limit can only be
increased by a 60 percent vote in each House.
As Senator Graham of Florida has pointed out, however, the so-called
debt limitation provision in the proposed amendment would allow us to
run deficits in the first decade and a half of the next century of as
much as $120 billion a year, masked by taking that money from the
Social Security trust fund, without that counting toward the deficit.
The proposed amendment applies the 60-vote requirement to ``the limit
on the debt of the United States held by the public''. So the debt held
by the Social Security Administration isn't covered and the usual
majority rule would apply to raising that debt limit.
In any case, history has proven the debt limit is a weak reed to rely
on, because when you vote on whether or not to increase the debt limit,
you are voting whether or not to bring down the Government of the
United States. We have to pay our legitimate debts, however many votes
it may take. If we don't do that, we are finished economically. To make
that point, let me quote from a July 8, 1987 letter from Secretary of
the Treasury James A. Baker III to the Chairman of the Senate Finance
Committee:
I cannot overemphasize the damage that would be done to the
United States' credit standing in the world if the Government
were to default on its obligations, nor the unprecedented and
catastrophic repercussions that would ensue. Market chaos,
financial institution failures, higher interest rates, flight
from the dollar and loss of confidence in the certainty of
all United States Government obligations would produce a
global economic and financial calamity. Future generations of
Americans would have to pay dearly for this grave breach of a
200-year-old trust.
Mr. President, we are not going to achieve a balanced budget by
threatening not to raise the debt ceiling, because that is a nuclear
weapon aimed at the economy of this country. You don't balance the
budget by threatening suicide, and that is what a failure to pay our
debts would be. If we do not pay our debts, this country's economy is
finished. So whether it takes the usual majority or 61 votes, it
doesn't matter. We will have to increase the debt ceiling, because
after the debts have been incurred, we won't have any choice.
Mr. President, my second problem with the amendment is that if a
later Congress does adopt effective enforcement legislation, it would
be putting in the hands of a minority of Senators, representing as
little as 15 percent of the population, critical decision-making power
over the economy of this Nation. Under the proposed amendment, it is
intended that outlays not exceed receipts, and the debt limit not be
increased, unless three-fifths of both Houses of the Congress agreed.
The economic future of our country should not be put in the hands of a
minority by a constitutional amendment which would be so difficult to
change if it went awry.
My third problem with the amendment is that it would put the Social
Security trust fund at risk. By my count, during this debate the Senate
has rejected at least three amendments to protect the Social Security
trust fund. As the senior Senator from Florida explained, Mr.
President, that means that we will continue running deficits of at
least $120 billion a year for more than a decade after this amendment
would go into effect, and will conceal these deficits by taking the
money from the Social Security trust fund. The money in that trust fund
is exactly that--money that we have collected in trust. I cannot vote
for a constitutional amendment which allows the use of that money to
cover up huge deficit spending. That's simply wrong.
My fourth problem with the amendment is that, if effectively
implemented, it would preclude the use of deficit spending to cushion
the impact of a recession. A balanced budget amendment would force the
Federal Government to raise taxes and cut spending in recessions, to
offset the loss of revenue caused by declining income. These policies
would deepen the impact of a recession and could even turn a mild
recession into a depression.
Indeed, the Treasury Department has done a study showing that, were
it not for countercyclical deficit spending, roughly one and a half
million more people would have been unemployed in the 1991-92
recession. Mr. President, we should not ignore the real world hardships
caused by recessions and we should not act in a way which could cause
millions of Americans to lose their jobs.
Finally, Mr. President, I am troubled by the fact that the proposed
amendment is intentionally ambiguous on the role of the President in
carrying out the amendment. The resolution of this crucial issue will
determine how the amendment will affect the checks and balances placed
in the Constitution by our Founding Fathers.
With regard to Presidential impoundment, the Senator from Utah,
Senator Hatch, says the President would have no power to impound funds
unless expressly granted by Congress, but the sponsors refuse to make
this explicit in the amendment itself.
There are some, including Members of this Senate, who already believe
that the President has inherent impoundment powers under article II of
the Constitution. Would not that argument be reinforced by a
constitutional amendment prohibiting outlays from exceeding receipts,
in view of the President's duty to preserve, protect, and defend the
Constitution?
Former Reagan administration Solicitor General Charles Fried has
testified that such a power would exist. He stated:
Now, the command of section 1 is very unqualified. Total
outlays shall not exceed total receipts unless you have the
three-fifths vote. It seems to me that command
would give the President--any President--a far better claim
to impound funds than that which was asserted some years
ago by President Nixon, because the President's warrant
would not be drawn from, as President Nixon said it was,
inherent powers of the Presidency. He could point to the
Constitution itself. He would say that they shall not
exceed, and he swears an oath to see that the laws are
faithfully executed, and I would think his claim to
impound would be very strong. Not only his claim, but he
would argue with considerable plausibility his duty to do
so.
So again, the record is, at best, unclear.
The question whether the President could enforce the amendment by
impoundment would not be an insurmountable problem, had the majority
not chosen to make it so. For instance, when we approved a balanced
budget amendment in the Senate in 1982, we included language proposed
by the Senator from New Mexico, Mr. Domenici, to ensure that the
amendment could not be construed to grant the President impoundment
powers.
This year, however, the sponsors of the amendment decided to remain
silent on this issue. That is not the way we should address the
question of amending the Constitution. This is the Constitution we are
talking about, and we need to know what the amendment we are
considering means in this critical area.
In conclusion, Mr. President, the proposed amendment provides too
easy an excuse for Congress not to act now to reduce the deficit and it
doesn't force congressional action later either.
It lets us off the hook now, and there is no hook later.
It's based on the argument that a constitutional amendment is needed
because previous laws calling for a balanced budget didn't work. But
its success, by its own terms in section 6, is dependent upon a future
Congress enacting a similar law.
The amendment before us, in other words, is unlikely to reduce the
deficit, but is likely to increase public cynicism about the willpower
of Congress to act.
We can and we should adopt enforcement legislation to achieve a
balanced budget now, with or without a constitutional amendment.
There is only one way to balance the budget now, or in 2002--and that
is with the willpower to make the tough choices. I hope we will defeat
this constitutional amendment and instead show the will power to make
the tough choices and enact enforcement legislation actually needed to
balance the budget.
Mrs. MURRAY. Mr. President, I voted against House Joint Resolution 1,
the so-called balanced budget amendment.
I voted no because this amendment is a 10-second political sound bite
with decades of economic implications. It will handcuff future
generations to an
[[Page
S3331]] economic blueprint this Congress dictates in 1995. And,
worst of all, it makes a mockery of the most important document this
country has ever produced.
I am a member of the Budget Committee. When I came to the Congress 2
years ago, I faced the largest debt ever amassed by any country in the
history of civilization. More debt was created during the 12 years of
Republican administrations in the 1980's and early 1990's than in the
entire 200 years preceding them.
I strongly support putting this country's economic house in order.
Mr. President, I support a balanced Federal budget. The people of this
Nation deserve nothing less. But this amendment does not get us there.
Words on a piece of paper cannot balance the budget, only legislators
like you and I can.
We have to make tough choices as we correct the fiscal mismanagement
of the 1980's. We have to balance the budget with surgical cuts; with a
scalpel, not a meat cleaver.
Mr. President, we have made some very tough decisions. I was one
Member of this body who voted for a plan--a plan with specific cuts and
common sense--which reduces the deficit by $505 billion over 5 years.
Program-by-program, cut-by-cut. Most of the Members of the Senate who
voted against the deficit reduction plan now support this
constitutional amendment.
Mr. President, where are the specifics? What will they cut? Which
taxes will they raise? Who will be hurt? The American people have a
right to know. Under this amendment, we have no idea.
For example, will they cut out funding for the Federal Government's
obligation to clean-up the Hanford Nuclear Reservation in my home State
of Washington? Will they eliminate the home mortgage deduction? Will
they cut Head Start, or WIC, or Ryan White? Will they stop guaranteeing
student loans? Will they block further assistance to our depressed
timber communities, or job training for laid-off aerospace workers?
Mr. President, just this week, we have seen some examples of how
careless cuts can be when they are made with a meat cleaver. The
rescissions package coming before the Senate soon is a mean-spirited
and irrational piece of legislation. As nasty as those cuts are, they
still do not get us to a balanced budget. Instead, they damage those we
can least afford to harm: our children.
If this body is serious about deficit reduction, we should resume the
debate on health care reform. Even cutting every discretionary program
will not get us to a balanced budget. We must control the growth of
health care costs. I find it ironic that many of the same Senators who
opposed the health care reform bill last year now support this
constitutional amendment.
This so-called balanced budget amendment is dangerous. It will remove
all our flexibility in dealing with emergencies--economic troubles like
recessions, or even natural disasters like volcanic eruptions,
earthquakes, flooding, hurricanes, and massive fires. My home State has
experienced many such disasters recently. If this amendment had been
part of the Constitution, how would my friends and neighbors have
coped?
Mr. President, I believe many of our colleagues would want to help in
these emergency situations. That is why the Congress is the proper
venue for deciding these issues--our Founding Fathers thought so, too.
This constitutional amendment throws our responsibility to the
courts. The courts will decide if funding is appropriate. Supreme Court
justices are not responsible to the people of my home State; they are
not elected by anyone. They are not sent to the Nation's capital to
tend to the needs of my constituents.
Mr. President, we have amended the Constitution only 17 times since
we adopted the Bill of Rights. We have never changed the Constitution
lightly. With each previous amendment, the American people voted to
expand rights and outline responsibilities--we have never inserted an
economic plan into the Constitution. This amendment sets a terrible
precedent.
I voted in favor of several amendments to the House Joint Resolution
1. I could see that the resolution had considerable support, and I
wanted to make sure that if it did indeed pass, we protected our most
vulnerable populations; that we maintained the integrity of the Social
Security trust fund; that we continued our fight against violent crime;
that we respected our veterans; and that we exempt natural disasters
from cuts.
I also believe that we should display common sense and work to reduce
the massive deficit before we enacted sweeping, across-the-board tax
cuts.
These safeguards all failed--every one of them. All attempts at
tempering the resolution, or placing some sensible priorities into the
legislation, were killed.
Mr. President, this is bad policy, and I cannot support any measure
that will handcuff our country's economic policy. When I stand in this
Chamber, I remember that I am not only a U.S. Senator but also a
mother.
It might be popular to vote yes, but I won't worry about my own
personal popularity until I know my children's economic future is safe.
I do not believe we should trivialize our Constitution in order to give
politicians a reason to make the kind of choices they should be making
anyway.
This resolution will hurt our country and handcuff future
generations. Amending the U.S. Constitution is not worth the gamble.
For these reasons, Mr. President, I did not support House Joint
Resolution 1.
Mr. PRESSLER. Mr. President, since 1981, there have been eight
balanced budget amendment measures that have been approved by the
Senate Judiciary Committee and reported to the Senate. Three of these
measures have received floor consideration.
In 1982, the Senate passed Senate Joint Resolution 58 by a 69-to-31
vote. This marked the first time either House of Congress had approved
such a measure. Although a substantial majority of the House of
Representatives voted in favor of a counterpart of Senate Joint
Resolution 58, the 236-to-187 margin fell short of the necessary two-
thirds vote.
In 1986, the Senate rejected a balanced budget amendment (
S.J. Res.
225) by a vote of 66-to-34, thus failing to achieve the necessary two-
thirds majority by a single vote.
Then during 1994, the Senate defeated Senate Joint Resolution 41 by a
vote of 63-to-37, 4 votes short of the two-thirds necessary for
adoption.
Since coming to the Senate in 1979, I consistently have cosponsored
and supported balanced budget amendment measures, and have voted for
adoption of these measures at each and every opportunity. I strongly
support the proposed amendment before us which was approved by the
House of Representatives. With our vote today, the Senate will choose
between a failed status quo or a new road toward true fiscal
accountability.
Mr. President, there is compelling need for a balanced budget
amendment to the Constitution. The Federal Government has run deficits
for 23 years in a row and for 54 of the last 62 years. As a result, our
national debt has spiraled to more than $4.8 trillion. The gross annual
interest on the debt exceeds $300 billion.
Moreover, if we maintain the status quo--as reflected in the
President's budget request for fiscal year 1996--the national debt
would increase to more than $6.7 trillion in 2000. Mr. President, is
this the kind of legacy we want to impose upon our children and
grandchildren?
The harsh fact is that up until now we have tried every legislative
means possible to lower deficit spending and achieve tax revenues in
excess of outlays. In the past 10 years, we have seen Gramm-Rudman,
Gramm-Rudman II, the 1990 budget amendment, and the failed 1993 budget
plan. These well-intended measures have failed to move us closer to a
balanced budget. Even if it were to succeed for one budgetary cycle,
what assurances are there for continued balanced budgets and surpluses
sufficient to eliminate our national debt?
There must be a measure beyond Federal statute and outside the
present legislative process that would require continued balanced
Federal budgets. That is why a constitutional measure is necessary.
The constitutional amendment before the Senate today would prohibit
deficit spending except during any fiscal year in which a declaration
of war
[[Page
S3332]] is in effect or when the country is engaged in an urgent
national security crisis. Also, the limit on deficit spending and the
limit on the national debt may be waived by a recorded vote of three-
fifths of the whole number of each House.
It seems that if the limits on deficit spending and the national debt
could be waived by a simple majority vote of the House and the Senate,
the purpose of the constitutional amendment would be nullified. It is
clear more than a majority should be required to waive the amendment.
Year after year huge deficits have been incurred by simple majority
votes.
Requiring a supermajority vote is not unique. The Constitution
currently has nine supermajority requirements on specific actions or
measures. These supermajorities include: ratification of treaties; veto
overrides; expulsion of a Member of the Senate or the House;
impeachment of the President, Vice President, and other Federal civil
officers and judges; waiver of disability of certain persons who
engaged in rebellion against the United States; election of a Vice
President by the Senate; and amendment of the Constitution. Also,
supermajorities are provided for in each House under its constitutional
right to determine the rules of its proceedings.
Measures such as a declaration of war or an amendment to the
Constitution were rightly considered by the framers to be the most
serious of policy commitments. They believed a broader consensus was
needed for these beyond a simple majority. The framers also imposed
supermajority requirements to ensure that the fundamental rights of
individuals were not overrun by the tyranny of a majority. Mr.
President, we have reached a point in our history that any serious
thought of further mortgaging the future of our children and
grandchildren should require a broader consensus than a simple
majority. It is for them that we must get our fiscal house in order. It
is for them that we must pass this balanced budget amendment.
The proposed amendment would take effect within 2 years after
ratification by three-fourths of the States, or by 2002, whichever
comes later. It is significant that 48 States, including my home State
of South Dakota, have constitutional provisions limiting their ability
to incur budget deficits. Such constraints have proven workable in the
States.
It is not surprising that a large majority of persons throughout the
country who have been polled on this issue support a balanced budget
amendment. Certainly, a large majority of South Dakotans from whom I
have heard and with whom I have met urge that this resolution be
adopted. They know it is the only way to achieve balanced Federal
budgets and reduction of the national debt. I hope, Mr. President, our
colleagues will bring that about.
Mr. LEAHY. Mr. President, during the past few days, I have been
dismayed at the attempts of the proponents of this constitutional
amendment to find a fix to pick up a vote or two in order to obtain
passage. It may make for high drama, but it also makes for bad law.
This is the United States Constitution that they are seeking to amend
and its provisions should be carefully crafted, studied and considered.
Back rooms and political dealmaking have no place in amending the
Constitution.
At the center of these desperate negotiations has apparently been a
belated effort to jerryrig some type of budget resolution or
implementing legislation to protect the Social Security trust fund from
being used to balance the budget under this so-called balanced budget
amendment. This is absurd.
The language of House Joint Resolution 1 is very clear. Section 1
states: ``Total outlays for any fiscal year shall not exceed total
receipts for that fiscal year.* * *'' And section 7 states: ``Total
receipts shall include all receipts of the U.S. Government except those
derived from borrowing. Total outlays shall include all outlays of the
U.S. Government except for those for repayment of debt principal.'' The
undisputed reading of this language is that the Social Security trust
fund will be covered by this constitutional amendment.
In addition to the unambiguous language of the constitutional
amendment itself, the legislative history of House Joint Resolution 1
makes it clear that the Social Security trust fund is not protected. In
fact, the proponents have fought back all efforts in the Senate
Judiciary Committee to amend the same language in Senate Joint
Resolution 1 and all amendments offered here on the Senate floor over
the past month.
During Senate Judiciary Committee consideration of this
constitutional amendment, Senator Feinstein offered an amendment to
exclude funds going in and out of the Social Security trust fund from
the definition of total receipts and total outlays. Unfortunately, a
majority of members of the Senate Judiciary Committee tabled Senator
Feinstein's amendment by a vote of 10 to 8 on January 18, 1995.
During the Senate debate on House Joint Resolution 1, Democrats
offered two separate amendments to take Social Security off the table.
Senator Reid offered an amendment to this constitutional amendment that
would have legally protected the
Social Security trust fund by excluding it from the definitions of
total outlays and total receipts in section 7 of House Joint Resolution
1. But that amendment was tabled by a vote of 57 to 41 on February 14,
1995.
Just a few days ago, Senator Feinstein offered a substitute balanced
budget amendment that again would have legally protected the Social
Security trust fund by excluding it from the definitions of total
outlays and total receipts in the substitute amendment. Again, the
proponents of this constitutional amendment tabled the Feinstein
substitute amendment by a vote of 60 to 39. Whether the Tennessee
Valley Authority is exempted and placed ``off budget'' may be in doubt,
but there is no doubt that the Social Security trust fund is included
by the proponents of this constitutional amendment.
Trying to
Major Actions:
All articles in Senate section
THE BALANCED BUDGET AMENDMENT
(Senate - March 02, 1995)
Text of this article available as:
TXT
PDF
[Pages
S3325-S3366]
THE BALANCED BUDGET AMENDMENT
protection from big spenders? the people lost by one vote
Mr. HELMS. Mr. President, there are two disappointing things to
mention today. The first is my regular daily report on the latest
available disclosure of the total Federal debt, this time as of the
close of business yesterday, Wednesday, March 1, stood at
$4,848,389,816.26.
If this debt were to be paid off today, with every man, woman, and
child in the country paying his or her proportionate share, each of us
would have to fork over $18,404.57. Of course, since millions of
Americans pay no taxes at all, the average share of the Federal debt
would be far greater than the per capita amount referred to above.
The other sad thing? It is, of course, the Senate's failure today to
approve a constitutional amendment requiring Congress to balance the
Federal budget. If just one more Senator had voted today in favor of
the amendment, it would have been approved by 67 Senators, exactly
enough to pass the amendment and send it to the 50 States for
ratification.
Don't look for a balanced Federal budget anytime soon. But one day it
will come. The American people will demand it.
REDUCE THE DEFICIT WITHOUT AMENDING THE CONSTITUTION
Mr. WELLSTONE. Mr. President, over the course of the last 3 weeks, we
have heard many arguments for and against the proposed balanced budget
amendment to the Constitution. Those arguments were made in good faith,
and I know they reflect a broad commitment by those on both sides of
this question to bringing the deficit down to reasonable levels. But
the balanced budget amendment is an empty promise, not a policy. It has
little immediate political cost and very high poll ratings--hence its
popularity. But enacting it would be a serious mistake. We should
reject it in favor of a real, long-term deficit reduction program.
Since 1936, when Minnesota's own Harold Knutson revived the idea of a
balanced budget constitutional amendment that has been originally
rejected by the Constitution's Framers, Congress has debated various
versions. The real question before us today, as it was 50 years ago, is
whether we should weld onto the Founding document of our democracy, the
U.S. Constitution, a budget gimmick that would do more harm than good
to the economic well-being of our Nation, and our citizens.
As I have consistently argued, in my judgment we do not need to amend
the U.S. Constitution to balance the Federal budget. Instead, we must
continue to make tough choices on actual legislative proposals, as I
have done, to cut wasteful and unnecessary post-cold-war defense
spending, to continue to reduce low priority domestic spending, to
completely restructure the way we finance and deliver health care in
this country--in both the public and private sector--and to scale back
special tax breaks for very wealthy interests in our society who have
for a long time not been required to pay their fair share. That
approach is the only responsible, fair way to bring our annual Federal
deficits, and the much larger Federal debt, under control.
For the last 15 years or so, that is what the Congress has been
unwilling to do, and that is the source of a lot of frustration in the
country. Congress has been unable to muster and sustain a majority to
make difficult budget choices. We have seen illustrated here in the
Senate over and over again a central problem: The political gap between
the promise to cut spending, and actual followthrough on that promise.
I make this point because I want to underscore that many of those who
have been beating their chests the hardest about a balanced budget
amendment have often been among those who have consistently voted
against these actual deficit reduction proposals. We cannot give over
our budget-balancing responsibilities to a machine, a mechanism. That
responsibility is ours.
Of course, I support balancing the Federal budget in a responsible,
fair way. Despite all of the rhetoric today, we all at least agree on
that basic goal. That's why some of us have voted consistently to
reduce actual Federal spending when we've had the chance over the last
few years on this floor. Not gimmicks, not smoke and mirrors, not
deficit reduction formulas that never identify precise cuts, but actual
reductions in Federal spending contained in actual amendments to
appropriations bills. Votes on those proposed cuts have been important
indicators of our willingness to make tough choices. This is where the
budget rubber has met the road.
The President's $500 billion deficit reduction package in the 103d
Congress, which I supported and which was approved without a single
Republican vote, was a major downpayment toward balancing the budget.
But Democrats had to do it alone. When we cut, the Republicans ran.
While we acted, they talked. Still, much more must be done.
But now, instead of real budget choices we are presented with a
gimmick that I do not believe will work to balance the budget, and that
if it does work as it's designed, could do serious harm to the U.S.
economy. It will also serve to reduce pressure in the next few years to
actually reduce the deficit further, allowing Members of Congress to
declare a temporary victory without cutting significantly from the
Federal deficit. And then the reckoning will come, when we are up
against the wall at the end of this century and have to balance the
budget in just a few short years with massive spending cuts in all
Federal spending, including Social Security and Medicare.
[[Page
S3326]] If that's true, then why is the amendment so popular,
at least in the abstract? In recent years, the borrow-and-spend
policies of the 1980's and early 1990's have come home to roost,
rekindling public support for drastic measures. But just so that we
don't lose our historical perspective in this debate, I think it's
important to recognize that the problem of huge Federal budget deficits
is a relatively recent one, going back only to the early 1980's. It's
just not true, as some amendment proponents imply, that the Federal
Government has been spending way beyond its means for decades.
The Reagan and Bush administrations gave America by far its 10
largest budget deficits in our history. The huge tax cuts and large
defense increases of that era are still costing us. Whatever your party
affiliation or perspective on enacting this amendment, that is
indisputable. If it were not for the interest costs on the debt
accumulated during the 1981-92 period, the Federal budget would be in
balance in 1996 and headed toward surplus thereafter.
I am not trying to explain away large deficits over the last decade
or so, but simply to point out that they are, more than anything else,
a direct result of the misguided and now thoroughly discredited fiscal
policy called supply side economics. Despite the urgings of some of our
colleagues in the new House leadership, and some of the provisions of
the Republican Contract for America, we must not turn down that supply-
side road again.
Opposing the amendment has not been easy, or politically popular. But
since I have spoken several times on various amendments that have been
proposed over the course of the last few weeks, let me try to
summarize one last time my major reasons for voting against this
amendment.
americans have a right to know how the amendment will affect them
Throughout this debate, I've argued that the people of Minnesota--and
all Americans--have an enormous stake in the outcome of this debate,
and that they have a right to know how the spending cuts required by
the amendment could affect them and their families. I offered an
amendment to one of the first bills before the Senate this year urging
proponents of the constitutional amendment to detail the over a
trillion dollars in cuts they would make to balance the budget by 2002,
before it is sent to the States for ratification. This is simple
``truth-in-budgeting;'' it's the least we could have expected from
proponents.
Indeed, the Minnesota State Legislature and Governor Carlson agree.
And they sent a Minnesota mandate to Washington to prove the point. The
legislature recently passed overwhelmingly a resolution, signed by the
Governor, urging those of us here in Congress to continue our efforts
to reduce the Federal budget deficit, and requesting financial
information on the impact the balanced budget amendment would have on
our State. By rejecting the amendment, which I introduced to provide
the information to all the States that the Minnesota Legislature was
seeking, the Senate sent States a chilling message.
Another major right-to-know amendment, offered by Senator Daschle,
was also defeated. Despite the straightforward logic of this approach,
these amendments were rejected on virtual party-line votes.
And so if we pass this constitutional amendment today, we would be
sending it to the State legislatures for ratification without giving
them, or the millions of American families whom they represent in each
State, any idea of how we intend to cut over a trillion dollars from
the Federal budget between now and the year 2002, or how it will affect
their lives and the lives of their children and grandchildren. Families
will not be told how deep the Medicare, Medicaid, school lunch, higher
education, or Social Security cuts will be; at least not before we vote
on the amendment.
That is, I think, a gross abdication of our sworn responsibility to
serve those we represent, and a slap in the face to those who count on
us for truth-in-budgeting. Recent polls show that over 80 percent of
Americans believe we should be straight with them about how we intend
to balance the budget under this amendment before we act on it. Even
so, balanced budget proponents have rejected the right-to-know and
instead offered Americans a ruse, an exercise in budget deception. In
so doing, they have seriously breached the standard of public
accountability that Americans should be able to expect from their
leaders. In addition, there are a number of sound fiscal policy
arguments against the amendment; I will raise just two examples.
amendment would deepen economic recessions and worsen disasters
Consider the potential risk that the spending cuts required by the
amendment could push soft economy into a recession, or in a worse case,
deepen an existing recession and push us into a depression. Now when
the economy slips into recession, Federal spending helps to cushion the
fall by increasing unemployment insurance and other assistance programs
for low- and moderate-income people. At the same time, income tax
collections drop because people and businesses are making less money in
a recession.
But under the amendment, Congress would be forced, perversely, to do
the opposite: raise taxes, cut spending, and push the economy into an
economic freefall. The so-called automatic economic stabilizers like
unemployment insurance that have proven so useful in recent decades
would be gone, and we would instead effectively enshrine in the
constitution the economic policies of Herbert Hoover. With fiscal
policy enjoined by the amendment, sole responsibility for stabilizing
the economy would rest with the Federal Reserve. And with their almost
exclusive focus on fighting inflation these days, more often than not
they end up protecting Wall Street investors--not average working
families.
As I have suggested, the amendment is an attempt to enshrine an
economic dogma which would cripple our ability to offer pragmatic
responses to changing economic conditions. Because our efforts to
change the balanced budget amendment to take this problem into account
also failed, this serious flaw remains.
Coupled with the absence of any exception for emergency disaster
spending, that was included in a proposed amendment defeated last week,
the lack of economic foresight this reflects is almost breathtaking to
me. In just a few days, we will consider an emergency spending bill to
help pay the Federal share of the California earthquake last year. The
cost of this disaster is now up to $15 billion.
In the last two decades, the Federal Government has spent $134
billion in Federal disaster relief, including $33 billion in the last 5
years alone. Under a balanced budget requirement, what would we do in
the face of a huge flood, earthquake, or other disaster that cost
scores of billions of dollars in relief aid? How long would it take to
garner the three-fifths votes necessary in both Houses to pay for it?
And what special legislative prizes would opponents require for their
votes? Those are all open to questions.
amendment could put federal deposit insurance at risk
Another open question is the impact of the amendment on bank
deposits. I am sure balanced budget amendment supporters don't intend
to put the life savings of American families at risk, or to threaten
the stability of the banking system. And yet that is precisely what
this amendment would do. Since the Depression, the FDIC has insured
depositors against bank failures. That limit is now up to $100,000 per
account. And right now those guarantees cover private savings of about
$2.7 trillion--that's a whole lot of money that's guaranteed by
the U.S. Government. Some have observed that the balanced budget
amendment could put the full faith and credit of the United States
embodied in such guarantees at risk.
amendment does not separate day-to-day expenses from investments
Most Americans believe that a balanced budget, like a balanced
checkbook, is a good idea. They argue that America, like a family,
should always balance its budget. But this overlooks a key fact: The
household budgets of most middle class Americans have substantial debt,
either for a car, a home, or a college education for their kids.
This reflects a central problem with the amendment. It ignores the
difference between two different types of spending: investments for the
future,
[[Page
S3327]] and ``operating,'' or day-to-day, spending. Taking out a
mortgage on a home is investing in your family's future; taking one out
to pay for next year's vacation is not. This is acknowledged by most
State governments, many of whom are required to balance their operating
budgets--but not their investment budgets.
American business agrees; incurring debt to invest and expand a
business has long been a hallmark of business strategies for sustained
growth. With governments, as with families or businesses, borrowing
isn't inherently bad; it depends what you're borrowing for. With
families, businesses or State governments, the central question is:
Will the debt we incur improve our long-term economic prospects? If
this principle applies to household or business budgets, why shouldn't
it apply to the Federal budget? Nonetheless, an amendment to address
this problem was rejected.
No protections for the social security trust funds
This balanced budget amendment fails to protect the Social Security
trust funds from being raided to balance the Federal budget. We tried
to make sure that for the purpose of calculating the deficit under the
balanced budget amendment, the huge surpluses in the Social Security
trust fund would not be counted. In that effort, too, we failed; our
proposed Social Security amendment was defeated. Make no mistake what
this means: Despite the promises of the proponents that they will not
balance the budget on the backs of Social Security recipients, they
have refused to explicitly protect this program in the language of the
constitutional amendment itself. In fact, they fought hard to defeat
our Social Security amendment. That is as good an indication of their
future intentions regarding Social Security as anything we have seen.
A shell game that will require states to raise taxes
There is another problem with this constitutional amendment. For many
in Minnesota, it will likely mean an increase in personal income,
sales, and property taxes needed to offset the loss in Federal aid from
crime control to higher education, roads and bridges to farm programs,
rural economic development to Medicare. This shell game, in
which costs are simply shifted from the Federal Government onto the
States, would force Minnesota to fund these efforts on its own. A
recent Treasury Department study concluded that an increase of between
9 and 13 percent in Minnesota taxes would be required to make up the
difference. In reality, a vote for the balanced budget amendment is
really a vote for a trickle-down tax increase.
a standard of fairness
I think it's a simple question of fairness. If this constitutional
amendment passes, in the next 7 years we are going to have to make
$1.48 trillion in spending cuts and other policy changes--assuming that
we enact Republican-proposed tax cuts for the wealthy and defense
increases. If we don't, we'll still have to make about $1.2 trillion in
cuts. If we make these cuts to meet the balanced budget amendment
requirement and timetable, then we should make sure that wealthy
interests in our society, those who have political clout, those who
hire lobbyists to make their case every day here in Washington, will be
asked to pay their fair share. At least they should bear as much of the
burden as regular middle class folks that we represent, who receive
Social Security or Medicare or Veterans benefits, or who receive
student loans to send their kids to college and offer them a better
future.
That's just common sense, and I had hoped that during this debate we
would signal that we would apply such a standard of fairness. For
example, too often in discussions about low-priority Federal spending
which ought to be cut, one set of expenditures has been notoriously
absent. That is tax breaks for wealthy and well-positioned special
interests. But that, too, was rejected by the constitutional
amendment's proponents when I offered an amendment urging simply that
we make sure such special tax breaks are on the table as we move
forward in our deficit reduction efforts. Tax subsidies are heavily
skewed to corporations and the relatively few people with very high
incomes, while Government benefits and services go in far larger
proportions to the middle class and the poor.
In the last few weeks, this issue of fairness has emerged more and
more clearly to me, more by its absence than by its presence. It looks
to me as though the current standard, at least as it has been applied
so far in the published plans of balanced budget proponents, will not
require much, if any, sacrifice from special interests in our society
who have enjoyed certain tax breaks, benefits, preferences, deductions
and credits that most regular middle-class taxpayers don't enjoy.
efforts to scrutinize tax breaks for wealthy blocked
But while the constitutional amendment's proponents don't seem to
mind that it could require States to raise State taxes by large
margins, they are adamantly opposed to making sure that wealthy
corporations and others pay their fair share of the deficit reduction
burden.
It is a fact, often overlooked, that we can spend money just as
easily through the Tax Code, through what are called ``tax
expenditures,'' as we can through the normal appropriations process.
Spending is spending, whether it comes in the form of a government
check or in the form of a tax break for some special purpose, like a
subsidy, a credit, a deduction, or accelerated depreciation for this
type of investment or that. These tax expenditures--in some cases they
are tax loopholes--allow some taxpayers to escape paying their fair
share, and thus make everyone else pay at higher rates. These arcane
tax breaks are simply special exceptions to the normal rules, rules
that oblige all of us to share the burdens of citizenship by paying our
taxes.
The General Accounting Office issued a report last year titled, ``Tax
Policy: Tax Expenditures Deserve More Scrutiny.'' It makes a compelling
case for subjecting these tax expenditures to greater congressional and
administration scrutiny, just as direct spending is scrutinized. The
GAO noted that most of these tax expenditures currently in the Tax Code
are not subject to any annual reauthorization or other kind of
systematic periodic review. They observed that many of these special
tax breaks were enacted in response to economic conditions that no
longer exist. In fact, they found that of the 124 tax expenditures
identified by the committee in 1993, about half were enacted before
1950. Now that does not automatically call them into question. It just
illustrates the problem of their not being very carefully looked at in
any systematic way over very long periods of time. Many of these
industry-specific breaks get embedded in the Tax Code, and are not
looked at again for years. And yet we refused by roll call vote to even
commit to consider them as we move forward in our efforts to balance
the Federal books.
When we begin to weigh, for example, scaling back the special
treatment for percentage depletion allowances for the oil and gas
industry against cutting food and nutrition programs for hungry
children, we may come out with quite different answers than we have in
the past about whether we can still afford to subsidize this industry.
The nonpartisan Congressional Budget Office estimates that eliminating
this particular tax break would save $4.9 billion in Federal revenues
over 5 years.
And this is not an isolated example. The Congressional Joint Tax
Committee has estimated that tax expenditures cost the U.S. Treasury
over $420 billion every single year. And they estimate that if we don't
hold them in check, that amount will grow by $60 billion to over $485
billion by 1999. Now some tax expenditures serve important public
purposes, like supporting charitable organizations, and should be
retained. But many of these must be on the table along with other
spending as we look for places to cut the deficit.
I could not find any hint of interest in cutting corporate tax breaks
in the Republican contract, I think because many of the benefits of
these tax breaks go to very high-income people with wealth and power
and clout in our society, and to corporations with high-powered
lobbyists. They're the ones for whom the contract provides an
estimated $169 billion windfall that would resurrect the tax-shelter
industry and effectively slash corporate rates.
At a time when we are talking about potentially huge spending cuts in
meat inspections designed to insure against
[[Page
S3328]] outbreaks of disease; or in higher education aid for
middle class families; or in protection for our air, our lakes, and our
land; or in highways; or in community development programs for States
and localities; or in sewer and water projects for our big cities; or
in safety net programs for vulnerable children, we should be willing to
weigh these cuts against special tax loopholes on which we spend
billions each year. And yet we could not even agree to put these on the
table along with everything else as we move forward in our efforts to
reduce the deficit.
ENSHRINES MINORITY RULE
Constitutional and congressional scholars have observed that the
balanced budget amendment gives a veto power to a small minority of
either the House or the Senate in key budget decisions, a profoundly
antidemocratic shift away from our proud, 200-year-old tradition of
majority rule. The need to win approval from three-fifths of both
Houses to waive the balanced budget requirement in a recession would
give added power to members whose votes might be needed to avoid
plunging the country into a deeper downturn.
Thus, the price of an agreement to let the Government run even a
modest deficit during a recession, and to provide recession-related
unemployment benefits, might be a capital gains cut or other tax break
touted by its backers as a ``growth incentive.'' As we saw in the
1980's, these tax breaks usually prove to lose revenues and increase
the deficit over the long term, which in turn could lead to additional
program cuts in subsequent years to bring the budget back into balance.
WEAKENS OUR ABILITY TO INVEST
As I have observed, the balanced budget amendment would largely deny
to the Federal government a basic practice that most businesses,
families, and States and local governments use--borrowing to finance
investments with a long-term payoff. Borrowing to finance new
investments is standard business practice. A business that failed to
modernize because it could not borrow would soon be left behind.
We must continue to invest in our people. Our economy is creating new
jobs at a near-record pace--over 5 million in the last 2 years alone--
yet it doesn't give much help to those ordinary working families who
are at the bottom, or in the struggling middle class. As one Iron
Ranger in Minnesota recently told me, ``All these jobs being created
doesn't do me much good if I have to hold three of them to keep my
family together.'' His comment reflects the anger and economic
insecurity many Americans feel because their personal economic
experience doesn't jibe with what Government statistics tell them--that
unemployment is down, inflation is in check, and economic growth
and productivity are booming. Despite these statistics, standards of
living and real wages of workers remain flat, or in slight decline;
many are just one downsizing away from layoff, and feel less secure. We
must invest in the skills and futures of our people if we are going to
turn this situation around.
The amendment would force a scaling back of Government investment in
areas where economists stress more investment is needed:
infrastructure, education and training, early intervention programs for
children, research and development. There is growing evidence we invest
too little in these areas and that such under-investment has
contributed to our Nation's weak economic performance in recent years.
It is true that for too long the Federal Government has been
undisciplined in its borrowing, and that is what threatens our fiscal
future. We have a responsibility to future generations to get our
fiscal house in order, and to do it the Federal Government has to
reprioritize spending in relation to this central question of
investment, by re-examining programs across the board and eliminating
or scaling back those that are wasteful and unnecessary. We must
redesign cumbersome Federal structures to meet the challenges of the
information age, of rapidly changing demographics, of our decaying
inner cities. We should do this in a way that's fair, open and
accountable, without the budget smoke and mirrors that have too often
fogged the real choices facing voters.
Let me say a word about the impact that systematic disinvestment
would have on working families, children and the elderly in my State,
because ultimately that is what this whole debate is about.
the impact of the amendment on minnesota families
Throughout this debate, I have tried to ask myself basic questions
about the impact of this balanced budget amendment on the families in
Minnesota whom I represent. I think it would inflict on Minnesotans
serious harm, and that is why I cannot in good conscience support it.
That is ultimately the deciding factor for me.
I've already talked about the shell game that this amendment would
require by shifting the costs of government from the Federal to the
State level, and forcing States to raise income, property and sales
taxes--in Minnesota's case by about 13 percent, according to the
Treasury Department. But what about the actual spending cuts? How would
they be distributed? Who would have to sacrifice, and who would
benefit?
Over 7 years, under the balanced budget amendment and accompanying
Republican proposals, Minnesota would lose nearly $5.9 billion in
Federal Medicare funds, Medicaid cuts would total nearly $3.7 billion,
elementary and secondary education would lose $1.5 billion, and Federal
law enforcement would lose $143.7 million. Minnesota farmers also would
likely lose billions in farm payments, causing a serious decrease in
family farm income. And it's not just rural areas
that would be hit. The two largest urban counties in my State,
Hennepin and Ramsey Counties, would alone lose about $10.3 billion in
total Federal aid over 7 years.
In addition, despite Republican promises to temporarily protect this
program, large cuts in Social Security benefits to Minnesotans--an
estimated $2,000 annually per beneficiary--should also be expected if
this program is slated for across-the-board cuts.
These are very large cuts, and they will have a major impact on the
people of my State. I have heard from elderly couples in Minnesota on
fixed incomes, terrified about the impact of the amendment on their
Medicare funding. And they have reason to be fearful. I have sat with
homeless men and women, Medicaid recipients, who are threatened with
going without even the most basic health care under the amendment.
Instead of this approach, we owe it to these people to do real
comprehensive health care reform.
Despite the claims of some that opponents of the amendment are
exaggerating the threat posed by these huge spending cuts, this is for
real. I am not making this up. In fact, just the other day, Finance
Committee Chairman Packwood said that he thought we would have to make
up to $550 billion in cuts in Medicare alone to meet its requirements--
not to mention the huge cuts in Medicaid he acknowledged would be
necessary. And it could go much higher than that, depending on budget
decisions made in other areas.
Finally, let me say a word about the process by which this amendment
has been considered. In recent weeks, balanced budget amendment
proponents have rejected virtually every single good faith effort to
improve the constitutional amendment. Amendments to prevent a raid of
the Social Security trust funds, to exempt earned veteran's benefits,
to strike the majority requirements, to prevent harm to hungry and
homeless children, to separate investment from day-to-day operating
budgets, to provide for exceptions for major disasters and economic
recessions--and many others--were defeated.
I believe that if the Senate passes this amendment today, as we look
back on this debate from the midst of a serious recession, major
disaster, or even undeclared national security emergency, this
unwillingness by proponents to accept even modest, reasonable changes
in the amendment will prove seriously misguided.
While at first look this amendment appears to make sense and is
widely popular, amending our Constitution in this way would be a
mistake with potentially serious fiscal, economic, and social
consequences and would seriously alter our democratic process. We can
and should balance the budget without gimmicks and without changing the
Constitution. I intend to continue to vote to do that. I urge my
colleagues to join me in that effort, and to
[[Page
S3329]] vote no on the balanced budget amendment. I yield the
floor.
Mr. LEVIN. Mr. President, I want deficit reduction and I am willing
to work for it. That is why I supported the President's deficit
reduction package in the last Congress. But while I have stood up for
real deficit reduction, what I am not prepared to do is to write into
the Constitution language that is more likely to lead to
disillusionment and constitutional crisis than to a balanced budget.
I see five flaws in the proposed amendment. First, the proposed
amendment would not balance the budget, it would just say that a future
Congress has to pass a law to enforce a balanced budget. Why wait?
Unless and until we make the tough choices needed to cut spending or
raise revenues, we will not have a balanced budget, whether or not we
pass the proposed constitutional amendment and whether or not the
States ratify it. We will instead have passed what could turn out to be
a cynicism-deepening illusion.
The proposed constitutional amendment says that starting no earlier
than 2002, Congress has to have a law enacted which enforces a balanced
budget. Why wait? Why wait to do the hard work of passing implementing
laws and doing the actual budgeting? That's a dodge which allows some
to say we are cured before we have taken the medicine. It puts a giant
loophole in the Constitution to cover over congressional weakness.
In May 1992, Robert Reischauer, the Director of the nonpartisan
Congressional Budget Office, testified before the House Budget
Committee that a balanced budget amendment is not a solution; it is
``only a repetition in an even louder voice of an intention that has
been stated over and over again during the course of the last 50
years.'' Dr. Reischauer stated:
It would be a cruel hoax to suggest to the American public
that one more procedural promise in the form of a
constitutional amendment is going to get the job done. The
deficit cannot be brought down without making painful
decisions to cut specific programs and raise particular
taxes. A balanced budget amendment in and of itself will
neither produce a plan nor allocate responsibility for
producing one.
Dr. Reischauer further stated:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
The public understands this. They know the difference between
promises and action. Let me tell you what some of the commentators are
saying about the balanced budget amendment back in my home State. Here
is what the Detroit Free Press said on January 15:
You wouldn't take seriously any politician who promised to
be faithful to his spouse, beginning in 2002, so why do so
many people take seriously the proposed balanced-budget
amendment?
It's the same kind of empty promise to be good--not now,
but later. Putting it in the Constitution isn't likely to
confer on Congress the spine or the wisdom to fulfill it.
* * * [T]he way to cut the budget is to cut the budget, not
to promise to do it sometime in the future. * * * Gluing a
balanced budget amendment onto the Constitution only
postpones the moment of truth.
And here is what the Battle Creek Enquirer said on January 29:
If a balanced budget is such a good idea, we say to
Congress: ``Just do it!'' After all, waiting until a
constitutional amendment mandates it will just delay a
balanced budget--perhaps by years.
This Congress isn't likely to give the nation a balanced
budget, that's for certain. But, by touting the need for this
amendment, it sure can talk like a Congress that already has
* * * [I]t's all an illusion.
``Just do it!'' That's what the American people want, Mr. President.
They know the difference between promises and action, and they want the
latter. A constitutional amendment can promise a balanced budget, but
it cannot deliver a balanced budget. Only concrete action by the
Congress can do that.
Put another way, Mr. President, the proposed constitutional amendment
has no effective enforcement mechanism. The amendment relies on a
future Congress to act to implement and enforce it. That is the bottom
line. This is the same reed that proved so weak in the 1980's when the
President and the Congress quadrupled the national debt from $1
trillion to $4 trillion.
The argument has been made that we have tried everything else, why
not a constitutional amendment. We can't depend on legislation, the
argument goes, so let's try a constitutional amendment.
So what does this amendment do? It depends on the same kind of
legislation to be enacted which its sponsors say has not previously
been effective.
When we were debating this amendment in 1986, Senator Hatch
acknowledged the following:
[T]here is no question that Congress would have to pass
implementing legislation to make it effective. * * * It would
be the obligation of Congress, after the amendment is passed
by both Houses and ratified by three-quarters of the states
to * * * enact legislation that would cause this to come
about.
And again, CBO Director Reischauer pointed out that:
Without credible legislation for the transition that
embodies an effective mechanism for enforcement, government
borrowing is not going to be cut. But the transitional
legislation and the enforcement mechanism are 95 percent of
the battle. If we could get agreement on those, we would not
need a constitutional amendment.
Just a few weeks ago, on January 30, Senator Hatch stated:
``* * * [U]nder section 6 of the amendment, Congress must--
and I emphasize must--mandate exactly what type of
enforcement mechanism it wants, whether it be sequestration,
rescission, or the establishment of a contingency fund.
In fact, the committee report accompanying this constitutional
amendment itself states that it ``* * * must be supplemented with
implementing legislation''.
Mr. President, I have offered an amendment to the constitutional
amendment to require this Congress to address this issue by adopting
legislation to implement and enforce a balanced budget requirement now.
Without my amendment, there are no real teeth in the promise of a
balanced budget contained in the proposed amendment.
Alexander Hamilton states in Federalist Paper No. 15, ``If there be
no penalty annexed to disobedience, the resolutions or commands which
pretend to be laws will, in fact, amount to nothing more than advice or
recommendation.''
If congressional weakness is the reason for this amendment--and it
is--then Congress will use the loopholes in this amendment to evade the
responsibility which it sets forth. My fear is that this amendment will
give us an excuse to duck the hard choices, as Congress has often
chosen to do, until it would become effective in 2002--at the earliest.
I am afraid that upcoming Congresses will say ``the balanced budget
amendment will take care of our problems, so we don't need to address
them now.''
Dr. Reischauer, in hi
s 1992 testimony, listed a number of loopholes
that Congress could use to get around an apparently rigid balanced
budget rule:
Using timing mechanisms and other budget gimmicks to achieve short-
run budget targets, including such actions as shifting pay dates
between fiscal years, accelerating or delaying tax collections,
delaying needed spending until future fiscal years, and selling
government assets;
Basing the budget on overly optimistic economic and technical
assumptions; and
Creating off-budget agencies that would have authority to borrow and
spend but whose transactions would not be directly recorded in the
budget.
That is what we did in the 1980's. We used optimistic estimates or
``rosy scenarios''. Here are some of those estimates. In 1981, our
estimates were off by $58 billion. In 1982, our estimates were off by
$73 billion. In 1983, our estimates were off by $91 billion, and on and
on. In 1991, they were off by $119 billion--$119 billion in 1 year. You
talk about a loophole. This one is big enough to drive a $119 billion
deficit through. That is how big this loophole is.
The sponsors of the amendment say that the real enforcement mechanism
is in section 2. That section provides that it will take 60 percent of
the votes, a supermajority, to increase the debt ceiling. So if our
estimates are too rosy--if, for instance, we follow the 1980's model of
estimates in order to evade the constitutional requirement, then, we
are told, we can fall back on
[[Page
S3330]] the requirement that the debt limit can only be
increased by a 60 percent vote in each House.
As Senator Graham of Florida has pointed out, however, the so-called
debt limitation provision in the proposed amendment would allow us to
run deficits in the first decade and a half of the next century of as
much as $120 billion a year, masked by taking that money from the
Social Security trust fund, without that counting toward the deficit.
The proposed amendment applies the 60-vote requirement to ``the limit
on the debt of the United States held by the public''. So the debt held
by the Social Security Administration isn't covered and the usual
majority rule would apply to raising that debt limit.
In any case, history has proven the debt limit is a weak reed to rely
on, because when you vote on whether or not to increase the debt limit,
you are voting whether or not to bring down the Government of the
United States. We have to pay our legitimate debts, however many votes
it may take. If we don't do that, we are finished economically. To make
that point, let me quote from a July 8, 1987 letter from Secretary of
the Treasury James A. Baker III to the Chairman of the Senate Finance
Committee:
I cannot overemphasize the damage that would be done to the
United States' credit standing in the world if the Government
were to default on its obligations, nor the unprecedented and
catastrophic repercussions that would ensue. Market chaos,
financial institution failures, higher interest rates, flight
from the dollar and loss of confidence in the certainty of
all United States Government obligations would produce a
global economic and financial calamity. Future generations of
Americans would have to pay dearly for this grave breach of a
200-year-old trust.
Mr. President, we are not going to achieve a balanced budget by
threatening not to raise the debt ceiling, because that is a nuclear
weapon aimed at the economy of this country. You don't balance the
budget by threatening suicide, and that is what a failure to pay our
debts would be. If we do not pay our debts, this country's economy is
finished. So whether it takes the usual majority or 61 votes, it
doesn't matter. We will have to increase the debt ceiling, because
after the debts have been incurred, we won't have any choice.
Mr. President, my second problem with the amendment is that if a
later Congress does adopt effective enforcement legislation, it would
be putting in the hands of a minority of Senators, representing as
little as 15 percent of the population, critical decision-making power
over the economy of this Nation. Under the proposed amendment, it is
intended that outlays not exceed receipts, and the debt limit not be
increased, unless three-fifths of both Houses of the Congress agreed.
The economic future of our country should not be put in the hands of a
minority by a constitutional amendment which would be so difficult to
change if it went awry.
My third problem with the amendment is that it would put the Social
Security trust fund at risk. By my count, during this debate the Senate
has rejected at least three amendments to protect the Social Security
trust fund. As the senior Senator from Florida explained, Mr.
President, that means that we will continue running deficits of at
least $120 billion a year for more than a decade after this amendment
would go into effect, and will conceal these deficits by taking the
money from the Social Security trust fund. The money in that trust fund
is exactly that--money that we have collected in trust. I cannot vote
for a constitutional amendment which allows the use of that money to
cover up huge deficit spending. That's simply wrong.
My fourth problem with the amendment is that, if effectively
implemented, it would preclude the use of deficit spending to cushion
the impact of a recession. A balanced budget amendment would force the
Federal Government to raise taxes and cut spending in recessions, to
offset the loss of revenue caused by declining income. These policies
would deepen the impact of a recession and could even turn a mild
recession into a depression.
Indeed, the Treasury Department has done a study showing that, were
it not for countercyclical deficit spending, roughly one and a half
million more people would have been unemployed in the 1991-92
recession. Mr. President, we should not ignore the real world hardships
caused by recessions and we should not act in a way which could cause
millions of Americans to lose their jobs.
Finally, Mr. President, I am troubled by the fact that the proposed
amendment is intentionally ambiguous on the role of the President in
carrying out the amendment. The resolution of this crucial issue will
determine how the amendment will affect the checks and balances placed
in the Constitution by our Founding Fathers.
With regard to Presidential impoundment, the Senator from Utah,
Senator Hatch, says the President would have no power to impound funds
unless expressly granted by Congress, but the sponsors refuse to make
this explicit in the amendment itself.
There are some, including Members of this Senate, who already believe
that the President has inherent impoundment powers under article II of
the Constitution. Would not that argument be reinforced by a
constitutional amendment prohibiting outlays from exceeding receipts,
in view of the President's duty to preserve, protect, and defend the
Constitution?
Former Reagan administration Solicitor General Charles Fried has
testified that such a power would exist. He stated:
Now, the command of section 1 is very unqualified. Total
outlays shall not exceed total receipts unless you have the
three-fifths vote. It seems to me that command
would give the President--any President--a far better claim
to impound funds than that which was asserted some years
ago by President Nixon, because the President's warrant
would not be drawn from, as President Nixon said it was,
inherent powers of the Presidency. He could point to the
Constitution itself. He would say that they shall not
exceed, and he swears an oath to see that the laws are
faithfully executed, and I would think his claim to
impound would be very strong. Not only his claim, but he
would argue with considerable plausibility his duty to do
so.
So again, the record is, at best, unclear.
The question whether the President could enforce the amendment by
impoundment would not be an insurmountable problem, had the majority
not chosen to make it so. For instance, when we approved a balanced
budget amendment in the Senate in 1982, we included language proposed
by the Senator from New Mexico, Mr. Domenici, to ensure that the
amendment could not be construed to grant the President impoundment
powers.
This year, however, the sponsors of the amendment decided to remain
silent on this issue. That is not the way we should address the
question of amending the Constitution. This is the Constitution we are
talking about, and we need to know what the amendment we are
considering means in this critical area.
In conclusion, Mr. President, the proposed amendment provides too
easy an excuse for Congress not to act now to reduce the deficit and it
doesn't force congressional action later either.
It lets us off the hook now, and there is no hook later.
It's based on the argument that a constitutional amendment is needed
because previous laws calling for a balanced budget didn't work. But
its success, by its own terms in section 6, is dependent upon a future
Congress enacting a similar law.
The amendment before us, in other words, is unlikely to reduce the
deficit, but is likely to increase public cynicism about the willpower
of Congress to act.
We can and we should adopt enforcement legislation to achieve a
balanced budget now, with or without a constitutional amendment.
There is only one way to balance the budget now, or in 2002--and that
is with the willpower to make the tough choices. I hope we will defeat
this constitutional amendment and instead show the will power to make
the tough choices and enact enforcement legislation actually needed to
balance the budget.
Mrs. MURRAY. Mr. President, I voted against House Joint Resolution 1,
the so-called balanced budget amendment.
I voted no because this amendment is a 10-second political sound bite
with decades of economic implications. It will handcuff future
generations to an
[[Page
S3331]] economic blueprint this Congress dictates in 1995. And,
worst of all, it makes a mockery of the most important document this
country has ever produced.
I am a member of the Budget Committee. When I came to the Congress 2
years ago, I faced the largest debt ever amassed by any country in the
history of civilization. More debt was created during the 12 years of
Republican administrations in the 1980's and early 1990's than in the
entire 200 years preceding them.
I strongly support putting this country's economic house in order.
Mr. President, I support a balanced Federal budget. The people of this
Nation deserve nothing less. But this amendment does not get us there.
Words on a piece of paper cannot balance the budget, only legislators
like you and I can.
We have to make tough choices as we correct the fiscal mismanagement
of the 1980's. We have to balance the budget with surgical cuts; with a
scalpel, not a meat cleaver.
Mr. President, we have made some very tough decisions. I was one
Member of this body who voted for a plan--a plan with specific cuts and
common sense--which reduces the deficit by $505 billion over 5 years.
Program-by-program, cut-by-cut. Most of the Members of the Senate who
voted against the deficit reduction plan now support this
constitutional amendment.
Mr. President, where are the specifics? What will they cut? Which
taxes will they raise? Who will be hurt? The American people have a
right to know. Under this amendment, we have no idea.
For example, will they cut out funding for the Federal Government's
obligation to clean-up the Hanford Nuclear Reservation in my home State
of Washington? Will they eliminate the home mortgage deduction? Will
they cut Head Start, or WIC, or Ryan White? Will they stop guaranteeing
student loans? Will they block further assistance to our depressed
timber communities, or job training for laid-off aerospace workers?
Mr. President, just this week, we have seen some examples of how
careless cuts can be when they are made with a meat cleaver. The
rescissions package coming before the Senate soon is a mean-spirited
and irrational piece of legislation. As nasty as those cuts are, they
still do not get us to a balanced budget. Instead, they damage those we
can least afford to harm: our children.
If this body is serious about deficit reduction, we should resume the
debate on health care reform. Even cutting every discretionary program
will not get us to a balanced budget. We must control the growth of
health care costs. I find it ironic that many of the same Senators who
opposed the health care reform bill last year now support this
constitutional amendment.
This so-called balanced budget amendment is dangerous. It will remove
all our flexibility in dealing with emergencies--economic troubles like
recessions, or even natural disasters like volcanic eruptions,
earthquakes, flooding, hurricanes, and massive fires. My home State has
experienced many such disasters recently. If this amendment had been
part of the Constitution, how would my friends and neighbors have
coped?
Mr. President, I believe many of our colleagues would want to help in
these emergency situations. That is why the Congress is the proper
venue for deciding these issues--our Founding Fathers thought so, too.
This constitutional amendment throws our responsibility to the
courts. The courts will decide if funding is appropriate. Supreme Court
justices are not responsible to the people of my home State; they are
not elected by anyone. They are not sent to the Nation's capital to
tend to the needs of my constituents.
Mr. President, we have amended the Constitution only 17 times since
we adopted the Bill of Rights. We have never changed the Constitution
lightly. With each previous amendment, the American people voted to
expand rights and outline responsibilities--we have never inserted an
economic plan into the Constitution. This amendment sets a terrible
precedent.
I voted in favor of several amendments to the House Joint Resolution
1. I could see that the resolution had considerable support, and I
wanted to make sure that if it did indeed pass, we protected our most
vulnerable populations; that we maintained the integrity of the Social
Security trust fund; that we continued our fight against violent crime;
that we respected our veterans; and that we exempt natural disasters
from cuts.
I also believe that we should display common sense and work to reduce
the massive deficit before we enacted sweeping, across-the-board tax
cuts.
These safeguards all failed--every one of them. All attempts at
tempering the resolution, or placing some sensible priorities into the
legislation, were killed.
Mr. President, this is bad policy, and I cannot support any measure
that will handcuff our country's economic policy. When I stand in this
Chamber, I remember that I am not only a U.S. Senator but also a
mother.
It might be popular to vote yes, but I won't worry about my own
personal popularity until I know my children's economic future is safe.
I do not believe we should trivialize our Constitution in order to give
politicians a reason to make the kind of choices they should be making
anyway.
This resolution will hurt our country and handcuff future
generations. Amending the U.S. Constitution is not worth the gamble.
For these reasons, Mr. President, I did not support House Joint
Resolution 1.
Mr. PRESSLER. Mr. President, since 1981, there have been eight
balanced budget amendment measures that have been approved by the
Senate Judiciary Committee and reported to the Senate. Three of these
measures have received floor consideration.
In 1982, the Senate passed Senate Joint Resolution 58 by a 69-to-31
vote. This marked the first time either House of Congress had approved
such a measure. Although a substantial majority of the House of
Representatives voted in favor of a counterpart of Senate Joint
Resolution 58, the 236-to-187 margin fell short of the necessary two-
thirds vote.
In 1986, the Senate rejected a balanced budget amendment (
S.J. Res.
225) by a vote of 66-to-34, thus failing to achieve the necessary two-
thirds majority by a single vote.
Then during 1994, the Senate defeated Senate Joint Resolution 41 by a
vote of 63-to-37, 4 votes short of the two-thirds necessary for
adoption.
Since coming to the Senate in 1979, I consistently have cosponsored
and supported balanced budget amendment measures, and have voted for
adoption of these measures at each and every opportunity. I strongly
support the proposed amendment before us which was approved by the
House of Representatives. With our vote today, the Senate will choose
between a failed status quo or a new road toward true fiscal
accountability.
Mr. President, there is compelling need for a balanced budget
amendment to the Constitution. The Federal Government has run deficits
for 23 years in a row and for 54 of the last 62 years. As a result, our
national debt has spiraled to more than $4.8 trillion. The gross annual
interest on the debt exceeds $300 billion.
Moreover, if we maintain the status quo--as reflected in the
President's budget request for fiscal year 1996--the national debt
would increase to more than $6.7 trillion in 2000. Mr. President, is
this the kind of legacy we want to impose upon our children and
grandchildren?
The harsh fact is that up until now we have tried every legislative
means possible to lower deficit spending and achieve tax revenues in
excess of outlays. In the past 10 years, we have seen Gramm-Rudman,
Gramm-Rudman II, the 1990 budget amendment, and the failed 1993 budget
plan. These well-intended measures have failed to move us closer to a
balanced budget. Even if it were to succeed for one budgetary cycle,
what assurances are there for continued balanced budgets and surpluses
sufficient to eliminate our national debt?
There must be a measure beyond Federal statute and outside the
present legislative process that would require continued balanced
Federal budgets. That is why a constitutional measure is necessary.
The constitutional amendment before the Senate today would prohibit
deficit spending except during any fiscal year in which a declaration
of war
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national security crisis. Also, the limit on deficit spending and the
limit on the national debt may be waived by a recorded vote of three-
fifths of the whole number of each House.
It seems that if the limits on deficit spending and the national debt
could be waived by a simple majority vote of the House and the Senate,
the purpose of the constitutional amendment would be nullified. It is
clear more than a majority should be required to waive the amendment.
Year after year huge deficits have been incurred by simple majority
votes.
Requiring a supermajority vote is not unique. The Constitution
currently has nine supermajority requirements on specific actions or
measures. These supermajorities include: ratification of treaties; veto
overrides; expulsion of a Member of the Senate or the House;
impeachment of the President, Vice President, and other Federal civil
officers and judges; waiver of disability of certain persons who
engaged in rebellion against the United States; election of a Vice
President by the Senate; and amendment of the Constitution. Also,
supermajorities are provided for in each House under its constitutional
right to determine the rules of its proceedings.
Measures such as a declaration of war or an amendment to the
Constitution were rightly considered by the framers to be the most
serious of policy commitments. They believed a broader consensus was
needed for these beyond a simple majority. The framers also imposed
supermajority requirements to ensure that the fundamental rights of
individuals were not overrun by the tyranny of a majority. Mr.
President, we have reached a point in our history that any serious
thought of further mortgaging the future of our children and
grandchildren should require a broader consensus than a simple
majority. It is for them that we must get our fiscal house in order. It
is for them that we must pass this balanced budget amendment.
The proposed amendment would take effect within 2 years after
ratification by three-fourths of the States, or by 2002, whichever
comes later. It is significant that 48 States, including my home State
of South Dakota, have constitutional provisions limiting their ability
to incur budget deficits. Such constraints have proven workable in the
States.
It is not surprising that a large majority of persons throughout the
country who have been polled on this issue support a balanced budget
amendment. Certainly, a large majority of South Dakotans from whom I
have heard and with whom I have met urge that this resolution be
adopted. They know it is the only way to achieve balanced Federal
budgets and reduction of the national debt. I hope, Mr. President, our
colleagues will bring that about.
Mr. LEAHY. Mr. President, during the past few days, I have been
dismayed at the attempts of the proponents of this constitutional
amendment to find a fix to pick up a vote or two in order to obtain
passage. It may make for high drama, but it also makes for bad law.
This is the United States Constitution that they are seeking to amend
and its provisions should be carefully crafted, studied and considered.
Back rooms and political dealmaking have no place in amending the
Constitution.
At the center of these desperate negotiations has apparently been a
belated effort to jerryrig some type of budget resolution or
implementing legislation to protect the Social Security trust fund from
being used to balance the budget under this so-called balanced budget
amendment. This is absurd.
The language of House Joint Resolution 1 is very clear. Section 1
states: ``Total outlays for any fiscal year shall not exceed total
receipts for that fiscal year.* * *'' And section 7 states: ``Total
receipts shall include all receipts of the U.S. Government except those
derived from borrowing. Total outlays shall include all outlays of the
U.S. Government except for those for repayment of debt principal.'' The
undisputed reading of this language is that the Social Security trust
fund will be covered by this constitutional amendment.
In addition to the unambiguous language of the constitutional
amendment itself, the legislative history of House Joint Resolution 1
makes it clear that the Social Security trust fund is not protected. In
fact, the proponents have fought back all efforts in the Senate
Judiciary Committee to amend the same language in Senate Joint
Resolution 1 and all amendments offered here on the Senate floor over
the past month.
During Senate Judiciary Committee consideration of this
constitutional amendment, Senator Feinstein offered an amendment to
exclude funds going in and out of the Social Security trust fund from
the definition of total receipts and total outlays. Unfortunately, a
majority of members of the Senate Judiciary Committee tabled Senator
Feinstein's amendment by a vote of 10 to 8 on January 18, 1995.
During the Senate debate on House Joint Resolution 1, Democrats
offered two separate amendments to take Social Security off the table.
Senator Reid offered an amendment to this constitutional amendment that
would have legally protected the
Social Security trust fund by excluding it from the definitions of
total outlays and total receipts in section 7 of House Joint Resolution
1. But that amendment was tabled by a vote of 57 to 41 on February 14,
1995.
Just a few days ago, Senator Feinstein offered a substitute balanced
budget amendment that again would have legally protected the Social
Security trust fund by excluding it from the definitions of total
outlays and total receipts in the substitute amendment. Again, the
proponents of this constitutional amendment tabled the Feinstein
substitute amendment by a vote of 60 to 39. Whether the Tennessee
Valley Authority is exempted and placed ``off budget'' may be in doubt,
but there is no doubt that the Social Security trust fund is included
by the proponents of this constitutional amendment.
Amendments:
Cosponsors:
