May 3, 1995 CONGRESSIONAL RECORD — SENATE S6025

While none of these proposals ultimately was successful, each created a

cost for the economies which depend on

PMA electric power. Electricity is the

cornerstone of much of the Nation’s

economy, particularly in the Pacific

Northwest. The high reliability and

low cost of electric power provides the

United States, and especially the Pacific Northwest, with a global competitive advantage which benefits the entire Nation.

As each of these proposals were

made, uncertainty over the future cost

of electricity was created. In the Pacific Northwest, where over half the

electric power consumed is marketed

by the Bonneville Power Administration, these proposals cast a cloud of uncertainty over future electric power

prices. Rate increases of the magnitude

contemplated by the proposals would

devastate the economy of the region by

discouraging investment in infrastructure, including modernization of new

plants and equipment, and close factories and businesses which operate on

the margin, many of which were attracted to the availability of low cost

hydroelectric power in the region. The

benefit of these proposals has overstated by every administration because

the potential for lost tax revenue as a

result of business failure or lack of investment was never taken into account.

In conclusion, Mr. President, proposals to sell off these revenue generating

entities that are such fundamental importance to the local and regional

economies they serve are misguided

and will be opposed by this Senator. I

am pleased to join with my colleagues

to reinforce the importance of this

issue.

I yield the floor.

Mr. CONRAD. Mr. President, I would

like to speak for just a moment on this

PMA matter and then direct my attention to another issue. Who controls

time?

The PRESIDING OFFICER. The

Chair would inquire of the Senator

from North Dakota if he is speaking on

the time of his colleague from North

Dakota?

Mr. DORGAN. Mr. President, I ask

unanimous consent the Senator from

North Dakota be allowed to speak for 9

minutes in the time reserved for morning business.

The PRESIDING OFFICER. Without

objection, it is so ordered.

The Senator from North Dakota is

recognized for up to 9 minutes.

THE POWER MARKETING

ADMINISTRATIONS

fMr. CONRAD. Mr. President, I thank

the Chair and thank my colleague. I

would like to speak just briefly on the

PMA matter and then speak on another issue as well.

With respect to the PMA matter, I

salute my colleagues who have come to

the floor to oppose the sale of PMA’s.

Let me say I believe sale of the Power

Marketing Administrations represents

a very bad idea. It is bad for rural

America. It represents bad faith. It is

bad economics and it is bad policy.

This would have a very serious impact on rural America. In my State we

would see an increase in rates of up to

60 percent; 240,000 customers in North

Dakota would be adversely affected.

Those rural customers are already paying rates that are 15 to 40 percent higher than city customers. The reason for

that, of course, is very obvious. There

is much less of a load per mile in rural

areas than in city areas, so the costs

are higher.

Mr. President, this would be a very

serious matter for rural America. It

also represents bad faith. The Government made a deal. The deal was this

power was going to go to help rural

America. That is precisely why the

Federal Government entered into this

enterprise. Preference power, it should

be emphasized, is not a subsidy. These

facilities are being repaid with interest. I believe the sale also represents

bad economics. Selling the PMA’s

would be a one-time shot. It does not

reduce the deficit because their own

budget rules say you cannot sell assets

to reduce the deficit. So, Mr. President,

selling these facilities forgo decades of

steady income.

Finally, I believe the PMA sale represents bad policy. These dams serve

multiple purposes. No private entity

can balance the interests of power production with flood control, navigation,

water supply, and wildlife values.

Mr. President, for those reasons I oppose the sale of the PMA’s.

Mr. CONRAD. Mr. President, today is

WHERE IS THE BUDGET?

fMay 3. I think it is time to start asking the question of our colleagues on

the other side, where is the budget?

Where is the budget? We are supposed

to have completed action on the budget

in the Budget Committee by April 1.

Today is May 3. We still do not see a

budget. I am on the Budget Committee.

I still do not know when we are even

going to start to work on the budget.

Mr. President, I must say I am somewhat surprised because our friends on

the other side of the aisle had a budget

before the election. They told the

American people that they had a budget plan. They said they could cut taxes,

they said they could increase defense

spending, and they said they could balance the budget. But now that they

have assumed power and assumed control and assumed authority, there is no

budget.

Mr. President, it is amazing the difference an election makes. Before the

election there was this plan. They had

the Contract With America. They told

everybody they had this miracle. It

was not going to reveal the details but

a miracle plan that was going to allow

them to cut taxes dramatically, increase defense spending, and balance

the budget. Now that they are in power

their plan is missing in action. Maybe

it is because the plan just does not add

up. This chart shows what we would

need to do to balance the budget over

the next 7 years. We would have to

have a reduction in spending of $1.2

trillion to begin with. Then if we were

going to be true to the promise we have

made to Social Security recipients,

they would have to cover the $636 billion in Social Security surpluses that

are going to be generated during that

7-year period.

So now the hole to fill in is $1.8 trillion—not million, not billion, but trillion dollars. That is real money even in

Washington talk. On top of that, of

course, we are going to have to cover

the massive tax cuts that the House

has passed, $345 billion of tax cuts over

the 7-year period. So that is the hole

that we have to fill in, $2.2 trillion.

Unfortunately, before they ever

started to fill in this hole, they dug the

hole deeper by passing these massive

tax cuts.

Let us see what they have produced

so far by way of proposals to narrow

the gap between the $2.2 trillion we

need, and what they have actual done

so far over in the House in terms of

proposal. They are down here at a measly, anemic, $485 billion.

Mr. President, I would say our

friends on the other side of the aisle

have a credibility gap that is opening

up here. In fact, it is more than a gap.

It is a chasm. They are $1.6 trillion

short. No wonder we do not see a budget out here. No wonder they have blown

the deadline. No wonder they have not

even started in the Budget Committee

and they were supposed to be completed a month ago.

It is amazing. During the balanced

budget amendment debate there was a

rush to amend the Constitution to balance the budget. Boy, that was priority

No. 1. But now when it comes time to

actually do something to balance the

budget, because of course, a balanced

budget amendment will not cut one

dime, will not add one dime of revenue,

will not narrow the deficit by a dollar—now, when it comes time to actually present a budget, to actually do

something about the deficit, the budget

plan is nowhere to be found. This just

does not add up. It does not add up, and

not surprisingly our colleagues on the

other side are more focused on a tax

cut for the wealthiest among us than

presenting a plan to reduce the deficit.

It is very interesting. If you look at

who benefits from the Republican tax

bill, what one finds is if you are a family of four earning over $200,000 a year,

you get an $11,000 tax cut. If you are a

family of four earning $30,000 a year,

you get $124.

So the idea of our friends on the

other side is to target tax relief in this

country by giving 100 times as much to

those earning over $200,000 a year than

those earning $30,000 a year, and they

call this middle-class tax relief. It is an

interesting concept of the middle class.
S6026 CONGRESSIONAL RECORD — SENATE May 3, 1995

It is an interesting concept of focusing

tax relief.

Mr. President, we have seen this plan

before. We have seen it all before—back

in the 1980’s. If we look back at that

time, we see what happens to the middle class. Do they benefit from this

kind of plan to give big tax cuts to the

wealthiest among us and explode the

deficit? No. We can look back and see

what happened in the 1980’s. The top 1

percent saw 62 percent of the wealth

growth go to them. The top 1 percent

got 62 percent of the wealth growth in

that period. The 80 percent at the bottom saw their wealth growth of 1.2 percent. That is trickle-down economics.

What we have learned is that wealth

does not trickle down. It gets sucked

up. The wealthiest 1 percent get all the

benefits.

Mr. President, let me just conclude

by saying our friends on the other side

have got to come up with a budget.

Then we are going to see the gap between rhetoric and reality.

I thank the Chair. I yield the floor.

Several Senators addressed the

Chair.

The PRESIDING OFFICER. The Senator from Montana.

Mr. BAUCUS. Mr. President, what is

the pending business?

The PRESIDING OFFICER. The Senator from Montana has 5 minutes in

morning business.

Mr. BAUCUS. I thank the Chair.

THE POWER MARKETING

ADMINISTRATIONS

fMr. BAUCUS. Mr. President, Webster’s define a tax as a requirement to

pay a percentage of income from property or value for support of the Government. So we can see that a tax can

come in many forms—a direct levy, or

a hidden fee that sneaks up on the taxpayers under a cover name. That is precisely what the Clinton administration

and some here in Congress have in

mind for many Montana and western

ratepayers.

As you may be aware, the administration in their fiscal year 1996 budget

proposes to sell off four Power Marketing Sdministrations: Alaska Power,

Southeastern Power, Southwestern

Power, and the Western Area Power

Administration, otherwise known as

WAPA which brings low-cost electricity to thousands of eastern Montana families, ranchers, farms, and

small businesses. They have found enthusiastic allies in the new House leadership. And together they say they will

privatize these electricity providers.

They predict a windfall, a one-time

profit of $3.7 billion. If anyone promises

you a free $3.7 billion, we all know you

had better think carefully. You had

better look at it real close. There is no

exception.

I submit that privatizing the Power

Marketing Administrations is a bad

idea. It is shortsighted, and it hurts. It

does not help. It hurts rural America.

Privatization cannot work when its result is to simply create four huge monopolies which will gouge their capital

market like any other monopoly.

So at its core, the proposal to sell off

PMA’s is no more than back-door tax

repeal. To sell off the PMA’s is no more

than a back-door tax increase on the

middle class. A tax hidden in the utility bill is every bit as much a tax as a

gas tax, an income tax, or anything

else. This is a tax, a tax increase on

rural America.

The chart, Mr. President, tells it a

little bit; $129 is the monthly bill of a

typical residential customer in this

area in Montana. This is from Marais.

Marais residents will find their bill will

increase 45 percent, which is $190 a

month, as opposed to $129.72 every

month.

What does that mean? That means

that Montana, like much of the West,

which is built on hydroelectric power,

will find their economies declining. By

harnessing the Missouri River, Fort

Peck Reservoir has provided water to

small industries which use the affordable power to create jobs and build

communities, and folks in rural areas

get affordable power to heat and light

their homes, an essential service. It is

something that works and has worked

ever since Franklin Roosevelt came

out to break ground at the Fort Peck

Dam and bring public power to rural

Montana.

Public power meant electricity an ordinary farm family could afford. It

helped create Montana communities

like Glasgow, Sidney, Shelby, and it

keeps towns like these strong and

healthy. As my friend Ethel Parker at

Fort Shaw says,

I have lived on a farm all my life; started

out south of Geyser in central Montana in a

semiarid prairie farm. The REA came to us

in the early 1940’s. Low-cost electricity has

made life livable for those of us who raise

the food and fiber for all Americans. Now

Congress would knock our pins out from

under us.

There are 100,000 Montana families,

one in three of all the men, women, and

children in Montana, that depend on

WAPA and share Mrs. Parker’s feelings, and they stand to see their power

bills increased by 25 cents on the average on the dollar if this proposal goes

forward. You are talking about real

tangible cuts in the living standards

for towns like Fort Shaw and all over

the country, and that is why I am a

staunch supporter of WAPA and equally against the sale of the PMA’s.

The second point is that WAPA and

the other power marketing programs

take not one tax dollar. In fact, the

Federal Government actually makes

money off of these programs. WAPA is

an example. The Federal Government

has invested a total of $5.6 billion in

WAPA, and each year the WAPA pays

the Federal Government approximately $380 million for this loan, with

interest, that is starting to be paid

back. And so far the Federal Treasury

has gotten back $4.1 billion on its initial loan. By the time this debt is retired in 24 years, the Federal Treasury

will have made $14 billion on its initial

investment of $5.6 billion. Even now,

the PMA’s run a profit for the Government. A recently released CRS report

on the PMA’s found that the Federal

Treasury actually earns a profit of $244

million a year.

To repeat, Mr. President, a recently

released CRS report on the PMA’s

found that the Federal Treasury actually earns a profit of $244 million a

year on the PMA’s. It is a profit. It

does not add to the deficit, Mr. President. It decreases the deficit. So you

have to look hard and you have to look

long to find a Federal program that

provides a good service to the public

and makes a profit. WAPA provides a

service and it makes a profit.

I find it incredibly shortsighted that

the administration would want to sell

America’s infrastructure for a quick,

one-time shot at cash—joined, I might

add, by the House leadership. They also

want to sell WAPA. So what’s next—

our highways, our bridges, our national

parks? The principle is the same.

America’s infrastructure up for sale.

That is what they want.

It does not make any sense to me,

and I do not intend to stand by and let

it proceed without a fight. And I serve

notice, Mr. President, I intend to do everything I can to see that this proposal

is defeated. We will shut the door on

this misguided backdoor tax.

Mr. President, I yield the floor.

Mr. WELLSTONE addressed the

Chair.

The PRESIDING OFFICER. The Senator from Minnesota.

Mr. WELLSTONE. I thank the Chair.

SALE OF PMA’S

Mr. WELLSTONE. Mr. President, I

shall be brief. I was one of the first

Senators—and I am glad to be out here

with colleagues on both sides of the

aisle—to oppose the idea of selling the

PMA’s. I have spoken with the President. I have spoken with Alice Rivlin

at OMB. I have spoken to relevant

Budget Committee members and written letters to other Senators.

I basically see it this way. If you sell

the PMA’s, if the Government should

sell the PMA’s above current value, the

only people who would want to buy

them, some of the private investorowned utility companies would want to

buy them in order to raise rates. That

is the only way they can make up the

difference, in which case the ratepayers

suffer. If you sell the PMA’s at below

current value, then this is a loss for

the taxpayers. If you sell the PMA’s at

exactly the current value, insulating

both the taxpayer and the ratepayer,

then the only thing you are doing is

privatizing for the sake of privatizing.

So this proposal makes absolutely no

sense.

Mr. President, I believe in the mission of the PMA’s and the longstanding

contract of the Western Power Administration with Minnesotans, and I

think to sell these PMA’s would be a

serious mistake for greater Minnesota.