May 1, 1995 CONGRESSIONAL RECORD — SENATE S5871

primarily going to be a medical malpractice day.

So we are open and ready for business

for any Member who wishes to discuss

that issue or to offer an amendment relating to that issue.

With that, for the time being, Mr.

President, I suggest the absence of a

quorum.

The PRESIDING OFFICER. The

clerk will call the roll.

The legislative clerk proceeded to

call the roll.

Mr. GREGG. Mr. President, I ask

unanimous consent that the order for

the quorum call be rescinded.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. GREGG. Mr. President, I ask

unanimous consent that I be allowed to

proceed as in morning business for approximately a half hour.

The PRESIDING OFFICER. Without

objection, it is so ordered.

Mr. GREGG. Thank you, Mr. PresiOUR NATION’S BUDGET

fdent.

I want to take this opportunity today

to talk a little bit about what is going

to happen relative to the budget of this

country as we move forward through

the next couple of months when we are

taking up key issues involving the

budget, and to talk a little bit about

Medicare, which is obviously an issue

of considerable concern for our senior

citizens and of equal concern for those

of us who served in the Senate and in

the House of Representatives as we

move through the process of trying to

restructure, first, the budget of the

country to put us into solvency and,

second, to make sure that the Medicare

system remains solvent, and that our

seniors will be able to benefit from

this, the largest insurance program in

the Nation.

As I think everybody knows, this

country faces some fairly significant

crises in the coming years over the

issue of the deficit. In fact, if we continue on our present course, it is projected that by about 2015, or thereabouts, this Nation will essentially end

up in bankruptcy. It will be a bankruptcy which had been generated primarily by the fact that we, as a Government, have failed to address the

spending side of the ledger of the Federal budget. It will also be a bankruptcy which passes on to our children

a Nation where their chances for opportunity, their chances for a lifestyle

which is prosperous, is essentially

eliminated.

Unfortunately, if we do not take action soon, we will end up like Mexico is

today; we will be a Nation unable to

pay its bills. This is not fair or right,

as I have said on a number of occasions

on this floor. In fact, the way I have

characterized it is—and I have talked

about the postwar baby boom generation, the Bill Clinton generation—we

will be the first generation in the history of this great and wonderful country to pass less on to our children than

was given to us by our parents. Such an

action cannot occur and should not

occur. It is not right and it is not fair.

We need to address the issue of the

deficit. In order to do this, it is, I

think, informative to look at some of

the proposals that are on the table and

which have been evaluated by various

agencies which review the deficit.

Each year, the Congressional Budget

Office subjects the President’s budget

to its own independent analysis. It

then publishes the analysis in a little

book, the latest version of which was

released last week. It is this blue book

here. This is a very significant document because, as you will recall, when

the President was elected, during his

first speech to the Congress he stated

he would use CBO as the fair and honest arbiter of the numbers of his budget.

This year, CBO has found some highly significant differences between what

the President said will happen under

his budget and what CBO believes will

actually occur.

If you will recall, in February, when

the President’s budget was shown—

when it was first delivered—it showed

basically a steady state of deficits of

$200 billion each year for as far as the

eye can see; $200 billion a year, basically until the end of the budget cycle

and beyond, with no progress toward a

balanced budget, but at least no deterioration from the present position,

which was pretty bad. It would have

added, for example, a trillion dollars of

new debt to the Federal deficit over the

next 5 years.

CBO, however, says that this is not

true; the President’s budget is not accurate. CBO’s analysis found that the

President’s budget proposal would actually cause the deficit to climb by $100

billion over the next 5 years. From $177

billion in the year 1996 to $276 billion in

the year 2000.

This chart here shows this problem.

This is the President’s budget as he

proposed it. This would be balanced

down here. There would be $200 billion

deficits for as far as the eye could see.

But CBO has taken a look at the President’s budget and found that not only

is he giving us a $200 billion deficit for

as far as the eye could see, it appears

that it is now on an upward trend and

well above $200 billion. In other words,

the President’s budget will actually result in adding $1.2 trillion of new debt

to the national debt over the next 5

years.

That is on top of the $4.8 trillion

which we already owe as a country, and

it is debt which our children will have

to pay. It is debt which is going to finance current expenses which we are

undertaking.

The President’s budget, it seems, was

subject to some unfair criticism back

in February, in fact. Republicans—and

I must include myself among them—

and some Democrats criticized it as a

do-nothing budget. Well, now it appears that it is not a do-nothing budget, it is a make-things-worse budget.

Congress also received some additional information which is fairly significant in the last couple of weeks. It

received a report from the trustees of

the Social Security and Medicare trust

fund. That is this report here. This is

important because the trustees of the

Medicare trust fund are independent

individuals who are given the obligation of managing the Social Security

and the trust fund program and who

are theoretically, outside the political

process, although three of them are political appointees.

For those who do not know that, the

trustees include, for example, the Secretary of the Treasury, the Secretary

of Labor and Human Resources, the

Commissioner of Social Security, the

Administrator of Health Care Financing Administration. In addition, there

are two public trustees. These two are

not administration officials, but private citizens, who were appointed to

their positions.

The alarming nature of this year’s

report results from the trustees’ telling

that the Medicare system is in a fullblown crisis, that it will go bankrupt

in just 7 years if we do not take decisive action to fix it.

Let me show another chart which reflects the seriousness of this situation.

This is the hospital trust fund, Medicare. As we see under the present scenario, it is solvent. Beginning in about

the year 1997, it starts to have a negative cash flow, and by the year 2002,

2003, or 2004 it goes into deficit. In

other words, it becomes bankrupt.

This is the most important trust fund

after Social Security that we deal with

as a nation. The Medicare trustees are

saying that the trust fund will

confront a negative cash flow in just 2

years. This means that the Medicare

program will be spending more than

the Medicare payroll tax brings in.

The Medicare will go insolvent in 7

years, or the year 2002. That is, the

trust fund will not only have a negative cash flow, but that it will also

have spent all the surplus reserves that

it has accumulated. In other words, it

will be bankrupt.

‘‘It is important to remember,’’ the

trustees said, ‘‘that under present law

there is no authority to pay insurance

benefits if the assets of the hospital

trust fund are depleted.’’ That means

at this point, when we cross this line,

there will be no money to pay for

health care for senior citizens. Medicare benefits would simply be cut off,

or seniors would have to fend for themselves for their health care. While Congress would probably do something

about that, right now the state of the

law is that in the year 2002 senior citizens will have no health care insurance.

How big is the Medicare financial

problem? The trustees report says the

following:

Short term, to restore actuarial balance

over the next 25 years, an immediate payroll
S5872 CONGRESSIONAL RECORD — SENATE May 1, 1995

tax of 1.3 percent would have to be imposed

or benefits would have to be reduced in a

comparable fashion. That 1.3 percent translates into $263 billion over 5 years or $387 billion over 8 years.

In the long term, to restore balance over a

75-year period, the payroll tax would have to

be hiked 3.5 percent immediately or a cut in

benefits would have to be made that is comparable. That translates into $565 billion

over 5 years or $1.1 trillion over 7 years.

These are the numbers required to restore actuarial balance. But these figures give an idea of the magnitude of

the problem that Medicare confronts.

Another important element of this

year’s Medicare trustees report is that

the public trustees—the citizen trustees, not the Clinton administration

trustees—took the highly unusual step

of including their own message, a dissent, in the statement. This statement

sounds much more urgent and alarming than the overall report. Remember,

it was given by the independent folks

who serve in this commission. And the

overall report is pretty severe.

The public trustees begin the message by saying there has been an acceleration of the deterioration of the

trust fund. They say that the deterioration results from some unforeseen

events, but also from the absence of

prompt action in response to clear

warnings that changes are necessary.

Here they are basically scolding the

Congress. They are saying, ‘‘We have

been telling you of this problem for

some time but you have ignored it. But

you have a major crisis on your hands

now and you can’t delay any longer.’’

The trustees also go on to say two

things which are rather striking, and I

have had them reproduced here because

they are so significant.

They say: ‘‘The Medicare Program is

clearly unsustainable in its present

form.’’ Unsustainable in its present

form.

They also say, and this is the independent trustees speaking: ‘‘We strongly recommend that the crisis presented

by the financial condition of the Medicare trust funds be urgently addressed

on a comprehensive basis, including a

review of the program’s financing

methods, benefit provisions, and delivery mechanisms.’’

In other words, the Medicare Program is insolvent, is bankrupt, and it

is unsustainable in its present form. It

has to be restructured.

In light of these two reports, the CBO

report and the Medicare trustees report, Congress really confronts what I

would call a political gut check. Are we

going to try to save the Medicare system and balance the budget despite the

political demagoguery that will surely

result? Are we going to do these things

in the face of a President who has basically washed his hands of both problems and taken the Pontius Pilate approach to budgeting, Pontius Pilate approach to Medicare, washed his hands

and said there is no problem and

walked off the stage? Or are we going

to pursue politics as usual and just pretend for another year there is no problem at all?

For my part, I believe we must reject

the politics as usual and move decisively to restore this country’s fiscal

standing. We must do so to save the

Medicare trust fund and to assure our

seniors that they have a health insurance plan that is solvent, and we must

do so to balance the budget, whether or

not we get the President’s help.

Why? Because it is the right thing to

do. It is the necessary thing to do.

Quite simply, it is our job to do it.

First, we must save the Medicare

trust fund from bankruptcy. To do this

we must pursue two tracks. We must

make some changes to head off the

bankruptcy in the year 2002 and restore

the short-term solvency, and we must

also undertake some structural improvements so that the Medicare trust

fund remains sustainable into the next

century.

This involves some immediate adjustments, and it involves opening up

the system to market-based incentives.

We must follow the lead of the private

sector and allow senior citizens to

choose from a wide variety of health

care plans, including traditional Medicare.

If we allow seniors to have a wide variety of choices similar to those that

we have as Members of Congress or as

Federal employees, then the Medicare

inflation will come under control and

we will be able for bring this system

into solvency.

This can be done by giving our seniors choice. We can do it not by cutting

Medicare. We do not have to cut spending on Medicare. All we need to do is

reduce its rate of growth.

Last year, the Medicare trust fund

and the Medicaid fund, which is a separate fund and is a welfare fund, both

grew at 10.5 percent, three times the

rate of inflation in the economy. It

happens to be 10 times the rate of inflation in the private sector health care

arena, which actually dropped last year

as a rate of growth. They had a minus

1.9 percent inflation rate.

Obviously, we cannot sustain doubledigit inflation rates in the Medicare

accounts. But we could sustain a

growth rate which was as high as 7-percent, or twice the rate of inflation, and

seven times the rate of inflation in the

private sector health care accounts.

We can obtain that goal of reaching a

7 percent rate of growth in Medicare by

giving seniors more choice and creating a market-place incentive for them

to move into health care provider proposals which are more cost efficient. I

have laid out a fairly significant program to do that, and have talked about

it before on the floor.

Along with moving to resolve the

bankruptcy of the Medicare system, we

also must act decisively to resolve the

problem with the deficit and the Federal budget. We must not only save

Medicare but we must reform the rest

of Government as well, because we

must be able to pass on to our children

a country which is solvent. This can be

done by improving the way the Government delivers its services. Welfare, including Medicaid, has some of the fastest growing programs of the Federal

Government but they are also some of

the areas where the Federal Government has had its biggest experiences of

failure. In fact, if there is one item you

can point to in the liberal welfare state

as having been a failure over the last 40

years, it is welfare itself. It has created

generations of dependency and despondency: People who are locked into

a system from which they cannot escape; people who should not be in the

system who are in the system; people

who should be getting assistance who

are not getting assistance.

We must admit that the status quo of

the welfare system, and the Medicaid

system, for that matter, which is part

of it, is indefensible. We must move the

responsibility for these programs and

the power to administer these programs back to the States through

using flexible funds and returning the

dollars and the authority over these

programs to the States.

This loss of power on the Federal

level will upset a lot of people around

here and there will be a lot of shrill

rhetoric. But the basis of that rhetoric

will be the concern for loss of power.

We will hear it couched in terms of

compassion. We will hear this outrageous statement, which is so often

made by some of my colleagues on the

left, that State Governors and State

legislatures and town governance individuals do not have the compassion or

the knowledge to manage these programs; that somehow, the knowledge

to manage these programs is uniquely

retained in a few bureaucrats here in

Washington and their assistants here

on the floor of the Senate and in the

House of Representatives.

But that argument of compassion is,

as we all know, a smokescreen for the

real argument or the real concern,

which is one of power. Controlling the

dollars and controlling the programs

means controlling people and having

power. There are many Members

around this arena who do not wish to

give up the power of the purse or the

power of the programs. But if we are to

get better programs—better managed,

more efficiently managed, delivering

better services—the way to do that is

to return the responsibility to the

States and to the communities along

with the dollars that support those programs.

So in the welfare and Medicaid accounts, we can do both. In fact, the

Governors have come forward and suggested to us that they will take over

these programs and they will take

them over at a fixed price. They will

deliver these programs and deliver

them even better than we do because

they know how to deliver them and

they have the flexibility to deliver

them if we will simply give them the

authority to do that. And, in doing
May 1, 1995 CONGRESSIONAL RECORD — SENATE S5873

that, we can save a lot of money and

produce a better program.

We also need to address other entitlements. For example, the Federal retirement program is one of the largest

categories of entitlements. It cannot

escape reform as we undertake a fair

and balanced approach to entitlement

reform. The American taxpayers bear

the full cost of Federal retirees’ annual

COLA adjustments, a feature that virtually no private pension plan shares

and that was not part of the Government’s original retirement contract

with Federal workers, and we must do

something to control that growth.

There are innumerable—literally

hundreds—of smaller entitlement programs, including some popular ones in

the area of agriculture, unemployment

compensation, and a variety of others.

But all of these should be put under the

microscope of review and we should ask

the questions: Do they work? Should

they continue to exist? Can they be improved? If we ask those questions, we

will find in all instances the answer is

they can be improved, and they can be

delivered more efficiently and for less

cost.

While balancing the budget will

mean examining the operation of some

sacred political cows, it can be done.

While in some cases we will decide that

the Federal Government just cannot

afford to continue funding some activities, in most cases entitlement reform

will simply result in better Government being delivered, probably, to

more people.

Unfortunately, however, it appears

that the Congress will have to go it

alone. The President is offering absolutely no help. In fact, as the CBO report and the President’s recent appearances tell us, his actions seem to be

just making things worse. Just when

the national predicament calls out for

strong fiscal leadership, the President

is doing exactly the opposite. He is

telling every interest group he appears

before that they deserve more money.

He just told the Iowa farmers that they

need to spend more money on pigs,

more pork. It really is outrageous.

Still, Congress must forge ahead. We

must act to preserve the Medicare system so our seniors are not faced with a

bankruptcy, which cannot be debated,

and which has been predicted by their

trustees, so that they will have an insurance trust fund that is there for

them and for the next generation. We

must act to preserve our children’s future by moving to balance the budget

by the year 2002.

These will not be an easy 2 months as

we go through the process of accomplishing these goals. We will have to

make serious and difficult decisions.

But I hope this Congress will not take

the course that the President has and

walk away from the matter. We need to

undertake this issue of bringing solvency into the Medicare fund for the

benefit of our seniors. We need to undertake balancing the budget for the

benefit of our children.

Mr. President, I yield the floor.

The PRESIDING OFFICER. The Senator from Minnesota.

Mr. WELLSTONE. Mr. President, I

HEALTH CARE

fknow the Senator from Arizona is here.

He is going to wish to lay down an

amendment and speak about it. I have

an amendment that I laid down on

Thursday that I want also to speak on.

But I thought we might stay in morning business just for a few minutes and

I might respond to my colleague from

New Hampshire and then we will go

back on the bill. I do not come with

any well-rehearsed remarks, but as I

was listening to the presentation of my

friend from New Hampshire, I did want

to respond in a couple of different

ways.

First of all, I was immersed in the

health care debate in the 103d Congress. Of course, at the very end, we

were deadlocked and there was, on the

part of a good number of Senators, I

think, a very strong commitment to

blocking any legislation from being

passed and therefore we were not able

to pass any kind of health care reform.

I point out to my colleague that many

of us made the argument that the only

way we were going to be able to contain costs—and that included looking

at Medicare and Medicaid, which are

two very big Government programs—

was within the context of overall

health care reform.

I take exception to what I heard my

colleague from New Hampshire saying

in a couple of different areas. First of

all, let me just be crystal clear. I think

the proposition that on the one hand—

at least some Senators have proposed

this, and many in the House of Representatives have proposed this—we go

forward with broad-based tax cuts

which amount to about $700 billion

over the next 10 years, of revenue we

would have to make up, and on the

other hand go forward with cuts—some

say just decreasing the rate of increase

of Medicare—I think that proposition

just will not be credible. It will not be

credible with a lot of senior citizens,

but that is not even the point. It will

not be credible with their children and

their grandchildren.

You cannot, on the one hand, say you

are for deficit reduction and then move

forward on broad-based tax reduction

to the point where you have to figure

out how to offset $700 billion before you

even go forward with deficit reduction,

and at the same time be proposing fairly draconian cuts in Medicare.

I have said all along I actually feel

quite credible on this issue because

from the very beginning of this debate

about balancing the budget by 2002 I

have raised the question, ‘‘Why 2002?’’ I

have raised the question of how you

can do it without separating capital

and operating budgets. I have tried to

be intellectually honest about this. I

have talked about dancing at two weddings at the same time.

I have said to citizens in Minnesota,

beware of any breed of politician—

Democrat, Republican, Independent—

and others who say: On the one hand,

you are going to have broad-based tax

cuts, on the one hand you are not going

to cut the military budget, on the one

hand you are going to pay interest on

the debt because we have to, on the one

hand Social Security is going to be put

in parenthesis and not touched, on the

one hand now we are not going to really cut Medicare—but we are going to

balance the budget, cut $1 trillion, by

2002.

But students, it is not going to be

higher education. Veterans, do not

worry. And children, it is not true that

we are going to cut the nutrition programs. The arithmetic of this does not

add up. My colleagues are discovering

that they are in this context—talking

about balancing the budget—are going

to have to propose deep and significant

cuts in Medicare and Medicaid. Please

remember about 75 percent of Medicaid

payments do not go to AFDC mothers,

or what we view as welfare, but actually go toward long-term care for the

aged. It is not just older people we are

talking about. We are talking about

older people; we are talking about their

children and grandchildren; we are

talking about families in this country.

Now we have a new wrinkle where

colleagues come out and say the trust

fund is in trouble, and they talk about

this as an actuarial issue. This is a

benefits program. You can use all of

the insurance language you want to

about trust funds and talk about actuarial assumptions and all the rest. The

fact of the matter is that in 1965 we

passed the Medicare and Medicaid Programs in the U.S. Congress. It was an

inadequate installment of universal

coverage but nevertheless it was significant. From my family having had

two parents with Parkinson’s disease,

let me just say one more time that

Medicare, imperfections and all, was

probably the difference between disaster and being able to at least live the

end of your lives with some dignity.

Both my mother and father have

passed away.

Even so, with Medicare, Mr. President, elderly people pay four times as

much out of pocket as people who are

not elderly. Please remember one more

time, since we have this stereotype of

older Americans being rich and not

having to really worry about any economic squeeze, that the median income

for men 65 years of age and older is

$15,000; for women it is about $8,000.

This is no small issue.

Mr. President, last Congress we

talked about how we could move forward on long-term care in such a way

that we could have more home-based

care. We, I think, reached some consensus, except, when we got to the point

where we will have to dig into our

pockets and figure out how to fund it,

that elderly people and people with disabilities ought to be able to live as