Even after all this discussion of the deficit, it can be difficult to really understand what all those billions of dollars means to an individual. In this section our participants try to explain it all in simpler terms. They begin with the idea that each and every American pays a portion of the debt...
A- I think the assessment for your share of all government debt is more like $20,000. I don't even bother to add up the numbers the way I used to do when I heard such vastly different claims. I know that even if I were to say your share was $20 million, and present statistical proof, it wouldn't phase you. Somehow our very real problem has to be brought home to ordinary persons in a meaningful way.
Q- Ronald Reagan ran dollar bills from earth to the moon and back. I've heard of advocates who make their point by referring to the number of toilet flushes or the number of times it takes to say uh, uh, uh, beginning at the time of Christ.
A- The point is, none of the illustrations have done any good---debt keeps marching on. On second thought, make that sprinting on!
The headlines in our local paper in early 1991 read "County may face $10 million shortfall" and a few days later another headline proclaimed "Cultural grants in county to total $112,000".
According to the first article, things were so tough the powers-that-be were considering new business license fees and a utility users' tax. Who uses utilities? As for the second article, the Monterey County Board of Supervisors gave the grants to thirty-three groups which included symphony, opera, choral music and poetry readings. Who primarily uses these programs?
Q-It looks like if you're in the first group you're assessed more taxes and if you're in the second you benefit from grants.
A- 56 of the riches communities in the nation, including Palm Springs, Newport Beach and Palo Alto, California receive Community Development Block Grants (CBDGs) from congress despite Jack Kemp's attempt to stop the flow of this HUD money which could be put to be use elsewhere, in his opinion.
Q- How much does each comunity get?
A- Of course it varies, but for the ones mentioned below the figure I hear put the grants in the $300,000 to $500,000 range.
Q- Whatever it is, it leaves less for the depressed inner city areas. We need programs that target funds better than the CBDGs.
A- Mr. Rostenkowski, one of the most powerful men in Congress with over 35 years in the House and ten years as Chairman of the powerful Ways & Means Committee, frequently addresses the National Press Club in Washington, D.C.
In 1985 he tried to get them to cover tax reform, and in 1987 he pitched them trade both of which resulted in massive reform bills. He freely admitted in July, 1990 that he was trying to get them to publicize his own favorite deficit reduction proposal. He chided the press about their failure to cover the budget because they think it is too boring.
Q- Don't take this personally, but the press does have a point. B-o-r-i-n-g!
A- He complimented and thanked the Washington Post and CBS for launching his deficit reduction plan in the media. He told the press they have a major role in promoting and making things happen in today's society. He asked them to use their clout to help get out his message. He may have been a shade too dramatic as he intoned "The stakes are high; the U.S. position in the world and living standards are at risk."
Q-I heard Mr. Rostenkowski address the National Press Club earlier on February 9, 1989. His theme that day was economic vs. social responsibility.
A-That's right, I almost forgot that appearance. He said there is a pent up demand for social spending on child care, public works, health, farmers, welfare and education and that for the first time in our history the next generation would face a lower standard of living. He milked the standard phrases about homelessness, child poverty and inadequate health care.
Q-It sounded like he was chairman of something like Health and Human Services---what is the Ways and Means Committee?
A-The House Ways & Means Committee has jurisdiction over all tax legislation, social security and other entitlements.
Well, anyway Dan Rostenkowski carried on about us being a debtor nation at the mercy of foreigners and then he got real cute with his choice of words ridiculing the Office of Management and Budget's assumptions for 1990: "Rosy Scenario has had a long run in Washington. It's time we retired her!"
He borrowed Ronald Reagan's famous one-liner and applied it to his own dealing with the Office of Management and Budget : "As to OMB's numbers---trust but verify!"
He claimed it would be a mistake to play chicken with the Gramm- Rudman targets because Budget Director Darman just might choose sequester. He agreed with Congressman Panetta, chairman of the Budget Committee, that all spending and all revenue must be on the table and that both must be part of effective deficit reduction.
As for taxes he pointed out that Ronald Reagan raised more taxes than any other peace time president. Six tax hikes took affect during his second term. He also ridiculed Ronald Reagan's numbers for FY1990: 3.2 percent real growth, 3.8 percent inflation, 6.3 percent short term interest rates.
Surprisingly he credited or criticized, depending on your point of view, President Reagan's increase in medicare spending to the tune of $10 billion/yr, declaring it to be the largest increase in medicare since 1965.
Q-Well you've got to admit the administration numbers were off.
A-You should know by now that no one predicts accurately--predictions are almost like a lottery.
But getting back to Mr. Rostenkowski; he was asked why he didn't favor taxing the rich to fund the needed social programs and he answered with a recommendation for a rise in the highest marginal rates from 28 percent to 39 percent.
Q- How about a gasoline tax? Sin tax? Mortgage deductions? Tax fringe benefits?
A- He thought a gas hike of ten or fifteen cents a gallon would provide an incentive to buy smaller more efficient cars.
Q- That means Japanese. I guess he doesn't represent Detroit?
A- He represents Chicago. He said he wouldn't propose a sin tax but he would vote for one. He reminded everyone that 1952 was the last time the tax on beer and wine was raised. As for mortgage deductions, he would like to limit them to a million dollars.
Q-Did he change his mind on these things in his July 1990 appearance before the National Press Club?
A-There he pledged not to move on taxes until President Bush made the first move and added that "Those who say tax increases are unnecessary are the economic equivalent of the flat earth society. They may be as entertaining as Groucho Marx, but they're as irrelevant as Karl Marx. They are simply wrong!" He referred to a Rostenkowski Package for Budget Reform which included 60 percent reductions from spending cuts (defense and entitlements) and savings on interest expense and 40 percent from revenue increases (tax increases on gasoline, tobacco, beer, wine and getting rid of the income tax bubble). In 1990 he claimed the gasoline tax wouldn't hurt the poor and middle class much.
Q-That's ridiculous since most of those things are commonly used by lower-income people and any increase in price from a tax or whatever, would comprise a larger percent of their budget.
A-Well he didn't want to pay attention to common sense so he had a survey commissioned which showed it would cost the poorer segments of the population only $60 more a year. He claimed his plan would allow the Fed to reduce interest rates and would get us on a pay-as-you-go schedule.
Q-Everyone makes that promise, but it is never kept.
A- That may be true, but constituents remember the promises and often direct their criticism elsewhere. Mr. Rostenkowski claimed that business leaders and young kids are supporting his plan and have organized in various schools as "Students for Deficit Reduction".
Q-What did he have to say about the Reagan Administration this time---if anything?
A-He spoke of the nation's debt increasing at a rate of $21 million an hour which he broke down further to $347,000 per minute and added that although talk may be cheap, inaction is costly.
Q- If he was speaking a couple years ago then you weren't exaggerating at all when you said debt is now increasing at $6,000 every second---in fact according to Citizens Against Government Waste and various taxpayers organizations, your estimate is a little low!
A- Thanks for the vote of confidence. Mr. Rostenkowski went on facetiously, saying how in the '80s it was pleasant to live beyond our means even though it increased our dependence on high-interest foreign money.
He criticized Ronald Reagan's statement that the "deficit is big enough to take care of itself" and expressed regret that as a society we had been willing during the Reagan years, to impose a substantial amount of pain on relatively small groups, accepting that as the price to be paid for avoiding the need for higher revenue.
He gave the same old rhetoric about leaving the burden for future generations and said that repaying our debt will hurt their standard of living and taunted the "ridiculous economists" who insist deficits don't matter.
He was correct in pointing out that deficits do matter in two very important areas: first they affect the cost of capital and therefore our competitiveness and secondly they cripple government's ability to respond to pressing social needs.
He reminded members of the press, who assuredly needed no reminding, that during the '80s the philosophy was "get government off people's back". He said "Self-reliance meant we shouldn't worry about public education because the rich could afford good private schools for their children. We shouldn't worry about clean air because the rich could escape to the mountains. We shouldn't worry about run away health costs because the rich could afford comprehensive health plans. Meanwhile we have tax subsidies totaling $37 billion annually for health insurance and 37 million Americans have no insurance. Is this right? Is this fair?"
He found it shameful and unacceptable, adding "If all Americans aren't well educated, well fed and in good health our entire society will ultimately pay. American industry won't be competitive and our standard of living will suffer. Workers of tomorrow won't be able to support retirees."
Q- What about funding for the war on drugs?
A- Someone brought up a proposal to have kids buy bonds for the war-on-drugs, in much the same way as kids in the forties purchased war-bonds. That's when he launched into the "richest nation on earth" rhetoric "and yet we can't afford the war on drugs"--we'd apparently do anything to stop drugs except raise the dollars needed--instead we suggest borrowing from our kids!!
He went on in patronizing terms and as he warmed to the subject he asked "Should we sell infrastructure bonds to teenagers getting their first drivers license? After all, pot holes are their problem too! Should we sell clean air bonds to young mothers airing their babies in the park?"
Q- It sounds like he was in good form.
A- He's a great down-to-earth speaker with some terrific lines. Unhappily it doesn't seem to bother him to tighten other people's belts.
Q- You mean he could take some lessons from Davey Crockett.
A- Exactly! He's looking at a campaign war chest worth over a million dollars which he could spend as he likes if he were to retire in 1992. In the meantime he asserted that we should all pay to finance our national priorities---everyone should participate in a program of shared sacrifice.
Q-I seem to remember he was in trouble with senior citizens not long before this.
A-That was over the catastrophic health care legislation, but on this occasion he seemed to be trying to patronize them. He said, "I can't believe the senior citizens are any less patriotic than anybody else in our society and that they won't make the sacrifice." He added that the various senior organizations he had talked to were planning to come up with sacrifices other than freezing colas.
Q-Did he mention anything about possible sequester?
A-Definitely! He claimed that sequestration would be disastrous. He reminded the audience of the $19 billion sequestered in 1987, the $4 billion in 1989 which lasted only four months but he predicted that in the fall of 1990 everyone should get ready for a sequester in the $100 billion range. He figured $60 billion plus additional borrowing to fund the Resolution Trust Corporation. He used some of the same scare tactics that were used in California by opponents of Proposition 13---that all necessary services would be cut--instead of prioritizing.
Q-Like what?
A-He said a sequester could put air traffic controllers on a 4-day week, reduce the number of IRS audits by 2, 000, lay off 1,900 FBI agents & reduce by 60 percent or $2 billion the spending on anti-drug activity, reduce drug treatments for and the number of inmate's able to be cared for in prisons.
He added that we could forget about cleaning up any toxic dump sites and thanked G-d the safety-net was in place to protect the very poor and elderly.
Remember, a sequester would have been a $87 billion cut in a $1.2 trillion budget---less than 7 percent. They've managed to triple spending in ten years---don't tell me they couldn't shave 7 percent.
Q-It's hard to match the energy and vitality of a Dan Rostenkowski but didn't California Congressman Pete Stark have his own plan to reduce the budget deficit?
A-Lots of plans have been floated. Pete Stark's, as I recall was rather complicated and long but I'll lay it out for you in abbreviated form the best I can:
1) Cut military spending by 25 percent or about $75 billion
a) Cancel B-2 bomber & no new weapon starts for a year
b) reduce number of carrier task forces & mothball all WWII battleships; they're easy targets
c) Full burden-sharing in Korea, Japan and Europe or remove most troops
d) Reduce foreign bases--would save $1 billion a year to give up Philippines bases where 15,000 military and 20,000 civilian dependents and employees (apparently leave domesticated bases untouched)
e) Cut all but theoretical research on SDI. It's costing $32 billion for research alone and is due to cost $132 billion over the next 10 years. The Senate already voted 54-44 to slow the time for deployment of SDI
f) Shut-down the land-based missile part of our defense triad and rely on sea-based deterrents and on an air-borne force.
g) Terminate all military public relations units
h) Consolidate all intelligence agencies and procurement staffs
i) Cut $18 billion from foreign aid
j) Cut $4 billion from NASA's budget
k) Stop Bureau of Reclamation construction = $600 million
l) Limit farm subsidies to only the smallest farmers to save $9 billion
m)Freeze inflation adjustments for most doctors under medicare
n) Adopt nationwide the method NY state uses to control prescription drugs
o) Discontinue Voice of America
p) Impose taxes on carbon emissions = $6 billion in annual revenue
Tax $28 per ton of carbon content of coal, oil and gas = $22.2 billion in 1991 revenue. Stark says it would encourage energy conservation and the development of renewable fuels, and stabilize carbon dioxide emissions by the end of the century
) Treat water-irrigation subsidies as taxable income
S) Tax the cutting of redwood trees
T) Increase tax on gas guzzlers
U) Deny tax deductions for cigarette ads
V) Impose a permanent 33 percent rate on incomes above $125,000 and a surtax on millionaires= estimated $5 billion revenue
W) Tighten rules on capital gains at death = another $5 billion
X) Raise corporate tax rate from 32 percent to 40 percent= $22 billion in revenue
Y) Reduce tax deductions for business meals & entertainment from 80 percent to 50 percent = $3.5 billion. (Lesson: When we accept small cuts in deductions without a whimper, the politicians are encouraged to go ahead and take a little more!)
Z) Increase the number of IRS auditors and have them concentrate on the low tax rates paid by foreign companies.
Q-The Worldwatch Institute also presented some pretty hefty plans for military savings.
A- Their's wasn't a plan to reduce the deficit and thereby save interest on the national debt. Worldwatch didn't mind the deficit and its huge interest expense as long as the borrowing could be used for civilian products, to refashion production equipment at arms plants and find new uses for military bases and personnel, and to retrain employees.
A- The government accounting office is one of the few cost effective agencies in D.C. Just in 1990 it identified $15.2 billion worth of waste, fraud and abuse.
Q- It has to be a huge operation.
A- GAO costs over $350 million and has 5,620 employees with all but 800 dedicated only to investigations and audits. Their reports become part of the public's data base. Employees are loaned out to the Congressional Budget Office and Joint. Tax Committee and at the request of any committee chairman.
Because for over thirty years all the chairman in the House have been Democrats, it has been suggested that the GAO has become partisan. In the summer of 1991 congressman Dingell claimed the GAO was saving the taxpayers $14.5 billion and was incensed that the Republicans should challenge its integrity.
Q- Have you ever heard of The Culture of Spending? It came out recently and I think the author is Jim Payne. He claims that since the beginning of our government the executive has been required to report administrative actions, implementation of laws and national problems to congress. Of course the number of reports grew over the years.
In 1963 600 reports were required; in 1980 that number had risen to 1,400. We're talking about reports required on a repeat basis---annually, quarterly, etc. In a typical year 500 to 1,500 specific one time reports are also produced. This led to the passage of the Congressional Reports Elimination Act of 1980 and the Congressional Reports Elimination Act of 1982 and guess what?
A- Even more reports!
Q- You know your bureaucrats! In 1985 2,800 reports were filed. So---what to do?
A- Pass another Act.
Q- Right on! They did in 1986 and as a result by 1990 congress was requiring 3,000 recurring reports a year at an estimated cost of $350 million. And then something you won't guess.
A-They found some members of congress couldn't read?
Q- I'll ignore that. In attempting to eliminate some, they began choosing among them and reading them for the first time.
A- And guess what---
Q- Stop it! They discovered these reports had value. Now they're requesting more than can possibly be read, and as Mr. Payne says, "Congressmen have proven they are way out of their depth, but haven't the sense to move to shallower water."
A- And so what else is new?
Q- You know those scandals at HUD---the department of housing and urban development--- reports were submitted as early as 1981 which told of over-charging, fraud and unsound loans and detailed ways to prevent the documented abuses. There were thousands of other reports to read so congress didn't pay any attention.
Newspapers led the way with the reported scandal eight years later. One senator said, "When you're working with a trillion-dollar budget, with 100 different agencies and cabinets, (you) can't overview each of these agencies."
A- That is my point exactly! What better argument can be made for less government. That was what was wrong with Michael Dukakis---his penchant for micromanaging. It wasn't the Willie Horton ads that did him in, it was his efficient conscientious accountant approach to government.
We---the American people----know better. Senator Rockefeller is going to take a few more years to get all the details correct so he can present a master-plan for managing the country when he tries for the presidency a few years down the road---the road to the White House.
How can one person successfully manage the affairs of 253 million people? How can 535 people successfully manage the affairs of 253 million people? The answer is clear. They can't!
Q- Before I interrupted with Mr. Payne's book you were talking about the GAO.
A- Well I was just going to mention that the GAO has the power to audit the Pentagon but not the CIA. In the Pentagon it found potential savings of $2.9 billion in military intelligence, $1.3 billion in overspending by the Air Force, $1.2 billion in the Navy and $582 million of potential waste in the Army.
Q- So much was made of the $400 dollar hammers and $600 toilet seats that nobody outside of government thinks public employees are competent. Such an image, although anyone who thinks about it knows it can't be true in every instance, must be terrible for the morale of government workers.
A- I heard about an Air Force base that paid $2,000 each for certain missile parts that a few months earlier cost only $677. The disparity was due to the cost to the contractor of restarting the assembly line. If the government workers had checked their excess-parts inventory before ordering, they would have found a 32-year supply of the required parts, provided free-of-charge when the contractor originally shut down its assembly line.
Q- I suppose we could exchange horror stories forever but my pet peeve is Amtrak. People who cannot even afford to ride Amtrak subsidize it through their taxes. Those who can afford the price of a subsidized ticket and who make the greatest use of the service have incomes far above the average taxpayer.
As far as I'm concerned, Amtrak is in competition with private airline and bus-travel alternatives. It therefore seems stupid to subsidize its high cost when it serves a very narrow segment of the population-----albeit a wide segment of congress. Amtrak's revenues barely cover its daily operating costs, let alone provide funds for maintenance.
A- In examining federal budgets I see that taxpayers have subsidized Amtrak to the tune of about $800 million a year. Between 1972 and 1987 $16 billion in taxes went into it although it is promoted as self-sufficient. Congress even gave it an interest-free 99-year renewable loan which, if counted, could make the losses twice as large.
Q- Three times a week the Cardinal, runs between D.C. and Chicago with half its seats empty. Since it goes through West Virginia, Senator Robert Byrd has seen that the service has not been cut even though the route fails to meet the minimum-ridership requirements Congress itself mandated.
A- My ears perk up whenever I hear Senator Byrd's name mentioned. He was first elected to the senate in 1959 and after 32 years he has garnered power in the rules committee and is chairman of the very powerful appropriations committee. His seniority and age make him immune to criticism. He openly uses his power to enrich his West Virginia constituents.
In the spring of 1991, however, he trampled on too many bodies in an underhanded attempt to move a CIA complex from Washington D.C. to a site in West Virginia. The move would require at least 5,000 clerical- type workers to commute about three hours a day or pick up and move. The majority of these workers had working spouses and so these jobs would also be affected. The top level jobs, about one thousand, were to be left in D.C.
So once again, those who could least afford the inconvenience are the ones to suffer while the more powerful have their interests attended to by their colleagues on the "power hierarchy." When are people going to wake up and identify their true political friends and enemies?
Q- Senator Byrd is definitely a friend to his own constituents and since he has been in the senate for 32 years, I would say they recognize that.
A-Yes, and if they don't they should read some of the documentation put together by investigative reporter and author Donald Lambro. Mr. Lambro claims Senator Byrd has personally delivered $1 billion worth of pork to West Virginia---he refers to a "monument of pork".
"Pork-barreling" among House members who represent narrow districts, is not uncommon. Bud Shuster, serving his tenth term, uses his position on the Public Works and Transportation Committee to bring the pork home to Altoona, Pennsylvania. He slipped thirteen demonstration projects for his folks into the 1991 highway bill, which if passed, would have cost tax payers across the nation $287 million dollars.
Q- You mean $287 million is the cost of the highway bill or Altoona's pork?
A- The highway bill would cost more than $150 billion spread over five years.
Q- Then Congressman Shuster tried to funnel pork worth $287 million to Altoona, Pennsylvania. That's dedication!
A- I believe the nation over all needs someone looking out for its good besides the president. Ideally that would be United States Senators. In my opinion, they should be able to exchange the accepted provincial short-range thinking of congressmen and congresswomen for the long range more encompassing points of view that the entire country so desperately needs.
Q- Just in passing, I'd like to get into that highway bill a little more. I understand it didn't pass in the House where they were trying to desperately push it through just before their August recess in 1991.
A- It was the five cents a gallon gasoline tax that was its downfall, but I expect it to be amended and revived in the fall of 1991 because everyone is worried about the deterioration of the nation's infrastructure.
Q- I guess it's evident that our highways, bridges, tunnels and so forth need repair and that because of the heavy congestion in some areas new ones need to be built.
A- If our infrastructure isn't repaired it is estimated to cost America $50 billion a year in lost productivity. Arguments for the tax brought out the fact that sixty percent of the miles in this country need repair--the roads are congested.
Germany and Japan invest twice what we do in transportation and have two and a half times our productivity rate. Japan recently committed $3.2 trillion for infrastructure, including four or five airports, and tunnels connecting the islands.
The average gasoline tax, including state and federal, is 30 cents in USA and $2.48 in Europe.
Q- Wasn't the five cents a gallon gasoline tax suppose to bring in $6.6 billion a year?
A- "Bring in" to disappear where? That was the question the driving public was asking. Last year's "Nickle for America" was used to mask the deficit, not to rebuild the infrastructure. This time 100 percent of the nickle must go directly and immediately to transportation or the people will rebel.
The same old argument was heard on the floor "The question is not whether we can afford to do this, but whether we can afford not to do this."
But there was general agreement that the best plan would be to get $33 billion each year and spend it immediately with no trust fund involved.
Q- Wouldn't the money needed to fund the highway bill break the budget agreement made in the fall of 1990?
A- That depends. The transportation sub-committee appropriations mandate that a nickle be considered as discretionary money and as such would raise the budget cap---questionable at best.
Q- Even if the bill passed the House wouldn't the Senate need to pass the legislation also and then have the president sign it?
A- Actually earlier in July,1991 the Senate passed its own version of the highway bill which authorized $123 billion from the highway trust funds to be paid out over a five year period and without imposing a further tax on gasoline. It would also provide an additional $32 billion for mass transit.
Q-Further tax?
A- Remember, you just talked about it---a nickle tax on gasoline was part of the 1990 budget compromise. A dangerous precedent was set at that time when members of congress and the administration agreed to allow that gasoline tax to be divided between the general revenue, ostensibly to reduce the deficit, and the highway trust fund. After all, the tax was essentially a user fee, collected on users of the highway system at the gasoline pumps across the nation, to maintain the infrastructure.
Q- Isn't a gasoline tax supposed to be regressive---hurting low income people more than the wealthy?
A- Seventy-six percent of this tax will be born by families with modest incomes. It has been estimated that those with incomes in the $10,000 range would face a two and a half percent increase in their federal income tax.
Q- What were some of the other objections to the proposed legislation?
A- Both the Highway and unemployment-benefit extension legislation could further dampen our economic performance. HR 5 provides an incentive for people to remain unemployed longer than they might without an extension of unemployment benefits and opponents claimed thousands of jobs would be jeopardized if the highway bill, HR 2950 moved ahead. Not only that, the gasoline tax would increase inflation and the cost of living for all Americans would rise as a result.
Q- In other words, both bills together were seen as lowering our standard of living.
A- That didn't seem to be the major objection. The accounting aspects and budget shenanigans were more important. Fred Grandy, a Republican from Iowa and Dan Rostenkowski, a powerhouse Democrat from Illinois hammered out creative technical maneuvers on the floor--which would probably bore you to death.
Q- Look----I've gotten this far---try me.
A- Dan Rostenkowski, chairman of the powerful Ways & Means committee, wanted a cut off the top off any nickle increase in the gasoline tax.
This caused Bob McEwen of Ohio to claim (Rosty wants) "a deduction on a tax that hasn't been raised yet!"
When Rosty took two and a half cents from the gas tax to offset the deficit in the fall of 1990, everyone was asked to take into consideration the unique situation of the budget accord and to act in a spirit of compromise. If they did, the leaders claimed, it would never happen again.
Q- Oh boy---and here they were back in 1991 ready to take a second piece of the action!
A-According to Dan Rostenkowski, only the net revenues can be spent. He wanted to take a nickle and reduce it by one and a half cents because business deductions cost the general revenue that amount.
His critics said he wasn't taking into account the increased revenue from increased productivity and new jobs which improved infrastructure would bring. They countered claiming 243,000 new jobs at $25,000 a job, brings in new income which would result in income tax bills of $2 or $3 thousand per job or a half billion dollars in new tax revenue.
Q- That only makes sense. If you're going to calculate the losses you must also calculate the gains.
A- Mr. Rostenkowski's opponents felt he was hatching another budget obfuscation gimmick. They argued, and you apparently feel correctly, that there should at least be a wash out.
Q- What are some ways to get around Rostenkowski's demands?
A- OK. Fred Grandy's option would have increased the funding for infrastructure without raising the gas tax. Remember last year the five cents gas tax was split--half to the general revenue to mask the deficit and half into the highway trust fund where motorists think it all belongs.
Grandy wanted to move the fractious 2.5 cents back into the trust fund--interest would accrue and would amount to about $12 billion. The advantages he saw were (1) no gas tax (2) at end of 1997 when the budget agreement ends there would be $20 billion more than under the administration's proposal (3) why raise taxes when we can draw down the trust fund?
Mr. Rostenkowski was concerned that only net revenues be spent, stressing the necessity to keep a certain amount in the trust fund. He saw no problem in Grandy's plan with gross revenue vs net revenues because the principal wouldn't be touched until later.
Without a gasoline tax the budget agreement allows a disbursement of $16 billion in 1992, $18 billion in 1993, $20 billion in 1994. In the end he backed Grandy's proposal as a good compromise since it was certain that Bush would veto any highway bill containing a gasoline tax.
Q- What about the demonstration projects that are always included in a highway bill?
A- Demonstration projects will get $6.8 billion or five percent of the entire bill over five years. David Dreier of California was bothered by demonstration projects, but Norm Mineta, another Californian and member of the Public Works and Transportation committee, assured him that this time the demonstration projects would be under local control---94 percent of the funds would be under local control. Of course this made opponents fearful that the federal government could end up completing intersections, overpasses and stretches of road if the states couldn't.
Tony Beilenson, also of California said, "We have to view this as an investment, not a tax. . . .Americans have got to understand if they want this kind of system, as well as other programs, they're going to have to start paying for it."
Q- You told me once that you were at the meeting in Washington D.C. where the idea for Citizens Against Government Waste originated.
A- That's right. I signed on at the very beginning when, at a meeting of the International Platform Association, Jack Anderson and J. Peter Grace decided to jointly look into the possibility of forming a citizens' organization to draw attention to the waste in government.
Q- Then you must have access to all those ridiculous studies, like the causes of rudeness on the tennis court, and other funny things the taxpayers fund without ever knowing about it.
A- They are hilarious. You should join Citizens Against Government Waste or read some of Grace's literature----it's better than a joke book.
Q- How about a couple of examples?
A- Here's a few:
Q- I sure wouldn't mind studying that sand on Waikiki!
A- But why focus on the little fish when there are larger fish to fry? Certainly it's easy to remember the chauffeured limousine service that cost taxpayers $35,000 per year with approximately three fifths of the trips unauthorized.
Examples like that of the Environmental Protection Agency employees' use of government cars for lunch at a cost of $45 a trip compared to cab fare at $5 a trip tend to stick with us because we can identify.
It is harder to identify with the exploits of those who use military aircraft to shuttle back and forth even though the numbers are so much larger and should elicit even more outrage. Government planes cost anywhere from $1,000 to $ 7,000 per hour.
Q- John Sununu made us all aware of infractions like that.
A- According to official records between 1982 and 1984, 260 persons connected with the State Department and the USIA (U.S. Information Agency) spent $400,000 more than necessary to get to and from destinations. The trip which triggered a series of publicized investigations was made by a State Department employee and his family who returned to Iowa from an assignment in Uruguay via a 600 mile twelve day luxury steamboat trip up the Mississippi River!
Q- I love it!
A- Records show thousands of foreign service officers have used ships as opposed to airlines at a cost of five to ten times as much. But all airline flights aren't cost efficient. One congressman opted for a flight between Detroit and Washington D.C. in a government T-39 which cost $1,578 instead of taking a commercial airline which would have cost $95.
All too often transportation has been via military aircraft and when documented, is generally the most expensive item of any trip. In 1985 three out of five House members traveled abroad at least once. The tab amounted to over $4 million, not including transportation
Q- Not including transportation?
A- That's right, I said without the cost of transportation!
Q- I remember reading in one of your books about Ronald Reagan giving some foreign aid to Ireland, because he's Irish or Scotch or---what is Reagan?
A- I think it had less to do with Ronald Reagan than Tip O'Neil---then Speaker of the House.
The Irish Head of State, Garret Fitzgerald and Britain's Prime Minister, Margaret Thatcher, requested international support for their November 15,1985 agreement to settle the political strife between Britain and Ireland with economic and social development.
Assuming "support" meant dollars, Ronald Reagan proposed giving these first-world countries $20 million American taxpayer dollars per year over a five year period and an additional $150 million in loan guarantees and credits. Generous? Maybe, but it's never enough so Congress sweetened the pot to $50 million cash per year over a five year period.
Q- That's what I meant.
A- I also pointed out something that would seldom be aired on television or carried in most local papers.
Q- I know---you always try to bring to the fore things that aren't covered in the popular media outlets.
A- In this case news about concessional financing is not a real hot item.
In attempting to cut back on foreign aid congress took advantage of still yet another opportunity to show how good intentions end in bad results. In the FY1987 budget the largest cut came in security assistance, which includes FMS (foreign military sales) loans.
Supposedly $1.7 billion was cut in FMS financing but in reality there was a shift to the much more expensive (expensive for the American taxpayer) concessional financing. Concessional credits are offered at subsidized rates, sometimes 3 percent below the cost of money to the Treasury.
According to Harry Shaw, former chief of the military-assistance branch of the Office of Management and Budget, the cuts may"...look good in the short run since total outlays are reduced and the budget balance is helped, over the long run deficits will be larger because of lower receipts."
Since the Reagan administration had been thwarted by Congress in the amount of aid it could give to other countries it attempted to make up for quantity by increasing the quality---that is offering loans on better terms than our own Treasury could obtain.
Q- You know the one thing I've learned so far--- you can't watch your representatives too carefully. It's impossible for citizens to know about, let alone evaluate and approve, what these people are up to in Washington.
A- The one thing I would have liked you to have learned so far, is that people---all people---are going to do what they want to do---period. As you can see, they'll find a way.
Unfortunately the same short-sightedness was used in devising a debt-relief formula to help countries who had borrowed at high rates in the past. Policy-makers in the Reagan administration considered the possibility of restructuring that debt, leaving the debtor countries to face balloon payments sometime in the future and definitely after the "do gooders" had retired.
No one wants to face the heat but that's no reason to add more fuel to the fire. Those in positions to make hard choices are also, in positions that receive tough criticism. Until we make the status quo more uncomfortable than the discomfort incurred in making necessary changes the country is going to suffer. We can no longer afford business as usual and must push the chicken-hearted out of their places of power.
Q-Everything is costing taxpayers more than it should and the court system is no exception. A megatrial in Chicago where 38 gang members would be tried on 22 counts of murder and numerous offenses could cost $1.6 million just for court-appointed attorneys who would end up sitting around for long stretches of the time.
A- Since courts and police protection are two of the truly legitimate functions of government, they would get top priority in my book. Also our long range space program would get higher billing if I had any input.
Q- That's right, NASA got quite a cut in the FY1992 budget and most people didn't pay much attention.
A- I was aware, perhaps because I have a friend from college-days who has been with NASA since the intensity of the sixties. The FY1992 budget cut NASA $217 million below the freeze level, which is less than it got last year, and the entire cut came out of the space station.
The Europeans pledged $8-$9 billion or about one third of the projected cost of the station and have already spent one billion. Our cancellation is bound to hurt future joint ventures---besides we were the ones who enticed other countries to join us in the project.
Half of Canada's space program was the space station and the entire Japanese space program was structured around it. It was hard to get the Europeans to join in in the first place because a large faction warned against our fickleness and wanted to go it alone anyway. Don't be surprised if we fail to get any cooperation next time.
Q- I guess that's an example of short-sighted leadership.
A-Senator Connie Mack of Florida told members of Citizens For A Sound Economy on April 7,1989, of an experience he had as a newcomer to Capitol Hill. He found that almost everyone was against any new commissions and agreed there were too many already.
But when a new commission was named "Select Committee on Families & Children" everyone advised him it would be suicide to vote against it. He didn't listen and sure enough his vote was used against him in the next election. His point was that it is stupid to have to vote for something because of its name instead of what it does!
Q-Senator Mack is one of the few people in Congress who appears to take the budget deficit seriously.
A-He does seem to be a man of conviction and principle which must make it hard to deal with all the shenanigans constantly going on in Washington.
As an example of budget gimmickry he brought up the refinancing of the REA which went on the books as a savings although it actually cost the taxpayers an additional $14-$15 billion.
Q-He remembers October 19,1987, the day the stock market dropped 500 points because it was also the day he started his run for the Senate.
A-He used to be a banker, you know, so that may be significant. Also he remembers that immediately after the stock market crash, Congress talked about reducing the deficit by about $60 billion. A $24 billion reduction was actually agreed to in the November 1987 summit but with the passage of the catastrophic health care bill, $35 billion in extra revenue was needed instead.
Q-I bet even though Senator Mack had more elderly constituents than most he voted against the catastrophic health care bill. Am I right?
A-Yes, and although I'm sure he did it out of a sense of fiscal responsibility it turned out to be the right thing to do to gain favor with his constituents. The elderly were up in arms over the bill and it was quickly repealed.