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CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT
(Senate - April 15, 1999)

Text of this article available as: TXT PDF [Pages S3725-S3756] CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT The Senate resumed consideration of the conference report. Mr. GRAMM. Mr. President, I rise today in support of the budget that is before the Senate. I am sorry that our dear chairman, Senator Domenici, is not here, but I want to say some very strong, positive things about this budget, and I wish he were here to hear it. I want to say it mostly because it is true. It would just be a plus if he were here to hear it. It has been my great privilege since I first came to Congress to be actively involved in budget debates. In fact, I remember the first debate I ever was involved in as a Member of the House was a debate about raising the debt ceiling, and I remember as if it were yesterday the House majority leader, Congressman Wright from Texas, stood up and said that we had no choice except to raise the debt ceiling of the Government, that we were in a position that a man would be in if his wife went out and ran up all these debts on the credit card and the debt collector was at the door. Today, in this era of political correctness, no one would ever suggest such a thing. They would say their spouses ran up these bills, and probably the reality would be the man did run up the bills in any case. But the point is that the then-majority leader of the House, in 1979, made the point that these bills had been run up and the bill collector was at the door, and so we didn't have any choice except to pay the bills as any good, honest family would. And so I stand up and say that the first thing I ever said in debate in the Chamber of the House was, well, it is not really the way it works. It is true that honest families would pay their bills, but what they would do is they would sit down at the kitchen table, they would talk about how they got in this financial mess, they would get out the credit card, they would get out the butcher knife, they would cut up the credit card, they would get an envelope and pencil and they would work out a new budget on the back of an old used envelope, and they would start over again. The problem in Congress was we kept simply spending money, incurring debt, raising the debt ceiling, and nobody ever sat down around the kitchen table, nobody ever got out the butcher knife and cut up the credit cards, and so, as a result, we never changed anything. So anyway, I opposed raising the debt ceiling. It failed. And then we tried to offer an amendment trying to tie the debt ceiling to the budget and saying you can only raise the debt ceiling if you balance the budget. Well, to make a long story short, from that time in 1979 until today, I have been involved in debate about every budget that has passed in this Congress or been enforced in this Government since 1979. And let me say [[Page S3726]] that of all those budgets, this is the best budget that has ever been written by American Government in that period. Now it is probably not, certainly not the most profound budget. The most profound budget was the Reagan budget that was written in 1981. But in terms of what you want a budget to be, it would be very hard to improve on what this budget does. And it is one of my frustrations that everything is now so focused on the war in Kosovo and on many other issues, and we are not having any kind of adequate debate or focus of attention on the profound nature of the budget that is in front of us and what great promise this budget holds for America if we actually enforce this budget. So let me begin by just ticking off some things this budget does, and then I want to get into a discussion of a comparison of this budget with what the President proposed. I want to get into some of these areas like Social Security and Medicare that have been talked about a lot and will be talked about again. But let me outline what this budget does. First of all, this is a 10-year budget that, if enforced, will balance the budget every single year for 10 years. To sort of turn on its head the language of the 1980s, this is a budget that has surpluses as far as the eye can see. And it has those surpluses because it maintains a restriction on spending in a period where revenues are gushing into the Federal Treasury, a period where if we are not very careful we are going to see the launching of a massive new spending spree which could squander the surpluses of today that give us the opportunity to pay down debt, to rebuild Social Security, and do it right this time by basing it on wealth instead of debt, that give us the ability to let working men and women in America keep more of what they earn through a reduction in taxes. If we can keep these spending control measures in place, we can provide adequate Government--in fact, the highest levels of Government spending in American history. And yet by controlling the growth of spending, with the power of the American economy and our competitiveness on the world market and the attractiveness of our capital market with huge amounts of wealth flowing into our equity markets, inflating values, making American families richer, and inducing them to take income and capital gains and pay record levels of taxes on it, we can keep the budget balanced, we can rebuild Social Security based on wealth, and we can cut taxes for working Americans. This budget does all those things. Now, a budget is like a marriage license. It gets you into the deal, but it doesn't make it successful. The easy part is saying ``I do.'' The hard part of a successful marriage is what comes after the wedding. But you cannot have the successful marriage if you don't have the wedding. We are being brought to the altar here with a document that promises all the right things. It is now going to be up to us to enforce those promises. But the key promise, the linchpin of this budget, the element of this budget on which everything else hinges is it enforces the spending caps. If we do not control spending, we are not going to have the surplus. We are not going to be able to rebuild Social Security based on wealth instead of debt. We are not going to be able to preserve a balanced budget, and we are not going to be able to cut taxes. Now, the second thing this budget does, which I rejoice in, is it strengthens our ability to do these things. Every Member of Congress, and I wish every American, understood what happened last year. The President stood up really on the opening day of Congress last year in the State of the Union Address and said save Social Security first. Don't spend a penny of the surplus on either Government programs or tax cuts. Save every penny of it for Social Security. Well, we all know that the President was not telling the truth. We all know that in the end we ended up spending very much of that surplus. We ended up on the last day of Congress taking a third of the surplus that was meant for Social Security and spending it on other programs, and we did it in the name of emergency spending. One of the most important features in this budget is that we have in this budget an enforcement mechanism that says that if someone wants to designate an emergency in nondefense spending, they are going to have to get 60 votes, if somebody raises a point of order. My basic view is, if something is not important enough or enough of an emergency that 60 out of the 100 Members of the Senate will vote for it, then it is not an emergency. I say right now that I personally intend, if others don't, to raise a point of order against each and every emergency spending bill that would raid the Social Security trust fund. I give notice right now that anybody who has an idea that we are going to make all these wonderful promises, that we are going to promise to love, cherish, and obey in this little wedding we are having here on the budget, but that we are going to turn around and start cheating in the fall by breaking this budget by claiming all kinds of expenditures are an emergency, that they better be ready to get 60 votes in the Senate if they are going to be successful. They better be ready for a real battle, because I, for one, believe in this budget, and I intend to fight for it very, very hard. This budget puts a focus on some priorities. It basically says that even in a tight budget not all spending is equal. It puts a focus on veterans' health care, and it does it by, quite simply, taking the position that in a time when you are trying to control spending, you have benefits and you have earned benefits. The basic position of our budget is that those who have served the country, who have preserved its life by wearing with pride its uniform and fighting its wars and by keeping its peace, that even at a time when we have tight budgets, they ought to come first. So this budget provides more money for veterans' health care, and I support it. This budget provides more money for education. It doesn't create the money magically. It takes it away from other programs, with the basic idea that we ought to let the States decide how to spend money on education rather than the Senate being a huge 100-member school. This budget calls for an increase in defense. One of the great unknowns now, not knowing what the war in Kosovo is going to cost, is what is this going to do with our budget and where do we go from here. I want everybody to understand that this budget is written in such a way that we contemplate an increase in defense spending. We want to give a pay increase to everybody in the military. We want to try to provide the pay and benefits and recognition that will help us retain in uniform and recruit the finest young men and women who have ever worn the uniform of the country. Today they wear that uniform with pride, but we have grown increasingly concerned that we are falling behind in recruitment, in retention. We are having trouble, especially, keeping pilots. Now that the President has us deployed in some 30 different engagements around the world, where defense spending has been cut by over a third since its peak in real terms, and yet we have massive military deployments, what is happening is, people are beginning to leave the military. This pay increase that we call for in this budget is vitally important in terms of helping us recruit and retain the best people. Having all these miracle weapons does us no good if we don't have quality people to man those systems. We have the best people in uniform today that we have ever had. We want to keep it that way. That is what this budget does. That is the choice we have. The choice that is presented to us in this budget is, even though we are in a period of record prosperity, even though the level of revenue flows is a record level, what we call for is to limit the growth of Government spending, put a focus on areas like veterans' health care and education and defense, use the surplus to deal with the looming crisis that faces us in Social Security, and to the extent that we have surpluses flowing from the general budget instead of from Social Security, take the bulk of that money and give it back to working families in tax cuts. That is what this budget does. I believe that it is an excellent budget. I think looking at the whole package, it is the finest budget presented in America in the 20 years that I have served in Congress. [[Page S3727]] Talking specifically about several different areas, I want everybody to understand that there is a shell game going on with Social Security. I want to explain, because people have trouble understanding what it is the President is doing on Social Security and what this budget does on Social Security. Let me first explain what this budget does on Social Security, and then explain the fraud that is perpetrated in the President's budget. What this budget does on Social Security is very, very simple. It says every penny that we collect in Social Security taxes that we don't have to have to pay Social Security benefits should be dedicated to Social Security. It ought to be locked away, and it ought to be available to any effort to rebuild the financial base of Social Security. But we should not spend it on any other Government program, nor should we use it for tax cuts. In fact, Senator Domenici, in a proposal that is enshrined in this budget, but we will have to vote on separately, sets up a lockbox where we literally change the lending limits that the Government faces, the debt ceiling, so that we will not be able to spend one penny of the Social Security surplus. This is vitally important because, as anybody in the Senate knows, and I wish every American knew, our Government has been stealing every penny of money coming in to the Social Security trust fund. We currently have IOUs for this money that are sent to West Virginia and put in a metal filing cabinet, but the Government then takes the money and spends it on everything but Social Security. None of that money is being used for Social Security purposes. Senator Domenici's lockbox would change that permanently and say that this money would be set aside to reduce debt, and it would be available when we can agree with the White House on a way to rebuild the financial base of Social Security. That is a critically important proposal. If the American people knew the extent that we have been stealing money out of the Social Security trust fund, there would be outrage in the country. That is exactly what is happening. The Domenici lockbox ends that forever, and it is vitally important. I hope every Member will support it. Now, let me talk about this shell game the administration is playing on Social Security. Let me say, to begin with, that if you have been involved in every budget since 1979, you have seen phony assumptions, smoke and mirrors, shell games, or whatever the words are that we use. But let me say, so that no one is confused, that in Republican and Democrat administrations I have seen people make assumptions that were wildly unrealistic about the future, about what inflation was going to be, about what interest rates were going to be, about what economic growth was going to be, about what spending was going to be; but those were always assumptions about what was going to happen in the future where at least people could say, well, it may be based more on hope than reality, but it could happen. What the Clinton administration has done is they have brought phoniness, distortion and untruth into the budget at a level which has never existed in the American budget in the history of this country. And no better example exists than under Social Security. I think I can explain it to you very simply. Here are the facts. In the year 2000, the first year of this budget, we projected a $131 billion surplus in the unified Federal budget. If you take every penny we get from every source, and you take every penny we spend on every program or giveaway, or lose, or forget about, and you bring those two together, we are taking in $131 billion more than we are spending. Now, Social Security is taking in $138 billion more than it is spending. So while we show that we have a $131 billion surplus, the reality is that if you don't count the Social Security trust fund, we are actually spending $7 billion more than we take in. So let me show it to you this way. We are taking in $138 billion more than we are spending on Social Security alone. We are then spending $7 billion of that money from Social Security on general government. Now, that would leave you with $131 billion of money for Social Security. What the administration does is it sends to West Virginia this piece of paper that actually prints out on a computer, and it says, ``IOU Social Security $138 billion.'' So they get this piece of paper, they tear it off--and it has actually been on television, and they won't let you photograph the bonds, interestingly--they tear off the perforated edges and they take that $138 billion IOU and put it in the filing cabinet. Now, what happens is, we then spend $7 billion of it immediately, and that brings us down to $131 billion. Now, the President says, well, let's take 62 percent of that and give it back to Social Security and we will spend 38 percent of it. So we started with $138 billion, we spent $7 billion, and then the President says let's spend 38 percent of what is left and then we will send another IOU to Social Security for $81 billion. So out of the $138 billion that they initially had, they send IOUs to Social Security for $219 billion. Now, they started with $138 billion and then they spent $7 billion, and then of that $131 billion that was left, they spent another $50 billion, and then they give Social Security an IOU for $219 billion. Now, any freshman accounting student in any accounting class in America would be given an ``F'' if they proposed on an examination paper such an accounting system. Yet, some of the most highly educated people in America--men and women of great stature--stand up in front of God, a television camera, and everybody else in the world and defend this totally phony, fraudulent, embarrassing proposal. I guess we all have our own standards, but I would not do it. I don't admire people who do it. I think it does a terrible injustice and disservice to the American public that this is happening. I wanted to show this graph to sort of bring the whole thing together. What I have here is plotted between the years 2000 and 2009, the years where this budget is in effect, the Social Security surplus. It starts out at $138 billion and it grows over the period to over $200 billion a year. That is the amount of money that Senator Domenici locks away in his lockbox. Now, in addition to the Social Security surplus, because the economy is growing so quickly and because we are controlling spending, if we actually do it, we will get an additional surplus in the rest of the Government in this area that I call ``B'' on this chart. Interestingly enough, what the President does is, he says let's take 38 percent of this unified budget, Social Security plus non-Social Security budget, and let's spend it and then give the rest to Social Security on top of the Social Security surplus that we have already measured. So that is how they start out with the Social Security surplus and then end up with these huge IOUs that they claim they are giving to Social Security. It is interesting because if you look at the President's plan--and this chart is from the Social Security Administration--if you look at their plan, they claim that under their plan they are building up the assets of Social Security from $864.4 billion to $6,697.8 trillion. Yet, when you look at the Office of Management and Budget figures--and all this is put out by the same administration--when you look at their actual level of paying down the debt, that level turns out to be only $2,183.6 trillion. So the question is, What happened to the $3.6 billion? What happened to it? The President says that under his system, with all this double counting of money, he was putting $5.8 trillion into Social Security; yet, his budget shows only $2.163 trillion actually saved for Social Security. What happened? Well, what happened is that none of this money ever went to Social Security to begin with. It was all a paper, double- counting bookkeeping. Their own numbers show it. Yet, nobody is embarrassed enough about it to simply say, well, this is phony and we apologize and we should have never tried to perpetrate this fraud on the American people. Now, I think we can be proud of the fact that in this budget every penny of the Social Security surplus is locked away to be used for Social Security. And when we decide how to save Social Security--and I wish we could decide today; maybe we will tomorrow--those funds will be there for that purpose. I think that is very important and I want to congratulate Senator Domenici [[Page S3728]] for his leadership on this issue. I want to address two other issues and I will speed it up if anybody else comes over and wants to speak. If not, I will give a fairly detailed description of both. The next issue is tax cuts. The budget before us simply says that every penny of the Social Security surplus will be there for Social Security; that of the surplus that is left, we keep a reserve of money that is available for a contingency use which could be used for one of many purposes, and then after we set aside that contingency, we provide the rest of the money for tax cuts for working Americans. After all, the surplus we have is due to the fact that Americans are working harder, working smarter, working in a more productive way, earning more and paying more taxes. There have been several proposals to cut taxes. None of them are endorsed in this budget. This budget simply gives to the Finance Committee the ability to cut taxes. And there have been a lot of proposals discussed. But the one that especially our Democrat colleagues have talked the most about is a proposal to cut taxes across the board. This has given rise to a debate in which I love to engage. Obviously, my Democrat colleagues love to engage in it as well. This is the debate that basically takes the view, as our Democrat colleagues often do, that investment is a good thing but investors are somehow bad people; that wealth is a wonderful thing but people who create it, that somehow there is something wrong with them, or that there is something wrong with letting them keep part of it. I don't understand how you can love investment and not love investors. I view people who are successful as being public benefactors. I never got a job being hired by somebody who made less money than I did. Everybody who ever hired me was richer than I was, which is why they were hiring me rather than me hiring them. And I never resented the fact that people had gotten rich by working in America. But here is what you are going to hear all day today, and here is what you are going to hear as we debate the tax cut. We have a very, very progressive tax system in America. ``Progressive'' is really a phony word. It is a made-up word that is meant to really cloud the issue so you don't really understand. Under our system, if you make more money, you not only pay more taxes proportionately, but the rate of taxes goes up. So that as you make more money, your taxes don't go up proportionately but they go up exponentially. Our system of taxes is so progressive that roughly 50 percent of Americans pay virtually no income taxes. And they pay no income taxes because there are many provisions which were adopted when Ronald Reagan was President in terms of changing the Tax Code. We were able to make some changes with the child tax credit and in our tax cut of 2 years ago that further exempted income from taxes. But the bottom line is that about 95 percent of income taxes are paid for by people who are in the upper half of the income distribution in the country. What our Democrat colleagues have discovered is that we do have a progressive income tax. So that if I pay $5,000 of income taxes, and someone else pays $50,000 of income taxes, and we give a 10-percent tax cut, I get $500 as a tax cut and they get $5,000 as a tax cut. And our Democrat colleagues think that is somehow outrageous. But the point is, the only way you are getting more of a tax cut is if you are paying more taxes. So that what they are really talking about is that the system is progressive. Should it be progressive? You know there are many people who believe we ought to have a flat tax and that everybody ought to pay the same rate. But the point is, if we are going to cut taxes and Senator Rockefeller pays 10 times as much in taxes as I do, or 100 times as much in taxes as I do--I don't know, and I hope he pays 100 times as much because then he is better off and so is America. But, whatever it is, the fact that he would get a bigger tax cut than I do from an across-the-board tax cut is the most reasonable thing on Earth to me if he is, in fact, paying more taxes than I am paying. I believe our No. 1 priority in cutting taxes is we ought to cut everybody's taxes by 10 percent. So, if you do not pay any taxes, you should have learned in the third grade--since I repeated the third grade I remember it--that anything times zero is zero. So with a 10- percent tax cut, if you are not paying any taxes, you don't get a tax cut. You are going to hear our colleagues say, well, 50 percent, or 40 percent, or whatever the number is they choose or make up today, people will get no tax cut under a 10-percent tax cut. The only person in America who will get no cut in income taxes from a 10-percent tax cut by definition is a person who pays no income taxes. Here is my point. Most Americans don't get Medicaid. Most Americans don't get food stamps. Most Americans don't get welfare. Why don't they get those things? They don't get those things because they are not poor. Tax cuts are for working people. Welfare is for poor people. Medicaid is for poor people who are sick. Medicare is for elderly people for their health care. We have many different programs that do not go to everybody. We have very few programs in America that everybody benefits from directly. The point is, if not everybody gets welfare, why should we be shocked that if you do not pay income taxes, that when we cut income tax rates you don't get a tax cut? I don't find that to be shocking. I don't have any trouble saying to somebody in my State who says, ``You cut income tax rates by 10 percent and I didn't get a tax cut.'' I know, because I understand arithmetic, that they are not paying any income taxes anyway. So I don't have any problem saying, ``Yes. That is right,'' because tax cuts are for one unique group of Americans, ``wagon pullers,'' I call them--the people who are pulling the wagon in which so many other Americans are riding; the people who are paying for the Medicaid they don't get, for the welfare benefits they don't get, for the food stamps they don't get. Tax cuts are for the people who are pulling the wagon in which all other beneficiaries of Government are riding. So I don't feel the least bit squeamish about saying that tax cuts are for taxpayers. If you do not pay income taxes, you don't deserve a cut in income taxes, because you are not paying any. We have a surplus because Americans are working harder and paying more taxes. In fact, they are doing it today, tax day. I want everybody who is going to the post office today to send their taxes to the government--if you happen to be on mountain time, or if you are on Pacific time and you have nothing better to do than to turn on C-SPAN-- I want you to remember this when you pay your taxes: I want you to remember, you didn't get food stamps, you didn't get welfare, you didn't get Medicaid, but I believe--and the party I am a member of, the Republican Party believes--that you ought to get a tax cut. Our Democrat colleagues are going to say--you are going to hear it, so pay close attention. They are going to say, yes, you get a tax cut. You-- this person working in Los Angeles, CA, on your way to mail your check in right now--you get a tax cut. Think of these people that don't get a tax cut. How is it fair that Joe Brown and Susie Brown, who make $21,000 a year, pay no income taxes, and get an earned-income tax credit--which is really a welfare benefit--why is it they don't get a tax cut when you do? The answer is, they don't pay any income taxes and you do. We have this basic viewpoint which our Democrat colleagues find to be radical. That point is, if you don't pay income taxes, you don't get a tax cut; if you do pay income taxes, you do get a tax cut. The more taxes you pay--and God bless you for doing it, because if people are paying record taxes it means they are earning record incomes--I believe, and the great majority of the Republicans in Congress believe, if you pay more taxes, you ought to get a bigger tax cut. That is what an across-the-board, 10-percent tax cut would do. A final point: This used to be a bipartisan idea. John Kennedy proposed an across-the-board tax cut in 1961 which was adopted and became law. His famous words are, ``A rising tide lifts all boats.'' That is still believed by one-half of the political spectrum in America. It is no longer believed by the other half--and that is the half that he was once a part of. To conclude, let me talk a little bit about Medicare. There is no more fraudulent portion of the President's [[Page S3729]] budget than the proposal about Medicare. Let me give Members a tiny bit of history. We, through an act of Congress, signed by the President, set up a Medicare Commission. In a gesture toward bipartisanship, Republicans--who control both Houses of Congress--agreed to appoint a Democrat, Senator Breaux, as chairman of that Commission. Senator Breaux did a great job as chairman of the Medicare Commission. It was my privilege to serve on that Commission. I remember as if it were yesterday President Clinton called the whole Commission down to the White House and talked to us about the terrible problems we had in Medicare and challenged each of us not to let the work of the Commission fail because of us. He challenged each of us to find a way to be for the final proposal. As it turned out, as most people now know, the final work of the Commission did fail. It failed by one vote. Not one single person appointed by President Clinton found a way to be for the final proposal, and they all voted against the Commission proposal. The President, in 3 months, had an opportunity to change American history on Social Security and Medicare, and in both cases he failed. What did the President do in his budget? What the President did in his budget is literally this: He said we are going to pay off debt-- though not as much as the Domenici budget--but we are going to name the debt reduction in honor of various programs. That is in essence what it was. In essence, what the President's budget does is send a little note to Medicare that says: You will be happy to know that Federal debt was reduced by such and such an amount and it was done in your name. It would be sort of like our Presiding Officer having someone send a check to his university saying, ``We made a contribution in your name,'' and then you say, ``When do I get the money?'' You don't ever get the money. What the President did in Medicare--which was one of the cruelest hoaxes I can imagine in public policy--the President didn't give Medicare a penny over 10 years, provided no additional money to Medicare. In fact, he cut Medicare, cuts that are not in the budget before the Senate. So he cuts Medicare funding over 10 years, and yet by sending this IOU to HCFA, the agency that runs Medicare, he somehow creates the impression that he has given Medicare more money, when none of this IOU can be spent. In fact, the only way we could ever provide money under this is to raise taxes, to cut Medicare or cut other Government programs. Yet the President creates this impression that he has provided this money that could be used for pharmaceutical benefits or all these other wonderful benefits. It is a cruel hoax. What we do in our budget is set out a procedure where this reserve fund, this reserve money that we didn't use for tax cuts that we kept as a buffer could, in part, be used for Medicare. Our problem in Medicare is we need to adopt the Breaux Commission report. We had a vote on instructing conferees for us to preserve our commitment to that. It is in this budget. We are going to bring that proposal to the Finance Committee. I hope we are going to adopt it. What that proposal will do, in addition to planting the seeds to save Medicare, for moderate- and low-income retirees it will, for the first time, give them assistance on pharmaceuticals. For middle-income retirees and upper-income retirees, by expanding the options that are available, by literally letting them have the same health insurance that I have as a Member of the Senate, it will allow them for the first time to have an opportunity to buy into a plan that will give them some assistance with their pharmaceuticals. I have talked a long time and covered a lot of subjects. Let me conclude by simply congratulating Senator Domenici. This is a great budget. If we can enforce this budget, America will be richer, freer, and happier. If we can enforce this budget, we will have an opportunity to begin the long process of rebuilding the financial base of Social Security based on wealth and not debt. If we can enforce this budget, we will pay off Government debt. If we can enforce this budget, we will be able to give working Americans tax cuts. It is one thing to enter the marriage; it is another thing to make it a successful one. This is a very important day, a very important budget. I am very proud to be for it. I yield the floor. Mr. HOLLINGS addressed the Chair. The PRESIDING OFFICER. The Senator from South Carolina. Mr. HOLLINGS. Mr. President, I just came to the floor to hear my distinguished colleague from Texas say this is the finest budget in 20 years. The PRESIDING OFFICER. Who yields time? Mr. CONRAD. I yield 10 minutes to the Senator from South Carolina. The PRESIDING OFFICER. The Senator from South Carolina is recognized for 10 minutes. Mr. HOLLINGS. Mr. President, this is the same act, same scene, under different auspices, different rules and regulations, with the manifest intent, in this particular Senator's opinion, that what is on course here is a Milton Friedman-like plan of the distinguished Senator from Texas to privatize Social Security, to establish private savings accounts. The Republicans do this in violation of all the rules and regulations that you can think of that have been put in over the past several years to bring about fiscal discipline. Let's get right to the point: We, up until now, have been on course with some fiscal discipline. Credit President Clinton and the 1993 Congress that enacted the Balanced Budget Act, which cut spending, increased taxes, increased taxes on Social Security--the very measure that they said was going to end the world and throw us into a depression whereby even the distinguished chairman on the House Budget Committee said he would change parties. I don't know whether he is running today for President as a Democrat or Republican, but to my knowledge Mr. Kasich is still a Republican. He said he would change parties if it worked. It is working. The market is over 10,000, we have housing starts and inflation is down, unemployment is down, and everything else of that kind. When they reported this budget, trying to continue the fiscal discipline, here is the language: In addition to the fiscal policies contained in the budget resolution, I also am troubled by the process the Republican majority wants to use in this year's budget. The reconciliation process have been used sparingly in the past to improve the fiscal health of the budget. It was created to give the Senate a process for making difficult fiscal decisions--decisions that often require cutting popular programs and increasing taxes to balance the budget. That is not the case this year. The Republicans want to use the reconciliation process to dramatically reduce revenues over the next ten years and impair the progress we have made so far in reducing the deficit and beginning to pay down the debt. The budget resolution also would modify the pay-go point of order. Pay-go was required to insure the Senate would provide off-sets to reduce taxes or increase spending. The modified budget resolution now will make it possible to cut taxes without a fiscal off-set. By making it easier to use future surpluses to cut taxes instead of paying down the debt, this will eliminate the fiscal discipline that has reduced the deficit and contribute to the fiscal cancer eating away at America. I say cancer, and I say that advisedly, because when President Johnson last balanced the budget, the interest cost on the national debt was only $16 billion. Today it is just about $1 billion a day. The last estimate of the Congressional Budget Office was $357 billion each year. When President Johnson last balanced the budget, after 200 years of history--the cost of all the wars from the Revolution on up, World War I, World War II, the cost of Vietnam, Korea--the interest cost on the national debt was only $16 billion. Now, since that time, without the cost of a war--we made money on Desert Storm--so, without the cost of a war it is now $1 billion a day, eating away. With that wasted money, the interest cost on the debt, I could give the distinguished Presiding Officer his $80 billion tax cut, I could give our Democratic friends our $80 billion in increased spending, I could give $80 billion to save Social Security, I could give $80 billion to pay down the debt--that is only $320 billion. But we are going to spend at least $357 billion this year on nothing, and if interest costs start going back up we will be to $500 billion. But, to the original point, read this conference report. Here are the shenanigans that go along and are given dignity by my distinguished colleague [[Page S3730]] from Texas saying it is the finest budget he's seen. I was sorry to see him do that because I joined him in passing Gramm-Rudman-Hollings for fiscal discipline, and this is the most undisciplined shenanigan that you will ever find. On page 18, section 202 of the conference report: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill, or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may-- (1) increase the appropriate allocations and aggregates of new budget authority and outlays by the amount of new budget authority provided by such measure (and outlays flowing therefrom) for that purpose; (2) in the Senate, adjust the levels used for determining compliance with the pay-as-you-go requirements of section 207; and (3) reduce the revenue aggregates by the amount of the revenue loss resulting from that measure for that purpose. I want the Parliamentarian to listen to that one. I can tell you how he will rule. He will say it means whatever Mr. Domenici says it means. What does that gobbledygook mean? Listen to this. I will read it again: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may [blah blah blah blah]. He can do away with the pay-go rule, he can cut the revenues, he can do whatever he pleases. And that is what my distinguished colleague from Texas calls the finest budget he has seen, because he doesn't want this crowd to read and understand what is going on. Bring out the Roth IRA for the rich. Under this budget, pass a law, don't care about the rules, don't care about pay-go, don't care about any available monies. I say that IRA is for the rich because one American--to bring it into focus, Bill Gates, $51 billion--is worth more than 100 million Americans. One man in this society that we are developing is now worth more than 100 million Americans. So there are a lot of people who do not have anything to say about this. But you sort of enhance your security and retirement--for the idle rich. Whoopee and the dickens with the pay-go rule, Mr. Parliamentarian. You don't have to worry about that. You don't have to worry about the loss of revenue or anything like that, the reconciliation process. It is reserved. Now the Republicans can come on in and privatize Social Security, all under the auspices of saving Social Security. It is still off on this public debt, as if there is some difference from the national debt. Let me explain one more time. When you pay down your public debt, you increase your Social Security debt. That is where the money comes from. The whole gimmick here is to pay down Wall Street's credit card with the Social Security credit card. It is like having a Visa and a Master and you want to pay down the MasterCard with your Visa card, so you pay down the MasterCard with the Visa card. But it is still your card; it is your debt. All you've done is shift debt from spending column to another. That is why the debt this particular fiscal year, 1999, goes up $100 billion. That is the Congressional Budget Office figure. Let's sober up here. Everybody is running around saying, ``Surplus, surplus.'' How are we going to do it? They all have different ideas: ``Surplus, surplus.'' The truth of the matter is there is no surplus. There is a deficit. We are spending $100 billion more than we are taking in. I thank the distinguished Presiding Officer. Mr. CONRAD addressed the Chair. The PRESIDING OFFICER. The Senator from North Dakota. Mr. CONRAD. Mr. President, let me thank the Senator from South Carolina. This country could have avoided an awful lot of the pain of the 1980s and 1990s if this country had listened to the Senator from South Carolina on budget matters. There has been no Member of this body who has had a better handle on the budget problems of this country than the Senator from South Carolina. Years ago, if we would have followed the Hollings plan and put in place a budget freeze, we could have avoided the massive deficits that came in the 1980s and the early 1990s, and this country would have been in a far better fiscal position. He has been an activist and a leader on the Budget Committee of every effort to provide fiscal discipline to this country. I venture to say, in this Chamber there is no single Member who has made a greater contribution moving this country from massive deficits to now surpluses than the Senator from South Carolina. Senator Hollings has been, I think, a model of what a United States Senator should be, in terms of budget discipline for this country. This country owes him a debt of thanks for the leadership he has provided. Mr. HOLLINGS. If the distinguished Senator will yield, he has been far too generous. Our floor leader, Senator Conrad of North Dakota, has really been leading the fight for us in the Budget Committee. That is why we are able to get some semblance of some discipline there. I hope, with the conference--maybe I could ask the Senator a question. Did they have a conference? Did the distinguished Senator from North Dakota go to a conference on the budget? Mr. CONRAD. Yes. I was on the conference committee. It went to the conference. Mr. HOLLINGS. Oh, they had one. Mr. CONRAD. They had one, but they did not have a budget there. It is most amazing. As my colleague knows, a conference is the representatives of the Senate and the representatives of the House coming together to work out the differences between the two. We were there, the Members were there. I think you would have been quite amazed, I say to the Senator from South Carolina, because there was no budget there, there was no document there. There was no discussion about the differences between the House and Senate. What we had was an immaculate conception. What we had was a document that appeared out of nowhere after we had met. Mr. HOLLINGS. As one big charade, rather than save Social Security, they plan to privatize it. There is no question in this Senator's mind. Mr. CONRAD. To privatize it or raid it in some other way. We really do not know. I was very interested to listen to the Senator from Texas say--say--that they had reserved every penny of Social Security surplus for Social Security. That is what we said. Mr. HOLLINGS. That is what he said. Mr. CONRAD. Unfortunately, that is not what the budget document provides. It is very interesting; the Senator from South Carolina probably knows better than anybody how one can play games with these documents. It is fascinating what they have done here, because on one line, they suggest that they have provided a lockbox for Social Security. That is on one line on page 16 and it runs on to page 17. But then on the bottom of page 17, in the next section, they gut what they did earlier on the page. This is the oldest budget game in the book: ``Now you see it, now you don't.'' Mr. HOLLINGS. It is an old insurance game. I remember that when I was Governor, we were trying to clean up the insurance industry in my State. A new company was looking for a slogan, and we finally came up with the winning slogan: ``Capital Life will surely pay, if the small print on the back don't take it away.'' Now we have it all the way up here 35 years later in the budgetary process of the U.S. Government. Mr. CONRAD. I wish it were not the case but, unfortunately, it is. We had, I think, hoped--certainly the Senator from South Carolina and I-- that we would be at a point where we really would reserve every penny of Social Security surplus for Social Security. We thought that is where we were headed. Unfortunately, what our friends across the aisle have done is indicate that that is what they are doing, but that is not what the budget document says. No, no, no, they have changed it all, and they have made it possible to continue the raid on the Social Security trust fund on a simple majority vote which, of course, their lockbox was intended to protect against. Unfortunately, what they say they have done and what they have done are two very, very different things. [[Page S3731]] Mr. HOLLINGS. They gave the key for the lockbox to everybody save the Social Security recipients. Mr. CONRAD. Social Security is clearly in danger. Clearly, the priority on the other side is a tax cut, a massive tax cut at all costs. That is their priority. Looking at this budget, the budget that is before us, the major problem with it is that it does not represent the priorities of the American people. I think the best way to understand this is we now have projected a surplus over the next 10 years of $2.6 trillion. Our friends on the other side say all of the non-Social Security surplus-- virtually all of it--ought to go for a tax cut. Nothing, not a dime out of that surplus is for Medicare--not a dime--even though it is in greater danger than Social Security. They do not have the resources available for the high-priority domestic concerns of education, health care, defense, because if you look over time, they are going to have massive cuts in those categories. They are disguised, they are hidden, but they are there. Mr. President, I think perhaps it would be useful to recount a little bit of the budget history, how we got to where we are today and where we are headed. This chart shows over the last 30 years the budget history of the United States at the Federal Government level. We can see the last time we had a surplus was back in 1969, a little bitty surplus of $3 billion. We bumped along. Then we got into the seventies and the deficits started rising. Then we got into the Reagan years and the deficits exploded. We then had the Bush years and the deficits got even worse, so that on a unified basis--unified basis simply means all spending, all revenue put in one pot; that is a so-called unified budget--and on a unified basis in 1992, the last year of the Bush administration, we had a $290 billion deficit. In 1993, President Clinton put before the Congress a 5-year plan to reduce the deficit. We passed that plan. It was done with all votes on this side of the aisle. Not a single Republican voted for that plan. Not one. That plan has reduced the deficit each and every year of the 5 years of the plan. In fact, now we are seeing a slight surplus. What did that plan contain? It cut spending. It cut spending and it raised income taxes on the wealthiest 1 percent in this country. The Senator from Texas who was talking earlier opposed that plan. He said, as did many on that side of the aisle, that it would not work. In fact, they said it would increase the deficit. They said it would increase unemployment. They said it would increase inflation. They said it would be an economic disaster. They were wrong. They were not just a little bit wrong, they were completely wrong. The fact is that plan worked and worked extremely well, and the proof is in the pudding. We can see what happened to the deficit after that plan passed in 1993. Each and every year the deficit came down. In this last year, we ran on a unified basis a $70 billion surplus, and we are headed for much larger surpluses if the projections come true. On a unified basis, we ran a surplus last year. But remember, that counts all revenues and all expenditures. If we take out Social Security, because that is a separate trust fund, we will see we still ran a deficit last year of $29 billion--if we take out Social Security--because it was in surplus by about $100 billion. The good news is, we are very close to balancing without counting Social Security this year, and in 2001, we anticipate we will balance without counting Social Security. That is an enormous, enormous development and enormous progress. You can see back in 1992, if we were not counting Social Security, we had a $340 billion deficit. That is the kind of progress that has been made, and it has been made because, as I indicated, we had a 1993 5- year plan that cut spending, raised taxes on the wealthiest 1 percent, raised income taxes on the wealthiest 1 percent, and in 1997, we had a bipartisan deal. In that case, we came together and agreed on a budget plan to finish the job of balancing the budget. This chart shows what the 1993 plan did and what the 1997 plan did. You can see most of the savings are the result of the 1993 package. Again, our friends on the other side of the aisle--all of them, to a person--voted against it. The bipartisan agreement was 1997, but most of the work has been done by the 1993 5-year plan and that, in combination with the 1997 plan, has put us in this very favorable circumstance we face now. I thought just for the record we should look back on what the deficits were under each of the last three Presidents. With President Reagan, from 1981 through 1988, we saw the deficits explode. They went from $80 billion a year--that is the deficit he inherited-- and very quickly he shot it up to $200 billion. Then we, at the end of his term, saw some improvement--back down to about $150 billion. When President Bush came in, the deficits exploded again, and went from $150 billion, as I indicated, up to $290 billion a year by 1992. Under President Clinton, as I indicated, in 1993 we passed a 5-year plan; and we can just look at the results. In 1993, the deficit was $255 billion. And you can see each and every year thereafter the deficit went down under that 5-year plan. We almost achieved unified balance under that 5-year plan. So the proof is in the pudding. Our friends on the other side of the aisle talk about ``sham'' and ``hoaxes,'' and all the rest of it. The proof is in the pudding. My friends, Democrats passed a plan in 1993, without a single Republican vote. Democrats did the heavy lifting to get this country back on a fiscally responsible course. Facts are stubborn things. And the facts show, without question, that the Democrats passed a plan that, in fact, restored fiscal health to this country. It is true in 1997 we did get together on a bipartisan basis to finish the job. I wish it could have been bipartisan in 1993. But our friends on the other side of the aisle said then that if you pass this plan, you are going to make the deficit worse. They said if you raise taxes, even if it is on just the wealthiest 1 percent, that is going to collapse the economy. They were wrong. Their economic prescription for this country was wrong. And the facts clearly show that they were wrong. Thank goodness there were people who were willing to stand up and cast very tough votes to cut spending and, yes, to raise taxes on the wealthiest 1 percent so we could get this country back on course. It worked; and it worked splendidly. The results are dramatic. Not only have we reduced the red ink and eliminated it--no more running of deficits--but we also got remarkable economic results. We now have an unemployment rate that is the lowest in 41 years. The other side said, when we passed the 5-year plan in 1993, if you pass it, unemployment is going to go up. Unemployment went down. Unemployment went way down, the lowest it has been in 41 years. The other side said, the inflation rate, if you pass this plan, will go up. They were wrong. The inflation rate has gone down. We have the lowest rate of inflation in 33 years. But the good news does not end there. In addition, we passed welfare reform. In fairness and in truth, that was done on a bipartisan basis. We came together on welfare reform. And the result, coupled with the good economy that came from the 1993 budget plan, that coupled with welfare reform, has led us to the lowest percentage of our people on welfare in 29 years. Look at this dramatic improvement in terms of the percentage on welfare in this country. As well, Federal spending has come down because, as I indicated, in 1993, part of that package was to cut the growth of spending in this country. And we did even more in the 1997 bipartisan plan. So the two together, the 1993 plan and the 1997 plan, have brought down Federal spending as a percentage of our national income to its lowest level since 1974. So now we are spending, as a percentage of our national income, the lowest level in 25 years of the Federal Government. Because we have reduced deficits and gotten our fiscal house back in order, debt held by the public has also declined. We reached a debt, in relationship to our gross domestic product, of [[Page S3732]] 50 percent in 1993. We saw, through the Reagan and Bush years, that the debt was climbing in relationship to the size of our gross domestic product. In 1993, when we passed that plan, we stopped the growth of the debt in relationship to the size of our income and reversed it. So now we have seen the debt come down to a level of 44 percent of our gross domestic product. And we anticipate, if we stay the course that we are currently on, we will get the debt down to only 9 percent of our gross domestic product in 2009. The budget before us threatens that course. Because the colleagues on the other side of the aisle are so fixated on a massive tax-cut scheme, they would rather do that than to make this progress in reducing our national debt. I think that is precisely wrong. I think what we did in 1993 demonstrates that taking debt burden down gives a greater lift to this economy than any tax-cut scheme that anybody can come up with. That is not to say we should not have tax reduction, because we should. The question is one of priorities and proportion. Our friends on the other side of the aisle say--we have $2.6 trillion of surpluses projected over the next 10 years--there are only two priorities. Their two priorities are to safeguard $1.8 trillion of that for so-called ``retirement security''--I don't know exactly what that means. That entire $1.8 trillion is generated by Social Security. It should be set aside for Social Security. That is the plan we Democrats offered in the Budget Committee. We offered to safeguard every penny of Social Security surplus for Social Security. That is $1.8 trillion. In addition, we said we also ought to put about $400 billion aside for Medicare. The budget that is before us does not provide one penny of these projected surpluses for Medicare --not one penny. These are not the priorities of the American people. Instead, our Republican colleagues say all the non-Social Security surplus, or virtually all of it--because you have about $800 billion of non-Social Security surplus over the next 10 years--they say, use virtually all of it for a tax-cut scheme. And the best description we have of what they do with it is a 10-percent, across-the-board tax cut. That is what the chairman of the Finance Committee has said he thinks should be done. That is what their leadership in the House have said they think should be done. We have a different view of what the priorities for the American people are. For that $2.6 trillion, we say every penny that comes from the Social Security surplus ought to be reserved for Social Security. Interestingly enough, that is what was passed here in the Senate. But it went to the conference committee, and somewhere in the dead of night they backed away from that commitment; they backed away from that commitment and they came up with this very clever, very complicated little scheme. And this very complicated and very clever scheme says, on one page, yes, we are going to devote the Social Security surpluses to Social Security, but in the very next line they undermine it all-- they undermine it all--they create a big loophole so that on a simple majority vote here the Social Security fund can be raided, can be looted, just like it has been done for the last 15 years. That is wrong. That is not the priority of the American people. The American people want to preserve every penny of Social Security surplus for Social Security. That is what the Democrats offered in the Senate Budget Committee. In addition to that, we said the next $400 billion of surplus ought to be reserved to strengthen and protect Medicare. Our friends on the other side have not provided one penny of the projected surpluses to strengthen Medicare. Instead, they say, let's have this massive tax cut scheme to benefit primarily the richest and wealthiest among us. Now, the Senator from Texas says, you cannot love investment and not love the investor. That is true. I think we all respect those who invest. We respect those who save. We respect those who are successful. The question is, how do we use Government policy? Who do we benefit when we make decisions? Do we use governmental power to benefit the wealthiest among us? Is that what we do? That is not what I favor. As I said, I believe the first priority ought to be every penny of Social Security surplus for Social Security; that is, $1.8 trillion of the $2.6 trillion we now estimate will be in surplus over the next 10 years. But the next $400 billion we say ought to be used to strengthen and protect Medicare. That leaves another $400 billion that would be available for high-priority domestic needs under our plan, like education, like health care, and, yes, defense and tax relief for the American people. Our friends on the other side of the aisle have a different view. They say, yes, reserve the $1.8 trillion, but not just for Social Security, no, not just for Social Security. They call it ``retirement security.'' If they want to reserve every penny for Social Security, why don't they say Social Security? Why have they come up with this new term ``retirement security''? I think most of us know why they have done that--because the Senator from Texas has a scheme to privatize part of Social Security, and he wants the money reserved for his plan. He doesn't want to say reserve every penny of Social Security surplus for Social Security. Instead, he wants to make people believe he is going to do that, but then he provides a big loophole so that later on this year he can come along and raid the Social Security trust fund for his plan to create private accounts. That is what is really going on here. None of us is fooled. They do not provide anything, not a penny of these projected surpluses, to strengthen and protect Medicare, when we know Medicare is in the most imminent danger of being insolvent. We say the priority ought to be Social Security and ought to be Medicare and, after that, we also ought to have some money for high-priority domestic needs like education and health care, and, yes, tax relief. But it is a matter of priority, and our friends on the other side of the aisle say the priority ought to be a massive tax cut. This is the comparison for what happens. Let me focus on the 10 years. The blue column represents what the Republicans would do to pay down debt, and the red column shows what we offered as Democrats in the Budget Committee to pay down debt. A lot of people might be as surprised by this, because the Democratic plan paid down more debt than the Republican plan. We paid down more debt over the next 10 years, by nearly $400 billion over and above what is in the Republican plan, because we believe that is a key priority for the country. Again, our Republican friends think there is a different priority. They want to have this massive tax cut scheme. That is really what is most on their mind. Unfortunately, because of this, they do not have, as I have indicated before, one penny of the surpluses set aside to strengthen Medicare, not a dime. They have what I call ``the Republican broken safe.'' Here it is. You look in it and what do you find? There is nothing there. Now, with what they have done in the conference committee, we ought to have this up for Social Security, too, because, goodness knows, we could find, after the clever game they have played here in this budget document, that we may go into the Social Security trust fund in the future and open the vault door and find there is nothing there, either. Because they have this set up so that they can raid every penny of the Social Security trust fund surplus and put it over into private accounts. They could do that. They could use it for a tax cut and call it retirement security. Who knows what that means, ``retirement security''? If they wanted to reserve the money for Social Security, why didn't they say it? Well, I guess if we wanted to be fair to them, they do say it, don't they? On one line they say they are going to reserve the money for Social Security, but they say, by a simple majority vote, you can overturn that. Before it was a supermajority vote. Now in the dead of night they changed it, simple majority vote, and now you can loot Social Security. You can raid it, because in the very next line, section 202, they created another reserve fund. It is clever. I don't think it is going to work for them, because the American people are too smart. They know the kind of games that get played here in Washington. T

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CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT
(Senate - April 15, 1999)

Text of this article available as: TXT PDF [Pages S3725-S3756] CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT The Senate resumed consideration of the conference report. Mr. GRAMM. Mr. President, I rise today in support of the budget that is before the Senate. I am sorry that our dear chairman, Senator Domenici, is not here, but I want to say some very strong, positive things about this budget, and I wish he were here to hear it. I want to say it mostly because it is true. It would just be a plus if he were here to hear it. It has been my great privilege since I first came to Congress to be actively involved in budget debates. In fact, I remember the first debate I ever was involved in as a Member of the House was a debate about raising the debt ceiling, and I remember as if it were yesterday the House majority leader, Congressman Wright from Texas, stood up and said that we had no choice except to raise the debt ceiling of the Government, that we were in a position that a man would be in if his wife went out and ran up all these debts on the credit card and the debt collector was at the door. Today, in this era of political correctness, no one would ever suggest such a thing. They would say their spouses ran up these bills, and probably the reality would be the man did run up the bills in any case. But the point is that the then-majority leader of the House, in 1979, made the point that these bills had been run up and the bill collector was at the door, and so we didn't have any choice except to pay the bills as any good, honest family would. And so I stand up and say that the first thing I ever said in debate in the Chamber of the House was, well, it is not really the way it works. It is true that honest families would pay their bills, but what they would do is they would sit down at the kitchen table, they would talk about how they got in this financial mess, they would get out the credit card, they would get out the butcher knife, they would cut up the credit card, they would get an envelope and pencil and they would work out a new budget on the back of an old used envelope, and they would start over again. The problem in Congress was we kept simply spending money, incurring debt, raising the debt ceiling, and nobody ever sat down around the kitchen table, nobody ever got out the butcher knife and cut up the credit cards, and so, as a result, we never changed anything. So anyway, I opposed raising the debt ceiling. It failed. And then we tried to offer an amendment trying to tie the debt ceiling to the budget and saying you can only raise the debt ceiling if you balance the budget. Well, to make a long story short, from that time in 1979 until today, I have been involved in debate about every budget that has passed in this Congress or been enforced in this Government since 1979. And let me say [[Page S3726]] that of all those budgets, this is the best budget that has ever been written by American Government in that period. Now it is probably not, certainly not the most profound budget. The most profound budget was the Reagan budget that was written in 1981. But in terms of what you want a budget to be, it would be very hard to improve on what this budget does. And it is one of my frustrations that everything is now so focused on the war in Kosovo and on many other issues, and we are not having any kind of adequate debate or focus of attention on the profound nature of the budget that is in front of us and what great promise this budget holds for America if we actually enforce this budget. So let me begin by just ticking off some things this budget does, and then I want to get into a discussion of a comparison of this budget with what the President proposed. I want to get into some of these areas like Social Security and Medicare that have been talked about a lot and will be talked about again. But let me outline what this budget does. First of all, this is a 10-year budget that, if enforced, will balance the budget every single year for 10 years. To sort of turn on its head the language of the 1980s, this is a budget that has surpluses as far as the eye can see. And it has those surpluses because it maintains a restriction on spending in a period where revenues are gushing into the Federal Treasury, a period where if we are not very careful we are going to see the launching of a massive new spending spree which could squander the surpluses of today that give us the opportunity to pay down debt, to rebuild Social Security, and do it right this time by basing it on wealth instead of debt, that give us the ability to let working men and women in America keep more of what they earn through a reduction in taxes. If we can keep these spending control measures in place, we can provide adequate Government--in fact, the highest levels of Government spending in American history. And yet by controlling the growth of spending, with the power of the American economy and our competitiveness on the world market and the attractiveness of our capital market with huge amounts of wealth flowing into our equity markets, inflating values, making American families richer, and inducing them to take income and capital gains and pay record levels of taxes on it, we can keep the budget balanced, we can rebuild Social Security based on wealth, and we can cut taxes for working Americans. This budget does all those things. Now, a budget is like a marriage license. It gets you into the deal, but it doesn't make it successful. The easy part is saying ``I do.'' The hard part of a successful marriage is what comes after the wedding. But you cannot have the successful marriage if you don't have the wedding. We are being brought to the altar here with a document that promises all the right things. It is now going to be up to us to enforce those promises. But the key promise, the linchpin of this budget, the element of this budget on which everything else hinges is it enforces the spending caps. If we do not control spending, we are not going to have the surplus. We are not going to be able to rebuild Social Security based on wealth instead of debt. We are not going to be able to preserve a balanced budget, and we are not going to be able to cut taxes. Now, the second thing this budget does, which I rejoice in, is it strengthens our ability to do these things. Every Member of Congress, and I wish every American, understood what happened last year. The President stood up really on the opening day of Congress last year in the State of the Union Address and said save Social Security first. Don't spend a penny of the surplus on either Government programs or tax cuts. Save every penny of it for Social Security. Well, we all know that the President was not telling the truth. We all know that in the end we ended up spending very much of that surplus. We ended up on the last day of Congress taking a third of the surplus that was meant for Social Security and spending it on other programs, and we did it in the name of emergency spending. One of the most important features in this budget is that we have in this budget an enforcement mechanism that says that if someone wants to designate an emergency in nondefense spending, they are going to have to get 60 votes, if somebody raises a point of order. My basic view is, if something is not important enough or enough of an emergency that 60 out of the 100 Members of the Senate will vote for it, then it is not an emergency. I say right now that I personally intend, if others don't, to raise a point of order against each and every emergency spending bill that would raid the Social Security trust fund. I give notice right now that anybody who has an idea that we are going to make all these wonderful promises, that we are going to promise to love, cherish, and obey in this little wedding we are having here on the budget, but that we are going to turn around and start cheating in the fall by breaking this budget by claiming all kinds of expenditures are an emergency, that they better be ready to get 60 votes in the Senate if they are going to be successful. They better be ready for a real battle, because I, for one, believe in this budget, and I intend to fight for it very, very hard. This budget puts a focus on some priorities. It basically says that even in a tight budget not all spending is equal. It puts a focus on veterans' health care, and it does it by, quite simply, taking the position that in a time when you are trying to control spending, you have benefits and you have earned benefits. The basic position of our budget is that those who have served the country, who have preserved its life by wearing with pride its uniform and fighting its wars and by keeping its peace, that even at a time when we have tight budgets, they ought to come first. So this budget provides more money for veterans' health care, and I support it. This budget provides more money for education. It doesn't create the money magically. It takes it away from other programs, with the basic idea that we ought to let the States decide how to spend money on education rather than the Senate being a huge 100-member school. This budget calls for an increase in defense. One of the great unknowns now, not knowing what the war in Kosovo is going to cost, is what is this going to do with our budget and where do we go from here. I want everybody to understand that this budget is written in such a way that we contemplate an increase in defense spending. We want to give a pay increase to everybody in the military. We want to try to provide the pay and benefits and recognition that will help us retain in uniform and recruit the finest young men and women who have ever worn the uniform of the country. Today they wear that uniform with pride, but we have grown increasingly concerned that we are falling behind in recruitment, in retention. We are having trouble, especially, keeping pilots. Now that the President has us deployed in some 30 different engagements around the world, where defense spending has been cut by over a third since its peak in real terms, and yet we have massive military deployments, what is happening is, people are beginning to leave the military. This pay increase that we call for in this budget is vitally important in terms of helping us recruit and retain the best people. Having all these miracle weapons does us no good if we don't have quality people to man those systems. We have the best people in uniform today that we have ever had. We want to keep it that way. That is what this budget does. That is the choice we have. The choice that is presented to us in this budget is, even though we are in a period of record prosperity, even though the level of revenue flows is a record level, what we call for is to limit the growth of Government spending, put a focus on areas like veterans' health care and education and defense, use the surplus to deal with the looming crisis that faces us in Social Security, and to the extent that we have surpluses flowing from the general budget instead of from Social Security, take the bulk of that money and give it back to working families in tax cuts. That is what this budget does. I believe that it is an excellent budget. I think looking at the whole package, it is the finest budget presented in America in the 20 years that I have served in Congress. [[Page S3727]] Talking specifically about several different areas, I want everybody to understand that there is a shell game going on with Social Security. I want to explain, because people have trouble understanding what it is the President is doing on Social Security and what this budget does on Social Security. Let me first explain what this budget does on Social Security, and then explain the fraud that is perpetrated in the President's budget. What this budget does on Social Security is very, very simple. It says every penny that we collect in Social Security taxes that we don't have to have to pay Social Security benefits should be dedicated to Social Security. It ought to be locked away, and it ought to be available to any effort to rebuild the financial base of Social Security. But we should not spend it on any other Government program, nor should we use it for tax cuts. In fact, Senator Domenici, in a proposal that is enshrined in this budget, but we will have to vote on separately, sets up a lockbox where we literally change the lending limits that the Government faces, the debt ceiling, so that we will not be able to spend one penny of the Social Security surplus. This is vitally important because, as anybody in the Senate knows, and I wish every American knew, our Government has been stealing every penny of money coming in to the Social Security trust fund. We currently have IOUs for this money that are sent to West Virginia and put in a metal filing cabinet, but the Government then takes the money and spends it on everything but Social Security. None of that money is being used for Social Security purposes. Senator Domenici's lockbox would change that permanently and say that this money would be set aside to reduce debt, and it would be available when we can agree with the White House on a way to rebuild the financial base of Social Security. That is a critically important proposal. If the American people knew the extent that we have been stealing money out of the Social Security trust fund, there would be outrage in the country. That is exactly what is happening. The Domenici lockbox ends that forever, and it is vitally important. I hope every Member will support it. Now, let me talk about this shell game the administration is playing on Social Security. Let me say, to begin with, that if you have been involved in every budget since 1979, you have seen phony assumptions, smoke and mirrors, shell games, or whatever the words are that we use. But let me say, so that no one is confused, that in Republican and Democrat administrations I have seen people make assumptions that were wildly unrealistic about the future, about what inflation was going to be, about what interest rates were going to be, about what economic growth was going to be, about what spending was going to be; but those were always assumptions about what was going to happen in the future where at least people could say, well, it may be based more on hope than reality, but it could happen. What the Clinton administration has done is they have brought phoniness, distortion and untruth into the budget at a level which has never existed in the American budget in the history of this country. And no better example exists than under Social Security. I think I can explain it to you very simply. Here are the facts. In the year 2000, the first year of this budget, we projected a $131 billion surplus in the unified Federal budget. If you take every penny we get from every source, and you take every penny we spend on every program or giveaway, or lose, or forget about, and you bring those two together, we are taking in $131 billion more than we are spending. Now, Social Security is taking in $138 billion more than it is spending. So while we show that we have a $131 billion surplus, the reality is that if you don't count the Social Security trust fund, we are actually spending $7 billion more than we take in. So let me show it to you this way. We are taking in $138 billion more than we are spending on Social Security alone. We are then spending $7 billion of that money from Social Security on general government. Now, that would leave you with $131 billion of money for Social Security. What the administration does is it sends to West Virginia this piece of paper that actually prints out on a computer, and it says, ``IOU Social Security $138 billion.'' So they get this piece of paper, they tear it off--and it has actually been on television, and they won't let you photograph the bonds, interestingly--they tear off the perforated edges and they take that $138 billion IOU and put it in the filing cabinet. Now, what happens is, we then spend $7 billion of it immediately, and that brings us down to $131 billion. Now, the President says, well, let's take 62 percent of that and give it back to Social Security and we will spend 38 percent of it. So we started with $138 billion, we spent $7 billion, and then the President says let's spend 38 percent of what is left and then we will send another IOU to Social Security for $81 billion. So out of the $138 billion that they initially had, they send IOUs to Social Security for $219 billion. Now, they started with $138 billion and then they spent $7 billion, and then of that $131 billion that was left, they spent another $50 billion, and then they give Social Security an IOU for $219 billion. Now, any freshman accounting student in any accounting class in America would be given an ``F'' if they proposed on an examination paper such an accounting system. Yet, some of the most highly educated people in America--men and women of great stature--stand up in front of God, a television camera, and everybody else in the world and defend this totally phony, fraudulent, embarrassing proposal. I guess we all have our own standards, but I would not do it. I don't admire people who do it. I think it does a terrible injustice and disservice to the American public that this is happening. I wanted to show this graph to sort of bring the whole thing together. What I have here is plotted between the years 2000 and 2009, the years where this budget is in effect, the Social Security surplus. It starts out at $138 billion and it grows over the period to over $200 billion a year. That is the amount of money that Senator Domenici locks away in his lockbox. Now, in addition to the Social Security surplus, because the economy is growing so quickly and because we are controlling spending, if we actually do it, we will get an additional surplus in the rest of the Government in this area that I call ``B'' on this chart. Interestingly enough, what the President does is, he says let's take 38 percent of this unified budget, Social Security plus non-Social Security budget, and let's spend it and then give the rest to Social Security on top of the Social Security surplus that we have already measured. So that is how they start out with the Social Security surplus and then end up with these huge IOUs that they claim they are giving to Social Security. It is interesting because if you look at the President's plan--and this chart is from the Social Security Administration--if you look at their plan, they claim that under their plan they are building up the assets of Social Security from $864.4 billion to $6,697.8 trillion. Yet, when you look at the Office of Management and Budget figures--and all this is put out by the same administration--when you look at their actual level of paying down the debt, that level turns out to be only $2,183.6 trillion. So the question is, What happened to the $3.6 billion? What happened to it? The President says that under his system, with all this double counting of money, he was putting $5.8 trillion into Social Security; yet, his budget shows only $2.163 trillion actually saved for Social Security. What happened? Well, what happened is that none of this money ever went to Social Security to begin with. It was all a paper, double- counting bookkeeping. Their own numbers show it. Yet, nobody is embarrassed enough about it to simply say, well, this is phony and we apologize and we should have never tried to perpetrate this fraud on the American people. Now, I think we can be proud of the fact that in this budget every penny of the Social Security surplus is locked away to be used for Social Security. And when we decide how to save Social Security--and I wish we could decide today; maybe we will tomorrow--those funds will be there for that purpose. I think that is very important and I want to congratulate Senator Domenici [[Page S3728]] for his leadership on this issue. I want to address two other issues and I will speed it up if anybody else comes over and wants to speak. If not, I will give a fairly detailed description of both. The next issue is tax cuts. The budget before us simply says that every penny of the Social Security surplus will be there for Social Security; that of the surplus that is left, we keep a reserve of money that is available for a contingency use which could be used for one of many purposes, and then after we set aside that contingency, we provide the rest of the money for tax cuts for working Americans. After all, the surplus we have is due to the fact that Americans are working harder, working smarter, working in a more productive way, earning more and paying more taxes. There have been several proposals to cut taxes. None of them are endorsed in this budget. This budget simply gives to the Finance Committee the ability to cut taxes. And there have been a lot of proposals discussed. But the one that especially our Democrat colleagues have talked the most about is a proposal to cut taxes across the board. This has given rise to a debate in which I love to engage. Obviously, my Democrat colleagues love to engage in it as well. This is the debate that basically takes the view, as our Democrat colleagues often do, that investment is a good thing but investors are somehow bad people; that wealth is a wonderful thing but people who create it, that somehow there is something wrong with them, or that there is something wrong with letting them keep part of it. I don't understand how you can love investment and not love investors. I view people who are successful as being public benefactors. I never got a job being hired by somebody who made less money than I did. Everybody who ever hired me was richer than I was, which is why they were hiring me rather than me hiring them. And I never resented the fact that people had gotten rich by working in America. But here is what you are going to hear all day today, and here is what you are going to hear as we debate the tax cut. We have a very, very progressive tax system in America. ``Progressive'' is really a phony word. It is a made-up word that is meant to really cloud the issue so you don't really understand. Under our system, if you make more money, you not only pay more taxes proportionately, but the rate of taxes goes up. So that as you make more money, your taxes don't go up proportionately but they go up exponentially. Our system of taxes is so progressive that roughly 50 percent of Americans pay virtually no income taxes. And they pay no income taxes because there are many provisions which were adopted when Ronald Reagan was President in terms of changing the Tax Code. We were able to make some changes with the child tax credit and in our tax cut of 2 years ago that further exempted income from taxes. But the bottom line is that about 95 percent of income taxes are paid for by people who are in the upper half of the income distribution in the country. What our Democrat colleagues have discovered is that we do have a progressive income tax. So that if I pay $5,000 of income taxes, and someone else pays $50,000 of income taxes, and we give a 10-percent tax cut, I get $500 as a tax cut and they get $5,000 as a tax cut. And our Democrat colleagues think that is somehow outrageous. But the point is, the only way you are getting more of a tax cut is if you are paying more taxes. So that what they are really talking about is that the system is progressive. Should it be progressive? You know there are many people who believe we ought to have a flat tax and that everybody ought to pay the same rate. But the point is, if we are going to cut taxes and Senator Rockefeller pays 10 times as much in taxes as I do, or 100 times as much in taxes as I do--I don't know, and I hope he pays 100 times as much because then he is better off and so is America. But, whatever it is, the fact that he would get a bigger tax cut than I do from an across-the-board tax cut is the most reasonable thing on Earth to me if he is, in fact, paying more taxes than I am paying. I believe our No. 1 priority in cutting taxes is we ought to cut everybody's taxes by 10 percent. So, if you do not pay any taxes, you should have learned in the third grade--since I repeated the third grade I remember it--that anything times zero is zero. So with a 10- percent tax cut, if you are not paying any taxes, you don't get a tax cut. You are going to hear our colleagues say, well, 50 percent, or 40 percent, or whatever the number is they choose or make up today, people will get no tax cut under a 10-percent tax cut. The only person in America who will get no cut in income taxes from a 10-percent tax cut by definition is a person who pays no income taxes. Here is my point. Most Americans don't get Medicaid. Most Americans don't get food stamps. Most Americans don't get welfare. Why don't they get those things? They don't get those things because they are not poor. Tax cuts are for working people. Welfare is for poor people. Medicaid is for poor people who are sick. Medicare is for elderly people for their health care. We have many different programs that do not go to everybody. We have very few programs in America that everybody benefits from directly. The point is, if not everybody gets welfare, why should we be shocked that if you do not pay income taxes, that when we cut income tax rates you don't get a tax cut? I don't find that to be shocking. I don't have any trouble saying to somebody in my State who says, ``You cut income tax rates by 10 percent and I didn't get a tax cut.'' I know, because I understand arithmetic, that they are not paying any income taxes anyway. So I don't have any problem saying, ``Yes. That is right,'' because tax cuts are for one unique group of Americans, ``wagon pullers,'' I call them--the people who are pulling the wagon in which so many other Americans are riding; the people who are paying for the Medicaid they don't get, for the welfare benefits they don't get, for the food stamps they don't get. Tax cuts are for the people who are pulling the wagon in which all other beneficiaries of Government are riding. So I don't feel the least bit squeamish about saying that tax cuts are for taxpayers. If you do not pay income taxes, you don't deserve a cut in income taxes, because you are not paying any. We have a surplus because Americans are working harder and paying more taxes. In fact, they are doing it today, tax day. I want everybody who is going to the post office today to send their taxes to the government--if you happen to be on mountain time, or if you are on Pacific time and you have nothing better to do than to turn on C-SPAN-- I want you to remember this when you pay your taxes: I want you to remember, you didn't get food stamps, you didn't get welfare, you didn't get Medicaid, but I believe--and the party I am a member of, the Republican Party believes--that you ought to get a tax cut. Our Democrat colleagues are going to say--you are going to hear it, so pay close attention. They are going to say, yes, you get a tax cut. You-- this person working in Los Angeles, CA, on your way to mail your check in right now--you get a tax cut. Think of these people that don't get a tax cut. How is it fair that Joe Brown and Susie Brown, who make $21,000 a year, pay no income taxes, and get an earned-income tax credit--which is really a welfare benefit--why is it they don't get a tax cut when you do? The answer is, they don't pay any income taxes and you do. We have this basic viewpoint which our Democrat colleagues find to be radical. That point is, if you don't pay income taxes, you don't get a tax cut; if you do pay income taxes, you do get a tax cut. The more taxes you pay--and God bless you for doing it, because if people are paying record taxes it means they are earning record incomes--I believe, and the great majority of the Republicans in Congress believe, if you pay more taxes, you ought to get a bigger tax cut. That is what an across-the-board, 10-percent tax cut would do. A final point: This used to be a bipartisan idea. John Kennedy proposed an across-the-board tax cut in 1961 which was adopted and became law. His famous words are, ``A rising tide lifts all boats.'' That is still believed by one-half of the political spectrum in America. It is no longer believed by the other half--and that is the half that he was once a part of. To conclude, let me talk a little bit about Medicare. There is no more fraudulent portion of the President's [[Page S3729]] budget than the proposal about Medicare. Let me give Members a tiny bit of history. We, through an act of Congress, signed by the President, set up a Medicare Commission. In a gesture toward bipartisanship, Republicans--who control both Houses of Congress--agreed to appoint a Democrat, Senator Breaux, as chairman of that Commission. Senator Breaux did a great job as chairman of the Medicare Commission. It was my privilege to serve on that Commission. I remember as if it were yesterday President Clinton called the whole Commission down to the White House and talked to us about the terrible problems we had in Medicare and challenged each of us not to let the work of the Commission fail because of us. He challenged each of us to find a way to be for the final proposal. As it turned out, as most people now know, the final work of the Commission did fail. It failed by one vote. Not one single person appointed by President Clinton found a way to be for the final proposal, and they all voted against the Commission proposal. The President, in 3 months, had an opportunity to change American history on Social Security and Medicare, and in both cases he failed. What did the President do in his budget? What the President did in his budget is literally this: He said we are going to pay off debt-- though not as much as the Domenici budget--but we are going to name the debt reduction in honor of various programs. That is in essence what it was. In essence, what the President's budget does is send a little note to Medicare that says: You will be happy to know that Federal debt was reduced by such and such an amount and it was done in your name. It would be sort of like our Presiding Officer having someone send a check to his university saying, ``We made a contribution in your name,'' and then you say, ``When do I get the money?'' You don't ever get the money. What the President did in Medicare--which was one of the cruelest hoaxes I can imagine in public policy--the President didn't give Medicare a penny over 10 years, provided no additional money to Medicare. In fact, he cut Medicare, cuts that are not in the budget before the Senate. So he cuts Medicare funding over 10 years, and yet by sending this IOU to HCFA, the agency that runs Medicare, he somehow creates the impression that he has given Medicare more money, when none of this IOU can be spent. In fact, the only way we could ever provide money under this is to raise taxes, to cut Medicare or cut other Government programs. Yet the President creates this impression that he has provided this money that could be used for pharmaceutical benefits or all these other wonderful benefits. It is a cruel hoax. What we do in our budget is set out a procedure where this reserve fund, this reserve money that we didn't use for tax cuts that we kept as a buffer could, in part, be used for Medicare. Our problem in Medicare is we need to adopt the Breaux Commission report. We had a vote on instructing conferees for us to preserve our commitment to that. It is in this budget. We are going to bring that proposal to the Finance Committee. I hope we are going to adopt it. What that proposal will do, in addition to planting the seeds to save Medicare, for moderate- and low-income retirees it will, for the first time, give them assistance on pharmaceuticals. For middle-income retirees and upper-income retirees, by expanding the options that are available, by literally letting them have the same health insurance that I have as a Member of the Senate, it will allow them for the first time to have an opportunity to buy into a plan that will give them some assistance with their pharmaceuticals. I have talked a long time and covered a lot of subjects. Let me conclude by simply congratulating Senator Domenici. This is a great budget. If we can enforce this budget, America will be richer, freer, and happier. If we can enforce this budget, we will have an opportunity to begin the long process of rebuilding the financial base of Social Security based on wealth and not debt. If we can enforce this budget, we will pay off Government debt. If we can enforce this budget, we will be able to give working Americans tax cuts. It is one thing to enter the marriage; it is another thing to make it a successful one. This is a very important day, a very important budget. I am very proud to be for it. I yield the floor. Mr. HOLLINGS addressed the Chair. The PRESIDING OFFICER. The Senator from South Carolina. Mr. HOLLINGS. Mr. President, I just came to the floor to hear my distinguished colleague from Texas say this is the finest budget in 20 years. The PRESIDING OFFICER. Who yields time? Mr. CONRAD. I yield 10 minutes to the Senator from South Carolina. The PRESIDING OFFICER. The Senator from South Carolina is recognized for 10 minutes. Mr. HOLLINGS. Mr. President, this is the same act, same scene, under different auspices, different rules and regulations, with the manifest intent, in this particular Senator's opinion, that what is on course here is a Milton Friedman-like plan of the distinguished Senator from Texas to privatize Social Security, to establish private savings accounts. The Republicans do this in violation of all the rules and regulations that you can think of that have been put in over the past several years to bring about fiscal discipline. Let's get right to the point: We, up until now, have been on course with some fiscal discipline. Credit President Clinton and the 1993 Congress that enacted the Balanced Budget Act, which cut spending, increased taxes, increased taxes on Social Security--the very measure that they said was going to end the world and throw us into a depression whereby even the distinguished chairman on the House Budget Committee said he would change parties. I don't know whether he is running today for President as a Democrat or Republican, but to my knowledge Mr. Kasich is still a Republican. He said he would change parties if it worked. It is working. The market is over 10,000, we have housing starts and inflation is down, unemployment is down, and everything else of that kind. When they reported this budget, trying to continue the fiscal discipline, here is the language: In addition to the fiscal policies contained in the budget resolution, I also am troubled by the process the Republican majority wants to use in this year's budget. The reconciliation process have been used sparingly in the past to improve the fiscal health of the budget. It was created to give the Senate a process for making difficult fiscal decisions--decisions that often require cutting popular programs and increasing taxes to balance the budget. That is not the case this year. The Republicans want to use the reconciliation process to dramatically reduce revenues over the next ten years and impair the progress we have made so far in reducing the deficit and beginning to pay down the debt. The budget resolution also would modify the pay-go point of order. Pay-go was required to insure the Senate would provide off-sets to reduce taxes or increase spending. The modified budget resolution now will make it possible to cut taxes without a fiscal off-set. By making it easier to use future surpluses to cut taxes instead of paying down the debt, this will eliminate the fiscal discipline that has reduced the deficit and contribute to the fiscal cancer eating away at America. I say cancer, and I say that advisedly, because when President Johnson last balanced the budget, the interest cost on the national debt was only $16 billion. Today it is just about $1 billion a day. The last estimate of the Congressional Budget Office was $357 billion each year. When President Johnson last balanced the budget, after 200 years of history--the cost of all the wars from the Revolution on up, World War I, World War II, the cost of Vietnam, Korea--the interest cost on the national debt was only $16 billion. Now, since that time, without the cost of a war--we made money on Desert Storm--so, without the cost of a war it is now $1 billion a day, eating away. With that wasted money, the interest cost on the debt, I could give the distinguished Presiding Officer his $80 billion tax cut, I could give our Democratic friends our $80 billion in increased spending, I could give $80 billion to save Social Security, I could give $80 billion to pay down the debt--that is only $320 billion. But we are going to spend at least $357 billion this year on nothing, and if interest costs start going back up we will be to $500 billion. But, to the original point, read this conference report. Here are the shenanigans that go along and are given dignity by my distinguished colleague [[Page S3730]] from Texas saying it is the finest budget he's seen. I was sorry to see him do that because I joined him in passing Gramm-Rudman-Hollings for fiscal discipline, and this is the most undisciplined shenanigan that you will ever find. On page 18, section 202 of the conference report: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill, or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may-- (1) increase the appropriate allocations and aggregates of new budget authority and outlays by the amount of new budget authority provided by such measure (and outlays flowing therefrom) for that purpose; (2) in the Senate, adjust the levels used for determining compliance with the pay-as-you-go requirements of section 207; and (3) reduce the revenue aggregates by the amount of the revenue loss resulting from that measure for that purpose. I want the Parliamentarian to listen to that one. I can tell you how he will rule. He will say it means whatever Mr. Domenici says it means. What does that gobbledygook mean? Listen to this. I will read it again: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may [blah blah blah blah]. He can do away with the pay-go rule, he can cut the revenues, he can do whatever he pleases. And that is what my distinguished colleague from Texas calls the finest budget he has seen, because he doesn't want this crowd to read and understand what is going on. Bring out the Roth IRA for the rich. Under this budget, pass a law, don't care about the rules, don't care about pay-go, don't care about any available monies. I say that IRA is for the rich because one American--to bring it into focus, Bill Gates, $51 billion--is worth more than 100 million Americans. One man in this society that we are developing is now worth more than 100 million Americans. So there are a lot of people who do not have anything to say about this. But you sort of enhance your security and retirement--for the idle rich. Whoopee and the dickens with the pay-go rule, Mr. Parliamentarian. You don't have to worry about that. You don't have to worry about the loss of revenue or anything like that, the reconciliation process. It is reserved. Now the Republicans can come on in and privatize Social Security, all under the auspices of saving Social Security. It is still off on this public debt, as if there is some difference from the national debt. Let me explain one more time. When you pay down your public debt, you increase your Social Security debt. That is where the money comes from. The whole gimmick here is to pay down Wall Street's credit card with the Social Security credit card. It is like having a Visa and a Master and you want to pay down the MasterCard with your Visa card, so you pay down the MasterCard with the Visa card. But it is still your card; it is your debt. All you've done is shift debt from spending column to another. That is why the debt this particular fiscal year, 1999, goes up $100 billion. That is the Congressional Budget Office figure. Let's sober up here. Everybody is running around saying, ``Surplus, surplus.'' How are we going to do it? They all have different ideas: ``Surplus, surplus.'' The truth of the matter is there is no surplus. There is a deficit. We are spending $100 billion more than we are taking in. I thank the distinguished Presiding Officer. Mr. CONRAD addressed the Chair. The PRESIDING OFFICER. The Senator from North Dakota. Mr. CONRAD. Mr. President, let me thank the Senator from South Carolina. This country could have avoided an awful lot of the pain of the 1980s and 1990s if this country had listened to the Senator from South Carolina on budget matters. There has been no Member of this body who has had a better handle on the budget problems of this country than the Senator from South Carolina. Years ago, if we would have followed the Hollings plan and put in place a budget freeze, we could have avoided the massive deficits that came in the 1980s and the early 1990s, and this country would have been in a far better fiscal position. He has been an activist and a leader on the Budget Committee of every effort to provide fiscal discipline to this country. I venture to say, in this Chamber there is no single Member who has made a greater contribution moving this country from massive deficits to now surpluses than the Senator from South Carolina. Senator Hollings has been, I think, a model of what a United States Senator should be, in terms of budget discipline for this country. This country owes him a debt of thanks for the leadership he has provided. Mr. HOLLINGS. If the distinguished Senator will yield, he has been far too generous. Our floor leader, Senator Conrad of North Dakota, has really been leading the fight for us in the Budget Committee. That is why we are able to get some semblance of some discipline there. I hope, with the conference--maybe I could ask the Senator a question. Did they have a conference? Did the distinguished Senator from North Dakota go to a conference on the budget? Mr. CONRAD. Yes. I was on the conference committee. It went to the conference. Mr. HOLLINGS. Oh, they had one. Mr. CONRAD. They had one, but they did not have a budget there. It is most amazing. As my colleague knows, a conference is the representatives of the Senate and the representatives of the House coming together to work out the differences between the two. We were there, the Members were there. I think you would have been quite amazed, I say to the Senator from South Carolina, because there was no budget there, there was no document there. There was no discussion about the differences between the House and Senate. What we had was an immaculate conception. What we had was a document that appeared out of nowhere after we had met. Mr. HOLLINGS. As one big charade, rather than save Social Security, they plan to privatize it. There is no question in this Senator's mind. Mr. CONRAD. To privatize it or raid it in some other way. We really do not know. I was very interested to listen to the Senator from Texas say--say--that they had reserved every penny of Social Security surplus for Social Security. That is what we said. Mr. HOLLINGS. That is what he said. Mr. CONRAD. Unfortunately, that is not what the budget document provides. It is very interesting; the Senator from South Carolina probably knows better than anybody how one can play games with these documents. It is fascinating what they have done here, because on one line, they suggest that they have provided a lockbox for Social Security. That is on one line on page 16 and it runs on to page 17. But then on the bottom of page 17, in the next section, they gut what they did earlier on the page. This is the oldest budget game in the book: ``Now you see it, now you don't.'' Mr. HOLLINGS. It is an old insurance game. I remember that when I was Governor, we were trying to clean up the insurance industry in my State. A new company was looking for a slogan, and we finally came up with the winning slogan: ``Capital Life will surely pay, if the small print on the back don't take it away.'' Now we have it all the way up here 35 years later in the budgetary process of the U.S. Government. Mr. CONRAD. I wish it were not the case but, unfortunately, it is. We had, I think, hoped--certainly the Senator from South Carolina and I-- that we would be at a point where we really would reserve every penny of Social Security surplus for Social Security. We thought that is where we were headed. Unfortunately, what our friends across the aisle have done is indicate that that is what they are doing, but that is not what the budget document says. No, no, no, they have changed it all, and they have made it possible to continue the raid on the Social Security trust fund on a simple majority vote which, of course, their lockbox was intended to protect against. Unfortunately, what they say they have done and what they have done are two very, very different things. [[Page S3731]] Mr. HOLLINGS. They gave the key for the lockbox to everybody save the Social Security recipients. Mr. CONRAD. Social Security is clearly in danger. Clearly, the priority on the other side is a tax cut, a massive tax cut at all costs. That is their priority. Looking at this budget, the budget that is before us, the major problem with it is that it does not represent the priorities of the American people. I think the best way to understand this is we now have projected a surplus over the next 10 years of $2.6 trillion. Our friends on the other side say all of the non-Social Security surplus-- virtually all of it--ought to go for a tax cut. Nothing, not a dime out of that surplus is for Medicare--not a dime--even though it is in greater danger than Social Security. They do not have the resources available for the high-priority domestic concerns of education, health care, defense, because if you look over time, they are going to have massive cuts in those categories. They are disguised, they are hidden, but they are there. Mr. President, I think perhaps it would be useful to recount a little bit of the budget history, how we got to where we are today and where we are headed. This chart shows over the last 30 years the budget history of the United States at the Federal Government level. We can see the last time we had a surplus was back in 1969, a little bitty surplus of $3 billion. We bumped along. Then we got into the seventies and the deficits started rising. Then we got into the Reagan years and the deficits exploded. We then had the Bush years and the deficits got even worse, so that on a unified basis--unified basis simply means all spending, all revenue put in one pot; that is a so-called unified budget--and on a unified basis in 1992, the last year of the Bush administration, we had a $290 billion deficit. In 1993, President Clinton put before the Congress a 5-year plan to reduce the deficit. We passed that plan. It was done with all votes on this side of the aisle. Not a single Republican voted for that plan. Not one. That plan has reduced the deficit each and every year of the 5 years of the plan. In fact, now we are seeing a slight surplus. What did that plan contain? It cut spending. It cut spending and it raised income taxes on the wealthiest 1 percent in this country. The Senator from Texas who was talking earlier opposed that plan. He said, as did many on that side of the aisle, that it would not work. In fact, they said it would increase the deficit. They said it would increase unemployment. They said it would increase inflation. They said it would be an economic disaster. They were wrong. They were not just a little bit wrong, they were completely wrong. The fact is that plan worked and worked extremely well, and the proof is in the pudding. We can see what happened to the deficit after that plan passed in 1993. Each and every year the deficit came down. In this last year, we ran on a unified basis a $70 billion surplus, and we are headed for much larger surpluses if the projections come true. On a unified basis, we ran a surplus last year. But remember, that counts all revenues and all expenditures. If we take out Social Security, because that is a separate trust fund, we will see we still ran a deficit last year of $29 billion--if we take out Social Security--because it was in surplus by about $100 billion. The good news is, we are very close to balancing without counting Social Security this year, and in 2001, we anticipate we will balance without counting Social Security. That is an enormous, enormous development and enormous progress. You can see back in 1992, if we were not counting Social Security, we had a $340 billion deficit. That is the kind of progress that has been made, and it has been made because, as I indicated, we had a 1993 5- year plan that cut spending, raised taxes on the wealthiest 1 percent, raised income taxes on the wealthiest 1 percent, and in 1997, we had a bipartisan deal. In that case, we came together and agreed on a budget plan to finish the job of balancing the budget. This chart shows what the 1993 plan did and what the 1997 plan did. You can see most of the savings are the result of the 1993 package. Again, our friends on the other side of the aisle--all of them, to a person--voted against it. The bipartisan agreement was 1997, but most of the work has been done by the 1993 5-year plan and that, in combination with the 1997 plan, has put us in this very favorable circumstance we face now. I thought just for the record we should look back on what the deficits were under each of the last three Presidents. With President Reagan, from 1981 through 1988, we saw the deficits explode. They went from $80 billion a year--that is the deficit he inherited-- and very quickly he shot it up to $200 billion. Then we, at the end of his term, saw some improvement--back down to about $150 billion. When President Bush came in, the deficits exploded again, and went from $150 billion, as I indicated, up to $290 billion a year by 1992. Under President Clinton, as I indicated, in 1993 we passed a 5-year plan; and we can just look at the results. In 1993, the deficit was $255 billion. And you can see each and every year thereafter the deficit went down under that 5-year plan. We almost achieved unified balance under that 5-year plan. So the proof is in the pudding. Our friends on the other side of the aisle talk about ``sham'' and ``hoaxes,'' and all the rest of it. The proof is in the pudding. My friends, Democrats passed a plan in 1993, without a single Republican vote. Democrats did the heavy lifting to get this country back on a fiscally responsible course. Facts are stubborn things. And the facts show, without question, that the Democrats passed a plan that, in fact, restored fiscal health to this country. It is true in 1997 we did get together on a bipartisan basis to finish the job. I wish it could have been bipartisan in 1993. But our friends on the other side of the aisle said then that if you pass this plan, you are going to make the deficit worse. They said if you raise taxes, even if it is on just the wealthiest 1 percent, that is going to collapse the economy. They were wrong. Their economic prescription for this country was wrong. And the facts clearly show that they were wrong. Thank goodness there were people who were willing to stand up and cast very tough votes to cut spending and, yes, to raise taxes on the wealthiest 1 percent so we could get this country back on course. It worked; and it worked splendidly. The results are dramatic. Not only have we reduced the red ink and eliminated it--no more running of deficits--but we also got remarkable economic results. We now have an unemployment rate that is the lowest in 41 years. The other side said, when we passed the 5-year plan in 1993, if you pass it, unemployment is going to go up. Unemployment went down. Unemployment went way down, the lowest it has been in 41 years. The other side said, the inflation rate, if you pass this plan, will go up. They were wrong. The inflation rate has gone down. We have the lowest rate of inflation in 33 years. But the good news does not end there. In addition, we passed welfare reform. In fairness and in truth, that was done on a bipartisan basis. We came together on welfare reform. And the result, coupled with the good economy that came from the 1993 budget plan, that coupled with welfare reform, has led us to the lowest percentage of our people on welfare in 29 years. Look at this dramatic improvement in terms of the percentage on welfare in this country. As well, Federal spending has come down because, as I indicated, in 1993, part of that package was to cut the growth of spending in this country. And we did even more in the 1997 bipartisan plan. So the two together, the 1993 plan and the 1997 plan, have brought down Federal spending as a percentage of our national income to its lowest level since 1974. So now we are spending, as a percentage of our national income, the lowest level in 25 years of the Federal Government. Because we have reduced deficits and gotten our fiscal house back in order, debt held by the public has also declined. We reached a debt, in relationship to our gross domestic product, of [[Page S3732]] 50 percent in 1993. We saw, through the Reagan and Bush years, that the debt was climbing in relationship to the size of our gross domestic product. In 1993, when we passed that plan, we stopped the growth of the debt in relationship to the size of our income and reversed it. So now we have seen the debt come down to a level of 44 percent of our gross domestic product. And we anticipate, if we stay the course that we are currently on, we will get the debt down to only 9 percent of our gross domestic product in 2009. The budget before us threatens that course. Because the colleagues on the other side of the aisle are so fixated on a massive tax-cut scheme, they would rather do that than to make this progress in reducing our national debt. I think that is precisely wrong. I think what we did in 1993 demonstrates that taking debt burden down gives a greater lift to this economy than any tax-cut scheme that anybody can come up with. That is not to say we should not have tax reduction, because we should. The question is one of priorities and proportion. Our friends on the other side of the aisle say--we have $2.6 trillion of surpluses projected over the next 10 years--there are only two priorities. Their two priorities are to safeguard $1.8 trillion of that for so-called ``retirement security''--I don't know exactly what that means. That entire $1.8 trillion is generated by Social Security. It should be set aside for Social Security. That is the plan we Democrats offered in the Budget Committee. We offered to safeguard every penny of Social Security surplus for Social Security. That is $1.8 trillion. In addition, we said we also ought to put about $400 billion aside for Medicare. The budget that is before us does not provide one penny of these projected surpluses for Medicare --not one penny. These are not the priorities of the American people. Instead, our Republican colleagues say all the non-Social Security surplus, or virtually all of it--because you have about $800 billion of non-Social Security surplus over the next 10 years--they say, use virtually all of it for a tax-cut scheme. And the best description we have of what they do with it is a 10-percent, across-the-board tax cut. That is what the chairman of the Finance Committee has said he thinks should be done. That is what their leadership in the House have said they think should be done. We have a different view of what the priorities for the American people are. For that $2.6 trillion, we say every penny that comes from the Social Security surplus ought to be reserved for Social Security. Interestingly enough, that is what was passed here in the Senate. But it went to the conference committee, and somewhere in the dead of night they backed away from that commitment; they backed away from that commitment and they came up with this very clever, very complicated little scheme. And this very complicated and very clever scheme says, on one page, yes, we are going to devote the Social Security surpluses to Social Security, but in the very next line they undermine it all-- they undermine it all--they create a big loophole so that on a simple majority vote here the Social Security fund can be raided, can be looted, just like it has been done for the last 15 years. That is wrong. That is not the priority of the American people. The American people want to preserve every penny of Social Security surplus for Social Security. That is what the Democrats offered in the Senate Budget Committee. In addition to that, we said the next $400 billion of surplus ought to be reserved to strengthen and protect Medicare. Our friends on the other side have not provided one penny of the projected surpluses to strengthen Medicare. Instead, they say, let's have this massive tax cut scheme to benefit primarily the richest and wealthiest among us. Now, the Senator from Texas says, you cannot love investment and not love the investor. That is true. I think we all respect those who invest. We respect those who save. We respect those who are successful. The question is, how do we use Government policy? Who do we benefit when we make decisions? Do we use governmental power to benefit the wealthiest among us? Is that what we do? That is not what I favor. As I said, I believe the first priority ought to be every penny of Social Security surplus for Social Security; that is, $1.8 trillion of the $2.6 trillion we now estimate will be in surplus over the next 10 years. But the next $400 billion we say ought to be used to strengthen and protect Medicare. That leaves another $400 billion that would be available for high-priority domestic needs under our plan, like education, like health care, and, yes, defense and tax relief for the American people. Our friends on the other side of the aisle have a different view. They say, yes, reserve the $1.8 trillion, but not just for Social Security, no, not just for Social Security. They call it ``retirement security.'' If they want to reserve every penny for Social Security, why don't they say Social Security? Why have they come up with this new term ``retirement security''? I think most of us know why they have done that--because the Senator from Texas has a scheme to privatize part of Social Security, and he wants the money reserved for his plan. He doesn't want to say reserve every penny of Social Security surplus for Social Security. Instead, he wants to make people believe he is going to do that, but then he provides a big loophole so that later on this year he can come along and raid the Social Security trust fund for his plan to create private accounts. That is what is really going on here. None of us is fooled. They do not provide anything, not a penny of these projected surpluses, to strengthen and protect Medicare, when we know Medicare is in the most imminent danger of being insolvent. We say the priority ought to be Social Security and ought to be Medicare and, after that, we also ought to have some money for high-priority domestic needs like education and health care, and, yes, tax relief. But it is a matter of priority, and our friends on the other side of the aisle say the priority ought to be a massive tax cut. This is the comparison for what happens. Let me focus on the 10 years. The blue column represents what the Republicans would do to pay down debt, and the red column shows what we offered as Democrats in the Budget Committee to pay down debt. A lot of people might be as surprised by this, because the Democratic plan paid down more debt than the Republican plan. We paid down more debt over the next 10 years, by nearly $400 billion over and above what is in the Republican plan, because we believe that is a key priority for the country. Again, our Republican friends think there is a different priority. They want to have this massive tax cut scheme. That is really what is most on their mind. Unfortunately, because of this, they do not have, as I have indicated before, one penny of the surpluses set aside to strengthen Medicare, not a dime. They have what I call ``the Republican broken safe.'' Here it is. You look in it and what do you find? There is nothing there. Now, with what they have done in the conference committee, we ought to have this up for Social Security, too, because, goodness knows, we could find, after the clever game they have played here in this budget document, that we may go into the Social Security trust fund in the future and open the vault door and find there is nothing there, either. Because they have this set up so that they can raid every penny of the Social Security trust fund surplus and put it over into private accounts. They could do that. They could use it for a tax cut and call it retirement security. Who knows what that means, ``retirement security''? If they wanted to reserve the money for Social Security, why didn't they say it? Well, I guess if we wanted to be fair to them, they do say it, don't they? On one line they say they are going to reserve the money for Social Security, but they say, by a simple majority vote, you can overturn that. Before it was a supermajority vote. Now in the dead of night they changed it, simple majority vote, and now you can loot Social Security. You can raid it, because in the very next line, section 202, they created another reserve fund. It is clever. I don't think it is going to work for them, because the American people are too smart. They know the kind of games that get played here in Washi

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CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT
(Senate - April 15, 1999)

Text of this article available as: TXT PDF [Pages S3725-S3756] CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT The Senate resumed consideration of the conference report. Mr. GRAMM. Mr. President, I rise today in support of the budget that is before the Senate. I am sorry that our dear chairman, Senator Domenici, is not here, but I want to say some very strong, positive things about this budget, and I wish he were here to hear it. I want to say it mostly because it is true. It would just be a plus if he were here to hear it. It has been my great privilege since I first came to Congress to be actively involved in budget debates. In fact, I remember the first debate I ever was involved in as a Member of the House was a debate about raising the debt ceiling, and I remember as if it were yesterday the House majority leader, Congressman Wright from Texas, stood up and said that we had no choice except to raise the debt ceiling of the Government, that we were in a position that a man would be in if his wife went out and ran up all these debts on the credit card and the debt collector was at the door. Today, in this era of political correctness, no one would ever suggest such a thing. They would say their spouses ran up these bills, and probably the reality would be the man did run up the bills in any case. But the point is that the then-majority leader of the House, in 1979, made the point that these bills had been run up and the bill collector was at the door, and so we didn't have any choice except to pay the bills as any good, honest family would. And so I stand up and say that the first thing I ever said in debate in the Chamber of the House was, well, it is not really the way it works. It is true that honest families would pay their bills, but what they would do is they would sit down at the kitchen table, they would talk about how they got in this financial mess, they would get out the credit card, they would get out the butcher knife, they would cut up the credit card, they would get an envelope and pencil and they would work out a new budget on the back of an old used envelope, and they would start over again. The problem in Congress was we kept simply spending money, incurring debt, raising the debt ceiling, and nobody ever sat down around the kitchen table, nobody ever got out the butcher knife and cut up the credit cards, and so, as a result, we never changed anything. So anyway, I opposed raising the debt ceiling. It failed. And then we tried to offer an amendment trying to tie the debt ceiling to the budget and saying you can only raise the debt ceiling if you balance the budget. Well, to make a long story short, from that time in 1979 until today, I have been involved in debate about every budget that has passed in this Congress or been enforced in this Government since 1979. And let me say [[Page S3726]] that of all those budgets, this is the best budget that has ever been written by American Government in that period. Now it is probably not, certainly not the most profound budget. The most profound budget was the Reagan budget that was written in 1981. But in terms of what you want a budget to be, it would be very hard to improve on what this budget does. And it is one of my frustrations that everything is now so focused on the war in Kosovo and on many other issues, and we are not having any kind of adequate debate or focus of attention on the profound nature of the budget that is in front of us and what great promise this budget holds for America if we actually enforce this budget. So let me begin by just ticking off some things this budget does, and then I want to get into a discussion of a comparison of this budget with what the President proposed. I want to get into some of these areas like Social Security and Medicare that have been talked about a lot and will be talked about again. But let me outline what this budget does. First of all, this is a 10-year budget that, if enforced, will balance the budget every single year for 10 years. To sort of turn on its head the language of the 1980s, this is a budget that has surpluses as far as the eye can see. And it has those surpluses because it maintains a restriction on spending in a period where revenues are gushing into the Federal Treasury, a period where if we are not very careful we are going to see the launching of a massive new spending spree which could squander the surpluses of today that give us the opportunity to pay down debt, to rebuild Social Security, and do it right this time by basing it on wealth instead of debt, that give us the ability to let working men and women in America keep more of what they earn through a reduction in taxes. If we can keep these spending control measures in place, we can provide adequate Government--in fact, the highest levels of Government spending in American history. And yet by controlling the growth of spending, with the power of the American economy and our competitiveness on the world market and the attractiveness of our capital market with huge amounts of wealth flowing into our equity markets, inflating values, making American families richer, and inducing them to take income and capital gains and pay record levels of taxes on it, we can keep the budget balanced, we can rebuild Social Security based on wealth, and we can cut taxes for working Americans. This budget does all those things. Now, a budget is like a marriage license. It gets you into the deal, but it doesn't make it successful. The easy part is saying ``I do.'' The hard part of a successful marriage is what comes after the wedding. But you cannot have the successful marriage if you don't have the wedding. We are being brought to the altar here with a document that promises all the right things. It is now going to be up to us to enforce those promises. But the key promise, the linchpin of this budget, the element of this budget on which everything else hinges is it enforces the spending caps. If we do not control spending, we are not going to have the surplus. We are not going to be able to rebuild Social Security based on wealth instead of debt. We are not going to be able to preserve a balanced budget, and we are not going to be able to cut taxes. Now, the second thing this budget does, which I rejoice in, is it strengthens our ability to do these things. Every Member of Congress, and I wish every American, understood what happened last year. The President stood up really on the opening day of Congress last year in the State of the Union Address and said save Social Security first. Don't spend a penny of the surplus on either Government programs or tax cuts. Save every penny of it for Social Security. Well, we all know that the President was not telling the truth. We all know that in the end we ended up spending very much of that surplus. We ended up on the last day of Congress taking a third of the surplus that was meant for Social Security and spending it on other programs, and we did it in the name of emergency spending. One of the most important features in this budget is that we have in this budget an enforcement mechanism that says that if someone wants to designate an emergency in nondefense spending, they are going to have to get 60 votes, if somebody raises a point of order. My basic view is, if something is not important enough or enough of an emergency that 60 out of the 100 Members of the Senate will vote for it, then it is not an emergency. I say right now that I personally intend, if others don't, to raise a point of order against each and every emergency spending bill that would raid the Social Security trust fund. I give notice right now that anybody who has an idea that we are going to make all these wonderful promises, that we are going to promise to love, cherish, and obey in this little wedding we are having here on the budget, but that we are going to turn around and start cheating in the fall by breaking this budget by claiming all kinds of expenditures are an emergency, that they better be ready to get 60 votes in the Senate if they are going to be successful. They better be ready for a real battle, because I, for one, believe in this budget, and I intend to fight for it very, very hard. This budget puts a focus on some priorities. It basically says that even in a tight budget not all spending is equal. It puts a focus on veterans' health care, and it does it by, quite simply, taking the position that in a time when you are trying to control spending, you have benefits and you have earned benefits. The basic position of our budget is that those who have served the country, who have preserved its life by wearing with pride its uniform and fighting its wars and by keeping its peace, that even at a time when we have tight budgets, they ought to come first. So this budget provides more money for veterans' health care, and I support it. This budget provides more money for education. It doesn't create the money magically. It takes it away from other programs, with the basic idea that we ought to let the States decide how to spend money on education rather than the Senate being a huge 100-member school. This budget calls for an increase in defense. One of the great unknowns now, not knowing what the war in Kosovo is going to cost, is what is this going to do with our budget and where do we go from here. I want everybody to understand that this budget is written in such a way that we contemplate an increase in defense spending. We want to give a pay increase to everybody in the military. We want to try to provide the pay and benefits and recognition that will help us retain in uniform and recruit the finest young men and women who have ever worn the uniform of the country. Today they wear that uniform with pride, but we have grown increasingly concerned that we are falling behind in recruitment, in retention. We are having trouble, especially, keeping pilots. Now that the President has us deployed in some 30 different engagements around the world, where defense spending has been cut by over a third since its peak in real terms, and yet we have massive military deployments, what is happening is, people are beginning to leave the military. This pay increase that we call for in this budget is vitally important in terms of helping us recruit and retain the best people. Having all these miracle weapons does us no good if we don't have quality people to man those systems. We have the best people in uniform today that we have ever had. We want to keep it that way. That is what this budget does. That is the choice we have. The choice that is presented to us in this budget is, even though we are in a period of record prosperity, even though the level of revenue flows is a record level, what we call for is to limit the growth of Government spending, put a focus on areas like veterans' health care and education and defense, use the surplus to deal with the looming crisis that faces us in Social Security, and to the extent that we have surpluses flowing from the general budget instead of from Social Security, take the bulk of that money and give it back to working families in tax cuts. That is what this budget does. I believe that it is an excellent budget. I think looking at the whole package, it is the finest budget presented in America in the 20 years that I have served in Congress. [[Page S3727]] Talking specifically about several different areas, I want everybody to understand that there is a shell game going on with Social Security. I want to explain, because people have trouble understanding what it is the President is doing on Social Security and what this budget does on Social Security. Let me first explain what this budget does on Social Security, and then explain the fraud that is perpetrated in the President's budget. What this budget does on Social Security is very, very simple. It says every penny that we collect in Social Security taxes that we don't have to have to pay Social Security benefits should be dedicated to Social Security. It ought to be locked away, and it ought to be available to any effort to rebuild the financial base of Social Security. But we should not spend it on any other Government program, nor should we use it for tax cuts. In fact, Senator Domenici, in a proposal that is enshrined in this budget, but we will have to vote on separately, sets up a lockbox where we literally change the lending limits that the Government faces, the debt ceiling, so that we will not be able to spend one penny of the Social Security surplus. This is vitally important because, as anybody in the Senate knows, and I wish every American knew, our Government has been stealing every penny of money coming in to the Social Security trust fund. We currently have IOUs for this money that are sent to West Virginia and put in a metal filing cabinet, but the Government then takes the money and spends it on everything but Social Security. None of that money is being used for Social Security purposes. Senator Domenici's lockbox would change that permanently and say that this money would be set aside to reduce debt, and it would be available when we can agree with the White House on a way to rebuild the financial base of Social Security. That is a critically important proposal. If the American people knew the extent that we have been stealing money out of the Social Security trust fund, there would be outrage in the country. That is exactly what is happening. The Domenici lockbox ends that forever, and it is vitally important. I hope every Member will support it. Now, let me talk about this shell game the administration is playing on Social Security. Let me say, to begin with, that if you have been involved in every budget since 1979, you have seen phony assumptions, smoke and mirrors, shell games, or whatever the words are that we use. But let me say, so that no one is confused, that in Republican and Democrat administrations I have seen people make assumptions that were wildly unrealistic about the future, about what inflation was going to be, about what interest rates were going to be, about what economic growth was going to be, about what spending was going to be; but those were always assumptions about what was going to happen in the future where at least people could say, well, it may be based more on hope than reality, but it could happen. What the Clinton administration has done is they have brought phoniness, distortion and untruth into the budget at a level which has never existed in the American budget in the history of this country. And no better example exists than under Social Security. I think I can explain it to you very simply. Here are the facts. In the year 2000, the first year of this budget, we projected a $131 billion surplus in the unified Federal budget. If you take every penny we get from every source, and you take every penny we spend on every program or giveaway, or lose, or forget about, and you bring those two together, we are taking in $131 billion more than we are spending. Now, Social Security is taking in $138 billion more than it is spending. So while we show that we have a $131 billion surplus, the reality is that if you don't count the Social Security trust fund, we are actually spending $7 billion more than we take in. So let me show it to you this way. We are taking in $138 billion more than we are spending on Social Security alone. We are then spending $7 billion of that money from Social Security on general government. Now, that would leave you with $131 billion of money for Social Security. What the administration does is it sends to West Virginia this piece of paper that actually prints out on a computer, and it says, ``IOU Social Security $138 billion.'' So they get this piece of paper, they tear it off--and it has actually been on television, and they won't let you photograph the bonds, interestingly--they tear off the perforated edges and they take that $138 billion IOU and put it in the filing cabinet. Now, what happens is, we then spend $7 billion of it immediately, and that brings us down to $131 billion. Now, the President says, well, let's take 62 percent of that and give it back to Social Security and we will spend 38 percent of it. So we started with $138 billion, we spent $7 billion, and then the President says let's spend 38 percent of what is left and then we will send another IOU to Social Security for $81 billion. So out of the $138 billion that they initially had, they send IOUs to Social Security for $219 billion. Now, they started with $138 billion and then they spent $7 billion, and then of that $131 billion that was left, they spent another $50 billion, and then they give Social Security an IOU for $219 billion. Now, any freshman accounting student in any accounting class in America would be given an ``F'' if they proposed on an examination paper such an accounting system. Yet, some of the most highly educated people in America--men and women of great stature--stand up in front of God, a television camera, and everybody else in the world and defend this totally phony, fraudulent, embarrassing proposal. I guess we all have our own standards, but I would not do it. I don't admire people who do it. I think it does a terrible injustice and disservice to the American public that this is happening. I wanted to show this graph to sort of bring the whole thing together. What I have here is plotted between the years 2000 and 2009, the years where this budget is in effect, the Social Security surplus. It starts out at $138 billion and it grows over the period to over $200 billion a year. That is the amount of money that Senator Domenici locks away in his lockbox. Now, in addition to the Social Security surplus, because the economy is growing so quickly and because we are controlling spending, if we actually do it, we will get an additional surplus in the rest of the Government in this area that I call ``B'' on this chart. Interestingly enough, what the President does is, he says let's take 38 percent of this unified budget, Social Security plus non-Social Security budget, and let's spend it and then give the rest to Social Security on top of the Social Security surplus that we have already measured. So that is how they start out with the Social Security surplus and then end up with these huge IOUs that they claim they are giving to Social Security. It is interesting because if you look at the President's plan--and this chart is from the Social Security Administration--if you look at their plan, they claim that under their plan they are building up the assets of Social Security from $864.4 billion to $6,697.8 trillion. Yet, when you look at the Office of Management and Budget figures--and all this is put out by the same administration--when you look at their actual level of paying down the debt, that level turns out to be only $2,183.6 trillion. So the question is, What happened to the $3.6 billion? What happened to it? The President says that under his system, with all this double counting of money, he was putting $5.8 trillion into Social Security; yet, his budget shows only $2.163 trillion actually saved for Social Security. What happened? Well, what happened is that none of this money ever went to Social Security to begin with. It was all a paper, double- counting bookkeeping. Their own numbers show it. Yet, nobody is embarrassed enough about it to simply say, well, this is phony and we apologize and we should have never tried to perpetrate this fraud on the American people. Now, I think we can be proud of the fact that in this budget every penny of the Social Security surplus is locked away to be used for Social Security. And when we decide how to save Social Security--and I wish we could decide today; maybe we will tomorrow--those funds will be there for that purpose. I think that is very important and I want to congratulate Senator Domenici [[Page S3728]] for his leadership on this issue. I want to address two other issues and I will speed it up if anybody else comes over and wants to speak. If not, I will give a fairly detailed description of both. The next issue is tax cuts. The budget before us simply says that every penny of the Social Security surplus will be there for Social Security; that of the surplus that is left, we keep a reserve of money that is available for a contingency use which could be used for one of many purposes, and then after we set aside that contingency, we provide the rest of the money for tax cuts for working Americans. After all, the surplus we have is due to the fact that Americans are working harder, working smarter, working in a more productive way, earning more and paying more taxes. There have been several proposals to cut taxes. None of them are endorsed in this budget. This budget simply gives to the Finance Committee the ability to cut taxes. And there have been a lot of proposals discussed. But the one that especially our Democrat colleagues have talked the most about is a proposal to cut taxes across the board. This has given rise to a debate in which I love to engage. Obviously, my Democrat colleagues love to engage in it as well. This is the debate that basically takes the view, as our Democrat colleagues often do, that investment is a good thing but investors are somehow bad people; that wealth is a wonderful thing but people who create it, that somehow there is something wrong with them, or that there is something wrong with letting them keep part of it. I don't understand how you can love investment and not love investors. I view people who are successful as being public benefactors. I never got a job being hired by somebody who made less money than I did. Everybody who ever hired me was richer than I was, which is why they were hiring me rather than me hiring them. And I never resented the fact that people had gotten rich by working in America. But here is what you are going to hear all day today, and here is what you are going to hear as we debate the tax cut. We have a very, very progressive tax system in America. ``Progressive'' is really a phony word. It is a made-up word that is meant to really cloud the issue so you don't really understand. Under our system, if you make more money, you not only pay more taxes proportionately, but the rate of taxes goes up. So that as you make more money, your taxes don't go up proportionately but they go up exponentially. Our system of taxes is so progressive that roughly 50 percent of Americans pay virtually no income taxes. And they pay no income taxes because there are many provisions which were adopted when Ronald Reagan was President in terms of changing the Tax Code. We were able to make some changes with the child tax credit and in our tax cut of 2 years ago that further exempted income from taxes. But the bottom line is that about 95 percent of income taxes are paid for by people who are in the upper half of the income distribution in the country. What our Democrat colleagues have discovered is that we do have a progressive income tax. So that if I pay $5,000 of income taxes, and someone else pays $50,000 of income taxes, and we give a 10-percent tax cut, I get $500 as a tax cut and they get $5,000 as a tax cut. And our Democrat colleagues think that is somehow outrageous. But the point is, the only way you are getting more of a tax cut is if you are paying more taxes. So that what they are really talking about is that the system is progressive. Should it be progressive? You know there are many people who believe we ought to have a flat tax and that everybody ought to pay the same rate. But the point is, if we are going to cut taxes and Senator Rockefeller pays 10 times as much in taxes as I do, or 100 times as much in taxes as I do--I don't know, and I hope he pays 100 times as much because then he is better off and so is America. But, whatever it is, the fact that he would get a bigger tax cut than I do from an across-the-board tax cut is the most reasonable thing on Earth to me if he is, in fact, paying more taxes than I am paying. I believe our No. 1 priority in cutting taxes is we ought to cut everybody's taxes by 10 percent. So, if you do not pay any taxes, you should have learned in the third grade--since I repeated the third grade I remember it--that anything times zero is zero. So with a 10- percent tax cut, if you are not paying any taxes, you don't get a tax cut. You are going to hear our colleagues say, well, 50 percent, or 40 percent, or whatever the number is they choose or make up today, people will get no tax cut under a 10-percent tax cut. The only person in America who will get no cut in income taxes from a 10-percent tax cut by definition is a person who pays no income taxes. Here is my point. Most Americans don't get Medicaid. Most Americans don't get food stamps. Most Americans don't get welfare. Why don't they get those things? They don't get those things because they are not poor. Tax cuts are for working people. Welfare is for poor people. Medicaid is for poor people who are sick. Medicare is for elderly people for their health care. We have many different programs that do not go to everybody. We have very few programs in America that everybody benefits from directly. The point is, if not everybody gets welfare, why should we be shocked that if you do not pay income taxes, that when we cut income tax rates you don't get a tax cut? I don't find that to be shocking. I don't have any trouble saying to somebody in my State who says, ``You cut income tax rates by 10 percent and I didn't get a tax cut.'' I know, because I understand arithmetic, that they are not paying any income taxes anyway. So I don't have any problem saying, ``Yes. That is right,'' because tax cuts are for one unique group of Americans, ``wagon pullers,'' I call them--the people who are pulling the wagon in which so many other Americans are riding; the people who are paying for the Medicaid they don't get, for the welfare benefits they don't get, for the food stamps they don't get. Tax cuts are for the people who are pulling the wagon in which all other beneficiaries of Government are riding. So I don't feel the least bit squeamish about saying that tax cuts are for taxpayers. If you do not pay income taxes, you don't deserve a cut in income taxes, because you are not paying any. We have a surplus because Americans are working harder and paying more taxes. In fact, they are doing it today, tax day. I want everybody who is going to the post office today to send their taxes to the government--if you happen to be on mountain time, or if you are on Pacific time and you have nothing better to do than to turn on C-SPAN-- I want you to remember this when you pay your taxes: I want you to remember, you didn't get food stamps, you didn't get welfare, you didn't get Medicaid, but I believe--and the party I am a member of, the Republican Party believes--that you ought to get a tax cut. Our Democrat colleagues are going to say--you are going to hear it, so pay close attention. They are going to say, yes, you get a tax cut. You-- this person working in Los Angeles, CA, on your way to mail your check in right now--you get a tax cut. Think of these people that don't get a tax cut. How is it fair that Joe Brown and Susie Brown, who make $21,000 a year, pay no income taxes, and get an earned-income tax credit--which is really a welfare benefit--why is it they don't get a tax cut when you do? The answer is, they don't pay any income taxes and you do. We have this basic viewpoint which our Democrat colleagues find to be radical. That point is, if you don't pay income taxes, you don't get a tax cut; if you do pay income taxes, you do get a tax cut. The more taxes you pay--and God bless you for doing it, because if people are paying record taxes it means they are earning record incomes--I believe, and the great majority of the Republicans in Congress believe, if you pay more taxes, you ought to get a bigger tax cut. That is what an across-the-board, 10-percent tax cut would do. A final point: This used to be a bipartisan idea. John Kennedy proposed an across-the-board tax cut in 1961 which was adopted and became law. His famous words are, ``A rising tide lifts all boats.'' That is still believed by one-half of the political spectrum in America. It is no longer believed by the other half--and that is the half that he was once a part of. To conclude, let me talk a little bit about Medicare. There is no more fraudulent portion of the President's [[Page S3729]] budget than the proposal about Medicare. Let me give Members a tiny bit of history. We, through an act of Congress, signed by the President, set up a Medicare Commission. In a gesture toward bipartisanship, Republicans--who control both Houses of Congress--agreed to appoint a Democrat, Senator Breaux, as chairman of that Commission. Senator Breaux did a great job as chairman of the Medicare Commission. It was my privilege to serve on that Commission. I remember as if it were yesterday President Clinton called the whole Commission down to the White House and talked to us about the terrible problems we had in Medicare and challenged each of us not to let the work of the Commission fail because of us. He challenged each of us to find a way to be for the final proposal. As it turned out, as most people now know, the final work of the Commission did fail. It failed by one vote. Not one single person appointed by President Clinton found a way to be for the final proposal, and they all voted against the Commission proposal. The President, in 3 months, had an opportunity to change American history on Social Security and Medicare, and in both cases he failed. What did the President do in his budget? What the President did in his budget is literally this: He said we are going to pay off debt-- though not as much as the Domenici budget--but we are going to name the debt reduction in honor of various programs. That is in essence what it was. In essence, what the President's budget does is send a little note to Medicare that says: You will be happy to know that Federal debt was reduced by such and such an amount and it was done in your name. It would be sort of like our Presiding Officer having someone send a check to his university saying, ``We made a contribution in your name,'' and then you say, ``When do I get the money?'' You don't ever get the money. What the President did in Medicare--which was one of the cruelest hoaxes I can imagine in public policy--the President didn't give Medicare a penny over 10 years, provided no additional money to Medicare. In fact, he cut Medicare, cuts that are not in the budget before the Senate. So he cuts Medicare funding over 10 years, and yet by sending this IOU to HCFA, the agency that runs Medicare, he somehow creates the impression that he has given Medicare more money, when none of this IOU can be spent. In fact, the only way we could ever provide money under this is to raise taxes, to cut Medicare or cut other Government programs. Yet the President creates this impression that he has provided this money that could be used for pharmaceutical benefits or all these other wonderful benefits. It is a cruel hoax. What we do in our budget is set out a procedure where this reserve fund, this reserve money that we didn't use for tax cuts that we kept as a buffer could, in part, be used for Medicare. Our problem in Medicare is we need to adopt the Breaux Commission report. We had a vote on instructing conferees for us to preserve our commitment to that. It is in this budget. We are going to bring that proposal to the Finance Committee. I hope we are going to adopt it. What that proposal will do, in addition to planting the seeds to save Medicare, for moderate- and low-income retirees it will, for the first time, give them assistance on pharmaceuticals. For middle-income retirees and upper-income retirees, by expanding the options that are available, by literally letting them have the same health insurance that I have as a Member of the Senate, it will allow them for the first time to have an opportunity to buy into a plan that will give them some assistance with their pharmaceuticals. I have talked a long time and covered a lot of subjects. Let me conclude by simply congratulating Senator Domenici. This is a great budget. If we can enforce this budget, America will be richer, freer, and happier. If we can enforce this budget, we will have an opportunity to begin the long process of rebuilding the financial base of Social Security based on wealth and not debt. If we can enforce this budget, we will pay off Government debt. If we can enforce this budget, we will be able to give working Americans tax cuts. It is one thing to enter the marriage; it is another thing to make it a successful one. This is a very important day, a very important budget. I am very proud to be for it. I yield the floor. Mr. HOLLINGS addressed the Chair. The PRESIDING OFFICER. The Senator from South Carolina. Mr. HOLLINGS. Mr. President, I just came to the floor to hear my distinguished colleague from Texas say this is the finest budget in 20 years. The PRESIDING OFFICER. Who yields time? Mr. CONRAD. I yield 10 minutes to the Senator from South Carolina. The PRESIDING OFFICER. The Senator from South Carolina is recognized for 10 minutes. Mr. HOLLINGS. Mr. President, this is the same act, same scene, under different auspices, different rules and regulations, with the manifest intent, in this particular Senator's opinion, that what is on course here is a Milton Friedman-like plan of the distinguished Senator from Texas to privatize Social Security, to establish private savings accounts. The Republicans do this in violation of all the rules and regulations that you can think of that have been put in over the past several years to bring about fiscal discipline. Let's get right to the point: We, up until now, have been on course with some fiscal discipline. Credit President Clinton and the 1993 Congress that enacted the Balanced Budget Act, which cut spending, increased taxes, increased taxes on Social Security--the very measure that they said was going to end the world and throw us into a depression whereby even the distinguished chairman on the House Budget Committee said he would change parties. I don't know whether he is running today for President as a Democrat or Republican, but to my knowledge Mr. Kasich is still a Republican. He said he would change parties if it worked. It is working. The market is over 10,000, we have housing starts and inflation is down, unemployment is down, and everything else of that kind. When they reported this budget, trying to continue the fiscal discipline, here is the language: In addition to the fiscal policies contained in the budget resolution, I also am troubled by the process the Republican majority wants to use in this year's budget. The reconciliation process have been used sparingly in the past to improve the fiscal health of the budget. It was created to give the Senate a process for making difficult fiscal decisions--decisions that often require cutting popular programs and increasing taxes to balance the budget. That is not the case this year. The Republicans want to use the reconciliation process to dramatically reduce revenues over the next ten years and impair the progress we have made so far in reducing the deficit and beginning to pay down the debt. The budget resolution also would modify the pay-go point of order. Pay-go was required to insure the Senate would provide off-sets to reduce taxes or increase spending. The modified budget resolution now will make it possible to cut taxes without a fiscal off-set. By making it easier to use future surpluses to cut taxes instead of paying down the debt, this will eliminate the fiscal discipline that has reduced the deficit and contribute to the fiscal cancer eating away at America. I say cancer, and I say that advisedly, because when President Johnson last balanced the budget, the interest cost on the national debt was only $16 billion. Today it is just about $1 billion a day. The last estimate of the Congressional Budget Office was $357 billion each year. When President Johnson last balanced the budget, after 200 years of history--the cost of all the wars from the Revolution on up, World War I, World War II, the cost of Vietnam, Korea--the interest cost on the national debt was only $16 billion. Now, since that time, without the cost of a war--we made money on Desert Storm--so, without the cost of a war it is now $1 billion a day, eating away. With that wasted money, the interest cost on the debt, I could give the distinguished Presiding Officer his $80 billion tax cut, I could give our Democratic friends our $80 billion in increased spending, I could give $80 billion to save Social Security, I could give $80 billion to pay down the debt--that is only $320 billion. But we are going to spend at least $357 billion this year on nothing, and if interest costs start going back up we will be to $500 billion. But, to the original point, read this conference report. Here are the shenanigans that go along and are given dignity by my distinguished colleague [[Page S3730]] from Texas saying it is the finest budget he's seen. I was sorry to see him do that because I joined him in passing Gramm-Rudman-Hollings for fiscal discipline, and this is the most undisciplined shenanigan that you will ever find. On page 18, section 202 of the conference report: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill, or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may-- (1) increase the appropriate allocations and aggregates of new budget authority and outlays by the amount of new budget authority provided by such measure (and outlays flowing therefrom) for that purpose; (2) in the Senate, adjust the levels used for determining compliance with the pay-as-you-go requirements of section 207; and (3) reduce the revenue aggregates by the amount of the revenue loss resulting from that measure for that purpose. I want the Parliamentarian to listen to that one. I can tell you how he will rule. He will say it means whatever Mr. Domenici says it means. What does that gobbledygook mean? Listen to this. I will read it again: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may [blah blah blah blah]. He can do away with the pay-go rule, he can cut the revenues, he can do whatever he pleases. And that is what my distinguished colleague from Texas calls the finest budget he has seen, because he doesn't want this crowd to read and understand what is going on. Bring out the Roth IRA for the rich. Under this budget, pass a law, don't care about the rules, don't care about pay-go, don't care about any available monies. I say that IRA is for the rich because one American--to bring it into focus, Bill Gates, $51 billion--is worth more than 100 million Americans. One man in this society that we are developing is now worth more than 100 million Americans. So there are a lot of people who do not have anything to say about this. But you sort of enhance your security and retirement--for the idle rich. Whoopee and the dickens with the pay-go rule, Mr. Parliamentarian. You don't have to worry about that. You don't have to worry about the loss of revenue or anything like that, the reconciliation process. It is reserved. Now the Republicans can come on in and privatize Social Security, all under the auspices of saving Social Security. It is still off on this public debt, as if there is some difference from the national debt. Let me explain one more time. When you pay down your public debt, you increase your Social Security debt. That is where the money comes from. The whole gimmick here is to pay down Wall Street's credit card with the Social Security credit card. It is like having a Visa and a Master and you want to pay down the MasterCard with your Visa card, so you pay down the MasterCard with the Visa card. But it is still your card; it is your debt. All you've done is shift debt from spending column to another. That is why the debt this particular fiscal year, 1999, goes up $100 billion. That is the Congressional Budget Office figure. Let's sober up here. Everybody is running around saying, ``Surplus, surplus.'' How are we going to do it? They all have different ideas: ``Surplus, surplus.'' The truth of the matter is there is no surplus. There is a deficit. We are spending $100 billion more than we are taking in. I thank the distinguished Presiding Officer. Mr. CONRAD addressed the Chair. The PRESIDING OFFICER. The Senator from North Dakota. Mr. CONRAD. Mr. President, let me thank the Senator from South Carolina. This country could have avoided an awful lot of the pain of the 1980s and 1990s if this country had listened to the Senator from South Carolina on budget matters. There has been no Member of this body who has had a better handle on the budget problems of this country than the Senator from South Carolina. Years ago, if we would have followed the Hollings plan and put in place a budget freeze, we could have avoided the massive deficits that came in the 1980s and the early 1990s, and this country would have been in a far better fiscal position. He has been an activist and a leader on the Budget Committee of every effort to provide fiscal discipline to this country. I venture to say, in this Chamber there is no single Member who has made a greater contribution moving this country from massive deficits to now surpluses than the Senator from South Carolina. Senator Hollings has been, I think, a model of what a United States Senator should be, in terms of budget discipline for this country. This country owes him a debt of thanks for the leadership he has provided. Mr. HOLLINGS. If the distinguished Senator will yield, he has been far too generous. Our floor leader, Senator Conrad of North Dakota, has really been leading the fight for us in the Budget Committee. That is why we are able to get some semblance of some discipline there. I hope, with the conference--maybe I could ask the Senator a question. Did they have a conference? Did the distinguished Senator from North Dakota go to a conference on the budget? Mr. CONRAD. Yes. I was on the conference committee. It went to the conference. Mr. HOLLINGS. Oh, they had one. Mr. CONRAD. They had one, but they did not have a budget there. It is most amazing. As my colleague knows, a conference is the representatives of the Senate and the representatives of the House coming together to work out the differences between the two. We were there, the Members were there. I think you would have been quite amazed, I say to the Senator from South Carolina, because there was no budget there, there was no document there. There was no discussion about the differences between the House and Senate. What we had was an immaculate conception. What we had was a document that appeared out of nowhere after we had met. Mr. HOLLINGS. As one big charade, rather than save Social Security, they plan to privatize it. There is no question in this Senator's mind. Mr. CONRAD. To privatize it or raid it in some other way. We really do not know. I was very interested to listen to the Senator from Texas say--say--that they had reserved every penny of Social Security surplus for Social Security. That is what we said. Mr. HOLLINGS. That is what he said. Mr. CONRAD. Unfortunately, that is not what the budget document provides. It is very interesting; the Senator from South Carolina probably knows better than anybody how one can play games with these documents. It is fascinating what they have done here, because on one line, they suggest that they have provided a lockbox for Social Security. That is on one line on page 16 and it runs on to page 17. But then on the bottom of page 17, in the next section, they gut what they did earlier on the page. This is the oldest budget game in the book: ``Now you see it, now you don't.'' Mr. HOLLINGS. It is an old insurance game. I remember that when I was Governor, we were trying to clean up the insurance industry in my State. A new company was looking for a slogan, and we finally came up with the winning slogan: ``Capital Life will surely pay, if the small print on the back don't take it away.'' Now we have it all the way up here 35 years later in the budgetary process of the U.S. Government. Mr. CONRAD. I wish it were not the case but, unfortunately, it is. We had, I think, hoped--certainly the Senator from South Carolina and I-- that we would be at a point where we really would reserve every penny of Social Security surplus for Social Security. We thought that is where we were headed. Unfortunately, what our friends across the aisle have done is indicate that that is what they are doing, but that is not what the budget document says. No, no, no, they have changed it all, and they have made it possible to continue the raid on the Social Security trust fund on a simple majority vote which, of course, their lockbox was intended to protect against. Unfortunately, what they say they have done and what they have done are two very, very different things. [[Page S3731]] Mr. HOLLINGS. They gave the key for the lockbox to everybody save the Social Security recipients. Mr. CONRAD. Social Security is clearly in danger. Clearly, the priority on the other side is a tax cut, a massive tax cut at all costs. That is their priority. Looking at this budget, the budget that is before us, the major problem with it is that it does not represent the priorities of the American people. I think the best way to understand this is we now have projected a surplus over the next 10 years of $2.6 trillion. Our friends on the other side say all of the non-Social Security surplus-- virtually all of it--ought to go for a tax cut. Nothing, not a dime out of that surplus is for Medicare--not a dime--even though it is in greater danger than Social Security. They do not have the resources available for the high-priority domestic concerns of education, health care, defense, because if you look over time, they are going to have massive cuts in those categories. They are disguised, they are hidden, but they are there. Mr. President, I think perhaps it would be useful to recount a little bit of the budget history, how we got to where we are today and where we are headed. This chart shows over the last 30 years the budget history of the United States at the Federal Government level. We can see the last time we had a surplus was back in 1969, a little bitty surplus of $3 billion. We bumped along. Then we got into the seventies and the deficits started rising. Then we got into the Reagan years and the deficits exploded. We then had the Bush years and the deficits got even worse, so that on a unified basis--unified basis simply means all spending, all revenue put in one pot; that is a so-called unified budget--and on a unified basis in 1992, the last year of the Bush administration, we had a $290 billion deficit. In 1993, President Clinton put before the Congress a 5-year plan to reduce the deficit. We passed that plan. It was done with all votes on this side of the aisle. Not a single Republican voted for that plan. Not one. That plan has reduced the deficit each and every year of the 5 years of the plan. In fact, now we are seeing a slight surplus. What did that plan contain? It cut spending. It cut spending and it raised income taxes on the wealthiest 1 percent in this country. The Senator from Texas who was talking earlier opposed that plan. He said, as did many on that side of the aisle, that it would not work. In fact, they said it would increase the deficit. They said it would increase unemployment. They said it would increase inflation. They said it would be an economic disaster. They were wrong. They were not just a little bit wrong, they were completely wrong. The fact is that plan worked and worked extremely well, and the proof is in the pudding. We can see what happened to the deficit after that plan passed in 1993. Each and every year the deficit came down. In this last year, we ran on a unified basis a $70 billion surplus, and we are headed for much larger surpluses if the projections come true. On a unified basis, we ran a surplus last year. But remember, that counts all revenues and all expenditures. If we take out Social Security, because that is a separate trust fund, we will see we still ran a deficit last year of $29 billion--if we take out Social Security--because it was in surplus by about $100 billion. The good news is, we are very close to balancing without counting Social Security this year, and in 2001, we anticipate we will balance without counting Social Security. That is an enormous, enormous development and enormous progress. You can see back in 1992, if we were not counting Social Security, we had a $340 billion deficit. That is the kind of progress that has been made, and it has been made because, as I indicated, we had a 1993 5- year plan that cut spending, raised taxes on the wealthiest 1 percent, raised income taxes on the wealthiest 1 percent, and in 1997, we had a bipartisan deal. In that case, we came together and agreed on a budget plan to finish the job of balancing the budget. This chart shows what the 1993 plan did and what the 1997 plan did. You can see most of the savings are the result of the 1993 package. Again, our friends on the other side of the aisle--all of them, to a person--voted against it. The bipartisan agreement was 1997, but most of the work has been done by the 1993 5-year plan and that, in combination with the 1997 plan, has put us in this very favorable circumstance we face now. I thought just for the record we should look back on what the deficits were under each of the last three Presidents. With President Reagan, from 1981 through 1988, we saw the deficits explode. They went from $80 billion a year--that is the deficit he inherited-- and very quickly he shot it up to $200 billion. Then we, at the end of his term, saw some improvement--back down to about $150 billion. When President Bush came in, the deficits exploded again, and went from $150 billion, as I indicated, up to $290 billion a year by 1992. Under President Clinton, as I indicated, in 1993 we passed a 5-year plan; and we can just look at the results. In 1993, the deficit was $255 billion. And you can see each and every year thereafter the deficit went down under that 5-year plan. We almost achieved unified balance under that 5-year plan. So the proof is in the pudding. Our friends on the other side of the aisle talk about ``sham'' and ``hoaxes,'' and all the rest of it. The proof is in the pudding. My friends, Democrats passed a plan in 1993, without a single Republican vote. Democrats did the heavy lifting to get this country back on a fiscally responsible course. Facts are stubborn things. And the facts show, without question, that the Democrats passed a plan that, in fact, restored fiscal health to this country. It is true in 1997 we did get together on a bipartisan basis to finish the job. I wish it could have been bipartisan in 1993. But our friends on the other side of the aisle said then that if you pass this plan, you are going to make the deficit worse. They said if you raise taxes, even if it is on just the wealthiest 1 percent, that is going to collapse the economy. They were wrong. Their economic prescription for this country was wrong. And the facts clearly show that they were wrong. Thank goodness there were people who were willing to stand up and cast very tough votes to cut spending and, yes, to raise taxes on the wealthiest 1 percent so we could get this country back on course. It worked; and it worked splendidly. The results are dramatic. Not only have we reduced the red ink and eliminated it--no more running of deficits--but we also got remarkable economic results. We now have an unemployment rate that is the lowest in 41 years. The other side said, when we passed the 5-year plan in 1993, if you pass it, unemployment is going to go up. Unemployment went down. Unemployment went way down, the lowest it has been in 41 years. The other side said, the inflation rate, if you pass this plan, will go up. They were wrong. The inflation rate has gone down. We have the lowest rate of inflation in 33 years. But the good news does not end there. In addition, we passed welfare reform. In fairness and in truth, that was done on a bipartisan basis. We came together on welfare reform. And the result, coupled with the good economy that came from the 1993 budget plan, that coupled with welfare reform, has led us to the lowest percentage of our people on welfare in 29 years. Look at this dramatic improvement in terms of the percentage on welfare in this country. As well, Federal spending has come down because, as I indicated, in 1993, part of that package was to cut the growth of spending in this country. And we did even more in the 1997 bipartisan plan. So the two together, the 1993 plan and the 1997 plan, have brought down Federal spending as a percentage of our national income to its lowest level since 1974. So now we are spending, as a percentage of our national income, the lowest level in 25 years of the Federal Government. Because we have reduced deficits and gotten our fiscal house back in order, debt held by the public has also declined. We reached a debt, in relationship to our gross domestic product, of [[Page S3732]] 50 percent in 1993. We saw, through the Reagan and Bush years, that the debt was climbing in relationship to the size of our gross domestic product. In 1993, when we passed that plan, we stopped the growth of the debt in relationship to the size of our income and reversed it. So now we have seen the debt come down to a level of 44 percent of our gross domestic product. And we anticipate, if we stay the course that we are currently on, we will get the debt down to only 9 percent of our gross domestic product in 2009. The budget before us threatens that course. Because the colleagues on the other side of the aisle are so fixated on a massive tax-cut scheme, they would rather do that than to make this progress in reducing our national debt. I think that is precisely wrong. I think what we did in 1993 demonstrates that taking debt burden down gives a greater lift to this economy than any tax-cut scheme that anybody can come up with. That is not to say we should not have tax reduction, because we should. The question is one of priorities and proportion. Our friends on the other side of the aisle say--we have $2.6 trillion of surpluses projected over the next 10 years--there are only two priorities. Their two priorities are to safeguard $1.8 trillion of that for so-called ``retirement security''--I don't know exactly what that means. That entire $1.8 trillion is generated by Social Security. It should be set aside for Social Security. That is the plan we Democrats offered in the Budget Committee. We offered to safeguard every penny of Social Security surplus for Social Security. That is $1.8 trillion. In addition, we said we also ought to put about $400 billion aside for Medicare. The budget that is before us does not provide one penny of these projected surpluses for Medicare --not one penny. These are not the priorities of the American people. Instead, our Republican colleagues say all the non-Social Security surplus, or virtually all of it--because you have about $800 billion of non-Social Security surplus over the next 10 years--they say, use virtually all of it for a tax-cut scheme. And the best description we have of what they do with it is a 10-percent, across-the-board tax cut. That is what the chairman of the Finance Committee has said he thinks should be done. That is what their leadership in the House have said they think should be done. We have a different view of what the priorities for the American people are. For that $2.6 trillion, we say every penny that comes from the Social Security surplus ought to be reserved for Social Security. Interestingly enough, that is what was passed here in the Senate. But it went to the conference committee, and somewhere in the dead of night they backed away from that commitment; they backed away from that commitment and they came up with this very clever, very complicated little scheme. And this very complicated and very clever scheme says, on one page, yes, we are going to devote the Social Security surpluses to Social Security, but in the very next line they undermine it all-- they undermine it all--they create a big loophole so that on a simple majority vote here the Social Security fund can be raided, can be looted, just like it has been done for the last 15 years. That is wrong. That is not the priority of the American people. The American people want to preserve every penny of Social Security surplus for Social Security. That is what the Democrats offered in the Senate Budget Committee. In addition to that, we said the next $400 billion of surplus ought to be reserved to strengthen and protect Medicare. Our friends on the other side have not provided one penny of the projected surpluses to strengthen Medicare. Instead, they say, let's have this massive tax cut scheme to benefit primarily the richest and wealthiest among us. Now, the Senator from Texas says, you cannot love investment and not love the investor. That is true. I think we all respect those who invest. We respect those who save. We respect those who are successful. The question is, how do we use Government policy? Who do we benefit when we make decisions? Do we use governmental power to benefit the wealthiest among us? Is that what we do? That is not what I favor. As I said, I believe the first priority ought to be every penny of Social Security surplus for Social Security; that is, $1.8 trillion of the $2.6 trillion we now estimate will be in surplus over the next 10 years. But the next $400 billion we say ought to be used to strengthen and protect Medicare. That leaves another $400 billion that would be available for high-priority domestic needs under our plan, like education, like health care, and, yes, defense and tax relief for the American people. Our friends on the other side of the aisle have a different view. They say, yes, reserve the $1.8 trillion, but not just for Social Security, no, not just for Social Security. They call it ``retirement security.'' If they want to reserve every penny for Social Security, why don't they say Social Security? Why have they come up with this new term ``retirement security''? I think most of us know why they have done that--because the Senator from Texas has a scheme to privatize part of Social Security, and he wants the money reserved for his plan. He doesn't want to say reserve every penny of Social Security surplus for Social Security. Instead, he wants to make people believe he is going to do that, but then he provides a big loophole so that later on this year he can come along and raid the Social Security trust fund for his plan to create private accounts. That is what is really going on here. None of us is fooled. They do not provide anything, not a penny of these projected surpluses, to strengthen and protect Medicare, when we know Medicare is in the most imminent danger of being insolvent. We say the priority ought to be Social Security and ought to be Medicare and, after that, we also ought to have some money for high-priority domestic needs like education and health care, and, yes, tax relief. But it is a matter of priority, and our friends on the other side of the aisle say the priority ought to be a massive tax cut. This is the comparison for what happens. Let me focus on the 10 years. The blue column represents what the Republicans would do to pay down debt, and the red column shows what we offered as Democrats in the Budget Committee to pay down debt. A lot of people might be as surprised by this, because the Democratic plan paid down more debt than the Republican plan. We paid down more debt over the next 10 years, by nearly $400 billion over and above what is in the Republican plan, because we believe that is a key priority for the country. Again, our Republican friends think there is a different priority. They want to have this massive tax cut scheme. That is really what is most on their mind. Unfortunately, because of this, they do not have, as I have indicated before, one penny of the surpluses set aside to strengthen Medicare, not a dime. They have what I call ``the Republican broken safe.'' Here it is. You look in it and what do you find? There is nothing there. Now, with what they have done in the conference committee, we ought to have this up for Social Security, too, because, goodness knows, we could find, after the clever game they have played here in this budget document, that we may go into the Social Security trust fund in the future and open the vault door and find there is nothing there, either. Because they have this set up so that they can raid every penny of the Social Security trust fund surplus and put it over into private accounts. They could do that. They could use it for a tax cut and call it retirement security. Who knows what that means, ``retirement security''? If they wanted to reserve the money for Social Security, why didn't they say it? Well, I guess if we wanted to be fair to them, they do say it, don't they? On one line they say they are going to reserve the money for Social Security, but they say, by a simple majority vote, you can overturn that. Before it was a supermajority vote. Now in the dead of night they changed it, simple majority vote, and now you can loot Social Security. You can raid it, because in the very next line, section 202, they created another reserve fund. It is clever. I don't think it is going to work for them, because the American people are too smart. They know the kind of games that get played here in Washington. T

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CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT
(Senate - April 15, 1999)

Text of this article available as: TXT PDF [Pages S3725-S3756] CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 2000--CONFERENCE REPORT The Senate resumed consideration of the conference report. Mr. GRAMM. Mr. President, I rise today in support of the budget that is before the Senate. I am sorry that our dear chairman, Senator Domenici, is not here, but I want to say some very strong, positive things about this budget, and I wish he were here to hear it. I want to say it mostly because it is true. It would just be a plus if he were here to hear it. It has been my great privilege since I first came to Congress to be actively involved in budget debates. In fact, I remember the first debate I ever was involved in as a Member of the House was a debate about raising the debt ceiling, and I remember as if it were yesterday the House majority leader, Congressman Wright from Texas, stood up and said that we had no choice except to raise the debt ceiling of the Government, that we were in a position that a man would be in if his wife went out and ran up all these debts on the credit card and the debt collector was at the door. Today, in this era of political correctness, no one would ever suggest such a thing. They would say their spouses ran up these bills, and probably the reality would be the man did run up the bills in any case. But the point is that the then-majority leader of the House, in 1979, made the point that these bills had been run up and the bill collector was at the door, and so we didn't have any choice except to pay the bills as any good, honest family would. And so I stand up and say that the first thing I ever said in debate in the Chamber of the House was, well, it is not really the way it works. It is true that honest families would pay their bills, but what they would do is they would sit down at the kitchen table, they would talk about how they got in this financial mess, they would get out the credit card, they would get out the butcher knife, they would cut up the credit card, they would get an envelope and pencil and they would work out a new budget on the back of an old used envelope, and they would start over again. The problem in Congress was we kept simply spending money, incurring debt, raising the debt ceiling, and nobody ever sat down around the kitchen table, nobody ever got out the butcher knife and cut up the credit cards, and so, as a result, we never changed anything. So anyway, I opposed raising the debt ceiling. It failed. And then we tried to offer an amendment trying to tie the debt ceiling to the budget and saying you can only raise the debt ceiling if you balance the budget. Well, to make a long story short, from that time in 1979 until today, I have been involved in debate about every budget that has passed in this Congress or been enforced in this Government since 1979. And let me say [[Page S3726]] that of all those budgets, this is the best budget that has ever been written by American Government in that period. Now it is probably not, certainly not the most profound budget. The most profound budget was the Reagan budget that was written in 1981. But in terms of what you want a budget to be, it would be very hard to improve on what this budget does. And it is one of my frustrations that everything is now so focused on the war in Kosovo and on many other issues, and we are not having any kind of adequate debate or focus of attention on the profound nature of the budget that is in front of us and what great promise this budget holds for America if we actually enforce this budget. So let me begin by just ticking off some things this budget does, and then I want to get into a discussion of a comparison of this budget with what the President proposed. I want to get into some of these areas like Social Security and Medicare that have been talked about a lot and will be talked about again. But let me outline what this budget does. First of all, this is a 10-year budget that, if enforced, will balance the budget every single year for 10 years. To sort of turn on its head the language of the 1980s, this is a budget that has surpluses as far as the eye can see. And it has those surpluses because it maintains a restriction on spending in a period where revenues are gushing into the Federal Treasury, a period where if we are not very careful we are going to see the launching of a massive new spending spree which could squander the surpluses of today that give us the opportunity to pay down debt, to rebuild Social Security, and do it right this time by basing it on wealth instead of debt, that give us the ability to let working men and women in America keep more of what they earn through a reduction in taxes. If we can keep these spending control measures in place, we can provide adequate Government--in fact, the highest levels of Government spending in American history. And yet by controlling the growth of spending, with the power of the American economy and our competitiveness on the world market and the attractiveness of our capital market with huge amounts of wealth flowing into our equity markets, inflating values, making American families richer, and inducing them to take income and capital gains and pay record levels of taxes on it, we can keep the budget balanced, we can rebuild Social Security based on wealth, and we can cut taxes for working Americans. This budget does all those things. Now, a budget is like a marriage license. It gets you into the deal, but it doesn't make it successful. The easy part is saying ``I do.'' The hard part of a successful marriage is what comes after the wedding. But you cannot have the successful marriage if you don't have the wedding. We are being brought to the altar here with a document that promises all the right things. It is now going to be up to us to enforce those promises. But the key promise, the linchpin of this budget, the element of this budget on which everything else hinges is it enforces the spending caps. If we do not control spending, we are not going to have the surplus. We are not going to be able to rebuild Social Security based on wealth instead of debt. We are not going to be able to preserve a balanced budget, and we are not going to be able to cut taxes. Now, the second thing this budget does, which I rejoice in, is it strengthens our ability to do these things. Every Member of Congress, and I wish every American, understood what happened last year. The President stood up really on the opening day of Congress last year in the State of the Union Address and said save Social Security first. Don't spend a penny of the surplus on either Government programs or tax cuts. Save every penny of it for Social Security. Well, we all know that the President was not telling the truth. We all know that in the end we ended up spending very much of that surplus. We ended up on the last day of Congress taking a third of the surplus that was meant for Social Security and spending it on other programs, and we did it in the name of emergency spending. One of the most important features in this budget is that we have in this budget an enforcement mechanism that says that if someone wants to designate an emergency in nondefense spending, they are going to have to get 60 votes, if somebody raises a point of order. My basic view is, if something is not important enough or enough of an emergency that 60 out of the 100 Members of the Senate will vote for it, then it is not an emergency. I say right now that I personally intend, if others don't, to raise a point of order against each and every emergency spending bill that would raid the Social Security trust fund. I give notice right now that anybody who has an idea that we are going to make all these wonderful promises, that we are going to promise to love, cherish, and obey in this little wedding we are having here on the budget, but that we are going to turn around and start cheating in the fall by breaking this budget by claiming all kinds of expenditures are an emergency, that they better be ready to get 60 votes in the Senate if they are going to be successful. They better be ready for a real battle, because I, for one, believe in this budget, and I intend to fight for it very, very hard. This budget puts a focus on some priorities. It basically says that even in a tight budget not all spending is equal. It puts a focus on veterans' health care, and it does it by, quite simply, taking the position that in a time when you are trying to control spending, you have benefits and you have earned benefits. The basic position of our budget is that those who have served the country, who have preserved its life by wearing with pride its uniform and fighting its wars and by keeping its peace, that even at a time when we have tight budgets, they ought to come first. So this budget provides more money for veterans' health care, and I support it. This budget provides more money for education. It doesn't create the money magically. It takes it away from other programs, with the basic idea that we ought to let the States decide how to spend money on education rather than the Senate being a huge 100-member school. This budget calls for an increase in defense. One of the great unknowns now, not knowing what the war in Kosovo is going to cost, is what is this going to do with our budget and where do we go from here. I want everybody to understand that this budget is written in such a way that we contemplate an increase in defense spending. We want to give a pay increase to everybody in the military. We want to try to provide the pay and benefits and recognition that will help us retain in uniform and recruit the finest young men and women who have ever worn the uniform of the country. Today they wear that uniform with pride, but we have grown increasingly concerned that we are falling behind in recruitment, in retention. We are having trouble, especially, keeping pilots. Now that the President has us deployed in some 30 different engagements around the world, where defense spending has been cut by over a third since its peak in real terms, and yet we have massive military deployments, what is happening is, people are beginning to leave the military. This pay increase that we call for in this budget is vitally important in terms of helping us recruit and retain the best people. Having all these miracle weapons does us no good if we don't have quality people to man those systems. We have the best people in uniform today that we have ever had. We want to keep it that way. That is what this budget does. That is the choice we have. The choice that is presented to us in this budget is, even though we are in a period of record prosperity, even though the level of revenue flows is a record level, what we call for is to limit the growth of Government spending, put a focus on areas like veterans' health care and education and defense, use the surplus to deal with the looming crisis that faces us in Social Security, and to the extent that we have surpluses flowing from the general budget instead of from Social Security, take the bulk of that money and give it back to working families in tax cuts. That is what this budget does. I believe that it is an excellent budget. I think looking at the whole package, it is the finest budget presented in America in the 20 years that I have served in Congress. [[Page S3727]] Talking specifically about several different areas, I want everybody to understand that there is a shell game going on with Social Security. I want to explain, because people have trouble understanding what it is the President is doing on Social Security and what this budget does on Social Security. Let me first explain what this budget does on Social Security, and then explain the fraud that is perpetrated in the President's budget. What this budget does on Social Security is very, very simple. It says every penny that we collect in Social Security taxes that we don't have to have to pay Social Security benefits should be dedicated to Social Security. It ought to be locked away, and it ought to be available to any effort to rebuild the financial base of Social Security. But we should not spend it on any other Government program, nor should we use it for tax cuts. In fact, Senator Domenici, in a proposal that is enshrined in this budget, but we will have to vote on separately, sets up a lockbox where we literally change the lending limits that the Government faces, the debt ceiling, so that we will not be able to spend one penny of the Social Security surplus. This is vitally important because, as anybody in the Senate knows, and I wish every American knew, our Government has been stealing every penny of money coming in to the Social Security trust fund. We currently have IOUs for this money that are sent to West Virginia and put in a metal filing cabinet, but the Government then takes the money and spends it on everything but Social Security. None of that money is being used for Social Security purposes. Senator Domenici's lockbox would change that permanently and say that this money would be set aside to reduce debt, and it would be available when we can agree with the White House on a way to rebuild the financial base of Social Security. That is a critically important proposal. If the American people knew the extent that we have been stealing money out of the Social Security trust fund, there would be outrage in the country. That is exactly what is happening. The Domenici lockbox ends that forever, and it is vitally important. I hope every Member will support it. Now, let me talk about this shell game the administration is playing on Social Security. Let me say, to begin with, that if you have been involved in every budget since 1979, you have seen phony assumptions, smoke and mirrors, shell games, or whatever the words are that we use. But let me say, so that no one is confused, that in Republican and Democrat administrations I have seen people make assumptions that were wildly unrealistic about the future, about what inflation was going to be, about what interest rates were going to be, about what economic growth was going to be, about what spending was going to be; but those were always assumptions about what was going to happen in the future where at least people could say, well, it may be based more on hope than reality, but it could happen. What the Clinton administration has done is they have brought phoniness, distortion and untruth into the budget at a level which has never existed in the American budget in the history of this country. And no better example exists than under Social Security. I think I can explain it to you very simply. Here are the facts. In the year 2000, the first year of this budget, we projected a $131 billion surplus in the unified Federal budget. If you take every penny we get from every source, and you take every penny we spend on every program or giveaway, or lose, or forget about, and you bring those two together, we are taking in $131 billion more than we are spending. Now, Social Security is taking in $138 billion more than it is spending. So while we show that we have a $131 billion surplus, the reality is that if you don't count the Social Security trust fund, we are actually spending $7 billion more than we take in. So let me show it to you this way. We are taking in $138 billion more than we are spending on Social Security alone. We are then spending $7 billion of that money from Social Security on general government. Now, that would leave you with $131 billion of money for Social Security. What the administration does is it sends to West Virginia this piece of paper that actually prints out on a computer, and it says, ``IOU Social Security $138 billion.'' So they get this piece of paper, they tear it off--and it has actually been on television, and they won't let you photograph the bonds, interestingly--they tear off the perforated edges and they take that $138 billion IOU and put it in the filing cabinet. Now, what happens is, we then spend $7 billion of it immediately, and that brings us down to $131 billion. Now, the President says, well, let's take 62 percent of that and give it back to Social Security and we will spend 38 percent of it. So we started with $138 billion, we spent $7 billion, and then the President says let's spend 38 percent of what is left and then we will send another IOU to Social Security for $81 billion. So out of the $138 billion that they initially had, they send IOUs to Social Security for $219 billion. Now, they started with $138 billion and then they spent $7 billion, and then of that $131 billion that was left, they spent another $50 billion, and then they give Social Security an IOU for $219 billion. Now, any freshman accounting student in any accounting class in America would be given an ``F'' if they proposed on an examination paper such an accounting system. Yet, some of the most highly educated people in America--men and women of great stature--stand up in front of God, a television camera, and everybody else in the world and defend this totally phony, fraudulent, embarrassing proposal. I guess we all have our own standards, but I would not do it. I don't admire people who do it. I think it does a terrible injustice and disservice to the American public that this is happening. I wanted to show this graph to sort of bring the whole thing together. What I have here is plotted between the years 2000 and 2009, the years where this budget is in effect, the Social Security surplus. It starts out at $138 billion and it grows over the period to over $200 billion a year. That is the amount of money that Senator Domenici locks away in his lockbox. Now, in addition to the Social Security surplus, because the economy is growing so quickly and because we are controlling spending, if we actually do it, we will get an additional surplus in the rest of the Government in this area that I call ``B'' on this chart. Interestingly enough, what the President does is, he says let's take 38 percent of this unified budget, Social Security plus non-Social Security budget, and let's spend it and then give the rest to Social Security on top of the Social Security surplus that we have already measured. So that is how they start out with the Social Security surplus and then end up with these huge IOUs that they claim they are giving to Social Security. It is interesting because if you look at the President's plan--and this chart is from the Social Security Administration--if you look at their plan, they claim that under their plan they are building up the assets of Social Security from $864.4 billion to $6,697.8 trillion. Yet, when you look at the Office of Management and Budget figures--and all this is put out by the same administration--when you look at their actual level of paying down the debt, that level turns out to be only $2,183.6 trillion. So the question is, What happened to the $3.6 billion? What happened to it? The President says that under his system, with all this double counting of money, he was putting $5.8 trillion into Social Security; yet, his budget shows only $2.163 trillion actually saved for Social Security. What happened? Well, what happened is that none of this money ever went to Social Security to begin with. It was all a paper, double- counting bookkeeping. Their own numbers show it. Yet, nobody is embarrassed enough about it to simply say, well, this is phony and we apologize and we should have never tried to perpetrate this fraud on the American people. Now, I think we can be proud of the fact that in this budget every penny of the Social Security surplus is locked away to be used for Social Security. And when we decide how to save Social Security--and I wish we could decide today; maybe we will tomorrow--those funds will be there for that purpose. I think that is very important and I want to congratulate Senator Domenici [[Page S3728]] for his leadership on this issue. I want to address two other issues and I will speed it up if anybody else comes over and wants to speak. If not, I will give a fairly detailed description of both. The next issue is tax cuts. The budget before us simply says that every penny of the Social Security surplus will be there for Social Security; that of the surplus that is left, we keep a reserve of money that is available for a contingency use which could be used for one of many purposes, and then after we set aside that contingency, we provide the rest of the money for tax cuts for working Americans. After all, the surplus we have is due to the fact that Americans are working harder, working smarter, working in a more productive way, earning more and paying more taxes. There have been several proposals to cut taxes. None of them are endorsed in this budget. This budget simply gives to the Finance Committee the ability to cut taxes. And there have been a lot of proposals discussed. But the one that especially our Democrat colleagues have talked the most about is a proposal to cut taxes across the board. This has given rise to a debate in which I love to engage. Obviously, my Democrat colleagues love to engage in it as well. This is the debate that basically takes the view, as our Democrat colleagues often do, that investment is a good thing but investors are somehow bad people; that wealth is a wonderful thing but people who create it, that somehow there is something wrong with them, or that there is something wrong with letting them keep part of it. I don't understand how you can love investment and not love investors. I view people who are successful as being public benefactors. I never got a job being hired by somebody who made less money than I did. Everybody who ever hired me was richer than I was, which is why they were hiring me rather than me hiring them. And I never resented the fact that people had gotten rich by working in America. But here is what you are going to hear all day today, and here is what you are going to hear as we debate the tax cut. We have a very, very progressive tax system in America. ``Progressive'' is really a phony word. It is a made-up word that is meant to really cloud the issue so you don't really understand. Under our system, if you make more money, you not only pay more taxes proportionately, but the rate of taxes goes up. So that as you make more money, your taxes don't go up proportionately but they go up exponentially. Our system of taxes is so progressive that roughly 50 percent of Americans pay virtually no income taxes. And they pay no income taxes because there are many provisions which were adopted when Ronald Reagan was President in terms of changing the Tax Code. We were able to make some changes with the child tax credit and in our tax cut of 2 years ago that further exempted income from taxes. But the bottom line is that about 95 percent of income taxes are paid for by people who are in the upper half of the income distribution in the country. What our Democrat colleagues have discovered is that we do have a progressive income tax. So that if I pay $5,000 of income taxes, and someone else pays $50,000 of income taxes, and we give a 10-percent tax cut, I get $500 as a tax cut and they get $5,000 as a tax cut. And our Democrat colleagues think that is somehow outrageous. But the point is, the only way you are getting more of a tax cut is if you are paying more taxes. So that what they are really talking about is that the system is progressive. Should it be progressive? You know there are many people who believe we ought to have a flat tax and that everybody ought to pay the same rate. But the point is, if we are going to cut taxes and Senator Rockefeller pays 10 times as much in taxes as I do, or 100 times as much in taxes as I do--I don't know, and I hope he pays 100 times as much because then he is better off and so is America. But, whatever it is, the fact that he would get a bigger tax cut than I do from an across-the-board tax cut is the most reasonable thing on Earth to me if he is, in fact, paying more taxes than I am paying. I believe our No. 1 priority in cutting taxes is we ought to cut everybody's taxes by 10 percent. So, if you do not pay any taxes, you should have learned in the third grade--since I repeated the third grade I remember it--that anything times zero is zero. So with a 10- percent tax cut, if you are not paying any taxes, you don't get a tax cut. You are going to hear our colleagues say, well, 50 percent, or 40 percent, or whatever the number is they choose or make up today, people will get no tax cut under a 10-percent tax cut. The only person in America who will get no cut in income taxes from a 10-percent tax cut by definition is a person who pays no income taxes. Here is my point. Most Americans don't get Medicaid. Most Americans don't get food stamps. Most Americans don't get welfare. Why don't they get those things? They don't get those things because they are not poor. Tax cuts are for working people. Welfare is for poor people. Medicaid is for poor people who are sick. Medicare is for elderly people for their health care. We have many different programs that do not go to everybody. We have very few programs in America that everybody benefits from directly. The point is, if not everybody gets welfare, why should we be shocked that if you do not pay income taxes, that when we cut income tax rates you don't get a tax cut? I don't find that to be shocking. I don't have any trouble saying to somebody in my State who says, ``You cut income tax rates by 10 percent and I didn't get a tax cut.'' I know, because I understand arithmetic, that they are not paying any income taxes anyway. So I don't have any problem saying, ``Yes. That is right,'' because tax cuts are for one unique group of Americans, ``wagon pullers,'' I call them--the people who are pulling the wagon in which so many other Americans are riding; the people who are paying for the Medicaid they don't get, for the welfare benefits they don't get, for the food stamps they don't get. Tax cuts are for the people who are pulling the wagon in which all other beneficiaries of Government are riding. So I don't feel the least bit squeamish about saying that tax cuts are for taxpayers. If you do not pay income taxes, you don't deserve a cut in income taxes, because you are not paying any. We have a surplus because Americans are working harder and paying more taxes. In fact, they are doing it today, tax day. I want everybody who is going to the post office today to send their taxes to the government--if you happen to be on mountain time, or if you are on Pacific time and you have nothing better to do than to turn on C-SPAN-- I want you to remember this when you pay your taxes: I want you to remember, you didn't get food stamps, you didn't get welfare, you didn't get Medicaid, but I believe--and the party I am a member of, the Republican Party believes--that you ought to get a tax cut. Our Democrat colleagues are going to say--you are going to hear it, so pay close attention. They are going to say, yes, you get a tax cut. You-- this person working in Los Angeles, CA, on your way to mail your check in right now--you get a tax cut. Think of these people that don't get a tax cut. How is it fair that Joe Brown and Susie Brown, who make $21,000 a year, pay no income taxes, and get an earned-income tax credit--which is really a welfare benefit--why is it they don't get a tax cut when you do? The answer is, they don't pay any income taxes and you do. We have this basic viewpoint which our Democrat colleagues find to be radical. That point is, if you don't pay income taxes, you don't get a tax cut; if you do pay income taxes, you do get a tax cut. The more taxes you pay--and God bless you for doing it, because if people are paying record taxes it means they are earning record incomes--I believe, and the great majority of the Republicans in Congress believe, if you pay more taxes, you ought to get a bigger tax cut. That is what an across-the-board, 10-percent tax cut would do. A final point: This used to be a bipartisan idea. John Kennedy proposed an across-the-board tax cut in 1961 which was adopted and became law. His famous words are, ``A rising tide lifts all boats.'' That is still believed by one-half of the political spectrum in America. It is no longer believed by the other half--and that is the half that he was once a part of. To conclude, let me talk a little bit about Medicare. There is no more fraudulent portion of the President's [[Page S3729]] budget than the proposal about Medicare. Let me give Members a tiny bit of history. We, through an act of Congress, signed by the President, set up a Medicare Commission. In a gesture toward bipartisanship, Republicans--who control both Houses of Congress--agreed to appoint a Democrat, Senator Breaux, as chairman of that Commission. Senator Breaux did a great job as chairman of the Medicare Commission. It was my privilege to serve on that Commission. I remember as if it were yesterday President Clinton called the whole Commission down to the White House and talked to us about the terrible problems we had in Medicare and challenged each of us not to let the work of the Commission fail because of us. He challenged each of us to find a way to be for the final proposal. As it turned out, as most people now know, the final work of the Commission did fail. It failed by one vote. Not one single person appointed by President Clinton found a way to be for the final proposal, and they all voted against the Commission proposal. The President, in 3 months, had an opportunity to change American history on Social Security and Medicare, and in both cases he failed. What did the President do in his budget? What the President did in his budget is literally this: He said we are going to pay off debt-- though not as much as the Domenici budget--but we are going to name the debt reduction in honor of various programs. That is in essence what it was. In essence, what the President's budget does is send a little note to Medicare that says: You will be happy to know that Federal debt was reduced by such and such an amount and it was done in your name. It would be sort of like our Presiding Officer having someone send a check to his university saying, ``We made a contribution in your name,'' and then you say, ``When do I get the money?'' You don't ever get the money. What the President did in Medicare--which was one of the cruelest hoaxes I can imagine in public policy--the President didn't give Medicare a penny over 10 years, provided no additional money to Medicare. In fact, he cut Medicare, cuts that are not in the budget before the Senate. So he cuts Medicare funding over 10 years, and yet by sending this IOU to HCFA, the agency that runs Medicare, he somehow creates the impression that he has given Medicare more money, when none of this IOU can be spent. In fact, the only way we could ever provide money under this is to raise taxes, to cut Medicare or cut other Government programs. Yet the President creates this impression that he has provided this money that could be used for pharmaceutical benefits or all these other wonderful benefits. It is a cruel hoax. What we do in our budget is set out a procedure where this reserve fund, this reserve money that we didn't use for tax cuts that we kept as a buffer could, in part, be used for Medicare. Our problem in Medicare is we need to adopt the Breaux Commission report. We had a vote on instructing conferees for us to preserve our commitment to that. It is in this budget. We are going to bring that proposal to the Finance Committee. I hope we are going to adopt it. What that proposal will do, in addition to planting the seeds to save Medicare, for moderate- and low-income retirees it will, for the first time, give them assistance on pharmaceuticals. For middle-income retirees and upper-income retirees, by expanding the options that are available, by literally letting them have the same health insurance that I have as a Member of the Senate, it will allow them for the first time to have an opportunity to buy into a plan that will give them some assistance with their pharmaceuticals. I have talked a long time and covered a lot of subjects. Let me conclude by simply congratulating Senator Domenici. This is a great budget. If we can enforce this budget, America will be richer, freer, and happier. If we can enforce this budget, we will have an opportunity to begin the long process of rebuilding the financial base of Social Security based on wealth and not debt. If we can enforce this budget, we will pay off Government debt. If we can enforce this budget, we will be able to give working Americans tax cuts. It is one thing to enter the marriage; it is another thing to make it a successful one. This is a very important day, a very important budget. I am very proud to be for it. I yield the floor. Mr. HOLLINGS addressed the Chair. The PRESIDING OFFICER. The Senator from South Carolina. Mr. HOLLINGS. Mr. President, I just came to the floor to hear my distinguished colleague from Texas say this is the finest budget in 20 years. The PRESIDING OFFICER. Who yields time? Mr. CONRAD. I yield 10 minutes to the Senator from South Carolina. The PRESIDING OFFICER. The Senator from South Carolina is recognized for 10 minutes. Mr. HOLLINGS. Mr. President, this is the same act, same scene, under different auspices, different rules and regulations, with the manifest intent, in this particular Senator's opinion, that what is on course here is a Milton Friedman-like plan of the distinguished Senator from Texas to privatize Social Security, to establish private savings accounts. The Republicans do this in violation of all the rules and regulations that you can think of that have been put in over the past several years to bring about fiscal discipline. Let's get right to the point: We, up until now, have been on course with some fiscal discipline. Credit President Clinton and the 1993 Congress that enacted the Balanced Budget Act, which cut spending, increased taxes, increased taxes on Social Security--the very measure that they said was going to end the world and throw us into a depression whereby even the distinguished chairman on the House Budget Committee said he would change parties. I don't know whether he is running today for President as a Democrat or Republican, but to my knowledge Mr. Kasich is still a Republican. He said he would change parties if it worked. It is working. The market is over 10,000, we have housing starts and inflation is down, unemployment is down, and everything else of that kind. When they reported this budget, trying to continue the fiscal discipline, here is the language: In addition to the fiscal policies contained in the budget resolution, I also am troubled by the process the Republican majority wants to use in this year's budget. The reconciliation process have been used sparingly in the past to improve the fiscal health of the budget. It was created to give the Senate a process for making difficult fiscal decisions--decisions that often require cutting popular programs and increasing taxes to balance the budget. That is not the case this year. The Republicans want to use the reconciliation process to dramatically reduce revenues over the next ten years and impair the progress we have made so far in reducing the deficit and beginning to pay down the debt. The budget resolution also would modify the pay-go point of order. Pay-go was required to insure the Senate would provide off-sets to reduce taxes or increase spending. The modified budget resolution now will make it possible to cut taxes without a fiscal off-set. By making it easier to use future surpluses to cut taxes instead of paying down the debt, this will eliminate the fiscal discipline that has reduced the deficit and contribute to the fiscal cancer eating away at America. I say cancer, and I say that advisedly, because when President Johnson last balanced the budget, the interest cost on the national debt was only $16 billion. Today it is just about $1 billion a day. The last estimate of the Congressional Budget Office was $357 billion each year. When President Johnson last balanced the budget, after 200 years of history--the cost of all the wars from the Revolution on up, World War I, World War II, the cost of Vietnam, Korea--the interest cost on the national debt was only $16 billion. Now, since that time, without the cost of a war--we made money on Desert Storm--so, without the cost of a war it is now $1 billion a day, eating away. With that wasted money, the interest cost on the debt, I could give the distinguished Presiding Officer his $80 billion tax cut, I could give our Democratic friends our $80 billion in increased spending, I could give $80 billion to save Social Security, I could give $80 billion to pay down the debt--that is only $320 billion. But we are going to spend at least $357 billion this year on nothing, and if interest costs start going back up we will be to $500 billion. But, to the original point, read this conference report. Here are the shenanigans that go along and are given dignity by my distinguished colleague [[Page S3730]] from Texas saying it is the finest budget he's seen. I was sorry to see him do that because I joined him in passing Gramm-Rudman-Hollings for fiscal discipline, and this is the most undisciplined shenanigan that you will ever find. On page 18, section 202 of the conference report: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill, or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may-- (1) increase the appropriate allocations and aggregates of new budget authority and outlays by the amount of new budget authority provided by such measure (and outlays flowing therefrom) for that purpose; (2) in the Senate, adjust the levels used for determining compliance with the pay-as-you-go requirements of section 207; and (3) reduce the revenue aggregates by the amount of the revenue loss resulting from that measure for that purpose. I want the Parliamentarian to listen to that one. I can tell you how he will rule. He will say it means whatever Mr. Domenici says it means. What does that gobbledygook mean? Listen to this. I will read it again: Whenever the Committee on Ways and Means of the House or the Committee on Finance of the Senate reports a bill or an amendment thereto is offered, or a conference report thereon is submitted that enhances retirement security through structural programmatic reform, the appropriate chairman of the Committee on the Budget may [blah blah blah blah]. He can do away with the pay-go rule, he can cut the revenues, he can do whatever he pleases. And that is what my distinguished colleague from Texas calls the finest budget he has seen, because he doesn't want this crowd to read and understand what is going on. Bring out the Roth IRA for the rich. Under this budget, pass a law, don't care about the rules, don't care about pay-go, don't care about any available monies. I say that IRA is for the rich because one American--to bring it into focus, Bill Gates, $51 billion--is worth more than 100 million Americans. One man in this society that we are developing is now worth more than 100 million Americans. So there are a lot of people who do not have anything to say about this. But you sort of enhance your security and retirement--for the idle rich. Whoopee and the dickens with the pay-go rule, Mr. Parliamentarian. You don't have to worry about that. You don't have to worry about the loss of revenue or anything like that, the reconciliation process. It is reserved. Now the Republicans can come on in and privatize Social Security, all under the auspices of saving Social Security. It is still off on this public debt, as if there is some difference from the national debt. Let me explain one more time. When you pay down your public debt, you increase your Social Security debt. That is where the money comes from. The whole gimmick here is to pay down Wall Street's credit card with the Social Security credit card. It is like having a Visa and a Master and you want to pay down the MasterCard with your Visa card, so you pay down the MasterCard with the Visa card. But it is still your card; it is your debt. All you've done is shift debt from spending column to another. That is why the debt this particular fiscal year, 1999, goes up $100 billion. That is the Congressional Budget Office figure. Let's sober up here. Everybody is running around saying, ``Surplus, surplus.'' How are we going to do it? They all have different ideas: ``Surplus, surplus.'' The truth of the matter is there is no surplus. There is a deficit. We are spending $100 billion more than we are taking in. I thank the distinguished Presiding Officer. Mr. CONRAD addressed the Chair. The PRESIDING OFFICER. The Senator from North Dakota. Mr. CONRAD. Mr. President, let me thank the Senator from South Carolina. This country could have avoided an awful lot of the pain of the 1980s and 1990s if this country had listened to the Senator from South Carolina on budget matters. There has been no Member of this body who has had a better handle on the budget problems of this country than the Senator from South Carolina. Years ago, if we would have followed the Hollings plan and put in place a budget freeze, we could have avoided the massive deficits that came in the 1980s and the early 1990s, and this country would have been in a far better fiscal position. He has been an activist and a leader on the Budget Committee of every effort to provide fiscal discipline to this country. I venture to say, in this Chamber there is no single Member who has made a greater contribution moving this country from massive deficits to now surpluses than the Senator from South Carolina. Senator Hollings has been, I think, a model of what a United States Senator should be, in terms of budget discipline for this country. This country owes him a debt of thanks for the leadership he has provided. Mr. HOLLINGS. If the distinguished Senator will yield, he has been far too generous. Our floor leader, Senator Conrad of North Dakota, has really been leading the fight for us in the Budget Committee. That is why we are able to get some semblance of some discipline there. I hope, with the conference--maybe I could ask the Senator a question. Did they have a conference? Did the distinguished Senator from North Dakota go to a conference on the budget? Mr. CONRAD. Yes. I was on the conference committee. It went to the conference. Mr. HOLLINGS. Oh, they had one. Mr. CONRAD. They had one, but they did not have a budget there. It is most amazing. As my colleague knows, a conference is the representatives of the Senate and the representatives of the House coming together to work out the differences between the two. We were there, the Members were there. I think you would have been quite amazed, I say to the Senator from South Carolina, because there was no budget there, there was no document there. There was no discussion about the differences between the House and Senate. What we had was an immaculate conception. What we had was a document that appeared out of nowhere after we had met. Mr. HOLLINGS. As one big charade, rather than save Social Security, they plan to privatize it. There is no question in this Senator's mind. Mr. CONRAD. To privatize it or raid it in some other way. We really do not know. I was very interested to listen to the Senator from Texas say--say--that they had reserved every penny of Social Security surplus for Social Security. That is what we said. Mr. HOLLINGS. That is what he said. Mr. CONRAD. Unfortunately, that is not what the budget document provides. It is very interesting; the Senator from South Carolina probably knows better than anybody how one can play games with these documents. It is fascinating what they have done here, because on one line, they suggest that they have provided a lockbox for Social Security. That is on one line on page 16 and it runs on to page 17. But then on the bottom of page 17, in the next section, they gut what they did earlier on the page. This is the oldest budget game in the book: ``Now you see it, now you don't.'' Mr. HOLLINGS. It is an old insurance game. I remember that when I was Governor, we were trying to clean up the insurance industry in my State. A new company was looking for a slogan, and we finally came up with the winning slogan: ``Capital Life will surely pay, if the small print on the back don't take it away.'' Now we have it all the way up here 35 years later in the budgetary process of the U.S. Government. Mr. CONRAD. I wish it were not the case but, unfortunately, it is. We had, I think, hoped--certainly the Senator from South Carolina and I-- that we would be at a point where we really would reserve every penny of Social Security surplus for Social Security. We thought that is where we were headed. Unfortunately, what our friends across the aisle have done is indicate that that is what they are doing, but that is not what the budget document says. No, no, no, they have changed it all, and they have made it possible to continue the raid on the Social Security trust fund on a simple majority vote which, of course, their lockbox was intended to protect against. Unfortunately, what they say they have done and what they have done are two very, very different things. [[Page S3731]] Mr. HOLLINGS. They gave the key for the lockbox to everybody save the Social Security recipients. Mr. CONRAD. Social Security is clearly in danger. Clearly, the priority on the other side is a tax cut, a massive tax cut at all costs. That is their priority. Looking at this budget, the budget that is before us, the major problem with it is that it does not represent the priorities of the American people. I think the best way to understand this is we now have projected a surplus over the next 10 years of $2.6 trillion. Our friends on the other side say all of the non-Social Security surplus-- virtually all of it--ought to go for a tax cut. Nothing, not a dime out of that surplus is for Medicare--not a dime--even though it is in greater danger than Social Security. They do not have the resources available for the high-priority domestic concerns of education, health care, defense, because if you look over time, they are going to have massive cuts in those categories. They are disguised, they are hidden, but they are there. Mr. President, I think perhaps it would be useful to recount a little bit of the budget history, how we got to where we are today and where we are headed. This chart shows over the last 30 years the budget history of the United States at the Federal Government level. We can see the last time we had a surplus was back in 1969, a little bitty surplus of $3 billion. We bumped along. Then we got into the seventies and the deficits started rising. Then we got into the Reagan years and the deficits exploded. We then had the Bush years and the deficits got even worse, so that on a unified basis--unified basis simply means all spending, all revenue put in one pot; that is a so-called unified budget--and on a unified basis in 1992, the last year of the Bush administration, we had a $290 billion deficit. In 1993, President Clinton put before the Congress a 5-year plan to reduce the deficit. We passed that plan. It was done with all votes on this side of the aisle. Not a single Republican voted for that plan. Not one. That plan has reduced the deficit each and every year of the 5 years of the plan. In fact, now we are seeing a slight surplus. What did that plan contain? It cut spending. It cut spending and it raised income taxes on the wealthiest 1 percent in this country. The Senator from Texas who was talking earlier opposed that plan. He said, as did many on that side of the aisle, that it would not work. In fact, they said it would increase the deficit. They said it would increase unemployment. They said it would increase inflation. They said it would be an economic disaster. They were wrong. They were not just a little bit wrong, they were completely wrong. The fact is that plan worked and worked extremely well, and the proof is in the pudding. We can see what happened to the deficit after that plan passed in 1993. Each and every year the deficit came down. In this last year, we ran on a unified basis a $70 billion surplus, and we are headed for much larger surpluses if the projections come true. On a unified basis, we ran a surplus last year. But remember, that counts all revenues and all expenditures. If we take out Social Security, because that is a separate trust fund, we will see we still ran a deficit last year of $29 billion--if we take out Social Security--because it was in surplus by about $100 billion. The good news is, we are very close to balancing without counting Social Security this year, and in 2001, we anticipate we will balance without counting Social Security. That is an enormous, enormous development and enormous progress. You can see back in 1992, if we were not counting Social Security, we had a $340 billion deficit. That is the kind of progress that has been made, and it has been made because, as I indicated, we had a 1993 5- year plan that cut spending, raised taxes on the wealthiest 1 percent, raised income taxes on the wealthiest 1 percent, and in 1997, we had a bipartisan deal. In that case, we came together and agreed on a budget plan to finish the job of balancing the budget. This chart shows what the 1993 plan did and what the 1997 plan did. You can see most of the savings are the result of the 1993 package. Again, our friends on the other side of the aisle--all of them, to a person--voted against it. The bipartisan agreement was 1997, but most of the work has been done by the 1993 5-year plan and that, in combination with the 1997 plan, has put us in this very favorable circumstance we face now. I thought just for the record we should look back on what the deficits were under each of the last three Presidents. With President Reagan, from 1981 through 1988, we saw the deficits explode. They went from $80 billion a year--that is the deficit he inherited-- and very quickly he shot it up to $200 billion. Then we, at the end of his term, saw some improvement--back down to about $150 billion. When President Bush came in, the deficits exploded again, and went from $150 billion, as I indicated, up to $290 billion a year by 1992. Under President Clinton, as I indicated, in 1993 we passed a 5-year plan; and we can just look at the results. In 1993, the deficit was $255 billion. And you can see each and every year thereafter the deficit went down under that 5-year plan. We almost achieved unified balance under that 5-year plan. So the proof is in the pudding. Our friends on the other side of the aisle talk about ``sham'' and ``hoaxes,'' and all the rest of it. The proof is in the pudding. My friends, Democrats passed a plan in 1993, without a single Republican vote. Democrats did the heavy lifting to get this country back on a fiscally responsible course. Facts are stubborn things. And the facts show, without question, that the Democrats passed a plan that, in fact, restored fiscal health to this country. It is true in 1997 we did get together on a bipartisan basis to finish the job. I wish it could have been bipartisan in 1993. But our friends on the other side of the aisle said then that if you pass this plan, you are going to make the deficit worse. They said if you raise taxes, even if it is on just the wealthiest 1 percent, that is going to collapse the economy. They were wrong. Their economic prescription for this country was wrong. And the facts clearly show that they were wrong. Thank goodness there were people who were willing to stand up and cast very tough votes to cut spending and, yes, to raise taxes on the wealthiest 1 percent so we could get this country back on course. It worked; and it worked splendidly. The results are dramatic. Not only have we reduced the red ink and eliminated it--no more running of deficits--but we also got remarkable economic results. We now have an unemployment rate that is the lowest in 41 years. The other side said, when we passed the 5-year plan in 1993, if you pass it, unemployment is going to go up. Unemployment went down. Unemployment went way down, the lowest it has been in 41 years. The other side said, the inflation rate, if you pass this plan, will go up. They were wrong. The inflation rate has gone down. We have the lowest rate of inflation in 33 years. But the good news does not end there. In addition, we passed welfare reform. In fairness and in truth, that was done on a bipartisan basis. We came together on welfare reform. And the result, coupled with the good economy that came from the 1993 budget plan, that coupled with welfare reform, has led us to the lowest percentage of our people on welfare in 29 years. Look at this dramatic improvement in terms of the percentage on welfare in this country. As well, Federal spending has come down because, as I indicated, in 1993, part of that package was to cut the growth of spending in this country. And we did even more in the 1997 bipartisan plan. So the two together, the 1993 plan and the 1997 plan, have brought down Federal spending as a percentage of our national income to its lowest level since 1974. So now we are spending, as a percentage of our national income, the lowest level in 25 years of the Federal Government. Because we have reduced deficits and gotten our fiscal house back in order, debt held by the public has also declined. We reached a debt, in relationship to our gross domestic product, of [[Page S3732]] 50 percent in 1993. We saw, through the Reagan and Bush years, that the debt was climbing in relationship to the size of our gross domestic product. In 1993, when we passed that plan, we stopped the growth of the debt in relationship to the size of our income and reversed it. So now we have seen the debt come down to a level of 44 percent of our gross domestic product. And we anticipate, if we stay the course that we are currently on, we will get the debt down to only 9 percent of our gross domestic product in 2009. The budget before us threatens that course. Because the colleagues on the other side of the aisle are so fixated on a massive tax-cut scheme, they would rather do that than to make this progress in reducing our national debt. I think that is precisely wrong. I think what we did in 1993 demonstrates that taking debt burden down gives a greater lift to this economy than any tax-cut scheme that anybody can come up with. That is not to say we should not have tax reduction, because we should. The question is one of priorities and proportion. Our friends on the other side of the aisle say--we have $2.6 trillion of surpluses projected over the next 10 years--there are only two priorities. Their two priorities are to safeguard $1.8 trillion of that for so-called ``retirement security''--I don't know exactly what that means. That entire $1.8 trillion is generated by Social Security. It should be set aside for Social Security. That is the plan we Democrats offered in the Budget Committee. We offered to safeguard every penny of Social Security surplus for Social Security. That is $1.8 trillion. In addition, we said we also ought to put about $400 billion aside for Medicare. The budget that is before us does not provide one penny of these projected surpluses for Medicare --not one penny. These are not the priorities of the American people. Instead, our Republican colleagues say all the non-Social Security surplus, or virtually all of it--because you have about $800 billion of non-Social Security surplus over the next 10 years--they say, use virtually all of it for a tax-cut scheme. And the best description we have of what they do with it is a 10-percent, across-the-board tax cut. That is what the chairman of the Finance Committee has said he thinks should be done. That is what their leadership in the House have said they think should be done. We have a different view of what the priorities for the American people are. For that $2.6 trillion, we say every penny that comes from the Social Security surplus ought to be reserved for Social Security. Interestingly enough, that is what was passed here in the Senate. But it went to the conference committee, and somewhere in the dead of night they backed away from that commitment; they backed away from that commitment and they came up with this very clever, very complicated little scheme. And this very complicated and very clever scheme says, on one page, yes, we are going to devote the Social Security surpluses to Social Security, but in the very next line they undermine it all-- they undermine it all--they create a big loophole so that on a simple majority vote here the Social Security fund can be raided, can be looted, just like it has been done for the last 15 years. That is wrong. That is not the priority of the American people. The American people want to preserve every penny of Social Security surplus for Social Security. That is what the Democrats offered in the Senate Budget Committee. In addition to that, we said the next $400 billion of surplus ought to be reserved to strengthen and protect Medicare. Our friends on the other side have not provided one penny of the projected surpluses to strengthen Medicare. Instead, they say, let's have this massive tax cut scheme to benefit primarily the richest and wealthiest among us. Now, the Senator from Texas says, you cannot love investment and not love the investor. That is true. I think we all respect those who invest. We respect those who save. We respect those who are successful. The question is, how do we use Government policy? Who do we benefit when we make decisions? Do we use governmental power to benefit the wealthiest among us? Is that what we do? That is not what I favor. As I said, I believe the first priority ought to be every penny of Social Security surplus for Social Security; that is, $1.8 trillion of the $2.6 trillion we now estimate will be in surplus over the next 10 years. But the next $400 billion we say ought to be used to strengthen and protect Medicare. That leaves another $400 billion that would be available for high-priority domestic needs under our plan, like education, like health care, and, yes, defense and tax relief for the American people. Our friends on the other side of the aisle have a different view. They say, yes, reserve the $1.8 trillion, but not just for Social Security, no, not just for Social Security. They call it ``retirement security.'' If they want to reserve every penny for Social Security, why don't they say Social Security? Why have they come up with this new term ``retirement security''? I think most of us know why they have done that--because the Senator from Texas has a scheme to privatize part of Social Security, and he wants the money reserved for his plan. He doesn't want to say reserve every penny of Social Security surplus for Social Security. Instead, he wants to make people believe he is going to do that, but then he provides a big loophole so that later on this year he can come along and raid the Social Security trust fund for his plan to create private accounts. That is what is really going on here. None of us is fooled. They do not provide anything, not a penny of these projected surpluses, to strengthen and protect Medicare, when we know Medicare is in the most imminent danger of being insolvent. We say the priority ought to be Social Security and ought to be Medicare and, after that, we also ought to have some money for high-priority domestic needs like education and health care, and, yes, tax relief. But it is a matter of priority, and our friends on the other side of the aisle say the priority ought to be a massive tax cut. This is the comparison for what happens. Let me focus on the 10 years. The blue column represents what the Republicans would do to pay down debt, and the red column shows what we offered as Democrats in the Budget Committee to pay down debt. A lot of people might be as surprised by this, because the Democratic plan paid down more debt than the Republican plan. We paid down more debt over the next 10 years, by nearly $400 billion over and above what is in the Republican plan, because we believe that is a key priority for the country. Again, our Republican friends think there is a different priority. They want to have this massive tax cut scheme. That is really what is most on their mind. Unfortunately, because of this, they do not have, as I have indicated before, one penny of the surpluses set aside to strengthen Medicare, not a dime. They have what I call ``the Republican broken safe.'' Here it is. You look in it and what do you find? There is nothing there. Now, with what they have done in the conference committee, we ought to have this up for Social Security, too, because, goodness knows, we could find, after the clever game they have played here in this budget document, that we may go into the Social Security trust fund in the future and open the vault door and find there is nothing there, either. Because they have this set up so that they can raid every penny of the Social Security trust fund surplus and put it over into private accounts. They could do that. They could use it for a tax cut and call it retirement security. Who knows what that means, ``retirement security''? If they wanted to reserve the money for Social Security, why didn't they say it? Well, I guess if we wanted to be fair to them, they do say it, don't they? On one line they say they are going to reserve the money for Social Security, but they say, by a simple majority vote, you can overturn that. Before it was a supermajority vote. Now in the dead of night they changed it, simple majority vote, and now you can loot Social Security. You can raid it, because in the very next line, section 202, they created another reserve fund. It is clever. I don't think it is going to work for them, because the American people are too smart. They know the kind of games that get played here in Washi