As we enter the dialogue our participants continue to discuss some of the important issues regarding the budget deficit....
Q-Do you favor a Balanced Budget Amendment?
A-The people I most respect and admire are in favor of such an amendment but although I am anxious to discuss the issue with you, I must say I am not fully committed to the movement.
For a Iong time I favored a turnover in congress without resorting to an amendment to limit terms. Just this week I've changed my mind on that one, so I have an open-mind.
Q- What changed your mind about term limitations?
A-As I told you, in all decisions I take into consideration the fundamental principle that all men, nations, and in this case, states, are going to act in their own best interest. Because of the seniority system in congress, voting incumbents out would not be in any state's best interest.
If California were to substitute fresh new faces for incumbents, all California's representatives would be low men and women on the totem pole. As the most populous state in the nation we'd be giving up all our clout.
Now we have representatives, like Mr. Panetta, who chair various committees and have control in what gets brought to the floor, how the debates are set up, the voting and so forth.
Congress is not a gentle place and a lot of things are what you and I would call "rigged". Certainly it would look that way to an unsophisticated fair-minded ten year old, and they almost always call them as they see 'em. Anyone who has been around kids knows that "how they see 'em" is generally stark unbiased reality.
Q- You mean the seniority thing changed your mind when it came to term limitations?
A- Yes, but I'm not certain an amendment is the correct tactic when it comes to the federal budget. However, until the seniority thing dawned on me, the ballot box was a viable alternative. The messy budget process admits no acceptable alternative in its present state.
Q-Has a balanced budget amendment ever been brought to a vote?
A-Congress has been kicking around a balanced budget amendment since 1936. Such an amendment was attempted in 1982 and failed by 45 votes. It was tried again on July 17, 1990. One hundred fifty-five organizations worked calling the fifty members of congress who were waivering.
Representative Larry Craig of Idaho claimed to have 270 of the 290 votes needed to pass the amendment -- two-thirds if every congress person showed up for the vote! Actually only 286 "yes" votes were needed because of absences, but even so proponents were only able to muster 279 in favor of the amendment--only 7 votes short!
Two thirds of the members have to vote for the amendment for it then to be ready to take to the states for their vote. If adopted, the balanced-budget amendment will no longer allow a "voice vote" for spending measures.
Q-I bet I'm not the only one ignorant of the procedure to get a constitutional amendment. Could you give a brief synopsis?
A- Amending the Constitution is not something most of us do everyday so don't feel ignorant. Article V of our Constitution allows for amending by either congress, with a two-thirds vote of membership which then must be ratified by three-quarters (38) states or state legislatures can petition congress for a change.
Over the years there have only been sixteen amendments, in addition to the ten in the bill of rights, that have made it all the way through the process. Thirty-two states had expressed a desire for a balanced budget amendment, but some have dropped out of that push as of 1990.
However, polls show between 70 to 80 percent of the public favors such an amendment. A balanced budget was taken for granted years ago before the 16th amendment allowed the imposition of the income tax.
Q- An income tax was expressly prohibited in the U.S. Constitution prior to 1913.
A- Provision for a balanced budget should have been part of the 16th amendment. There was no need to specify a balanced budget earlier.
Q- Representative Billy Tauzin of Louisiana said that it was only in 1986 that congress appropriated more than the president requested. In every other year during the Reagan administration, the congress managed to pass a budget less than the President requested. Neither Ronald Reagan nor George Bush ever submitted a balanced budget.
The general public can't seem to get excited about a balanced budget--they see no relevance to their own personal lives.
A-Perhaps they'd feel differently if they had seen the study which appeared in the December 1989 Fortune magazine showing a balanced budget would raise the income of citizens by eleven percent in less than a decade. Taxes will grow faster than the income of the average American worker if current law remains unchanged. It is unconscionable to think of increasing taxes on incomes that are stagnant or shrinking!
Q-Usually proponents of balanced budgets try to scare people.
A-A lot of the facts are scary--there's no two ways about it.
Representative Joe Barton of Texas tried to make the facts meaningful the day before the House voted on a balanced budget amendment with analogies like: one trillion = 1,000 billion; one billion = 1,000 million; one million = 1,000 thousands.
He warned us that every American's share of the debt was $12,000 and that figure has been increasing by $750 every year for the past several years. He claimed the balanced budget amendment would help solve the problem or at least prevent it from happening again in the future.
He advised us that the then current $3 trillion debt ceiling was to be raised in August, 1990 to $3.5 trillion; that the debt is increasing at about $150 billion a year, or $12 billion a month or $3 billion a week or $500 million day or $18 million an hour or almost $300,000 a minute or $4,000 per second! Did anyone heed the warning? Did anyone care? Were any steps taken to check this precipitous dash to our own destruction?
Q- You are scaring me---because I know the answer.
A- The answer is we've managed to exceed all Mr. Barton's direst predictions. A year later we've raised the debt ceiling to $4.1 trillion and that debt is now costing close to $6,000 a second.
Q- What do you want me to do----pray?
A- I may have just convinced myself to fight for a balanced budget amendment because that's the answer I was about to give you!
Q- Really? Pray?
A- Fight for a balanced budget amendment.
Q- I may have witnessed a conversion.
A- Very funny. Why don't you support a balanced budget amendment?
Q- I suppose it's because I don't understand it very well. This stuff is complicated, you know. And I'm not alone in simply wanting someone else to figure it all out.
A- You're right---you're not alone. But look at where that kind of irresponsibility has taken us. I'm sorry, but the buck stops here----with us----with "We the people". And there's no getting around it unless you don't mind passing to your children a country very different than the one you inherited.
Q- Weren't there several versions of the balanced amendment presented in 1990?
A- There was the Stenholm-Craig Amendment and the Barton Amendment, the one supported by Milton Friedman.
Q-One of the "respected and admired" you referred to earlier, no doubt.
A- Section I of the Barton Amendment required congress and the executive branch to agree on an estimate of receipts and outlays. Section II capped the debt as of the first day of the second year after the amendment is made part of the Constitution. Section III mandated that the President submit a balanced budget. Section IV said the estimates reached and referred to in Section I cannot increase at a rate faster than national income increases. In other words it prohibits taxes from rising at a faster rate of growth than national income.
Q- I think Section IV is my favorite.
A- Section V said Section IV can be waived under declaration of war. Section VI said all items currently known as off-budget expenses must be included in these determinations. Section VII gave Congress the authority to implement the legislation and Section VIII set 1995 as a starting date. Sec. VIII received a lot of criticism from opponents but it made sense because 1995 was the date that budget summiteers targeted for a zero deficit.
Q-Do you favor a Balanced Budget Amendment?
A-The people I most respect and admire are in favor of such an amendment but although I am anxious to discuss the issue with you, I must say I am not fully committed to the movement.
For a Iong time I favored a turnover in congress without resorting to an amendment to limit terms. Just this week I've changed my mind on that one, so I have an open-mind.
Q- What changed your mind about term limitations?
A-As I told you, in all decisions I take into consideration the fundamental principle that all men, nations, and in this case, states, are going to act in their own best interest. Because of the seniority system in congress, voting incumbents out would not be in any state's best interest.
If California were to substitute fresh new faces for incumbents, all California's representatives would be low men and women on the totem pole. As the most populous state in the nation we'd be giving up all our clout.
Now we have representatives, like Mr. Panetta, who chair various committees and have control in what gets brought to the floor, how the debates are set up, the voting and so forth.
Congress is not a gentle place and a lot of things are what you and I would call "rigged". Certainly it would look that way to an unsophisticated fair-minded ten year old, and they almost always call them as they see 'em. Anyone who has been around kids knows that "how they see 'em" is generally stark unbiased reality.
Q- You mean the seniority thing changed your mind when it came to term limitations?
A- Yes, but I'm not certain an amendment is the correct tactic when it comes to the federal budget. However, until the seniority thing dawned on me, the ballot box was a viable alternative. The messy budget process admits no acceptable alternative in its present state.
Q-Has a balanced budget amendment ever been brought to a vote?
A-Congress has been kicking around a balanced budget amendment since 1936. Such an amendment was attempted in 1982 and failed by 45 votes. It was tried again on July 17, 1990. One hundred fifty-five organizations worked calling the fifty members of congress who were waivering.
Representative Larry Craig of Idaho claimed to have 270 of the 290 votes needed to pass the amendment -- two-thirds if every congress person showed up for the vote! Actually only 286 "yes" votes were needed because of absences, but even so proponents were only able to muster 279 in favor of the amendment--only 7 votes short!
Two thirds of the members have to vote for the amendment for it then to be ready to take to the states for their vote. If adopted, the balanced-budget amendment will no longer allow a "voice vote" for spending measures.
Q-I bet I'm not the only one ignorant of the procedure to get a constitutional amendment. Could you give a brief synopsis?
A- Amending the Constitution is not something most of us do everyday so don't feel ignorant. Article V of our Constitution allows for amending by either congress, with a two-thirds vote of membership which then must be ratified by three-quarters (38) states or state legislatures can petition congress for a change.
Over the years there have only been sixteen amendments, in addition to the ten in the bill of rights, that have made it all the way through the process. Thirty-two states had expressed a desire for a balanced budget amendment, but some have dropped out of that push as of 1990.
However, polls show between 70 to 80 percent of the public favors such an amendment. A balanced budget was taken for granted years ago before the 16th amendment allowed the imposition of the income tax.
Q- An income tax was expressly prohibited in the U.S. Constitution prior to 1913.
A- Provision for a balanced budget should have been part of the 16th amendment. There was no need to specify a balanced budget earlier.
Q- Representative Billy Tauzin of Louisiana said that it was only in 1986 that congress appropriated more than the president requested. In every other year during the Reagan administration, the congress managed to pass a budget less than the President requested. Neither Ronald Reagan nor George Bush ever submitted a balanced budget.
The general public can't seem to get excited about a balanced budget--they see no relevance to their own personal lives.
A-Perhaps they'd feel differently if they had seen the study which appeared in the December 1989 Fortune magazine showing a balanced budget would raise the income of citizens by eleven percent in less than a decade. Taxes will grow faster than the income of the average American worker if current law remains unchanged. It is unconscionable to think of increasing taxes on incomes that are stagnant or shrinking!
Q-Usually proponents of balanced budgets try to scare people.
A-A lot of the facts are scary--there's no two ways about it.
Representative Joe Barton of Texas tried to make the facts meaningful the day before the House voted on a balanced budget amendment with analogies like: one trillion = 1,000 billion; one billion = 1,000 million; one million = 1,000 thousands.
He warned us that every American's share of the debt was $12,000 and that figure has been increasing by $750 every year for the past several years. He claimed the balanced budget amendment would help solve the problem or at least prevent it from happening again in the future.
He advised us that the then current $3 trillion debt ceiling was to be raised in August, 1990 to $3.5 trillion; that the debt is increasing at about $150 billion a year, or $12 billion a month or $3 billion a week or $500 million day or $18 million an hour or almost $300,000 a minute or $4,000 per second! Did anyone heed the warning? Did anyone care? Were any steps taken to check this precipitous dash to our own destruction?
Q- You are scaring me---because I know the answer.
A- The answer is we've managed to exceed all Mr. Barton's direst predictions. A year later we've raised the debt ceiling to $4.1 trillion and that debt is now costing close to $6,000 a second.
Q- What do you want me to do----pray?
A- I may have just convinced myself to fight for a balanced budget amendment because that's the answer I was about to give you!
Q- Really? Pray?
A- Fight for a balanced budget amendment.
Q- I may have witnessed a conversion.
A- Very funny. Why don't you support a balanced budget amendment?
Q- I suppose it's because I don't understand it very well. This stuff is complicated, you know. And I'm not alone in simply wanting someone else to figure it all out.
A- You're right---you're not alone. But look at where that kind of irresponsibility has taken us. I'm sorry, but the buck stops here----with us----with "We the people". And there's no getting around it unless you don't mind passing to your children a country very different than the one you inherited.
Q- Weren't there several versions of the balanced amendment presented in 1990?
A- There was the Stenholm-Craig Amendment and the Barton Amendment, the one supported by Milton Friedman.
Q-One of the "respected and admired" you referred to earlier, no doubt.
A- Section I of the Barton Amendment required congress and the executive branch to agree on an estimate of receipts and outlays. Section II capped the debt as of the first day of the second year after the amendment is made part of the Constitution. Section III mandated that the President submit a balanced budget. Section IV said the estimates reached and referred to in Section I cannot increase at a rate faster than national income increases. In other words it prohibits taxes from rising at a faster rate of growth than national income.
Q- I think Section IV is my favorite.
A- Section V said Section IV can be waived under declaration of war. Section VI said all items currently known as off-budget expenses must be included in these determinations. Section VII gave Congress the authority to implement the legislation and Section VIII set 1995 as a starting date. Sec. VIII received a lot of criticism from opponents but it made sense because 1995 was the date that budget summiteers targeted for a zero deficit.
Q-How about a run down of those who spoke pro and con the balanced budget amendment---just in case potential supporters or opponents would like to contact their own congress persons.
A- It sounds like maybe you are ready to fight for an amendment! As briefly as I can make it then---the following persons spoke in favor of the amendment:
Peter De Fazio of OR, Beverly Byron of MD, Dave McCurdy of OK (He said the first installment would be paid this year with four additional installments ensuring the amendment would be completely in place in 1995 to guard the future.
This was in answer to Jack Brooks scorn that it was not to "start" for five years!) Jim Moody-WI, Joe Barton-TX, Thomas Carper-DE, J.J. Pickle-TX, George Gekas-PA, James Olin-VA, Bill Frenzel-WI, Bob Dornan-CA, Billy Tauzin-LA, Bob Clement-TN, Mickey Edwards-OK, Claude Harris-AL, Matthew Rinaldo-NJ, Craig James-FL, Jerry Huckaby-LA, Toby Roth-WI (Roth claimed that the vote could fairly be seen as a vote between special interests and the people in general), Saiki-HI (Saiki claimed it was a small step but in the right direction), Wayne Owen-UT (He claimed to be a "death-bed convert" and said it would do violence to good social programs but the deficit itself is doing more harm to future generations. He agreed with Mr. Frenzel that what was needed was courage and not process change. The trouble Owen sees is that we don't know how to enforce such an amendment. No one wants to turn the economy over to the nine Supreme Court Justices. Anyway he came to the reluctant conclusion that at least this amendment "makes us make" the decision to cut!), Dick Cheney-WY, Fred Upton -MI (Because the 1974 budget process reform didn't work nor did G-R and its various revisions. He reminded everyone that 1969 was the last year congress adopted a balanced budget.) Bill Paxon-NY, Charles Bennett-FL ( He admitted that many of the things the government does today were never considered to be government's business when he came to Congress 40 years ago!) Don Ritter-PA, Andrew Jacobs-IN, Robert Lagomarsino-CA, Clarence Miller-OH, Bill Emerson-MO, Bob Smith-NH, Charles Pashayan, Jr.-CA, John Duncan-TN ("We've been more generous with other peoples' money than we would have been with our own. The Crime Bill and Education legislation were passed in the last couple days which were 16%-18% increases in appropriations. There's no discipline!"---Wasn't Davey Crockett from Tennessee?) Barbara Boxer-CA (Ms. Boxer used her time to blame Reagan and Bush and said she was going to vote for the amendment out of frustration but "frustration doesn't make good policy")
For the Barton (tougher version) amendment:
Chuck Douglas-NH, Tim Valentine-NC, Jimmy Quillen-TN, James Inhofe-OK, Charlie Stenholm-TX, Larry Craig-ID, Chris Cox-CA, Marilyn Lloyd-TN, John Porter-IL, Austin Murphy-PA (very reluctantly), Lynn Martin-IL, Glenn Poshard-IL, Bill Sarpolius-TX, Bill Dannemeyer-CA, Earl Hutto-FL, Carlos Moorhead-CA, Richard Ray-GA, D.French. Slaughter-VA, James Hayes-LA, Steven Schiff-NM, Jim Kolbe-AZ, Wally Herger-CA, Denny Smith-OR, John Tanner-TN, Gerald Kleczke-WI, Tim Penny-MN, Butler Derrick-SC, Steven Gunderson-WI, David Dreier-CA, Richard Stallings-ID, Tom Lewis-FL, Bill McCollum-FL, Lewis Payne-VA, Mel Hancock-MO, Elizabeth Patterson-SC, Jim Chapman-TX, Newt Gingrich-GA, Doug Bereuttr-NE, John Miller-WA, Helen Bentley-MD, Barbara Vucanovich-NV, Bob Smith-OR, Bill Grant-FL, Cass Ballenger-NC, Tom Bliley-VA, Dana Rohrbacher-CA, Jack Fields-TX, Dennis Hastert-IL and a few whose names I failed to record.
The following persons spoke against the amendment and many more voted against it: Tom Downey-NY ("I think its a dumb idea. . .A balanced budget is not a goal") James Trafficant-OH, David Obey-WI, Joe Moakley-MA, Richard Durbin-IL, Don Edwards-CA, Romano Mazzoli-KY, Pat Schroeder-CO, Dante Fascell-FL, Barbara Kennelly-CT, Barney Frank-MA, Ted Weiss-NY(Can't estimate properly--the bill is a sham--what if there are natural disasters?) Robert Wise, Jr-WV (Amendment feels good-WV has a balanced budget amendment and a line-item veto clause but it also has a deficit as do 27 of the 49 states requiring balanced budgets in their constitutions!) Jim Slattery-KS, William Hughes-NJ (We don't need a constitutional amendment to give us backbone--the electorate can provide the backbone needed -he didn't want to tamper with the sacred Constitution nor give decisions re; budget matters to the Supreme Court--he claimed such an amendment would make the deficit subject to a point of order) Bill Alexander-AR (He didn't like the social security trust funds included as "income") Sander Levin-MN (He said we should mend our ways and not our Constitution--to pass the blame for our debt onto a flaw in our Constitution is out and out wrong!) Rose Oakar-OH (She wanted to cut the Pentagon's budget. Claimed defense spending has increased 200% in the last decade. Was distressed about the use of the social security trust funds which have long been slated to be taken out of the accounting in 1993. She ended by saying "If you're for seniors and disabled people vote against this amendment.") Joelene Unsoeld-WA (She praised LBJ for giving us our last surplus budget--she was also against giving control of our economy to judges. Yeah, right, better to leave it out-of-control!) David Skaggs-CO (He saw problems with estimating receipts and using social security trust funds.) Dennis Hertel-MI ("The tool we need is a president that leads"--He blamed the mess on Reagan.) Richard Gephardt-MO, Charles Schumer-NY (He suggested instead of the amendment we should simply ask the president to come before the American people and tell them "We have a crisis!") Jack Brooks-TX (He led the opposition, claiming such an amendment is not "workable".), Charles Hayes-IL (He carried on about the need to increase revenue and cut defense.) Bruce Vento-MN (He wants to keep power with a simple majority.) Richard Lehman-Ca (He agreed the amendment gives to much power to minorities and that we have to make Panetta's "tough decisions"!)
Leon Panetta, chairman of the House budget committee spoke with gusto against the balanced budget amendment!
Q-Hold it! Hold it! Your own congressman? Some fighter you are!
A- Unfortunately Mr. Panetta claimed the amendment was a last hurrah, a simple solution requiring no sacrifices. He explained that presidents never submit balanced budgets and that the amendment was a refuge, a hiding place an escape from "tough choices".
He said no gimmick can overcome the people's distrust of elected officials. He also predicted the FY1991 deficit would be $232 billion or without counting social security trust funds, $300 billion. Even with a constitutional amendment, he said, we will still have to make tough choices. Congress can not find political guts in any process change--"Harsh realities of the 90s are here!"
Q- Do you ever hear politicians come up with things that you know are not true?
A-Do you mean have I ever caught them lying? If a person speaks with authority, but errors, that is not all that different from speaking a falsehood when the true state of affairs is known. The only honest thing is to say you don't know when you don't. I've caught members of congress doing both.
Q-You mean knowingly stating an untruth and arrogantly pretending to the truth when they have failed to do their homework?
A-During a C-SPAN interview with Congressman Bill Richardson of New Mexico on October 9, 1990 a caller from Arizona claimed that the budget for FY1991 was larger than for FY1990 and therefore should not be referred to as a "cut". Mr. Richards replied, "Trust me, Sir. There are no increases anywhere in this package for any agency."
Q- No kidding!
A- He also said "Talk show hosts come out with facts that take us weeks to unravel."
Q- At least he admitted they come out with facts, not fiction.
A- "It's a political tactic", he said," when people claim they haven't had a chance to review what they are voting on."
Q- Boy, I believe that one! Not that it's a political tactic, but that elected officials don't read legislation before they vote on it.
A- I've heard many of them admit as much and accuse their colleagues of the same thing.
I hate to be critical, you hate to be critical, we all hate to be critical, but this country is in the trouble it's in precisely because nobody likes to be critical. We too easily settle for a congress, that in many instances, is simply not up to the job.
If we, as ordinary citizens, choose to be "nice" rather than appear harsh and critical and demand intelligence and integrity, we must be prepared to suffer the consequences. However we should remember we are choosing, not only for ourselves, but for our children who will suffer after us.
Having said that I'm going to have the courage to say that in my opinion, Mr. Richardson does not come across as a very bright or accurate congressman--he definitely said, and I rewound the tape to make certain, "First of all there are 240 million federal employees."
Q- Come on! That sounds like a slip of the tongue. We may not be public about it, but you and I do it all the time.
A-Could be. But former Senator William Proxmire of Wisconsin, as respected a gentleman as you are likely to encounter, makes claims for the social security system that I know without a doubt are completely untrue. In his case I believe he is "assuming" facts from his own bias and just hasn't bothered to check his information.
Q-Many organizations, both knowingly and unknowingly, put out false information. For instance Sane, a citizens' disarmament organization.
A- You're right. I was given a Sane leaflet outside my local post office which claimed "While the military budget has increased 215 percent since 1980, health care has declined". But checking into the claims I found the proportion of GNP devoted to defense fell steadily from over 13 percent in the early 1950s to under 5 percent in the late 1970s. The ratio began to rise in 1979, but has averaged less than 6 percent in the 1980s. The defense ratio was smaller during the Reagan administration than during any other time since World War II except for the Carter period.
Q-You might be interested in another flyer the organization handed out to the general public and which I saw in February, 1989. Sane came up with figures showing the dispersal of every dollar, figures which differed substantially from those cited by then-Senator Rudy Boschwitz. Boschwitz
Shane
A- I have a cartoon on my wall showing the "chief statistician" sitting at her computer surrounded by volumes of books and charts and reading a document. The caption reads, "37% of all statistics are wrong." That sums up my feeling as far as statistics go. I use them, because that's the name of the game, but I'm swayed by ideology, never numbers.
In the fall of 1990 Dan Rostenkowski told his colleagues that "We're going to regret cutting so little this year." He was looking at the $130 billion deficit going into FY1991 and realizing that $66 billion would have to be cut in the FY1991 budget in order to reach the revised Gramm-Rudman deficit target for that year.
Q- The original Gramm-Rudman targets called for zero deficits by the end of FY1991. Isn't that right?
A- Right but those targets were revised and the zero target was extended to FY1993.
Q- Fat chance!
A- The FY1991 target that had Mr. Rostenkowski worried was $64 billion. He could see that any meaningful deficit reduction would require some real belt tightening and he rattled off a list of needs (wants) that would have to be scrapped or at least postponed. This was on the eve of the last minute budget compromise.
But John Porter of Illinois was a bit more philosophical "It's (referring to the continuing resolution--C.R.) our fault---we have insufficient commitment to the process. ..We do our job five weeks late." He would not support another C.R. even if it were short term and clean, because no matter how it starts out it always ends up an omnibus bill full of everything but the kitchen sink.
Q- "Clean"? I guess that means without all kinds of non-germane amendments.
A- That's the meaning of "clean" in this context, but nobody ever said anything about "honest".
A- The 1990 budget compromise which changed the process for fixing the FY1991 budgets and beyond, also raised taxes by a minimum of $170 billion and allowed spending to increase by at least $245 billion. Entitlement spending was projected to grow by over $200 billion over the next five years. Savings are as phony as a---------.
Q- Didn't that budget compromise call for cuts as well as spending increases?
A- The trouble is we got real spending and phony cuts!
Q- Why am I not surprised?
A- Budget Director Darman counted the transfer of $5.6 billion of revenue from the Postal Service to the general budget as an entitlement cut. Increasing taxes on banks was also counted as an entitlement cut, as was the provision shifting the time when certain retirement benefits are paid to federal employees. Delaying some student-loan payments was considered an entitlement cut, while agricultural savings were made contingent on the increasingly unlikely completion of international trade negotiations.
Q- Hold it. I just want to make certain I'm understanding what entitlement mean.
A- There's discretionary spending which requires annual approval and non-discretionary spending which does not require annual approval. People or departments are entitled to the non-discretionary benefits if they fall within the guidelines written into the legislation. Mr. Darman considered the failure to change the 75 percent premium-subsidy in the Part B portion of medicare to be an entitlement cut. (See previous file)
Q- You mean there was no change in the premium and yet it was called a cut? You said earlier that Ronald Reagan backed down from his own proposal to lower that 75 percent subsidy by a measly ten percent, making it a 65 percent subsidy.
How, almost ten years later, when an attempt to lower the subsidy by a whopping 50 percent for beneficiaries with incomes above $125,000---asking them to pay 75 percent of the real cost instead of only 25 percent---going from $31.80 a month to $63.60 a month---how, when that attempt failed, can Richard Darman possibly get away with calling no change an entitlement cut?
A-Mr. Darman is a professional numbers cruncher---his job is to make things tidy---to make them fit and come out on paper "as promised". The elected officials should be the real object of your wrath.
Provisions changing direct-loan programs into guaranteed-loan programs are counted as entitlement savings, demonstrating that politicians have failed to learn, even with the on-going savings and loan fiasco, that off-budget spending still costs real money.
This latest budget-process reform, by effectively trashing Gramm-Rudman, actually makes it easier for Congress to spend other people's money.
Q- Where is Davey Crockett when we need him?
A- What compromise was there between the Republican administration and the House Democrats in the fall of 1990? There was no reduction of the capital-gains tax, no call for limiting taxes, no call for a balanced budget amendment, and no call for a line-item-veto.
Instead there were deficit targets and caps on domestic, defense, and foreign-aid spending, all automatically adjusted upward whenever economic and technical assumptions are found to have been too optimistic.
This is a giant loophole and so is the provision that caps can be adjusted upward in an emergency. It would have been far better to adopt the threatened sequester which would have been automatic. All the President had to do was fail to accept the budget compromise advanced by Congress.
Q- George Bush did say no once, but Congress gave itself enough time to come up with another compromise budget. You mean he could have said no to the second budget proposal and forced sequester?
A-Absolutely. Once a sequester was in effect then Bush could have forced some real spending reductions.
The FY 1991 budget called for only a 2.6 percent increase, less than the rate of inflation, which in congressionaleese works out to a cut. It called for an extremely modest $47 billion cut in entitlements to be spread out over five years.
The budget proposal also called for a cut or elimination of the deficiency payments to those getting over $125,000 in non-farm income. It would increase Pell grants for education for the poor but increase loans for middle income people--neither a cut nor an increase but merely a change in the mix of loans and grants.
It would re-target the school lunch subsidies and cut the size of the subsidy for the more wealthy. In the health area the budget proposed to take more from certain doctors and accelerate malpractice reform. $11.1 billion was allocated to the war on drugs. Project HOPE was to receive $2.1 billion and HOME $1 billion--both projects under the auspices of HUD.
Q-It sounds like they never terminate programs, only add new ones.
A-For eight years Ronald Reagan tried to kill a number of programs, pointing out that no government program should become immortal. To cut a program in order to trim the deficit just didn't sell. George Bush has added a twist---trim an existing program in order to shift funds to another. The spending caps written into the October 1991 compromise makes this the only way to fund new programs.
Q- Wasn't the increased government spending during the Reagan Administration due to the huge buildup in defense?
A-Domestic spending rose under Ronald Reagan from $313 billion to $533 billion. If you eliminate debt and defense expenses, total domestic spending for all levels of government, local, state and federal, equaled twenty-five percent of GNP or over $1.3 trillion in 1989.
Q-According to the National Taxpayers Union, three bills were introduced in the Senate during 1991 advocating spending cuts and three hundred and fifty bills were introduced requiring that more money be spent.
A- In the summer of 1991 former U.S. Senator, William Proxmire told the International Platform Association audience that he put the comparison at a thousand to one for the people appearing before his committee seeking more money and those asking that spending be cut.
Q- Do you get the feeling that average citizens are not serious about reducing the deficit?
A- You're right, but that's why education and leadership are needed. What we need today is a public servant like Charles Dawes, first director of the Budget Bureau, who in 1921 ordered every bureau chief in government to save a minimum of 25 percent of his annual budget allocation even if it meant dismissing employees.
For too long now our representatives have relied on taxpayers to absorb the cost of providing for one need after another.Politicians seldom ask for restraint. They never seem to consider the possibility that a majority of citizens, if asked, might, like Mr. Dawes, just care enough about the deficit to take some initiative and begin to prioritize. Responsible people do it all the time when it comes to their own money.
Q- People seem to forget that the only way government can be "provider" is with their own money. I think you must admit, however, that recent budgets have shown spending restraint.
A- Oh, dream on! That's what those who want to raise your taxes are hoping you'll believe. The budget compromise for FY1991 allowed for an 11 percent hike in discretionary spending---twice the rate of inflation.
Q- I wrote a paper about the budget when Ronald Reagan first became president. I remember in 1981 non-defense discretionary spending was 25 percent of the budget and entitlements accounted for 32 percent.
A- Great! That means over ten years, defense has come down a smidgen to 23 percent of the budget and entitlements at 48 percent now occupy almost half the budget. In the FY1991 budget, non-defense discretionary spending accounted for 16 percent, and the other 13 percent was earmarked for interest expense. If entitlements are left unchecked they may reach 70 percent of the budget by 1996.
Q- According to the Congressional Budget Office, the 1976 deficit was 4.3 percent of GNP and in 1989 it was only 2.9 of GNP. So I'd say things are looking up.
A- Wrong!! Deficit refers to one single year and what you should be looking at is our over all debt load as a portion of our gross national product. The debt itself is increasing and the interest we pay to carry that debt every year now amounts to almost $300 billion. In the 1980s the Organization for Economic Cooperation and Development (OECD) showed the USA deficit as a share of GNP, below the OECD average. Today among major industrial nations, our share of GNP is smaller only than Italy's as a percentage of the general budget.
Q- How can debt keep building up when services are cut back and we are told about the the inability of congress to spend?
A- You keep forgetting Washington's definition of a cut---a decrease in the increase---that's all. A typical DC cut was illustrated by the so-called medicare cut. Instead of increasing by 11.2 percent the FY 1991 budget settled on a 10 percent increase. Discretionary spending would have grown at a rate of 3.5 percent and thanks to the great budget compromise it will only be allowed to rise 2 percent.
A-The 5 year deficit projection was $802.8 billion higher in January 1991 than what was projected for those same five years back in January 1990, ten months before the budget accord.
Q- How can you know this in the summer of 1991?
A- As I write, these events haven't happened yet but the projections were issued at the beginning of 1990 and 1991. The point is they have changed mightily in a year.
In January of 1990 the administration projected a deficit for FY 1991 (ending September,30 1991 remember) of $3.1 billion, for FY1992 of $25.1 billion, and a surplus at the end of FY 1993 of $5.7 billion, a FY1994 surplus of $10.7 billion, and a Fy1995 surplus of $9.4 billion with a total deficit over the entire five years of $62.4 billion.
After the October 1990 accord, which got rid of the social security surplus, and the implementation of the new budget process, the following projections were issued by the administration in January, 1991 for those same five years: FY1991 (again--ending September 30,1991) the largest deficit projection ever recorded up to that time of $318.1 billion, of $280.9 billion, another record in FY1992, of $201.5 in FY1993 instead of the surplus predicted in January 1990 for this time period, continued deficit of $61.8 billion in FY1994 and a $2.9 billion deficit at the end of FY 1995 leaving a total deficit for those five years of $865.2 billion---over $800 billion more than the five year deficit total first projected.
Q- I don't think anybody pays any attention because an exchange of higher taxes for deficit reduction has never worked.
A- You and all of us ordinary citizens have plenty of reason to be cynical. You're absolutely right---Bush supposedly broke his "no-new-taxes" promise in order to cut the deficit. The idea was to trade $165 billion of taxes for $500 billion deficit reduction over five years. Mid-way into the first year the forecast for the cumulative deficits through FY1995 has doubled to over a trillion dollars.
Q- Promises, promises.
A- I don't know how much more you can take, but I've had it!!
Paul Craig Roberts, claimed in a Wall Street Journal article written July 30,1991 that, "Before the budget agreement was reached, the government knew that its claims for deficit reduction would not be achieved. It withheld revised economic assumptions. . ."
I also knew those claims wouldn't materialize; but not because of pre-digested figures from any budget cruncher's office but because of the nature of the beast---or should I say beasts----our spineless, avoid-the-truth, duck-responsibility members of congress---the ones that unfortunately make up the majority.
I've watched them for seven years now and they are pretty darn predictable. The revised forecast was published in the October 3, 1990 issue of the Wall Street Journal. The "fraud" was praised as realism. Co-mingling the savings and loan bailout with the operational budget inflated assets as they came under the governments control as "S&L takeovers". Of course their sale counted as negative spending on the books and is not something Mr. Darman is anxious to record.
Q- Mr. Darman (Richard Darmen, head of OMB) is a very creative accountant.
A- You're not kidding! Again, according to Dr. Roberts, Mr. Darman was able "to project federal outlays in 1994 $50 billion below the 1992 level, thus giving the appearance of expenditure reduction. Mr. Darman has managed to produce a larger deficit with a tax increase and a defense build-down than Mr. Reagan achieved with a tax cut and defense buildup."
Q- Why can't they cut?
A- They promised to cut. Forget the entitlements for a minute. The October 1990 agreement divided all discretionary (over which they had some choices) spending into three areas; defense, foreign aid and domestic spending.
The pay-as-you-go idea was if you wanted to increase children's benefits, for example, you would have to take from workers training or something else within the domestic budget----you were not allowed to cut aid to Egypt because that would be interfering with the foreign aid budget, nor could you kill a weapon system because the defense budget was to be kept separate.
This was to be for the first three years of the five year plan---beginning in FY1994 congress could transfer goodies from one "cookie jar" to another.
Q-How was that radically altered projection justified?
A- Spending is only supposed to increase by 2.6 percent in 1992. The FY1992 budget complies with spending limits contained in the Oct 1990 budget accord of $290.8 billion on military spending authority, $21.8 billion on foreign aid and $200 billion on domestic spending programs that are authorized annually.
The remainder of the budget goes to interest payments and spending on programs that are distributed by formula, such as social security and farm subsidies. Facts show there has been an 12 percent spending increase in the FY1991 over the FY1990 budgets and another 7.4 percent increase FY1992 over FY1991.
George Bush will have spent in his first term, $667 billion above the Reagan growth rate (if all goes well!). The $189 billion deficit run up in Reagan's last year was considered a catastrophe at the time. Like seeing violence night after night on the television screen, the public has become numb.
The projection cannot, in my opinion, be justified as you asked, but it can be explained to some extent.
Q- Then please explain it.
A- In a word---loopholes.
Q- Ok---I get it. Off-budget stuff like the Gulf War, Savings and Loan crisis---
A- And anything else your member of congress can get declared as an "emergency"!
Q- Forget this member of congress stuff----the Bush administration is setting a poor example. First of all it looks like the allies are coming through with the cost of the war so there's no emergency there. But the administration went ahead and declared extra aid to Israel an "emergency" under its request for Desert Storm funds.
A-Everyone on capitol hill is playing what journalists have been referring to as "spend it but don't count it".
Q-They've been playing that game for years, but something tells me they've come up with some new twists. Am I right?
A- This time they use "reserve trust funds" because spending out of "reserves" only requires a simple majority vote in the Senate. Any spending not declared in the 1992 budget is supposed to be subject to a point of order. (see page ) An objection raised in that manner can only be overcome by sixty votes.
Q- It doesn't seem fair, but you can see the attraction of the "reserves".
A- You want to talk about fair and unfair?
The 102nd Congress opened with a shameful debate on the House floor in which Republican Representative Nancy Johnson of Connecticut emerged as a heroine in my book. She refused to be silenced by House rules until she had had her full say on what she regarded as a shameful disregard for law and justice by the majority party in the House.
The problem was the reneging on the terms of the long negotiated budget compromise wrenchingly reached at the end of 1990. The budget negotiators were very much aware that the OMB (Office of Management and Budget) has a bias for controlling spending whereas the CBO's (Congressional Budget Office) bias is toward expanding spending. It was only because the negotiators finally agreed to use OMB figures that an agreement was reached.
The first act of the 102nd Congress however, was to change the term of that agreement---not with a bill that would surely be vetoed by President Bush, as the budget compromise itself would have been if it were not for the stipulation that OMB figures were to be used, but by using new House rules.
The new rules say any bill that doesn't use numbers from the CBO or the Joint Tax Committee can be ruled out of order on the floor of the House.
This stipulation kills a capital-gains tax cut before it is even formulated. OMB estimates additional revenue from a reduction in the capital gains rate over six years of $12.5 billion in contrast to the $11.4 billion loss predicted by the Joint Tax Committee.
A- I heard Newt Gingrich, a congressman from Georgia and a minority House leader, spouting about unfairness on C-SPAN on October, 10 1990. He claimed that a vote was taken on a 268 page amendment, sight unseen. According to Mr. Gingrich, Democrats had 62 waiver of rules but wouldn't allow Republicans to vote on their no tax budget plan because it did not meet the Bush mandates. The congressman spoke of a poll which showed that 76 percent of the people were opposed to a tax increase and 83 percent favored spending cuts as a way to cut the deficit.