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“THE FEDERAL BUDGET” mentioning the U.S. Dept of Labor was published in the House of Representatives section on pages H4911-H4914 on May 12, 1995.
The publication is reproduced in full below:
THE FEDERAL BUDGET
The SPEAKER pro tempore (Mr. Fox of Pennsylvania). Under a previous order of the House, the gentleman from West Virginia [Mr. Wise] is recognized for 60 minutes.
Mr. WISE. Mr. Speaker, special orders are kind of interesting. What are they about? I am sure the public looks and they see that there is an empty hall.
The benefit of special orders, that is what we are in right now, is it gives Members on both sides of the aisle, the aisle being the central aisle down the middle, it gives Members, Republican and Democrat, on both sides of the aisle a chance to lay out a little more in detail, to expound more fully on what they think is important, just as Mr. Pallone before me laid out some of his concerns about some of the budget proposals that have come forward.
Often on the floor of the House, where we are limited by how long we can speak, whether it is 3 minutes or 5 minutes, where there is the hurly-burly of debate, it is difficult to get out in a reasoned way what it is that you really want to say. That is why many on both sides of the aisle take this opportunity.
I take this opportunity because I want to speak about the budget. I want to speak about what I think ought to be in the budget. I want to respectfully disagree with the budget that has been presented by the Republican side, but also lay out an alternative, to lay out my budget, and I want to say this is my budget, not endorsed necessarily by anyone.
I think some important points need to be made. In developing a budget, and particularly a balanced budget, and everyone agrees on the need for balance in the budget. We balance a budget in our families, in our homes, in our businesses, in State and local governments.
But in balancing a budget, what is the goal? The goal I think for the country is not simply to be able to point with pride and say we have got a balanced budget. It is to be able to say we have a balanced budget in the context of a healthy economy because we take the steps necessary for a healthy economy.
Yes, we believe that most of the time that means there is a balanced budget. But there are times in the Federal Government, not true necessarily in other budgets, but there are times in the Federal Government where it is necessary to run an imbalance, in times of
recession when people are being laid off.
As businesses balance their budgets by laying off, that is the time when the Federal Government must come in and pick up the slack. Otherwise, the recession only worsens.
A balanced budget is important, yes; healthy economy, though, is the goal. Let's talk about it in terms of healthy economy.
My concern is that if we adhere to a 7-year proposal, that is, ``Thou shalt
[[Page H4912]] balance the budget in 7 years regardless of the consequences,'' then I am concerned about what that means for the economy, because it may be more of a blow than the economy can handle.
I would have to have a movie made this summer about the proceedings that went on here titled ``Honey, I Shrank the Budget and I Blew Up the Economy,'' because that is not what this is about. This is about building a healthy economy.
First of all I want to respond very quickly to the Medicare arguments, pro and con, and then move into other aspects of the budget.
I note with interest the statements made about how there are no cuts in Medicare, and I think that argument has gone back and forth a lot. Let the record show that it was last year that this administration, the Clinton administration, brought forward a plan for reforming Medicare in the context of overall health care reform, and that was almost universally disowned by those on the other side. Now they say, ``Well, we've got this great plan and we want you to be involved.''
We are saying it has to be done in the context of overall health care reform. It also has to be done in the context of something else. If you are asking seniors to pay more out of pocket for restructuring the health care plan, then I think it is not too much to ask that that actually go toward Medicare, that that actually go toward deficit reduction, but that it not go for a tax break for the very wealthiest in our country.
It is ironic that the amount that would come out of Medicare, roughly
$300 billion over 7 years, is almost the amount that was voted by this House or voted by the Members of the majority party for a tax break, 51 percent of those benefits going to those earning over $100,000 a year.
Incidentally, in West Virginia where the bulk of
the income level is $20,000 and below, that segment of the population would get only 4 percent of that tax cut benefits, while those over $100,000 got 51 percent. That is a clear disparity.
It is interesting because in my town meetings, 18 of them which I held across the State during the last couple of months, in my town meetings even upper income people were saying ``We don't need a tax cut, particularly one that gives us a tax break. What we are interested in is more deficit reduction and more balancing the budget.''
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So that is one of the main sticking points on Medicare, do not go cutting Medicare to give a tax break for the upper income.
But let us talk now about the budget and the economy.
The goal as I say is for a balanced budget, but in the context of a healthy economy. What is it that makes a healthy economy? Growth makes a healthy economy, and if you have two businesses side by side and both of them have a debt problem, they have too much debt, and the United States has too much debt, and they take steps to cut that, where is it, Mr. Speaker, you would want to invest, in the company that cuts everything across the board regardless of how much business it creates, or would you want to invest in the company that is going to make sensible cuts, but at the same time is going to beef up those provisions by bringing growth to that business and help it to grow out of some of its problems?
I think we ought to put the debt of the United States in context. We have a debt problem, and I think it is looming as a serious problem; it is not a crisis. And let us look at some statistics.
First of all, the debt, that total amount that the United States has rung up, has increased dramatically in the past 12 years. It has gone from roughly $1 trillion, took about 200 years to get to about this level, $1 trillion, and in the last 12 to 15 years it has now grown to
$4.5 trillion. And I know I am not in scale with my high air chart, Mr. Speaker, but the debt is somewhere around $4.5 trillion. That is a lot of money obviously. But let us put it in the context of history.
Following World War II this country's debt was about 125 percent of its gross domestic product. In other words, everything this country did in a year's time in business and sales and what not, the debt was about 125 percent. We worked that debt down steadily over the next four decades to roughly 35 percent of our gross domestic product for 1 year's economy.
It has now gone up, yes, it is true, to around 65 to 70 percent, but this is, incidentally, about the same level that almost every other major industrialized nation is carrying of debt in relation to its gross domestic product. So we have a problem and the trend line is up and leveling off. But we do not have a crisis. But we need to reverse that trend.
Why do we need to reverse that trend? The debt takes time to pay off. But more importantly, it is the interest on the debt that we pay every year that is growing. That is what is important.
Roughly the interest on the debt is somewhere around $300 billion, this year roughly 15 percent of our total Federal budget. That is $300 billion that is not going for education, it is not going for defense, it is not going for anything except to repay past consumption. So that needs to come down. But let us bring it down in a reasonable way.
The deficit is the yearly amount that this Government spends over what it takes in; if you take in this much and you spend that much. Let us look at the deficit in relation to our economy. Three or four years ago this country's deficit was about 6 percent of its gross domestic product. Because of the steps taken in the 1993 budget plan, hotly disputed, I might add, because of that it came from 6 percent and it is on a trend line to be cut in half, and it is on course right now to be around 2.5 to 3 percent of our gross domestic product. So, over a 5-
year time the deficit in relation to our overall economy has been cut in half. That is not good enough. It has to keep going down, but we have to acknowledge the progress that has been made and it has been made in a solid and stable way and incidently the economy, despite the predictions of those who opposed that program only 2 years ago, passed by one or two votes as I recall here in the House, the economy instead of going in the tank as was proposed has only grown instead.
Now, what does that mean for future deficit reduction? My feeling is we need to continue that glide path but that we need to make sure that several things are built in. First, that it is a gentle glide path and not an abrupt one. Second, that is builds in growth. The reality is if you are talking about paying off a debt of $4.5 trillion, if you are talking about eliminating a deficit of $170 billion this year, or $200 billion on average, then you are talking about the need to be able to grow and the economy must grow, and you must make sure the steps you take bring growth and not retrenchment.
So that deficit is what needs to be focused on, so I would urge that instead of a 7-year time plan with some pretty draconian cuts that it be spread out to 10 years to 12 years. Why 10 to 12? Rule of thumb. It took you 10, 12 years to get into this predicament. I think it is going to take logically 10 to 12 to get out.
But I noticed most private sector bankruptcy proceedings or chapter 11 proceedings, if you put forward a reasonable repayment plan for the creditors over a number of years, then everyone breathes a lot easier, the creditors loosen up, you are beginning to pay off your debt in a logical way and everybody is happy and that business still continues to go on.
So, I am not wedded to a 7-year plan. I am not wedded for another reason. Here we get a bit, Mr. Speaker, here I have been known to be able to cause whole crowds' eyes to glaze over when I start explaining capital budgeting, but let me try. All of us believe that the family budget and a Federal budget should be treated the same, that you should balance. There is a difference. And the family budget and the Federal budget are much the same in that they both must set priorities. Families sit around the table every month and decide how much for utilities, how much for food, how much for school, how much for health care, and so on.
Families know something. Families know they also
have to borrow to grow. That is why my wife and I have a mortgage on our house. We cannot afford to pay for a house in 1 year. We have to mortgage over 20 to 30 years. That is why we buy a car on a payment plan. We cannot afford to pay for a car in 1 year. We pay for it over several years.
[[Page H4913]] That is why I worked my way through college and had to borrow to get through college, and that is why my children will probably see the same, but we look at the borrowing for the house, the car, and the education as a necessary expense that has long-term benefits and over time helps us grow. It appreciates in value and adds to our value.
So, families know that, and they do that.
The Federal Government does not account for those long-term investments that way. When you build a mile of road, you build a Federal building, you buy aircraft carriers, those things that have long-term value, the Federal Government shows them being paid for in that 1 year. It does not spread the cost out over the lifetime of the asset. It pays for it in that 1 year, so that in turn balloons up what most businesses and families know would be a much lesser expense because they would spread the cost out over the lifetime of that asset. There is no capital budgeting. That is what it is called. There is no capital budgeting in the Federal budget.
There is in every State and city government, and business and family budget. The State of West Virginia, for instance, has a balanced budget, but the State of West Virginia, as almost every State with possibly the exception of one State, the State of West Virginia and 48 other States at least all borrow money for their highways and in some cases for water, sewer, and other long-term investments. The Federal Government is not able to show it that way. So I would put this country on a capital budget for those long-term items.
But the family also does something else. The family budget shows that debt service. The Federal Government borrows, but it does not know whether it is borrowing a dollar for gasoline for a Federal vehicle or a dollar for a mile of road. That needs to change.
So, growth must be, must clearly be built into this.
I would urge several things in preparing a budget. First of all, I would urge that there be a longer phase-in period. Second, I would suggest there be capital budgeting, that the Federal Government be able to invest and encourage investment just like every business, every State, every city, every family does, and to have for those items that are long-term you can borrow for those and show it as such for those items that are day-to-day consumption, your payroll, materials, those kinds of things you pay for them, and you balance your budget for those.
Third is, I urge growth policies. My concern about the budget that will be on the floor next week is it discourages growth;, it does not encourage it. If you believe balancing the budget in and of itself will bring you growth, then fine, and you are happy as a hog in slop, but the fact of the matter is the statistics are pretty clear, it does not. If you look at studies you find interestingly enough at times when we have the closest to balanced budgets our economy sometimes is in the worst shape, and vice versa. Many are wringing their hands about the deficit today, but they are not pointing out that the stock market is at an all-time high, that employment has been running along at a fairly consistent pace, and the Federal Reserve has clamped down seven times already on the economy in the past year trying to restrain inflation because they will felt the economy was growing too fast. So I think there is a real need to recognize growth policies.
I would urge under that heading there are several programs not to be cut that are proposed to be cut. Student loans. The present proposal is to cut the student loan program $33 billion over 7 years. I do not know about others in the Chamber. I think I do, but I know that many of us got our education through student loan programs. And indeed, the best investment that the Federal Government can make is to make sure that someone gets a higher education. If someone graduates from college, the Department of Labor estimates their income today by graduating from college is 60 percent higher over their lifetime than simply graduating from high school. That incidentally has changed in the last 10 years from being just 30 percent higher to doubling, so the power of a college education or higher education is there.
Incidentally, speaking from the most businesslike Federal Government standpoint, that is good news for the Federal Government, because that means they pay more taxes. It is good news for the economy because
they are more active in the economy, generating more revenue and so on.
The person who goes to college today may be the employer, the business creator, the business grower of tomorrow.
Please leave student loans alone.
I would leave intact other growth programs. The Economic Development Administration, almost every industrial park probably in our country, certainly in my State, has EDA money in it. That is what provides the linchpin that brings together the deal, the private sector, it provides the water, the sewer, sometimes the shell building, technical feasibility studies. We just broke ground on a major development in the eastern panhandle of West Virginia. It is estimated that the EDA grant which I believe was $2 million will generate 357 jobs. I costed that out. In addition to the other Federal grants involved it was around
$7,883 per job created. The estimated income those workers will be making, that will be repaid to the Federal Government in 4 years. Real estate developers will tell you if they can get their money back in 4 years, that is a heck of a great investment, and now those people will be generating money for the economy and also paying taxes for 40 years after that.
So whether it is the Economic Development Administration, the Appalachian Regional Commission, so many of the other important growth-
producing infrastructure creating entities, I would urge that those be retained.
We just had a debate on the floor today about, and unfortunately it passed, cutting $700 million from the State revolving fund. What does that mean, Mr. Speaker? That is the money that goes to build water and sewer projects for all of our communities; $100 billion need out there. This Government comes up with at best $2 billion a year, and that just got cut. It does not make any sense to me, because water and sewer is how we grow.
The third area is transportation, Mr. Speaker. I would hope that the money not be cut for the highway trust fund and the aviation trust fund. We need to be growing roads and improving our roads and our infrastructure and our mass transit, not retrenching. There is a reason Mr. Speaker, people talk about the economic miracle of Japan; there are a lot of reasons. One of them is this: Japan has half the economy of the United States or roughly 60 percent of the economy, half the population, and yet spends more in real dollars than the United States does in its infrastructure, and so clearly we can learn from that.
I would support targeted tax cuts, Mr. Speaker, tax cuts that actually go to create growth, not tax cuts handed out just to hand out tax cuts, because it is a great bumper sticker, but tax cuts that go to create growth, limited and targeted capital gains cuts, targeted investment tax credits that actually provide incentives for small businesses to buy the equipment that helps them to expand their capacity and productivity.
Targeted tax cuts that encourage the development of municipal and private water and sewer systems and those other areas that help us grow. Many of those incidentally were removed in the 1986 tax act. I think it is time to revisit that. So there is much that can be done for growth, Mr. Speaker.
Finally, Mr. Speaker, as I am getting close to the end, let me say that it is a laudable effort that all make to cut the Federal deficit. That has to be done. As I mentioned, I do not make light of the deficit, because what the deficit represents is the interest that is being paid on the national debt.
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And that debt is too high, and the interest is too high, and it robs us of other areas, if you are going to spend money that could be better spent. Not a dollar of that goes to education or goes to any other useful application.
So I do not quarrel with the need to reduce the deficit. I do quarrel with the idea that you can willy-nilly cut your way to Nirvana, that you can willy-nilly cut your way to a balanced budget, and particularly doing it in 7 years, particularly doing it with the type of
[[Page H4914]] arcane and antiquated and ineffective accounting system that the Federal Government has.
It is like we are trying to play a game by rules that are four or five decades old, and we know they are not any good, and we know they are artificial, and we know they do not produce the most logical outcome, but, by golly, they are the rules, those are the rules we are going to play by even if it has a bad outcome.
So, cutting your way completely to a balanced budget, particularly in 7 years, I believe can create incredible problems for the economy. And so I would urge that growth be an important initiative in that.
I don't think you reach growth by cutting the very programs that create growth, and so I hope that there will be time eventually to look at those growth areas and to be putting a growth agenda forward.
I understand this budget is going to pass next week, I guess, on the floor of this House. The votes are here. It will be muscled through. It will pass.
But my thought, though, is that after it passes, then we can have some calmer reflection in the country as well as this Congress, and that we can be talking about a true growth initiative that moves this country forward. You get balanced budgets by having a strong economy, and so as we work towards that balanced budget goal, I think at the same time we have to recognize what the ultimate goal is, and that is the strength of this economy.
In closing, Mr. Speaker, I do want to address one concern that has been raised. Some have said, ``Where is your alternative, Democrats? Where is your alternative?'' ``We have a budget we just reported out of the Committee on the Budget,'' say the Republican leadership, ``and where is the Democratic alternative?''
Ladies and gentleman, the Democrats have been putting their alternative out there on the line. I get partisan at this point, Mr. speaker. The Democrats have been putting their alternative out on the line for the past few years. We are the ones who passed without any help from the other party, passed a deficit reduction plan that reduced the deficit $500 billion over 5 years, took the deficit from being almost 6 percent of gross domestic product to less than 3 percent of gross domestic product in 5 years. We are the party that put out a comprehensive health care plan that last year was attacked by this side because it restricted choice, the freedom-to-choose provider. It had too much managed care. This year they come and say the greatest thing since sliced bread is managed care. That is how they would seek to reduce the deficit.
I would say Democrats have been there. Incidentally, we are going to continue to be there. I am going to be putting forth my growth agenda. I am going to be putting forward my balanced-budget alternatives. Others of us are working to put these forward. My hope is eventually this center aisle can be replaced by people working on both sides of it, working together, crossing over to work for a true growth agenda and to work for what I know everyone in this Chamber agrees on and across the country, the need for policies that truly put this country on the road to a healthy economy, in so doing, a balanced budget as well.
I also think it is important that these special orders at the end of the day following legislative business be taken and be recognized for what they are, not addresses to the Congress per se, but addresses to more fully expound the thoughts each Member has and to try and shape the policy discussion, very important policy discussion that is taking place here over the next couple of weeks.
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