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[Congressional Record Volume 141, Number 86 (Tuesday, May 23, 1995)]
[Senate]
[Pages S7154-S7198]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                      UNANIMOUS-CONSENT AGREEMENT

  Mr. DOMENICI. I ask unanimous consent that the motion to waive with 
respect to the Bradley amendment be set aside after the debate and that 
the vote occur at a time to be determined by the two leaders, which is 
the way we have done the other ones.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. I will yield our 10 minutes to Senator Nickles.
  Mr. EXON. I yield the 10 minutes on our side to be controlled by the 
Senator from New Jersey.
  Mr. BRADLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. BRADLEY. The distinguished Senator from Oklahoma says this is not 
a tax cut that I am trying to save, but, instead, that this is a 
spending program. And he continually refers to AFDC. Then why are you 
telling the Finance Committee to raise an additional $20 billion? In 
effect, the budget resolution tells the Finance Committee to increase 
revenues by $20 billion--that is what this does, by $20 billion. Now, 
the Senator thinks he will do it by increasing taxes on families with 
under $28,000 in income. The Finance Committee might choose to do 
something else. But make no mistake, this results in increased taxes.
  Mr. NICKLES. Will the Senator yield?
  Mr. BRADLEY. Certainly, on your time.
  Mr. NICKLES. I will be brief. I would like to point out to my 
colleague that I think he is totally incorrect. The revenue numbers in 
our budget are the CBO baseline revenues. We did not change revenues. 
We did not direct the Finance Committee to change revenues. They have 
to reduce outlays. We do not raise revenues, we reduce outlays.
  Mr. BRADLEY. The effect of this will be to increase either the offset 
for Social Security taxes or, for 48 percent of the people receiving 
the earned income tax credit, income tax increases. That increases net 
revenues.
  I yield 2 minutes to the distinguished Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, I rise to strongly support the Bradley 
amendment. It is amazing to me that the Budget Committee could review 
the totality of tax expenditures, $480 billion, and yet has selected 
the one area that is for working people, working men and women. Who are 
the people that are going to benefit from the earned income tax credit? 
They are the construction workers, the secretaries, the janitors, the 
hard-working backbone of this country and its economy. They have been 
singled out.
  The Budget Committee could have said we are going to take care of the 
billionaires' tax loophole, that benefits people who reject their 
citizenship in order to take their bounty and go to another country. 
But oh, no; they didn't go after the billionaires.
  You do not get the earned income tax credit unless you work. We are 
trying to reward work and particularly, the work of men and women that 
have children. They are the group of Americans that are falling 
furthest behind over the period of the last 15 years. This is the one 
program that helps and assists them.
  I do not know what it is about the Budget Committee that wants to 
single out working men and women who are making less than $28,000 a 
year to raise their taxes. They are the ones who are going to be 
targeted by this budget resolution--having their sons and daughters 
that go to college paying more in [[Page S7155]] terms of the 
guaranteed loan programs. They are the ones whose kids are not going to 
have the summer jobs. They are the ones who are going to find out that 
the support and assistance for school-aged children that go to the 
public schools have been cut, that they are not going to get the 
Government's help.
  What in the world is it about the Republicans to want to put that 
kind of burden on the working families of this country? That is wrong.
  The Bradley amendment addresses that, and it deserves our support. 
The Budget Committee should have found, out of $480 billion, some other 
way to make up that difference without targeting the working families 
in this country.
  Mr. BRADLEY. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator has 6\1/2\ minutes remaining.
  Mr. BRADLEY. I yield 3 minutes to the distinguished Senator from 
Connecticut.
  Mr. LIEBERMAN. Mr. President, I rise in support of this amendment to 
restore a portion of the cuts to the earned income tax credit 
envisioned by this budget.
  This program is such a great example of the kinds of public policies 
we should be pursuing. We have spent countless hours in this Chamber 
trying to figure out ways to get people to work and get them off the 
welfare rolls. That debate is sure to continue. But in the meantime, 
our Tax Code always contains the incentive for the working poor in this 
country to keep on working. It helps these people stay above the 
poverty line and off the welfare rolls which is just where each and 
every one of us in this Chamber would like them to be. And as if all of 
that were not enough, in a time when Americans demand less Government, 
the EITC accomplishes all of this without a new Government agency, 
without an elaborate bureaucracy, without creating a new payroll for a 
new program.
  I have made it clear that I believe the Senator from New Mexico has 
engaged in a noble and honest effort in presenting the budget we have 
before us today. While I do not agree with all of the priorities 
represented by the budget before us, I very much appreciate the effort 
and admire the bottom line. Which is why I am so puzzled by the EITC 
cuts. In the quest for a leaner, more efficient Government, I believe 
that cutting the EITC is an odd choice. The budget before us proposes 
to reduce the EITC by $13 billion by the year 2000 and by an additional 
$2 billion by the year 2002. These rollbacks in the program will come 
from repealing the final phase of the 1993 expansion of the EITC and 
the repeal of the EITC for workers without children.
  In practical terms, this rollback of the EITC will mean an increased 
tax burden of $21 billion over the next 7 years on more than 12 million 
American households. In my home State of Connecticut alone, this would 
mean an average tax increase of $1,408 over 7 years on 67,660 working 
families. This increased tax burden on the very sector of the 
population that can least afford to sustain it, the working family, 
just does not make sense. It is a policy that takes us further from, 
not closer to, our goal of encouraging work and self-sufficiency.
  The EITC encourages people to work toward a higher standard of 
living. Specifically, it supplements the earnings of eligible lower- 
and moderate-income workers and families with a Federal income tax 
credit that increases their disposable income. Families move off 
welfare dependence to full-time work because EITC makes work pay. Thus, 
parents who work full time are not forced to raise children in poverty.
  And I know that one of the stated purposes of these cuts is to 
eliminate fraud in the EITC program. That is a noble goal but I am 
afraid, that like the news of Mark Twain's death, fraud in this program 
may be greatly exaggerated. The President has proposed denying the EITC 
credit to illegal aliens and I am pleased that the proposal before us 
incorporates that idea. It also makes sense to require a Social 
Security number in order to qualify for the credit. The IRS is making a 
good faith effort to ensure that this
 credit is going to the people who need it the most.

  I also think it is wise to adopt the President's proposal to deny the 
EITC to otherwise eligible tax filers with interest and dividend income 
exceeding $2,500. If your investments are generating that much income, 
it is hard to argue that you really need the EITC. For that reason, I 
am pleased that we moved forward with this proposal as a way to offset 
part of the cost of reinstating the self-employed health insurance 
deduction.
  Historically, the EITC has enjoyed bipartisan support. My colleagues 
on the other side of the aisle have had many positive things to say 
about the EITC. They have described the program as a key means of 
helping low-income workers with dependent children get off and stay off 
welfare and a great way to help low-income families with the cost of 
raising their children. It sends assistance to those in need; to those 
who work hard and yet struggle to make a living and provide for their 
children.
  Jack Kemp, George Bush, and Ronald Reagan have all been strong 
advocates of the EITC. President Reagan described the EITC as ``The 
best anti-poverty, the best pro-family, the best job creation measure 
to come out of the Congress.''
  The Republicans other budget proposals regarding the EITC are 
identical to those in the President's fiscal year 1996 budget. They 
include a proposal to roll back the EITC by denying the credit to 
illegal aliens, and the denial of the EITC to otherwise eligible tax 
filers whose interest and dividend income exceeds $2,500. I strongly 
support these two proposals.
  First, I agree that with the President that compliance measures must 
be strengthened. A prerequisite to EITC eligibility should be the 
possession of a valid Social Security number. This would create a 
simple and efficient screening process which would allow the IRS to 
deny the credit in the absence of a valid Social Security number.
  The Republicans second proposal to deny the EITC to eligible tax 
filers is another Clinton administration proposal. I agree with the 
President's position that taxpayers with $2,500 of taxable interest and 
dividends do not need the EITC. Indeed, this proposal has already been 
included in H.R. 831 to offset a portion of the cost of reinstating the 
income tax deduction for health insurance premiums paid by the self 
employed.
  In closing I'd like to take a few moments to stress the emphasis that 
the EITC places on work. The EITC is a work incentive and by law it is 
only available to working families. If you are not working, you are not 
eligible for the EITC. It is just that simple. Additionally, for those 
in the lowest income levels, the EITC increases with each dollar of 
earnings. Therefore, if an individual in the eligible income bracket 
works longer hours, he will receive a larger EITC. This is tax 
fairness.
  I urge my colleagues to vote against any rollbacks in the EITC by 
supporting this amendment.
  Mr. President, the debate on this amendment is about priorities since 
this amendment does not affect the bottom line of this budget 
resolution. The amendment leaves intact the substantial, I would say, 
historic, feat of balancing the budget by the year 2002.
  This amendment says we do not want the earned income tax credit funds 
cut. The reason is that this is a program that rewards work. It is a 
low-bureaucracy, low-overhead program. It has worked by rewarding work 
and it is a program that has traditionally enjoyed bipartisan support. 
The Democratic Leadership Council, which I am pleased to chair, has 
long supported this program as has former Presidents Reagan and Bush as 
well as Jack Kemp.
  The budget before us has an impact on the program. It would reduce 
tax relief for 12 million American families by $21 billion. In my home 
State of Connecticut, this would mean a reduction in tax relief over 
the next 7 years of $1,400 for more than 67,000 working families. As a 
matter of priority, I do not want the bulk of these reductions.
  Mr. President, the cost of this program has grown. But that is not 
because it is out of control. The cost of this program has grown 
because we in Congress have directed that it grow because we believe in 
this program.
  My friend from Oklahoma says that the EITC is costing more annually 
than the AFDC. I say that is good [[Page S7156]] news. That means we 
are finally spending more to reward work than to reward those who do 
not work. I hope the gap between these two programs continues to grow 
as time goes by.
  Mr. President, it is important to note here, finally, that the 
increase in the program in recent years is not by fraud and deviousness 
in the program, it is by congressional design and congressional intent. 
When the changes we made to the program in 1993 are fully phased in at 
the end of fiscal year 1996, this program, the EITC, will actually grow 
by a very modest rate of 4.5 percent a year.
  So as a matter of priority, as a matter of sustaining a bipartisan 
consensus on supporting those who are poor and work and need our help 
and encouragement so they not go onto welfare, I support this 
amendment.
  Finally, I would like to quote former President Reagan who described 
the EITC as ``the best antipoverty, the best profamily, the best job 
creation measure to come out of the Congress.'' That is absolutely 
right. That is why I support the amendment.
  I yield the floor.
  Mr. BRADLEY. How much time remains?
  The PRESIDING OFFICER. Three minutes remain.
  Mr. BRADLEY. I yield myself 2 minutes.
  Mr. President, the earned income credit is called the earned income 
credit for a very specific reason. You do not get it unless you earn 
money. You do not get it as a gift. You get it because you work. You 
get it because you work and have earned money. You do not earn much 
money, but you do earn some money. And you also frequently are eligible 
for various benefits. As you earn more money, you lose those benefits. 
As you earn more money, you pay more Social Security.
  What the earned income tax credit is supposed to do is to give that 
working family that earns money some break for the Social Security and 
other taxes they pay and for the benefits that they lose as they earn 
more money. It is a very simple concept in terms of the Social Security 
tax. It could have the same impact as a tax credit against Social 
Security. But we do not have a credit against Social Security taxes. 
The earned income credit is essentially giving people who pay 
significant Social Security taxes some of that back. So it is clearly a 
reduction of an overall Federal tax burden,
 both income tax and Social Security tax. While people who are at 
$16,000 or $17,000 a year do not pay in a lot of income tax, they pay 
in over $2,000 in Social Security taxes. With the earned-income tax 
credit, because they work, they get a break for those Social Security 
taxes.

  They get a refund from the Government so they pay less Social 
Security tax, in reality.
  Mr. NICKLES. Mr. President, I want to try and clarify some of the 
statements that have been made.
  In the first place, I will repeat what I told Senator Bradley. This 
budget resolution does not direct the Finance Committee not to raise 
taxes. We do not have a tax increase in this budget.
  I know many of my colleagues on the other side want to have a tax 
increase. We do not have a tax increase. This says reduce the outlays.
  My colleague from Connecticut said we are saving $21 billion. We 
reduced the rate of growth in this program. That is our direction or 
suggestion to the Finance Committee to reduce the growth by $21 billion 
over 7 years. If we froze the program, we would have $50 billion in 
savings.
  Frankly, I think we probably should freeze it because it is so 
rampant with abuse. It is so fraudulent. There are so many people 
taking advantage of this program. The more people find out about it the 
more they like it, especially if they find out that their neighbor or 
somebody else is taking advantage of it, and received a nice cash lump 
sum of $2,000 or $3,000.
  Unfortunately, the amount of dollars are so significant more people 
will be filing fraudulent returns. That is what the IRS has told 
Congress. The IRS has made some interesting statements. They said 13 
percent of returns they judge to have intentional errors. In other 
words, fraud. They said 29 percent, in a 1994 study, 29 percent 
received too much earned-income credit. Regarding illegal aliens, the 
IRS suspects that more than 160,000 receive earned-income credits in 
1994.
  I am afraid we spent a lot of money for GAO to do some homework for 
Congress, and then we do not pay any attention to their work. Maybe we 
should not in some cases. In this case, they have clearly shown this is 
a fraudulent program that needs to be reformed.
  Some of our colleagues are saying, no, no, keep the status quo, keep 
going as usual. So what if 30-some percent have abused the program. So 
what if it went from a few billion dollars a year to a $30 billion 
program. Allow it to continue.
  Mr. President, I do not think we can afford to. We can achieve every 
bit of the savings, and allow the program to go by eliminating the 
fraud in this program. If we do not, we ought to be ashamed of 
ourselves.
  GAO says look at a wealth test. We enacted an EITC wealth test 
earlier this year, but its thresholds are too high. A person can have a 
lot of assets and receive a lot of income from those assets and they 
can still qualify for the earned-income credit. For hours of work, 
there is no minimum. People can work 100 hours and qualify for $3,000 
benefit in this program. People do not have to work 2,000 hours. The 
average recipient last year worked, I think, 1,300 hours. Some people 
could work 100 hours and still receive it.
  This program is set up for abuse. The GAO has done a pretty 
significant study. This is recent study, in March 1995. I encourage my 
colleagues to look at it. It is available. We paid for it. We should 
look at that information.
  I know my colleagues on the other side supported this massive 
increase in 1993, and they are very proud of it. They have gone back 
and quoted Ronald Reagan who stated it was a good thing. However, the 
total cost of this program in 1980 was $2 billion; in 1986 it was still 
$2 billion.
  This program did not grow very fast, initially. By 1988 it grew to 
$5.9 billion. Then its cost really exploded. I heard a couple of my 
colleagues say it is primarily for families, but in 1993 their tax bill 
opened the program up to people who do not have children.
  Originally, as conceived by Senator Russell Long and others, the EITC 
was for families. Senator Long has written an op-ed piece saying he 
supported the earned-income program, but he said Congress went too far 
in 1993 when they expanded this program to apply to people without 
children. Originally, people had to have one or two kids to qualify for 
the program. Now you do not. Again, we make a lot more people eligible 
and we increase the amount of money they are eligible for.
  In 1990, the maximum amount anybody could receive out of this program 
was $953. In 1995, the maximum that someone can receive with two kids 
is $3,110. In the year 2000, that maximum amount under current law will 
be $4,068. We have millions of people that are eligible. So we are 
saying, no, we do not think we can afford that. So we allow the maximum 
to increase every year but at much smaller levels. So we say by the 
year 2000 the maximum amount that someone could receive with two or 
more children would be $3,560, over $450 more than what they are 
receiving today, but not going all the way to $4,068.
  Granted, the EITC is not growing as fast under our proposal. It 
should not because the program is so rampant with fraud and abuse. It 
is growing too fast. We need to curtail it. We need to have some 
containment on entitlement programs or we will never, ever, get to a 
balanced budget.
  Then, Mr. President, I want to mention one other thing. That is the 
way our colleagues on the other side of the aisle want to pay for this. 
They will take it from the so-called reserve fund that we are setting 
aside, if we balance the budget, to give back to the American taxpayer.
  This is about the third or the fourth amendment, and I am sure we 
will receive more, where our colleagues on the other side of the aisle 
are saying how they want to spend the so-called economic dividend. They 
want to spend it before we get there. That is, in a nutshell, the 
reason why the Democrats have never had balanced budgets. They want to 
spend it before we get it. They want to spend more than we take in. 
They are more popular spending money than taking it away.
  When we call this program an earned-income tax credit, it makes 
people [[Page S7157]] think we are reducing taxes. We are not. This 
program is a negative income tax. We ought it call it what it is. It is 
a negative income tax.
  George McGovern campaigned on a negative income tax in 1972, and now 
we have it in law. Perhaps it has maybe a better title, but for 80 
percent of the people, it is a lump sum negative income tax. It is a 
cash payment. It is a cash payment that is growing a lot faster than 
AFDC.
  We should be discussing this when we get into welfare reform. I am 
all for trying to create incentives to get people to work, but this is 
a lump sum payment that discourages work. There are a lot of people 
that might work just enough to maximize this payment, by either 
reporting income, or not reporting income.
  We had some people on this case that might report income they did not 
receive so they could get into this level, and others might not report 
income that they received, cash or otherwise, so they could stay at 
this level.
  I do not even want to get into the confusing stuff about the marginal 
tax rates this program creates, but we find people in the phase-out 
side of this program that will end up paying 80 percent or 90 percent 
of their additional, marginal income in taxes. Think about that. I do 
not want to get too confusing with facts, but they can have the highest 
marginal tax rate of anybody in America. And that is not fair, either.
  That is a real disincentive to earn more income. I do not think we 
should have that.
  The direction of the Finance Committee and the direction of this 
budget is to limit the growth of this program. It is growing too fast. 
It is out of control.
  GAO says--not just Don Nickles and Bill Roth who had a hearing on 
this in the Governmental Affairs Committee--that the cost of this 
program is exploding. I compliment Senator Roth for his efforts. We 
need to respond. The Finance Committee and Ways and Means Committee 
needs to respond. We need to get this program under control.
  The PRESIDING OFFICER. The Senator from Oklahoma has 1 minute 
remaining, and 1 minute is remaining on the other side.
  Mr. NICKLES. I reserve the balance of my time.
  Mr. KENNEDY. Mr. President, I yield myself the 1 remaining minute.
  Mr. President, let the Senate think about who we are talking about 
here. We are talking about Americans who are working. If they are 
making the minimum wage and if they are getting food stamps, and they 
are getting EITC, they are still below the poverty line. Still below 
the poverty line.
  Now, that is what the issue is. Four trillion dollars in tax benefits 
or tax expenditures over the length of this measure, $4 trillion, will 
be accumulated. But the only place that the Republicans could find a 
place to collect money was $20 billion from these working families. If 
they are working full time for minimum wage, are getting food stamps, 
getting the EITC, these people still do not have enough, to bring up a 
family. And still they are trying to take that benefit away. It is 
wrong.
  I hope the Bradley amendment will be successful.
  The PRESIDING OFFICER. The Senator's time is expired.
  Mr. EXON. Mr. President, has all time expired?
  The PRESIDING OFFICER. The Senator from Oklahoma has 1 minute.
  Mr. EXON. If I understand it correctly, we have finished debate and 
under the previous agreement we will have the vote on this at some 
succeeding time, is that correct?
  The PRESIDING OFFICER. The Senator from Oklahoma has 1 remaining 
minute.
  Mr. EXON. I thought the Senator has yielded back. He has not yielded 
back? I am sorry.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I will be brief. We have one minute 
remaining and we will be voting at a time designated by the two 
leaders.
  It is vitally important we pass the budget. We have a chance for the 
first time in history to pass a budget that is going to call for a 
balanced budget. Many of us thought we should do that whether we passed 
a constitutional amendment to balance the budget or not. It is not 
possible to pass a balanced budget unless we curtail the growth of 
expensive programs. This program has been growing out of control. This 
program cost a few billion dollars a few years ago. It cost $25 billion 
this year. It will be costing $36 billion by the year 2002. We cannot 
continue that rate of growth. We have to slow it down.
  Under this proposal it continues to grow about $1 billion a year, not 
as rapidly as proposed under current law. We cannot sustain current law 
growth. We cannot sustain 55 percent growth per year, so this is an 
effort to curtail it.
  I urge my colleagues to vote against the amendment and I yield the 
floor.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, has all time has expired?
  The PRESIDING OFFICER. All time has expired on both sides.
  Mr. EXON. Mr. President, I am pleased to yield a maximum of 45 
minutes to my great friend and colleague, the senior Senator from West 
Virginia, off the minority side's time allotted.
  Mr. BYRD. Mr. President, I thank the distinguished Senator from 
Nebraska, the ranking manager of the bill.
  Mr. President, both Houses of Congress waited for weeks beyond the 
time when budget resolutions are normally brought before the House and 
Senate. In fact, as Senators are aware, section 301(a) of the 
Congressional Budget Act requires that on or before April 15 of each 
year the Congress shall complete action on a concurrent resolution on 
the budget for the fiscal year beginning on October 1 of such year. 
Nevertheless, Congress has often missed this deadline, so the lateness 
of this particular budget resolution is not extraordinary.
  It is particularly understandable that this year's budget resolution 
would be late, in light of the fact that it contains more deficit 
reduction than has ever been proposed in any budget resolution. I 
believe the figure is nearly $1 trillion in deficit reduction that 
would purportedly be achieved over the next 7 years if this budget 
resolution is agreed to, and if all of its reconciliation instructions 
were enacted into law. That is what the Congressional Budget Office's 
current projections show.
  At the end of that 7 years, according to table 1 on page 6 of the 
Budget Committee's report, under this budget resolution we will have 
achieved a budget surplus of $1.3 billion. Apparently that surplus 
occurs only under a unified budget. For those who are not intimately 
familiar with budget terminology, a unified budget is one that allows 
the use of trust fund surpluses to mask the true size of the deficit.
  For this particular budget resolution, the use of such trust fund 
surpluses, and particularly the Social Security surplus, is necessary 
to achieve the $1.3 billion surplus in the year 2002. If one turns back 
one page in the Budget Committee's report to page 5, one will find 
another table. This table, table 1, sets forth the projected deficits 
recommended by the Budget Committee through the year 2002 without using 
the trust fund surpluses. This table shows that even if we adopt this 
budget resolution lock, stock, and barrel, we will still have a 
deficit--according to the Budget Committee--of $113.5 billion in 2002. 
In other words, if we do not apply the Social Security trust fund 
surplus against the deficit, the budget will not balance in the year 
2002 under this budget resolution. Instead, there will be a deficit of 
$113.5 billion.
  Having said that, I am quick to acknowledge the tremendously 
difficult work that has been done by the able chairman of the Budget 
Committee, Mr. Domenici. He has spent months on this budget resolution 
and, having worked closely with him on appropriation and budget matters 
for many years, I know that he is thoroughly familiar with virtually 
every item in this budget resolution. I would expect no less from this 
very able and distinguished Senator. It cannot have been easy to 
recommend the difficult choices that were necessary to achieve $1 
trillion in deficit reduction without including any additional revenues 
and without cutting military spending. I would note, however, that the 
task would have been even more difficult had not the 1993 
Reconciliation Act [[Page S7158]] been enacted. So let us not lose 
sight of that fact. That measure, at the time of its passage, was 
estimated to cut the deficit by $433 billion below the CBO baseline 
over 5 years.
  President Clinton deserves a great deal of credit for having proposed 
a major deficit reduction package shortly after he assumed office in 
1993. Subsequently, Congress enacted the Omnibus Reconciliation Act of 
1993, which resulted in reducing 5-year deficit projections by $433 
billion. Not one Republican, not one in either House, voted for the 
package, but, as I said, the Budget Committee has benefited from that 
1993 deficit reduction package. Without that package that we enacted in 
1993, the committee would have had to come up with another $433 billion 
in deficit reduction in this resolution in order to reach their target 
in 2002.
  Mr. President, despite the rhetoric to the contrary--let me say this. 
I hope all Senators will hear it. Despite the rhetoric to the contrary, 
this is not the first budget resolution that has projected a balanced 
budget. I hear many Senators say, ``For the first time we have a budget 
resolution here that projects a balanced budget.''
  That ain't so. This is not the first budget resolution that has 
projected a balanced budget. In fact, it is not even the second, or 
third budget resolution that has done so. That this is so is supported 
by the Budget Committee's report accompanying this year's resolution. 
In Mr. Exon's minority views, on page 314, the following statement is 
made:

       Contrary to Republican statements, this is not the first 
     budget resolution to achieve balance. It is the fifth in 
     line. The 1980, 1981, 1982, and 1991 budget resolutions were 
     in balance. In the 1991 budget, Democrats did not use the 
     Social Security trust fund surplus to reach balance. This all 
     goes to demonstrate that the universe covered by a budget 
     resolution can change in the course of the years.

  That is the language, that is the committee report, and I quoted from 
Mr. Exon's statement there.
  So, there have been four other occasions when budget resolutions have 
projected a balanced budget. We have done this before. This is not the 
first time. In fact, I recall that President Carter's fiscal year 1981 
budget contained a deficit of something like $15.9 billion. We in the 
Senate found that to be intolerable, and as majority leader at that 
time, I convened a session at which the chairman and ranking members of 
the Budget, Appropriations, and other relevant committees sat down for 
several days including an entire weekend to come up with the necessary 
changes to balance President Carter's 1981 budget. We accomplished our 
purpose and the fiscal year 1981 budget resolution, therefore, showed a 
balanced budget. but, as with all other budget resolutions, including 
this one, as we shall see, changes in economic and technical forecasts 
caused the actual 1981 budget to be out of balance. The latest such 
budget resolution prior to the pending one was that for fiscal year 
1991. Some Senators will recall that the
 1991 budget resolution was adopted subsequent to the 1990 Budget 
Summit. That Budget Summit was requested by President Bush in May of 
1990. I participated in it, as did a number of other Senators, 
including Mr. Dole, Mr. Domenici, and Mr. Gramm, to name a few--Mr. 
Hatfield and Mr. Bentsen, who was a Senator at that time. From the 
House side, the summit participants included Mr. Gephardt and Mr. 
Gingrich, among a number of others.

  We spent literally weeks and weeks and weeks, and even months 
negotiating a bipartisan deficit reduction package which, it was agreed 
by all, should be no greater than $500 billion over five years. The 
fear was that anything over $500 billion would throw the economy into 
recession. We had the best Democratic and Republican brains in the 
Nation sitting around that summit table at Andrews Air Force Base. In 
addition to Members of Congress and their staffs, we had the benefit of 
the wisdom of Mr. Richard Darman, President Bush's OMB Director; Mr. 
John Sununu, the President's Chief of Staff; and even the Secretary of 
the Treasury, Mr. Nicholas Brady. Also present was the CBO Director, 
Dr. Robert Reischauer, and several of his key staff. I should mention 
that Leon Panetta was there. As anyone can see, we did not suffer from 
a lack of expertise at the 1990 bipartisan Budget Summit. Well, after 
all those months of intense negotiations, which often ran into the 
night and included Saturdays and Sundays, we finally reached an 
agreement.
  That agreement cut the projected 5-year deficits for fiscal years 
1991-95 by $500 billion. When first presented to the House, in the form 
of a budget resolution, the summit agreement was voted down. After some 
modifications were made, however, a budget resolution was agreed to by 
the House on October 8, 1990, and by the Senate the next day.
  I have here the fiscal year 1991 budget resolution conference report. 
It is numbered report 101-820, and was submitted by Mr. Panetta, who 
was the House Budget Committee chairman at the time. On page 2 of this 
1991 budget resolution conference report, we see a heading entitled 
``Recommended Levels and Amounts.'' Under that heading in section 
3(a)(4), one will find the on-budget deficits for fiscal years 1991-94 
and an on-budget surplus for fiscal year 1995.
  Specifically, the conference report itself reads as follows:

       Sec. 3. (a)(4)(A) The amounts of the deficits are as 
     follows: Fiscal year 1991: $143,700,000,000. Fiscal year 
     1992: $100,900,000,000. Fiscal year 1993: $62,000,000,000. 
     Fiscal year 1994: $14,700,000,000.
       (B) The amount of the surplus is as follows: Fiscal year 
     1995: $20,500,000,000.

  So there you have it. The budget resolution for fiscal year 1991, 
which incorporated the budget cuts agreed to at the 1990 Budget Summit, 
showed an on-budget surplus of $20.5 billion in the fifth year; namely, 
fiscal year 1995. That surplus was to be achieved under that budget 
resolution without using the Social Security surplus. In fact, if one 
turns to page 21 of the 1991 budget resolution conference report, there 
one will find a table which, among other things, shows that if the 
Social Security and other trust fund surpluses are used to reduce the 
deficits, then there were supposed to be surpluses, not deficits, for 
fiscal years 1993, 1994, and 1995. In fact, the surpluses were to be: 
for fiscal year 1993, $44.8 billion; for fiscal year 1994, $108.5 
billion; and for fiscal year 1995, $156.2 billion.
  My purpose, Madam President, in raising these matters is to put to 
rest the misconception that somehow the Republican leadership in the 
Congress has come up with the first budget resolution ever that 
projects balance; and the further misconception that past Congresses 
failed to bite the bullet and make the tough choices to balance the 
budget. The fact is that we thought we had enacted the necessary 
spending restraints in 1990, on a bipartisan basis, to achieve a 
balanced budget by 1995. The experts told us we had done so. But, as is 
the case now, and, as I have said many times, there is no earthly way 
that any human being can accurately predict what the deficit will be 5 
years from now.
  We all know what happened to those 1991 budget resolution 
projections. They went south. No sooner was the ink dry on the Summit 
Agreement, and its accompanying reconciliation act, than CBO changed 
its projections.
  I have here a CBO document entitled ``CBO Papers--The 1990 Agreement: 
An Interim Assessment'' dated December 1990. On page 8, this paper lays 
out major changes in the 1991-95 deficit calculations upon which the 
Congress and President Bush had just depended when they enacted the 
provisions of the Summit Agreement, which was supposed to achieve a 
budget surplus by fiscal year 1995. Here is what CBO had to say about 
their changed projections, only 1 month after enactment of the Summit 
Agreement:

       The October interim economic assumptions increase the 
     projected deficit by $41 billion in 1991 and by about $60 
     billion per year thereafter, compared with CBO's summer 
     baseline. The October forecast reflects significant signs of 
     weakness that appeared in the economy after CBO completed its 
     summer forecast in June. The Iraqi invasion of Kuwait in 
     early August has caused a sharp increase in oil prices, which 
     has boosted inflation. In addition, the revision of the 
     national income and product accounts for the past three years 
     suggests that the economy's potential rate of growth is lower 
     than previously thought.
       Taken together, these economic developments reduce 
     projected revenues by about $30 billion per year. Higher 
     inflation increases cost-of-living adjustments for Social 
     Security and other benefit programs, as well as discretionary 
     inflation adjustments for defense and non-defense 
     appropriations. Higher unemployment raises spending for 
     unemployment compensation and for income-assistance programs. 
     Finally, lower revenues and higher spending increase federal 
     borrowing requirements and debt service [[Page S7159]] costs, 
     by amounts growing from $2 billion in 1991 to $17 billion in 
     1995.
       During the final months of fiscal year 1990, the Resolution 
     Trust Corporation (RTC)--the agency charged with resolving 
     insolvent savings and loan associations--spent $10 billion 
     more than CBO projected in July. This surge in spending 
     suggests that the RTC is resolving cases more quickly and 
     needs more working capital than previously thought. As a 
     result, CBO has increased its estimates of deposit insurance 
     spending in 1991 and 1992. Together with the resulting 
     increase in debt service costs, deposit insurance reestimates 
     increase the projected deficit by $16 billion in 1991 and $42 
     billion in 1992, have little effect in 1993, and reduce the 
     deficit somewhat thereafter.

  So, Madam President, it became obvious, rather quickly then, that 
budget balance would not be achieved without further major deficit 
reduction packages. President Bush chose not to undertake further 
budget summits, nor to propose further deficit reduction for fiscal 
years 1992 or 1993.
  It was left up to President Clinton to propose further deficit 
reduction. He rose to the challenge in his ``Vision For America,'' 
which was submitted to Congress on February 17, 1993. President Clinton 
laid out a blueprint for improving the lives of Americans and for 
reducing the Federal deficit, while at the same time, addressing the 
Nation's investment deficit in both human and physical infrastructure. 
The 1993 Omnibus Reconciliation Act was subsequently enacted and 
resulted in $433 billion in deficit reduction--and it had to be done 
without a single Republican vote.
  That brings me to the pending budget resolution, which, as I stated 
at the beginning of my remarks, calls for some very difficult budget 
cuts which, according to OMB, will total $961 billion below a baseline 
which already assumes a non-defense discretionary freeze for the next 7 
years. From this baseline, this budget resolution would cut: $256 
billion from Medicare; $175 billion from Medicaid; $209 billion from 
other entitlements; $190 billion from nondefense discretionary spending 
(as measured from a 1995 freeze extended through 2002; defense is 
increased by $25 billion); and $155 billion from reduced debt service.
  For nondefense discretionary spending, this budget resolution would 
cut $190 billion below a 1995 freeze; the equivalent of a $300 billion 
cut below the levels in the President's budget. By the year 2002, 
nondefense discretionary spending will be cut by nearly one-third, 
declining to 2.5 percent of the gross domestic product, and that would 
be a record low.
  For military spending, on the other hand, this budget resolution 
proposes no cuts to the President's budget, as opposed to its proposed 
$300 billion in cuts below the President's nondefense budgets, over the 
next 7 years. That is preposterous. If we accept this budget 
resolution, we will cut by one-third--provided the instructions are 
carried through--we will cut by one-third that portion of the budget 
which funds education, the National Institutes of Health, environmental 
cleanup, health and safety programs to ensure the safety of food and 
water for our citizens, research and development, School-To-Work and 
other job training programs, NASA, aviation safety (including air 
traffic control), civilian and military retirement, agriculture, 
highway and bridge construction and maintenance, transit assistance, 
the Small Business Administration, the judiciary and the courts, 
nuclear waste cleanup, our national parks, law enforcement, and the 
operating costs of every department and agency of the Federal 
Government.
   These and all other nondefense programs--all other nonmilitary 
programs--will suffer devastating cuts over the next 7 years.
  But not the military; not the military. No cuts are proposed for the 
military over the next 7 years.
  Does anyone believe that the military budget cannot be cut? Does 
anyone believe that the military budget ought not be cut? Does anyone 
believe that there are not items in that military budget that can be 
cut, ought to be cut, and still maintain the kind of security for our 
country that we expect?
  Well, apparently some of our friends on the other side of the aisle 
do believe that. Not only that, this budget resolution will reestablish 
a wall so that military spending will have its own separate caps for 
the next 7 years. This will prohibit Congress from cutting military 
spending and using those cuts to ease the pain on nonmilitary spending. 
This means that we will limit our ability to set priorities by removing 
from the budget-cutting pot the entire military budget. It is off 
limits.
  Furthermore, this budget resolution will eliminate the hold-harmless 
provisions of the Budget Enforcement Act for discretionary spending. 
This means that discretionary caps will no longer be adjusted for 
economic and technical miscalculations which are beyond the control of 
Congress.
  I fought for that in connection with the 1990 summit and the budget 
resolution that flowed therefrom. I fought for that. I sat right down 
in my office and discussed that with Mr. Darman. I said, ``There's no 
give on that. Nondefense discretionary has got to be held harmless.'' 
And we were, and we have been held harmless since. But that is out now 
with this budget resolution.
  Finally, this budget resolution will create a new requirement that, 
in order to not be charged against discretionary spending, emergencies 
will have to achieve a 60-vote supermajority in the Senate.
  So if we have a disaster in Texas, get ready to produce 60 votes, or 
else it will be charged against discretionary spending. And where do we 
have the money? Discretionary spending is on the block. The ax is going 
to fall, as it has fallen time and time again in recent years.
  It is clear that nondefense discretionary spending will suffer the 
greatest harm of any area of the Federal budget under this budget 
resolution. And the American people will not have to wait for 
reconciliation to feel the effects of the nondefense, nonmilitary, 
discretionary cuts. Those cuts will be coming to the House and Senate 
floors very soon after the adoption of the budget resolution conference 
agreement. Each of the 11 nondefense discretionary appropriation bills 
will contain a large dose of reality as to what is being asked of the 
American people in the way of cutbacks in government services. And 
these cuts will keep coming each and every year for the next 7 years. 
There will be no relief. If the caps are exceeded, then automatic cuts, 
or sequesters, will occur to bring nonmilitary spending back within 
each year's cap on both budget authority and outlays. Rest assured, if 
this budget resolution is agreed to, and I have no doubts that it will 
be agreed to, these cuts will occur. We will no longer have to 
speculate about the pain that will occur. It will have arrived.
  For the entitlement portion of the budget, this budget resolution 
also calls for tough medicine. As the debate has already brought out, 
cuts of $256 billion for Medicare; $175 billion for Medicaid; and $209 
billion from other entitlements will be very harsh upon those in our 
society who, in many cases, are the least
 able to afford to pay more for their benefits. The changes called for 
in the budget resolution for entitlements will be taken up later this 
year in a massive reconciliation bill. Only if enacted by Congress and 
signed into law by the President, will these entitlement cuts take 
place.

  So there will be another day to make that decision.
  Page 5 of the committee report, Madam President, contains this 
statement:

       The committee's recommendations are real, enforceable, and 
     achieve the fiscal policy goal of a comprehensive, unified 
     balanced budget in 2002.

  I ask Senators where is the enforcement on entitlement spending in 
this resolution? Let me read again page 5 of the committee report. I 
quote:

       The committee's recommendations are real, enforceable, and 
     achieve the fiscal policy goal of a comprehensive, unified 
     balanced budget in 2002.

  I ask the committee, where is the enforcement on entitlements? The 
committee report says these are enforceable. Where? Where is the 
enforcement on entitlement spending in this resolution? I have asked my 
staff to find that. My staff has searched in vain to find caps on 
entitlements and sequesters to enforce the caps. There are no such 
provisions. Despite the committee's claim, there is no enforcement on 
entitlement spending for the next 7 years. Yet, as any knowledgeable 
observer knows, entitlements are where the growth in Federal spending 
is occurring. The cuts in discretionary spending will occur--you can 
bet--they will occur because there are caps every [[Page S7160]] year 
and automatic, across-the-board cuts discretionary spending within 
those caps.
  Yes, they are enforceable, those cuts in nonmilitary discretionary 
spending. Cuts in nonmilitary discretionary spending will occur because 
there are caps every year and automatic, across-the-board cuts to keep 
the nonmilitary discretionary spending within those caps. Yet, for 
entitlements, this resolution contains no caps and no other enforcement 
mechanisms.
  Similarly, for revenues, there is nothing in this resolution to 
ensure that each year's revenue projection will be achieved. What if we 
have a recession? What if we have a recession, as we probably will? How 
will the shortfall be accounted for?
  The only way in this resolution is by increasing the deficit.
  For entitlement spending and revenues, this budget resolution is no 
different--no different--from any of the other budget resolutions in 
the past. In fact, the proposed balanced budget amendment to the 
Constitution suffers from the same flaw. We pointed that out time and 
time again in the debate. That amendment suffered from that flaw. Human 
beings simply cannot accurately forecast budgets 7 years, or 5 years or 
4 years or 3 years or 2 years, or even 1 year in advance. This budget 
resolution is no different from the budget resolution for fiscal year 
1991 which, as I have already pointed out, was not worth the paper it 
was written on. When all is said and done, it was not worth the paper 
it was written on. It took CBO just 1 month--1 month--to change the 
revenues downward and the entitlements upward. The pending resolution 
will not improve the negative effects of those misestimates for 
revenues and entitlements at all.
  This brings me to a final area of the pending resolution, which is 
disturbing to me, perhaps as much as any of the other matters I have 
raised, if not more. That is the portion of this budget resolution 
which states that after enactment of reconciliation, the Congressional 
Budget Office will provide the Senate with a revised estimate of the 
deficit for the years 1996 through 2005, and if there is any additional 
deficit reduction, the ``surplus'' can be used for a cut in revenues. 
The resolution would not allow the surplus to be explicitly used for 
additional deficit reduction or to lessen the impact of proposed 
Medicare or Medicaid cuts.
  CBO has already indicated that if the deficit is eliminated by the 
year 2002, there will be a ``bonus surplus'' gained from a reduction in 
interest rates and an improvement of one-tenth of a percentage point in 
the growth rate. The mark requires the fiscal dividend to be limited to 
the amount CBO certifies is the additional deficit reduction that 
results from the enactment of reconciliation legislation based upon the 
Republican mark.
  Madam President, first of all, I do not believe there will be any 
windfall if this budget resolution is agreed to and if its accompanying 
reconciliation measure is signed into law. This budget resolution 
assumes there will be no recessions over the next 7 years. Furthermore, 
any objective review of the past history of CBO's 5-year deficit 
projections would lead one to find highly suspect the 7-year 
projections contained in the pending resolution. I do not believe the 
chances are any better than 1 in 1,000 that, if we accept this budget 
resolution to carry out its entire contents without change, we will 
achieve a balanced budget in 2002.
  Regarding the tax cut provided in this resolution, I am frankly 
amazed. For all the talk--all the talk--about balancing the budget and 
all the mighty effort expended, we turn right around again in the same 
budget balancing document and spend $170 billion that we do not have 
and will, in all likelihood, never have on a tax cut. It is folly. Here 
we go again. Like the old song says: ``Livin' on money that we ain't 
made yet.''
  ``Livin' on money that we ain't made yet.'' That money is not going 
to be there when the day rolls around.
  In case I am wrong, I do not support the use of any resulting 
windfall for tax cuts. And I do not care who recommends the tax cuts. 
It can be President Clinton, if he wants to. I am not going down that 
road with him. I do not think he should have gone down that road. I do 
not think anybody ought to be recommending tax cuts at this time. I am 
not supporting Mr. Clinton and I am not supporting the Republicans on 
any tax cuts.
  If there are any windfalls, we should apply them toward the deficit 
rather than give them away in tax cuts. That is what we wanted to do. 
We want to balance the budget. It is the height of ridiculosity to 
propose tax cuts for the wealthy which total over $350 billion over the 
next 7 years, while at the same time we are devastating domestic 
discretionary programs that are investments in the Nation's future and 
in the people's future.
  I believe that the other side of the aisle would do well to tone down 
the partisan rhetoric and the blame game. Democrats did not put us in 
this downward spiral. We all had a hand in it. We had a Democratic 
House, but we had a Republican President and we had a Republican 
Senate. Democrats have done their best to lead the efforts to eliminate 
the Federal deficit in the past. We recognize it has to be done. We did 
not ignore the problem in the past. We did not ignore it in 1993, and 
we stand ready to do our part again to do what is necessary to achieve 
budget balance. But it is obvious that we cannot do this if all we are 
interested in is partisanship.
 Virtually every substantive amendment that was offered by Democrats in 
the Budget Committee markup was rejected on a party line vote. Here on 
the Senate floor, the same partisan approach has been used by the 
Republican majority.

  I, therefore, do not kid myself by holding out any hope that there 
will be any attention paid by the Republican side to the suggestions or 
proposals made by this side of the aisle. That is unfortunate. We are 
all here to do our solemn duty in, once again, making tough choices 
which affect the lives of virtually every American in order to balance 
the budget. None of us shy away from that duty. But, I submit that the 
Senate and the American people would be far better served if, at some 
point during this year's budget and reconciliation battles, we put 
aside partisan and Presidential politics, and vote for the best 
possible legislation in all instances--no matter whose idea it may be.
  I close by congratulating again, Mr. Domenici, the chairman of the 
Budget Committee. He is an extremely capable and bright and dedicated 
Senator, and he has demonstrated a great deal of courage in bringing 
this resolution forward.
  But I like to look at history in a situation like this, just as in 
many other situations. I have related some recent history to show that 
budget resolutions have a way of being overly optimistic and that there 
are conditions that occur in the economy which, in the final analysis, 
result in changing the expected and hoped-for outcomes of the budget 
resolutions.
  I also compliment Senator Exon, who has done a fine job, a dedicated 
job on the Budget Committee. It is not easy. And all of the members on 
that committee are to be complimented. I am not on the committee, and I 
do not envy those who have worked so hard. They have spent hours and 
days and weeks, and they have done their best. I know they have done 
their best.
  I know the Senator from New Mexico has done his best. He believes in 
this product. But he has no control over the future. Nobody has any 
control over tomorrow. ``Boast not thyself of tomorrow, for thou 
knowest not what a day may bring forth.'' Recessions can occur, 
military conflicts may arise. There are things we cannot foresee. We 
cannot foresee what inflation will be, what the unemployment rate will 
be, what the gross domestic product will be, what interest rates will 
be.
  In closing, I compliment the managers and I hope that what I had to 
say today will be of some benefit and that it will at least cause us to 
look back over the road we have traveled in the past and possibly to 
temper what we may have to say with regard to the future's optimist 
projections.
  Madam President, how much time do I have left?
  The PRESIDING OFFICER. The Senator has 2 minutes 10 seconds 
remaining.
  Mr. BYRD. I yield back my 2 minutes.
  Mr. DOMENICI. Madam President, I yield myself 1 minute off my side. 
Before he leaves the floor, I thank Senator Byrd very much for his 
remarks. [[Page S7161]] I know we do not agree on the details, but I 
thank him very much for the way in which he described the Budget 
Committee, as hard-working people. It is very hard to get people 
together on such diverse issues. I compliment Senator Exon for his hard 
work. Again, I thank Senator Byrd for his remarks.
  There is no question that if we could predict with specificity 
exactly what will happen 3 years, 7 years, 20 years
 from now, we would be greater than the Roman Senate. But in any event, 
we cannot do that. I understand we are doing our very best. But I think 
the assumptions and expectations of this budget are realistically 
conservative in terms of economics and the like, even more so than the 
President's budget, which did not do much to the deficit but had less 
conservative estimates in the next 4 years. I thank him for his 
remarks.

  I yield the floor.
  Mr. EXON. Madam President, let me take a moment and thank my friend 
and colleague, the chairman of the committee, Senator Domenici, with 
whom I have worked for a long, long time. I have saluted him during 
this debate before and I do so again now.
  I also want to take a moment to compliment my very dear friend, the 
senior Senator from West Virginia, for his outstandingly considerate 
and thoughtful remarks. I just hope that the Senate will be wise enough 
to recognize and realize that someone with the wisdom, dedication and 
the evenhandedness that has been part and parcel of Senator Byrd's 
lengthy and very distinguished career would give us pause for 
consideration. I think sometimes we get carried away, and I can think 
back and make talks on several measures that have been introduced in 
the U.S. Senate to solve the deficit problem. I voted against most of 
them because I did not think they held water.
  I simply say that there are many concerns that we have on both sides 
of the aisle. Some of the sharp debate we have had on this measure is a 
very legitimate process of the consideration--the debate and 
deliberations that the U.S. Senate has been known for a long time.
  As a personal aside, let me say that I have often said with my 
experience in politics, the great reward has been the people that I 
have met and have been associated with that would have never come my 
way had I not been chosen by the great people of the State of Nebraska 
to represent them as Governor and then as a U.S. Senator. One of the 
finest things that has happened to this Senator, with all of the 
outstanding people that I have met and been associated with and worked 
with, Senator Byrd has always been a pillar of what I think a U.S. 
Senator should be all about. And I think the remarks that he just gave 
demonstrate better than I could have said it how important he has been 
and remains as a Member of this body. I thank my friend from West 
Virginia.
  Mr. BYRD. Madam President, I thank both managers of the bill.
  Mr. DOMENICI. Senator Gramm of Texas is going to offer an amendment. 
Technically, under the rules, I am supposed to manage the opposition. 
But I choose today to designate, if he will assume the responsibility, 
Senator Exon as the manager in opposition to the Republican amendment.
  Mr. EXON. I appreciate those remarks by Senator Domenici. We are 
prepared to cooperate as he has outlined. If I understand it correctly, 
we are now moving back and forth, and we are now prepared to listen to 
the beginning of the debate on what I understand is called the Gramm 
amendment. We are prepared for that if the Chair is.
  The PRESIDING OFFICER. The Chair recognizes the senior Senator from 
Texas.

                           Amendment No. 1123

(Purpose: Setting forth the congressional budget for the United States 
Government for the fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 
                                 2002)

  Mr. GRAMM. Madam President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Texas [Mr. Gramm], for himself, Mr. Coats, 
     Mr. Coverdell, Mr. Craig, Mr. Faircloth, Mr. Grams, Mr. 
     Helms, Mr. Kempthorne, Mr. Kyl, Mr. Lott, Mr. Mack, Mr. 
     McCain and Mr. Smith, proposes an amendment numbered 1123.

  Mr. GRAMM. Madam President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. GRAMM. Madam President, I ask unanimous consent further reading 
be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAMM. Madam President, I have offered an amendment which will 
reduce government spending from the level recommended in the Senate 
budget, that will include the heart of the tax cuts contained in the 
Contract With America, and that will, for all practical purposes, bring 
the budget which is now under consideration in the Senate into line 
with the budget that has already been adopted in the House.
  In short, if the amendment that I have offered is adopted, we can 
virtually guarantee that the tax cuts which Republicans across the land 
committed to in the 1994 elections will become the law of the land.
  I would like to outline what this debate is about. I would like to 
talk about the amendment. I would like to outline what the amendment 
does, and then I would like to talk about the issue that we are going 
to decide when we cast a vote on this amendment.
  In September of last year on the north plaza of the Capitol Building, 
Republican candidates for the U.S. Senate, in fact, every Republican 
challenger in the country that was running in an open seat or against a 
Democratic incumbent except one who could not be there on that 
occasion, gathered to issue to America, a statement that we called ``7 
more in '94.''
  I want to read the opening part of that statement, and then I want to 
refer to a couple of things in it. We said, ``We pledge to the American 
people that if they empower us as a majority in the U.S. Senate on 
November 8, 1994, we will dedicate ourselves to the adoption of these 
legislative priorities.'' Among those priorities, we had a tax 
exemption for children, we had the reestablishment of individual 
retirement accounts for families, we had the reduction of the capital 
gains tax rate, and the indexing of capital gains, and we pledged to 
repeal the earnings test under Social Security.
  One week later, as everyone in America now knows, Republican 
candidates for the House of Representatives gathered on the west front 
of the Capitol and presented their Contract With America which outlined 
two goals as it related to the budget.
  One goal was to balance the Federal budget, a commitment we also had 
made 1 week earlier on the northern approach to the Capitol; and also 
they outlined a comprehensive program to cut taxes, to let families 
keep more of what they earn, to provide incentives for people to work 
and to save and to invest.
  That was in September 1994. We all know that the American people on 
November 8 changed American Government in the most sweeping 
congressional election since 1932. We won a majority in both Houses of 
Congress. The House of Representatives, good to its word, not only made 
promises in the campaign but they fulfilled each and every one of those 
promises. They adopted a budget last week that balanced the Federal 
budget over a 7-year period and that mandated tax cuts as they had 
outlined in the Contract With America.
  Now, that brings the Senate to this point in the debate. Where we are 
today is that we have a budget before the Senate that fulfills half the 
fiscal commitments we made that September day. We have before the 
Senate a budget that over a 7-year-period limits the growth of 
Government spending to 3.3 percent a year, down from an average of 
about 5.5 percent a year growth over the previous 5 years, down from 
about 7.5 percent growth in Government spending since 1950.
  As a result of constraining the growth in Government spending, the 
budget that is before the Senate is a budget that will achieve balance 
over a 7-year-period. [[Page S7162]] 
  I want to congratulate Senator Domenici. I want to congratulate my 
colleagues for having achieved half of the commitment that we made 
prior to the elections in 1994.
  My amendment today seeks to achieve the other half of those 
commitments. Now, what is the difference at this moment between the 
House budget and the Senate budget? Stated in its most simple terms, 
the budget that we are considering in the Senate spends $175 billion 
more on nondefense spending programs over the next 7 years than the 
budget which was adopted in the House. That is the first difference. 
Our budget spends a lot more money than the House budget spends, on 
nondefense expenditures.
  The second difference is that the budget in the Senate does not 
mandate a tax cut, whereas the budget in the House does.
  My amendment is a very simple amendment. What my amendment does is 
make two changes in spending. No. 1, it phases in the reductions in the 
growth of spending under Medicaid so that while Medicaid expenditures 
grow every year over the next 7 years, and while Medicaid grows faster 
than Government spending is growing, we slow down the rate of growth in 
Medicaid more quickly under the substitute which I have offered than 
under the budget that is currently pending before the Senate.
  Many people believe that those savings are not only achievable but 
desirable.
  The most significant change in spending that I have proposed in this 
amendment reduces nondefense discretionary spending below the level 
contained in the budget that is before the Senate, so that overall we 
are spending $142 billion less under my amendment than we are spending 
in the budget that is currently before the Senate.
  If we look at this chart, Mr. President, it shows basically what the 
amendment does to spending. The red line is a line that shows the 
growth of Government spending under the Domenici budget; that growth 
averages 3.3 percent a year.
  What my amendment does, by reducing the growth of discretionary 
spending, and by phasing in savings in Medicaid more quickly, rather 
than growing at 3.3 percent a year, Government spending would grow at 
approximately 3 percent a year. Government is still spending more each 
year than it spent the year before, but not spending as much as it 
would have spent had this amendment not been adopted.
  This amendment then provides for tax cuts for the American people. 
These tax cuts basically contain the following items: A $500 tax credit 
per child; cutting the capital gains tax rate by 50 percent and 
indexing it for inflation; estate tax relief for small business and 
small farms; faster depreciation through expensing for small business 
to encourage investment in small business in America; beginning the 
process of phasing out the so-called marriage penalty, this perverse 
provision in the Tax Code where if two people with incomes meet, fall 
in love, and decide to get married, they pay the Government as much as 
$4,500 a year--for the right to be married--in additional taxes; this 
amendment reestablishes individual retirement accounts for all 
Americans; it allows spouses working in the home to have an individual 
retirement account on exactly the same basis as if they worked outside 
the home; it allows the deduction with a credit for expenses in 
adopting a child; it raises the threshold for the earnings test under 
Social Security so that if senior citizens need to work to supplement 
their income, if they have the ability to work, they can do it without 
losing Social Security in the process; and finally, if someone takes 
care of an elderly person in their home, they are allowed a credit for 
part of those expenses.
  This, in essence, is the tax cut that is contained in the House 
budget and is the heart of the Contract With America.
  Now, let me take on the issues that are going to be raised. There are 
going to be some people who will say, ``Look, let us balance the budget 
before we talk about tax cuts.''
  That is very easy to respond to. We are both balancing the budget. 
The Domenici budget balances the budget, certifies the savings, locks 
them in with enforcement mechanisms, and so does the amendment I have 
offered. In terms of balancing the budget, both amendments will balance 
the Federal budget.
  What my amendment does is spend less money, and by reducing spending 
by $142 billion over the next 7 years, my amendment makes it possible 
for us to adopt as part of the reconciliation process a tax cut, 
fulfill the commitment we made in the campaign, and to do something 
more: To begin the process of not only balancing the budget but 
changing who is doing the spending in America.
  The debate here is really between those who say we want the 
Government to spend $142 billion more, in the Senate, than Government 
spends in the House budget, and those who support my amendment and say 
let us have the Federal Government spend $142 billion less so families 
can spend more of their own money on their own children, so that 
businesses can invest more of their own money in their own businesses.
  I know there are those who will say this is a debate about how much 
money we spend on children, this is a debate about how much money we 
spend on education, housing, and nutrition. But this is not a debate 
about how much money we spend on children. It is not a debate about how 
much money is spent on nutrition or housing or education. It is a 
debate about who is going to do the spending.
  In the budget that is before us, the Government is going to continue 
to do the spending. In the amendment that I have offered, the family 
will do the spending. I know Government and I know the family and I 
know the difference. I believe if the American family is allowed to 
have a $500 tax credit per child so parents can spend more of their own 
money on their own children, on their own future, that they will do a 
better job in spending that money than the Federal Government is doing.
  In the House they propose eliminating public funding for public 
television. In the House, they propose eliminating the Federal 
Department of Education. And they give part of that money back to 
parents, to let parents decide how it is spent. I believe that is a 
clear choice and I want to be absolutely certain that people know that 
we can make that choice in this amendment. If you want families to 
spend more of their own money rather than having the Government spend 
it, you want to be for this amendment.
  Second, this amendment cuts the capital gains tax rate, provides 
incentives for investment, and I know there will be those in this 
debate who will say this helps rich people. ``If you cut the capital 
gains tax rate, rich people are going to exploit the situation because 
what they are going to do is mobilize their money; they are going to 
invest it; they will create jobs. But if they are successful, they will 
earn profits.''
  Welcome to America. That is how our system works. If we want people 
to create jobs there has to be an incentive to do it. I do not 
understand people who love jobs but hate the people who create them. I 
do not understand how we can expect people to make investments and take 
risks, and yet somehow resent allowing them to benefit when they are 
successful from the investments they make and the risks they take.
  As I listen to all this talk about rich people versus poor people, it 
has started me thinking about my own life's experience. I have been 
blessed in having a lot of jobs in my life, especially when I was 
growing up. I worked as a peanut processor, I worked in a cabinet shop, 
I worked in a boat factory, in addition to all the jobs we all had 
working in a grocery store, throwing a newspaper. No poor person ever 
hired me in my life. Every job I ever got in my life, I got because 
somebody beat me to the bottom rung of the economic ladder, climbed up, 
saved his money, invested it wisely, and made it possible for someone 
like me to get my foot on the bottom rung of the economic ladder.
  What my amendment seeks to do, by cutting the capital gains tax rate 
and by providing incentives for people to work and to save and to 
invest, is to guarantee that tens of millions of additional young 
Americans will get an opportunity to put their foot on the bottom rung 
of the economic ladder and start climbing up themselves. By cutting 
discretionary spending we have the opportunity to cut programs where 
Government is subsidizing business [[Page S7163]] and, instead, cut the 
capital gains tax rate and provide investment incentives so that 
investment decisions are not made by the Government but where 
investment decisions are made in the private sector of the economy.
  Some people are going to say, ``Look, we ought to forget this $500 
tax credit per child because it is not enough money to make any 
difference.'' For a two-child family, this $500 tax credit is going to 
mean that family is going to get to keep $1,000 more every year of what 
they earn to invest in their own children. That may not be much money 
in Washington, DC, but in Texas, where I am from, the ability of a 
family to spend $1,000 more of its own money on its own children is 
real money. The fact that that is not real money in Washington, DC, 
tells you something about the problems that we have in Washington, DC. 
I think these are changes we need to make.
  So here is the choice we are about. The choice is this. The House of 
Representatives has controlled Government spending, and using the words 
we use in Washington, cut Government spending. Even though spending 
grows every year in their budget, it just does not grow as fast as it 
would have grown had they not changed policies. But in the House, they 
spent roughly $175 billion less on nondefense spending than the budget 
that we are now considering in the Senate. My amendment simply cuts 
spending by roughly that amount and gives that money back to parents to 
invest in their own children, cuts the capital gains tax rate, 
encourages savings and investment by changing the tax code so that 
rather than the Government spending this $175 billion, it can be spent 
in the private sector, where families and businesses are making the 
decisions instead of the Government.
  This is not a debate about balancing the budget. Both budgets balance 
the budget. This is not a debate about spending money on children or 
investing in businesses. Both budgets do that. But it is a debate about 
who is going to do the spending. Under my amendment, families will do 
more spending and the Government will do less spending. Under my 
amendment, Government will make fewer investment decisions and private 
business will make more investment decisions.
  Not only do I believe this is good policy, I think it is important 
for two reasons. One is economic and one is political.
  Economically, I think the economy is beginning to soften. 
Economically, I think we are beginning to feel, now, the impact of the 
tax increase that was adopted 2 years ago.
  I think the impact is being felt on the American economy, and I think 
we are beginning to see troublesome signs in the economy. I think it is 
very important, as part of this budget, because we want it to work and 
we want to balance the budget, that we as part of this budget provide 
incentives for private investment. As Government does less, it is 
important that we give parents the ability to do more by letting them 
keep more of their own money. It is important, as Government does less, 
that we provide incentives for business to do more in creating jobs and 
growth and opportunity.
  I think that is especially true given that we are going to reform the 
welfare system and we are going to ask millions of people to get out of 
the welfare wagon and help the rest of us pull. Cutting the capital 
gains tax rate, providing incentives for investment and growth I think 
is a vital part of this.
  Finally, we had an election. We all see the results of that election. 
We have a Republican majority. We have 54 Republicans in the Senate. We 
have a Republican majority in the House for the first time in 40 years. 
We won that election based on commitments that we made to the American 
people, and in terms of the budget we committed to do two things. No. 1 
to balance the Federal budget. That is a commitment on which we are 
clearly going to deliver. But we also committed to reduce spending 
further so that families can keep more of what they earn and so that 
businesses can make more investment decisions to create more jobs, more 
growth, more opportunity for our people. That is a commitment that we 
are not going to fulfill unless we adopt this amendment.
  Finally, before I yield the floor and allow the opposition to speak 
and begin to recognize our colleagues who are cosponsors to the 
amendment, let me say this. I know there are others who are talking 
about cutting a deal--compromising, coming up with a temporary tax cut. 
I think if we are going to change America, if we are going to change 
Government policy, we have to stop cutting deals in Washington, DC. We 
promised that we would do this in the election. As chairman of the 
Republican senatorial committee, I went all over the country and with 
Republican candidates everywhere committed to this program, and so did 
others of our colleagues on the Republican side of the aisle.
  Now we come down to the moment of truth. There are many who say, 
look, it was hard enough balancing the budget. This was excruciatingly 
painful. This was difficult. We do not want to go the final step to 
live up to what we committed in the election.
  I think that is a mistake. I think America will be richer and freer 
and happier if we do it. It is not only the right thing to do 
economically, it is the right thing to do because we committed to do 
it.
  I reserve the remainder of our time.
  Mr. FEINGOLD addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, we have spent a lot of time discussing the 
basic unfairness of the tax cut proposed by some Members on the other 
side of the aisle. The American people are wise to Republican tax 
shenanigans that benefit the wealthiest in this Nation. The amendment 
that has just been offered by the Senator from Texas embraces the 
unworkable and unrealistic tax cut described by Speaker Gingrich as, 
``The heart and soul, the crown jewel of the Contract With America.''
  It is a phony jewel at best and a very deceptive one, I hasten to 
suggest. The plain fact is that we cannot afford a tax cut, and there 
should not be one in this budget if we are going to balance the budget. 
Our primary goal, the goal that the American people overwhelmingly 
endorse, should be to reduce the deficit. A tax cut like the one in the 
House Contract With America would only add to the problem by forcing us 
to make even deeper and more painful spending cuts.
  Poll after poll has shown that voters want Congress to get the 
Nation's fiscal house in order by balancing the budget, not by cutting 
taxes.
  Mr. President, we have just spent the majority of Friday and Monday 
talking about the draconian impact of the Republican budget cuts. Those 
cuts are in Medicare, and lower income beneficiaries are all going to 
suffer. We also talked about Medicare cuts and the cuts to education, 
the cuts to the EITC program, the cuts to veterans programs, and the 
cuts to agriculture. But no matter how the deficit is eliminated, the 
fact is that achieving balance is an extraordinarily difficult and 
painful task. It requires more than $1 trillion in spending cuts--cuts 
that have a real impact on real people. Adding tax cuts to the mix 
would only ensure that the pain goes even deeper. And in this budget 
that translates to even harsher treatment for our seniors, our schools 
and education, our children, and the least well off in our society.
  There has also been a great deal of talk in this Chamber especially 
about the so-called economic bonus that will magically occur if this 
budget is enacted. According to CBO, it would be possible for a total 
of some $170 billion over the next 7 years and balloon to $356 billion 
over 10 years if those figures work out--if those figures work out. The 
bonus has become the financing source for the tax cuts being advocated 
by our friends on the other side of the aisle. If this bonus does 
occur--and I think that point is very debatable--I submit there are 
many better purposes to which it could and should be put. In fact, the 
driving force behind the Democratic amendments center on this very 
issue.
  The question is very simple: Should any economic bonus be reserved 
for tax cuts for the best off in our society or should it be used to 
soften the blows of some of the extraordinarily harsh cuts that will be 
meted out under the plan? Our position is very simple: we cannot afford 
a tax cut. It makes the job of [[Page S7164]] balancing the budget just 
that much more difficult and disproportionately unfair.
  Furthermore, in the event that an economic bonus or surplus should 
accrue as a result of the painful choices that are being made, this 
bonus should be used to lessen the pain of those cuts rather than a tax 
cut and thus better assuring a realistic balanced budget by a day 
certain.
  That is where we stand, Mr. President, and that is where the American 
people stand, too. That is where realistic and reasonable people stand. 
I certainly strongly recommend that we disapprove the amendment offered 
by the Senator from Texas.
  Mr. FEINGOLD addressed the Chair.
  The PRESIDING OFFICER (Mr. Smith). Who yields time?
  Mr. GRAMM. Mr. President, if we go back and forth----
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. Let me respond very briefly and then I would yield to 
Senator Grams.
  Mr. President, let me first say that the amendment I have offered 
cuts spending by another $142 billion to make it possible for us to let 
families keep more of what they earn and to provide incentives for 
businesses to invest their own money in their own future and generate 
jobs.
  I hear our colleagues on the Democratic side of the aisle talking 
about difficult choices. I am not aware that a single one of them plans 
to make a single difficult choice, and these are difficult choices 
being made by Republicans. Their proposal is that if we make the 
difficult choices so that we balance the budget, if any benefit should 
accrue from that we allow Government to spend the benefits. Our 
proposal is that if we make the tough choices and benefits accrue as a 
result of those tough choices in lower interest rates and higher growth 
because we have balanced the budget, because the Government is not 
borrowing half of all the money that is loaned in America, we give that 
money back to the people who earned the money to begin with, the people 
who do the work, pay the taxes, and pull the wagon.
  So I do not think the distinction between the two visions for the 
future that we are debating here could be any clearer.
  I do not think the American people believe that the tax cuts adopted 
in the House of Representatives are unreasonable or unworkable. I do 
not think the American people think that the idea of letting families 
spend more of their own money by having Government spend less of it is 
an unrealistic or unworkable idea. In fact, it has worked in reverse 
for 40 years. The average family in 1950, with two children, sent $1 
out of every $50 it earned to Washington. Today, it is sending $1 out 
of every $4.
  I am just proposing to take a very small step back in the right 
direction for a change.
  I yield 10 minutes to the distinguished Senator from Minnesota, 
Senator Grams.
  Mr. GRAMS. I thank the Senator very much. And I want to thank him 
very much for giving me the time on this amendment, and also give a lot 
of credit to the Senator from Texas for bringing this amendment to the 
floor.
  Mr. President, we have heard strong and passionate statements from my 
colleagues on the subject of the $500 per-child tax credit and other 
tax reductions.
  But there is one thing we have not heard.
  We have not heard from the people themselves, those who would benefit 
most from tax relief, those who pay the bills--that is, the middle-
class Americans who work every day--and a lot of nights and weekends, 
too--just trying to make a better life for themselves, their children, 
their families.
  And they do it at the same time they are paying more and more taxes 
to the Federal Government.
  Who is speaking up for them? Who is speaking up for the taxpayers?
  As their elected representatives, it is supposed to be us. But 
sometimes I am not so sure we are.
  November was only 6 months ago, but in a city where the headline-
making political promises of yesterday too often end up lining the 
bottom of the bird cage, the message of November already seems to have 
been forgotten by many of us in the Senate.
  And so, if not us, who is speaking up for the taxpayers?
  Believe me, Mr. President, they may not be here to speak for 
themselves, but they have a voice in this debate, and they have a right 
to be heard today.
  Fortunately, the taxpayers in my State of Minnesota are prolific 
letter-writers. And, thanks to their letters, some of which I have 
brought with me to the floor, they will be heard today.
  And this is just a very small sample but a representation of what I 
have received in the mail.
  Listen carefully--their thoughtful words reflect a deep 
dissatisfaction with the status quo in Washington.
  Listen to Ralph Krasky of Minneapolis:

       We are just being killed in taxes. We both work and all we 
     do is save for April 15. Let us keep what we make. After all, 
     it is not the government's money. It is our money.

  Or listen to Elaine Haataja, 53 years old and living in Menagha.
  She lost her husband to cancer a year ago:

       I am very angry at our Federal and State tax system. I had 
     no choice but to go to work for $5 an hour to support myself 
     and keep up the taxes and insurance on my house and car.
       ``I receive $700 a month from my husband's pension, which 
     isn't enough a month to pay utilities and insurance plus the 
     upkeep on the house and my old car. And now I have to pay 
     $1,100 for Federal and State taxes.

  The frustration is real, Mr. President, in Minneapolis, in Menagha, 
and every town in between. People feel as if their own Government has 
let them down; that somehow Government has gotten off the right track.
  ``I urge you to continue to cut taxes and cut spending and cut the 
Federal bureaucracy,'' writes Ralph Grant of Rockford, MN.
  ``There is more than enough waste and fraud and pork and duplication 
in the Federal budget to sustain a severe reduction without affecting 
any necessary and required services.''
  Minnetrista residents Kathy and Gary Hejna agree:

       We believe this country was built with hard work and 
     sacrifice, not sympathy and handouts.
       We also believe that we can spend this money more 
     effectively than the Government, who has only succeeded in 
     creating a permanent, dependent welfare class with our money 
     over the last 40 years.
       Any bill that takes money away from the Government and 
     gives it to the families, the basic unit of society, can only 
     benefit everyone in this country.

  With seven children, Kathy and Gary would receive a tax credit of 
$3,500 every year under the Gramm amendment.
  Think what a difference an extra $3,500 could mean for a family.
  It could mean health insurance, a special education for a gifted 
child, or simple necessities like groceries and clothing.
  Think how the $500 per-child tax credit could strengthen the American 
family.
  Kathleen and William Bart of Roseville have given it a lot of 
thought. ``A $500 Federal tax credit for each dependent is not a 
Federal hand-out,'' they write, ``but would allow parents to keep more 
of the money that they make and to use it to care for their own 
children.
  ``A $500 Federal tax credit for each dependent would unquestionably 
strengthen many families--especially middle-class and economically-
disadvantaged families.''
  Lori Brandt, who lives in Plymouth, MN, has thought about it, too. 
``Families desperately need a break today,'' she says, ``and tax relief 
is long overdue.''
  From Duluth came this letter by Justin Black. ``So many families 
starting out these days are as poor as dirt because they have to pay so 
much taxes when they haven't had the time to barely start their lives.
  ``They need a break like this tax bill so they can afford to raise a 
healthy family. Remember: they're the hope for the next generation and 
they need to have a strong family life to take over where the last 
generation left off.''
  ``My husband, Jay, is an executive with a small manufacturing 
business and I am a mother and homemaker, as well as teacher to our two 
small children,'' says Patty Meacham of Audubon, MN, in her letter to 
my office.
  ``We are helping to support Jay's 69-year-old-mother, because we 
don't feel the government should be responsible for every person within 
our borders. [[Page S7165]] 
  ``Tax cuts would enable us to do much more Grandma, and perhaps she 
could get off the rolls of people accepting rent assistance.
  ``It is no source of pride for us that she has to go to a government 
agency for help, but how can we do what is right for her, when we are 
so greatly strapped by the tax burden placed upon us?''
  A young couple from Coon Rapids tried to but a new home to fulfill 
the American dream, only to learn after meeting with their realtor that 
they simply could not afford to do it on their own.
  ``I have finally reached the point of complete frustration and anger 
over the amount of taxes being deducted from my check each month,'' 
said their letter.
  ``When we got home that evening my husband and I sat down with our 
checkbook and our bills and tried to determine what we were doing 
wrong. After taking everything into consideration we determined that we 
weren't spending our money foolishly.
  ``The only real problem we found was when we looked at our paycheck 
stubs and actually realized how much of our income was going to pay for 
taxes.
  ``It saddens me to think of how hard my husband and I work and how 
much time we have to spend away from our daughter to be at work * * * 
and we still cannot `reach the American dream.'''
  The $500 per-child tax credit would help families like Natalie's 
realize their dreams. And Minnesotans know it will help the economy, 
too.
  David Clark, a taxpayer from Eden Prairie writes: ``Taxation is an 
awesome burden in the U.S. today, and it is sucking away resources from 
the economy that could be used to create jobs and opportunities for 
everyone, including the poor.
  ``I urge you to use the new Republican majority to enact the 
legislation needed to get the Government off our backs.''
  Walter Wilder, a doctor from Edina, writes: ``Tax cuts will help to 
balance the budget by stimulating growth, bringing in more income, 
including from the high-income people.''
  And J. Randy Brown of Oakdale says: ``I agree with your position that 
tax cuts are also a necessary part of the overall budget solution. 
Reduced taxes will result in renewed growth, job-creating, and the 
result of that would be increased revenues.''
  Mr. President, if it were up to the American people, we would have 
tax relief, and the vote would not even be close.
  The House heard the people and passed its budget last week, with the 
$500 per-child tax credit as its centerpiece.
  But now it is our turn. The American people are not sure we are up to 
the task. And I am afraid they may be right.
  ``I just finished my '94 taxes. What a disappointment,'' writes Tim 
Hulst of New Hope.
  ``The government can't seem to get enough of my money. Last year, I 
worked two jobs--seven days per week--and my wife worked full time to 
try and support ourselves and three children.
  ``After all we've paid in, we still owe $1,000 more. Please convince 
your fellow Senators how important it is to cut taxes. I wonder 
sometimes if the Republicans in the Senate really get it.''
  Dean Fairbrother of Minneapolis has the same concerns. ``The status-
quo, too-cautious approach exemplified by many of the senior members of 
the Republican Senate caucus is unacceptable. Keep pushing for family 
tax relief,'' he urged.
  ``Ignore the tired lamentations coming from the Old Bulls. They are 
wrong--you, me, and the majority of Americans pleading for such relief 
are dead right.''
  The letter-writer who leveled the harshest criticism at this Chamber 
is Folkert Breitsma of Maple Grove, who writes:
  ``It is a disgrace to see billions of our money squandered by 
politicians who are out of touch with real life and have the audacity 
to say that the national government can be entrusted with the money--
that they know what is good for us.
  ``I have watched the Senate stonewall most of the initiatives brought 
forth by the House. It is defended by the Senators as being `more 
deliberate' and `take time to study the initiatives.'
  ``However it is promoted, I see it as stonewalling by a group of 
people that do not have a clear vision of what they want to achieve and 
have the arrogance to claim they know what is best for the country.''
  Those are strong words--not my words, but words in which I find a 
good deal of truth.
  But there is hope, Mr. President--the hope offered by the $500 per-
child tax credit we debate today.
  Mr. President, look what the $500 per-child tax credit could do for 
the Minnesotans who wrote asking for our help:
  We would return $1.4 million to the people of Wadena County, home of 
Elaine Haataja; we would return $48.7 million to the people of Ramsey 
County, home of the Bart Family; $3 million to Becker County, home of 
the Meacham Family; $20.8 million to Washington County, home of the 
Browns; and $101.5 million would be returned to Hennepin County, which 
the Brandts, the Breitsmas, the Kraskys, the Hulsts, and the 
Fairbrothers call home.
  By passing the $500 per-child tax credit, we would return $500 
million to Minnesota families--$25 billion annually to families across 
America.
  We have heard what the people have to say. I think the question, 
again, is who is speaking up for the taxpayers?
  As I close, Mr. President, I want to remark that the senior Senator 
from Nebraska said a few moments ago the tax cut would more deeply 
increase the pain to balance the budget. The pain of the tax burden on 
this country's families is growing more and more, and they are 
demanding and asking for tax relief.
  I strongly urge my colleagues to support and adopt the Gramm 
amendment.
  The PRESIDING OFFICER. The time of the Senator from Minnesota has 
expired.
  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, what I am hearing in the Senate today is 
almost word for word what I heard in the early 1980's: Give the people 
a tax cut and do not worry about the deficit. We are for tax cuts, too, 
but only after we get our deficit under control.
  I yield 5 minutes to my colleague from Wisconsin.
  Mr. FEINGOLD. Mr. President, I certainly thank the Senator from 
Nebraska, and I want to say I admire how straightforward the Senator 
from Texas is with his amendment and his approach. He lays it right on 
the line. He believes we can afford at this point a $350 billion tax 
cut and still balance the budget.
  In fact, I appreciate the candor of the whole Republican contract in 
admitting that this really is the centerpiece, this is the crown jewel 
of the Republican contract, as stated by the Speaker and as stated by 
the Senator from Texas.
  I was amazed when they first came up with that formulation. Of all 
the different things you could pick from the Republican contract: 
regulatory reform, trying to get the Government off our back; line-item 
veto; the balanced budget amendment--for a moment I thought that was 
the crown jewel of the Republican contract--the issue of unfunded 
mandates we already dealt with; issues having to do with Congress, 
living by the rules that it creates for others. All of these things are 
apparently swept aside when it comes to the importance of delivering a 
tax cut at this time even though this country has reached a $5 trillion 
debt and a deficit that has only recently been brought down through the 
efforts of the Clinton administration.
  So I agree with the Senator from Texas. This is the key amendment on 
this whole issue. The Senator says that the tax cut is the heart of the 
Contract With America. Well, this is the test: Is your heart with the 
tax cuts or is your heart with deficit reduction? You cannot have it 
both ways, and this is the test and this is what the American people 
are looking for.
  What is very unfortunate is that the Senator from Texas fails to tell 
what this amendment really does. It takes [[Page S7166]] $170 billion 
that is already in the budget resolution, adds that much again, makes 
the cuts deeper for the various programs that are going to be cut, and 
you know what, Mr. President, it still does not balance the budget in 
the year 2002, unless you take the money of Social Security.
  This is not a balanced budget in the first place, Mr. President, and 
this amendment will only make it worse. Do not let anyone on the 
Republican side kid you, this budget resolution does not balance the 
budget in the year 2002, unless you take the money from Social 
Security. So this amendment cannot possibly solve that problem.
  The Senator from Texas talks about two visions. He sees this as all 
about whether we are going to return the money to the people. But that 
is not what the November 8 election was all about. I think both in 1992 
and 1994, the American people spoke with a very clear voice. They did 
not call for tax cuts. They said get rid of the Federal deficit, get 
rid of the huge interest payments we have to pay on the debt, do not 
saddle our children and our grandchildren with this deficit. That was 
the message in 1992 and it was the message in 1994. It is not a 
partisan message. People are just saying, clean up the mess that was 
made in the 1980's that the Senator from Nebraska just referred to.
  The amendment of the Senator from Texas would make the mess much 
worse. It would say that even though all these deep cuts are being made 
in so many important human programs, we still have $350 billion in 
spare change around for tax cuts. I do not think anyone out there 
really believes that.
  Let me agree with the Senator from Texas that this should not be 
about class warfare. I support neither the Senator's proposal nor the 
proposal for a tax cut in the budget resolution, nor do I support the 
President's proposal for a much tinier tax cut. I say we cannot do any 
of it, and there is a moderate bipartisan coalition in this body of 
Republicans and Democrats alike who say just get rid of all the tax 
cuts; whatever we have to reduce spending with, let us use that money 
to reduce the deficit.
  You know, Mr. President, my biggest concern is not this amendment. 
This amendment is going down to defeat, I am happy to say. The crown 
jewel of the Republican contract will be soundly defeated on the floor 
of this Senate in a very short while. The Speaker's crown jewel will be 
gone. The $350 billion is not going to be voted by this body. We will 
defeat the crown jewel of the Republican contract. But I will say, Mr. 
President, that this is a stalking horse to make the $170 billion that 
is already in the budget resolution look moderate. We also cannot 
afford that, and we will have amendments later to deal with this. If I 
may have 1 additional minute?
  Mr. EXON. Thirty seconds. If I give you another minute, there will 
not be enough. Thirty seconds.
  Mr. FEINGOLD. I thank the ranking member very much.
  Mr. President, this amendment, more than anything else, offends the 
common sense of the American people--they know better than we do--if we 
vote for this. It offends them because they know darn well you cannot 
balance the budget and spend $350 billion on tax cuts and tell them it 
is going to work. It does not work. It is phony and it should be 
defeated.
  I thank the Chair.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The time of the Senator from Wisconsin has 
expired. The Senator from Texas.
  Mr. GRAMM. Mr. President, I know it breaks the hearts of our 
colleagues, but in this amendment, I am proposing cutting Government 
spending, their precious programs, so that families can spend their own 
money on their own children on their own future, and invest in their 
own businesses. If that violates common sense, I think it says there is 
a difference between common sense in Washington, DC, and on the floor 
of the U.S. Senate as compared to common sense around every kitchen 
table in the kitchen of every working family in America.
  I yield 8 minutes to the Senator from Indiana, Senator Coats.
  Mr. COATS. Mr. President, I thank my fellow Senator from Texas, 
Senator Gramm, for yielding, and I rise today in very strong support of 
his amendment, which has the courage to confront an issue that I 
believe is essential to our future: The preservation of the American 
family.
  The amendment before us strengthens--not weakens--strengthens the 
budget resolution by recognizing that cutting budgets and cutting taxes 
are part of the same movement in America, a movement to limit our 
Government and empower our people.
  These twin goals, I contend, are not inconsistent. They are 
inseparable, and we can prove our commitment to both if we are willing 
to cut Federal spending just an additional three-tenths of 1 percent. 
Let us understand that. These two goals are not incompatible if Members 
are willing to take three-tenths of 1 percent more in Federal programs 
and apply it as a return to the American taxpayer.
  While I support the progrowth and savings provisions provided in this 
amendment, in the limited time I have, I would like to focus my remarks 
on the profamily elements of this amendment.
  Opponents have argued that the only way to help children is to 
maintain record high levels of Federal spending on every Government 
program. But there is a better way. What we are asking today is simply, 
who is better informed and who is more compassionate to make choices in 
the interest of our children, the Federal Government or America's 
families? Can there be any serious debate on how that question is 
answered?
  The lessons that we have learned from decades of social spending are 
clear: Government programs have proven incapable of fighting social 
despair and disorder. But strong families can, and it is time to admit 
that when families fail, so does our society. It is also time to 
understand that when our families are involved and favored and 
supported, they construct a hopeful future for America.
  This Congress today is presented with a choice between the failed, 
discredited compassion of Government and the proven power of strong 
families to build hope in their children and order in our society.
  I believe, Mr. President, it is a transparent ploy to say this is 
simply a matter of rich versus poor. Rather, it is a matter of where 
resources and authority should rest: in Government or in our families 
and our communities?
  Much of the opposition to tax relief seems to be based on a myth, a 
myth that tax cuts somehow waste the Government's money.
  The Government produces nothing. It has no resources of its own to 
spend. Tax cuts are not a waste of Government funds; they are simply a 
method to allow Americans to keep their own money. They are a method to 
build working independence as an alternative to Government paternalism 
which has proven so destructive, despite the honorable intentions of 
its proponents.
  It is tax cuts that are the best form of social investment, an 
investment in the ability of people to care for themselves. In 1993, 
the Bipartisan Commission on America's Urban Families found that, ``The 
trend of family fragmentation drives the Nation's most pressing social 
problems--crime, educational failure, declining mental health, drug 
abuse, and poverty. These, in turn, further fragment families.''
  One of the key policy recommendations of the commission was to 
``increase the self-sufficiency and economic well-being of families by 
either significantly increasing the personal exemption or a child tax 
credit for all children through age 18.''
  Those were the conclusions of the Bipartisan Commission on American 
Urban Families, and I think we should listen to their words. The 
findings on the National Commission of Urban Families were remarkably 
similar to the findings advocated 3 years ago by the Democratic 
Progressive Policy Institute; in an impressive report entitled 
``Putting Children First,'' a progressive family policy for the 
nineties, this group found, ``There are some things that only families 
can do, and if families are placed under so much stress that they 
cannot raise children effectively, the rest of the society cannot make 
up the difference in later years.'' [[Page S7167]] 
  Mr. President, the time of political change is the time to reassess 
our national priorities. We need to redirect our focus and our funds to 
strengthen the family. While Government's role in preserving the family 
is limited, it is not insignificant. Perhaps the single most important 
thing Government can accomplish for families is to lift the economic 
burdens that can cripple the family.
  Over the last 50 years, we have had a lousy track record in doing 
that. The personal exemption is now just 12 percent of income, where it 
used to be at 42 percent in 1948 when it was first introduced. Since 
the end of World War II, it is families that have borne the burden of 
increased taxes. That burden increased more than 200 percent for 
families with two children.
  Their average after-tax income is below that, even of elderly 
households, single persons, and couples without children. In my home 
State of Indiana, the median family income for a family of four is 
$30,000 and, of that, nearly $11,000 is devoted to Federal, State, and 
local taxes. The average family in Indiana pays more in taxes than it 
does in housing, food, and clothing expenses combined.
  The Gramm amendment completes the budget resolution by addressing not 
only the Government's budget deficit, but also the deficit and the 
resources of families to care for their own. It is a deficit created by 
increased taxation of the family through the erosion of the personal 
exemption. For too long we have ignored this growing burden and its 
growing social costs.
  Mr. President, the promise of tax relief for the American family is 
now before us to be fulfilled or to be ignored. At the end of this 
process, I want to vote on a budget that tackles both threats to the 
American family--the threat of the budget deficit and an ever-growing 
threat of a tax burden. I want to support a budget that contributes to 
a growing economy and builds new momentum for job creation. For too 
long we have dismissed the needs of families to answer the call of 
other interests. With this vote, that trend can end.
  I urge my colleagues to vote for passage of this critical amendment. 
Again, the fundamental choice before us is, do we want to leave more 
money in the hands of Federal bureaucrats to spend in their so-called 
wisdom on behalf of our families and the needs that are pressing on our 
society, or do we want to rest that decision with parents and with 
families?
  By cutting spending just an additional three-tenths of 1 percent, we 
can give that decision to families rather than rest it in the hands of 
Government bureaucrats. That is the decision before us. We can have 
both. It is a fundamental choice that we must make. I am pleased to 
join the Senator from Texas, and I am pleased that he offered this 
amendment because that presents us and grants us that choice.
  If I have any additional time, I know the Senator is pressed for 
time, I am happy to yield any additional time back.
  Mr. EXON. Mr. President, in view of the fact that we have more time 
left than that side, would the Senator from Texas object to two rather 
short statements in a row?
  Mr. GRAMM. I would not object.
  Mr. EXON. Then I would yield at this time 4 minutes to the Senator 
from Michigan, followed by 2 minutes by the Senator from Minnesota.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.
  Mr. LEVIN. Mr. President, I thank the Chair and my friend from 
Nebraska.
  Tomorrow, or the next day, the Senate is likely to approve a budget 
which would be described as being balanced by the year 2002, although 
it will not be. It will not be balanced because it relies heavily on 
surpluses in the Social Security Trust Fund to achieve that so-called 
balance.
  But the proposed budget resolution before us is unbalanced in another 
important way. The budget blueprint represented here penalizes middle-
income working families, reduces our investment in education, and 
penalizes our senior citizens, in order to provide a tax reduction 
which will benefit mainly the wealthiest of Americans.
  One of the most inequitable aspects of the budget before us is that 
it raises taxes on working families. The proposal to cut back the 
earned-income tax credit for working families--in other words, to raise 
taxes on working families who make less than $28,000 per year will, 
according to the Department of the Treasury, raise their taxes, and in 
the case of a single parent with two children, for instance, who makes 
$8,800 a year, raise his or her taxes by $354. That is a minimum-wage 
parent making $8,800. That is a tax increase of $354, according to the 
Department of the Treasury, and that is what is in the budget 
resolution before us.
  Now, Kevin Phillips, a conservative commentator, says this about the 
Republican budget proposal and this particular tax increase on people 
making $28,000 or less. He said,

       It is the senior citizens, the poor, students, and ordinary 
     Americans who will see programs that they depend on gutted by 
     this proposal, while the richest 1 or 2 percent, far from 
     making sacrifices, actually get new benefits and tax 
     reductions.

  President Reagan described the earned income tax credit, which is 
being cut back in the proposal before us, as ``the best antipoverty, 
best pro-family, best job creation measure to come out of the 
Congress.'' That is what President Reagan told us about the earned 
income tax credit. That is what the proposal before us will cut back. 
That is the law which benefits families that earn under $28,000, and 
that is the proposal before us which will cut back that earned income 
tax credit so that families earning under $28,000 will pay more in 
taxes.
  Why are we doing this? Mainly to cut some taxes. And, according to 
the proposal of the Senator from Texas, most of the tax cut will go to 
the wealthiest of Americans. Over 50 percent of the benefits in the 
amendment of the Senator from Texas goes to Americans earning over 
$100,000. Now, what a contrast that is.
  In the budget proposal before us, if you earn less than $28,000, you 
are slated for a tax increase. If we adopt the Bradley amendment, we 
will cure that unfairness. But then comes along another amendment which 
compounds the unfairness, and that is the amendment of the Senator from 
Texas, which then says we ought to take that pot of money created by 
the cuts on seniors and on students and on working people and give 
those dollars mainly, over 50 percent, to people earning over $100,000.
  Now, the contrast could not be sharper. It could not be clearer. The 
unfairness is clear. We can correct that unfairness in two ways, by 
adopting the Bradley amendment and defeating the Gramm amendment.
  Mr. President. I rise to oppose the Gramm amendment which would 
provide for a $345 billion tax cut over the next 7 years.
  This tax cut provides more than half of its benefits to people making 
more than $100,000 a year. It gives a $20,000 tax break to those who 
make $350,000.
  On Wednesday or Thursday, the Senate will likely approve a budget 
which will be described as balanced in the year 2002 although it will 
not be. It relies heavily on surpluses in the Social Security trust 
funds to achieve balance. The proposed budget resolution before us is 
already unbalanced in another important way. The budget blue print 
represented here penalizes middle-income working families, reduces our 
investment in education, and penalizes our senior citizens, in order to 
provide for a tax reduction which will benefit mostly the wealthiest of 
Americans.
  The Gramm amendment would make the inequities of this budget worse 
and would remove from conference with the House the possibility that 
the unfairness might be somewhat reduced. One of the most inequitable 
aspects of the proposal before us is that to pay for these tax cuts for 
the most well-off Americans, it raises taxes on working families. The 
proposal to cut back the earned income tax credit for working families 
making less than $28,000 per year would, according to the Department of 
the Treasury, raise taxes by $354 on a single parent with two children 
making only $8,840 a year. That's minimum wage.
  Yesterday, I quoted noted conservative commentator Kevin Phillips, as 
have a number of my colleagues this week, but his recent public remarks 
sum up the problems with the Republican budget proposal and this 
particular tax increase on people making $28,000 a year very well. He 
said:

[[Page S7168]]

       If the budget deficit were really a national crisis instead 
     of a pretext for fiscal favoritism and finagling, we'd be 
     talking about shared sacrifice, with * * * the people who 
     have the big money making the biggest sacrifice. Instead, 
     it's senior citizens, the poor, students, and ordinary 
     Americans who'll see programs they depend on gutted while * * 
     * the richest 1- or 2-percent, far from making sacrifices, 
     actually get new benefits and tax reductions.

  The earned income tax credit has a long history of bipartisan 
support. President Reagan called the EITC, ``The best anti-poverty, the 
best pro-family, the best job creation measure to come out of the 
Congress.'' The EITC has played an important role in providing 
incentives to keep people working who are struggling to get on the 
lowest rungs of America's economic ladder and to stay off the welfare 
roles.
  And our Republican colleagues do not, look to the $2\1/2\ trillion 
over the next 5 years in all tax expenditures. There is no effort in 
this budget to control the growth of corporate tax deductions, no 
effort to restrain the growing tax breaks for the largest and richest 
among us. In fact, the Gramm amendment would eliminate the corporate 
alternative minimum tax, a tax designed to assure that profitable 
companies have to pay some reasonable amount in Federal income taxes. 
This is a more than $25 billion tax reduction for such companies.
  Instead, the Republican budget aims a $21 billion tax increase at the 
working families with children. In Michigan, this means a $457 million 
tax hike over 7 years on nearly 316,000 hard-working taxpayers making 
less than $28,000 a year. Over the next 7 years, they'll pay an average 
of nearly $1,500 more.
  Mr. President, the budget before us has its priorities wrong. The 
Bradley amendment on which we will vote shortly is a step in the right 
direction. The Gramm amendment is just wrong. It would provide tax cuts 
for the wealthiest while leaving intact this tax increase on working 
families. It's simply a question of fairness.
  I urge my colleagues to defeat the Gramm amendment and support the 
Bradley amendment.
  I thank the Chair.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Minnesota is recognized for 2 minutes.
  Mr. WELLSTONE. Mr. President, I would apologize as a teacher for not 
doing justice to the issues before the Senate. It is just impossible in 
2 minutes.
  Let me start out by saying that there is an old Yiddish proverb that 
I think applies to this amendment on the floor. That Yiddish proverb 
says you cannot dance at two weddings at the same time. Quite frankly, 
this is a perfect example of that.
  On the one hand, we tell people we are serious about deficit 
reduction. On the other hand, we are talking about $300 or $350 billion 
of tax cuts going disproportionately to the wealthiest and highest-
income citizens.
  Mr. President, I just have to say that that does not pass the test of 
intellectual rigor in the State of Minnesota. People want the Senate to 
get real with them. They want the Senate to be straightforward with 
them. They do not believe for a moment that we can have hundreds of 
billions of dollars of tax cuts while, at the same time, we are 
pretending to be serious about deficit reduction.
  Second of all, Mr. President, and it is very difficult to talk about 
what the statistics mean in personal terms, but honest to God, when we 
are talking about severe cuts in Medicare for elderly people, and 
Medicaid for elderly people, and nutrition programs for children, and 
support for students to be able to go on to higher education, a higher 
education that they can afford, and when we give away an investment in 
education and health care and jobs for people, and we want to do all of 
this deficit reduction on the backs of these citizens, middle-income 
citizens, families, working people, all on behalf of hundreds of 
billions of dollars of tax cuts for the wealthiest people in the United 
States of America, it not only does not meet the Minnesota standard of 
rigor, it does not meet the Minnesota standard of fairness.
  Mr. GRAMM. Mr. President, I yield the junior Senator from Arizona 6 
minutes.
  Mr. KYL. I thank the Senator from Texas for yielding. Mr. President, 
I express my strong support for the Gramm amendment.
  This amendment is about keeping our promises to the American people 
to provide tax relief to the American families. We have heard a lot of 
criticism about this amendment. It provides a $500 per child tax credit 
for the American family. It provides for marriage penalty relief, 
spousal IRA, a new American dream savings account to allow people to 
buy a home, provides a credit to families caring for elderly family 
members.
  It keeps faith with our seniors. It does not take a nickel from 
Social Security. In fact, it raises the Social Security earnings 
limitation, something that the senior citizens from Arizona have been 
fighting for since I has been here. It enables seniors to be able to 
work without having a penalty.
  It provides estate and gift tax relief, provides incentive for the 
purchase of long-term care insurance, something all of our seniors are 
interested in. This amendment also provides incentives for businesses 
to grow and create new jobs.
  Capital gains tax reform--there is over $5 trillion in backed-up 
capital, in pent-up capital, in our society that could be freed with 
this kind of capital gains tax relief. That means jobs for Americans.
  This amendment provides for a home office deduction. For small 
business expensing. It repeals the corporate alternative minimum tax 
and provides for neutral cost recovery. Balancing the budget, Mr. 
President, is important, but balancing the budget is not the only goal. 
At best we will produce a Government that still taxes too much, spends 
too much, and regulates too much.
  With the Gramm amendment we are saying to the American people that we 
trust them to spend their own hard-earned tax dollars more wisely than 
the bureaucrats in Washington. They know how to take care of their 
family and how to invest and create new jobs.
  While some here talk of ordinary Americans, we believe that Americans 
are extraordinary. Given the opportunity, they can improve their own 
lives and the lives of their families. They just need the resources to 
do so.
  Who cares, Mr. President, more about a child's education than a 
parent? Give them the $500 child tax credit. Who spends the money more 
wisely and efficiently? The St. Mary's Food Bank in Arizona or the 
Department of Agriculture, that administers nutrition programs? If I 
had $500 to contribute to an entity to provide for the poor, I am going 
to contribute it to a local charity sooner than to the U.S. Government.
  Who is a better job creator, the Federal Government or private 
business? The Gramm amendment means Congress has to prioritize the 
remaining spending, like American families have to do. By reducing 
taxes, it provides a chance to stimulate economic activity and produce 
more revenue for the Treasury.
  Mr. President, when a retailer has a sale on a Saturday, does he 
expect to receive less income as a result of that sale? No. By reducing 
the rates, he intends to bring more people in and more than make up by 
increased volume what he has lost in the price that he charges.
  The same thing occurs when we reduce taxes rates. We are not 
producing less revenue to the Treasury. We actually--and experience 
proves this--produce more revenue to the Treasury by virtue of that 
reduction.
  Finally, Mr. President, I heard some conversation a while ago that 
basically suggests the liberals in this body believe that this 
amendment will make it more difficult to balance the budget and 
deliver. They oppose it. Here is my challenge to all of the liberals 
who have spoken here. Will they support the budget resolution without 
this tax increase in it? Do any of our liberal colleagues want to stand 
up and say yes, they will vote for this amendment, for the budget 
resolution before the Senate, so long as we do not have the tax 
increases in it?
  The answer, Mr. President, is no. And the reason they will not 
support the budget resolution even without the tax increases is because 
fundamentally they do not support a balanced budget.
  Mr. GRAMM. Tax cuts, not increases.
  Mr. KYL. Mr. President, I am sorry if I misspoke with regard to the 
tax cuts [[Page S7169]] being proposed by the Gramm amendment.
  The bottom line, the liberals who oppose the Gramm tax cuts do so 
because they like taxes, because they want the money to spend, not 
because they are going to support a budget resolution that does not 
have these tax cuts in it.
  If any of our liberal colleagues are willing to stand up and prove me 
wrong by saying no, they will vote for this budget resolution so long 
as it does not have the Gramm tax cuts in it, then I will eat these 
words and say, fine, I accept their vote.
  I suggest, Mr. President, that the talk about opposing this 
amendment, because they are interested in balancing the budget, is just 
so much talk because in the end they will vote against the budget 
resolution that balances the budget. They would rather have the tax 
money to spend. That is why they oppose the Gramm tax cuts.
  I hope that our colleagues will support the Gramm tax cuts. Mr. 
President, I believe if they do so they will be striking a blow for the 
American economy and for the American family.
  Mr. EXON. Mr. President, I yield 5 minutes to the Senator from South 
Carolina.
  Mr. HOLLINGS. Mr. President, I thank the distinguished leader on our 
side.
  Mr. President, the amendment of the Senator from Texas is premised on 
the idea that both House and Senate budget resolutions balance the 
budget: Absolutely false. Let me refer specifically to the House 
budget, page 4: The deficit for the year 2002 is estimated at $120.7 
billion. They make no pretense, they print it in black and white.
  Moreover, if we look at the figures on page 4, lines 20 and 21, we 
will find that the debt increases from 2001 to 2002 by $192 billion; 
that is the real deficit under the House resolution.
  The real deficit under the Senate budget for the year 2002 is listed 
on page 7, line 21 as $113.5 billion. If we turn to page 9, we can see 
that the debt increases $177 billion--the real deficit.
  So the very notion that we have done a good job, that we have 
balanced the budget, or that we deserve a reward, is all based on a 
false premise. Mr. President, the biggest falsity, one perpetrated on 
both sides of the aisle, is the belief that we can balance the budget 
through spending cuts alone and without increasing revenues.
  I laid out the harsh budget realities in January of this year. I 
continue to report it, but in the limited time I have, I cannot go 
through the entire document. Thus, I would ask unanimous consent to 
have it printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           Hollings Releases Realities on Truth in Budgeting

       Reality No. 1: $1.2 trillion in spending cuts is necessary.
       Reality No. 2: There aren't enough savings in entitlements. 
     Have welfare reform, but a jobs program will cost; savings 
     are questionable. Health reform can and should save some, but 
     slowing growth from 10 to 5 percent doesn't offer enough 
     savings. Social Security won't be cut and will be off-budget 
     again.
       Reality No. 3: We should hold the line on the budget on 
     Defense; that would be no savings.
       Reality No. 4: Savings must come from freezes and cuts in 
     domestic discretionary spending but that's not enough to stop 
     hemorrhaging interest costs.
       Reality No. 5: Taxes are necessary to stop hemorrhage in 
     interest costs.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               1996            1997            1998            1999            2000            2001            2002     
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deficit CBO Jan. 1995 (using trust                                                                                                                      
 funds).................................             207             224             225            253             284             297             322 
                                         ===============================================================================================================
Freeze discretionary outlays after 1998.               0               0               0            -19             -38             -58             -78 
Spending cuts...........................             -37             -74            -111           -128            -146            -163            -180 
Interest savings........................              -1              -5             -11            -20             -32             -46             -64 
                                         ---------------------------------------------------------------------------------------------------------------
    Total savings ($1.2 trillion).......             -38             -79            -122           -167            -216            -267            -322 
                                         ===============================================================================================================
Remaining deficit using trust funds.....             169             145             103             86              68              30               0 
Remaining deficit excluding trust funds.             287             264             222            202             185             149             121 
5 percent VAT...........................              96             155             172            184             190             196             200 
Net deficit excluding trust funds.......             187              97              27            (17)            (54)           (111)           (159)
Gross debt..............................           5,142           5,257           5,300          5,305           5,272           5,200           5,091 
Average interest rate on debt (percent).             7.0             7.1             6.9            6.8             6.7             6.7             6.7 
Interest cost on the debt...............             367             370             368            368             366             360             354 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Figures are in billions. Figures don't include the billions necessary for a middle-class tax cut.                                                

  Here is a list of the kinds of nondefense discretionary spending cuts 
that would be necessary now as a first step to get $37 billion of 
savings and put the country on the road to a balanced budget:

------------------------------------------------------------------------
         Nondefense discretionary spending cuts            1996    1997 
------------------------------------------------------------------------
Cut space station.......................................   2.1     2.1  
Eliminate CDBG..........................................   2.0     2.0  
Eliminate low-income home energy assistance.............   1.4     1.5  
Eliminate arts funding..................................   1.0     1.0  
Eliminate funding for campus based aid..................   1.4     1.4  
Eliminate funding for impact aid........................   1.0     1.0  
Reduce law enforcement funding to control drugs.........   1.5     1.8  
Eliminate Federal wastewater grants.....................   0.8     1.6  
Eliminate SBA loans.....................................   0.21    0.282
Reduce Federal aid for mass transit.....................   0.5     0.1  
Eliminate EDA...........................................   0.02    0.1  
Reduce Federal rent subsidies...........................   0.1     0.2  
Reduce overhead for university research.................   0.2     0.3  
Repeal Davis-Bacon......................................   0.2     0.5  
Reduce State Dept. funding and end misc. activities.....   0.1     0.2  
End P.L. 480 title I and III sales......................   0.4     0.6  
Eliminate overseas broadcasting.........................   0.458   0.570
Eliminate the Bureau of Mines...........................   0.1     0.2  
Eliminate expansion of rural housing assistance.........   0.1     0.2  
Eliminate USTTA.........................................   0.012   0.16 
Eliminate ATP...........................................   0.1     0.2  
Eliminate airport grant in aids.........................   0.3     1.0  
Eliminate Federal highway demonstration projects........   0.1     0.3  
Eliminate Amtrak subsidies..............................   0.4     0.4  
Eliminate RDA loan guarantees...........................   0.0     0.1  
Eliminate Appalachian Regional Commission...............   0.0     0.1  
Eliminate untargeted funds for math and science.........   0.1     0.2  
Cut Federal salaries by 4 percent.......................   4.0     4.0  
Charge Federal employees commercial rates for parking...   0.1     0.1  
Reduce agricultural research extension activities.......   0.2     0.2  
Cancel advanced solid rocket motor......................   0.3     0.4  
Eliminate legal services................................   0.4     0.4  
Reduce Federal travel by 30 percent.....................   0.4     0.4  
Reduce energy funding for Energy Technology Develop.....   0.2     0.5  
Reduce Superfund cleanup costs..........................   0.2     0.4  
Reduce REA subsidies....................................   0.1     0.1  
Eliminate postal subsidies for nonprofits...............   0.1     0.1  
Reduce NIH funding......................................   0.5     1.1  
Eliminate Federal Crop Insurance Program................   0.3     0.3  
Reduce Justice State-local assistance grants............   0.1     0.2  
Reduce export-import direct loans.......................   0.1     0.2  
Eliminate library programs..............................   0.1     0.1  
Modify Service Contract Act.............................   0.2     0.2  
Eliminate HUD special purpose grants....................   0.2     0.3  
Reduce housing programs.................................   0.4     1.0  
Eliminate Community Investment Program..................   0.1     0.4  
Reduce Strategic Petroleum Program......................   0.1     0.1  
Eliminate Senior Community Service Program..............   0.1     0.4  
Reduce USDA spending for export marketing...............   0.02    0.02 
Reduce maternal and child health grants.................   0.2     0.4  
Close veterans hospitals................................   0.1     0.2  
Reduce number of political employees....................   0.1     0.1  
Reduce management costs for VA health care..............   0.2     0.4  
Reduce PMA subsidy......................................   0.0     1.2  
Reduce below cost timber sales..........................   0.0     0.1  
Reduce the legislative branch 15 percent................   0.3     0.3  
Eliminate Small Business Development Centers............   0.056   0.074
Eliminate minority assistance score, small business                     
 interstate and other technical assistance programs,                    
 women's business assistance, international trade                       
 assistance, empowerment zones..........................   0.033   0.046
Eliminate new State Department construction projects....   0.010   0.023
Eliminate Int'l Boundaries and Water Commission.........   0.013   0.02 
Eliminate Asia Foundation...............................   0.013   0.015
Eliminate International Fisheries Commission............   0.015   0.015
Eliminate Arms Control Disarmament Agency...............   0.041   0.054
Eliminate NED...........................................   0.014   0.034
Eliminate Fulbright and other international exchanges...   0.119   0.207
Eliminate North-South Center............................   0.002   0.004
Eliminate U.S. contribution to WHO, OAS, and other                      
 international organizations including the United                       
 Nations................................................   0.873   0.873
Eliminate participation in U.N. peacekeeping............   0.533   0.533
Eliminate Byrne grant...................................   0.112   0.306
Eliminate Community Policing Program....................   0.286   0.780
Moratorium on new Federal prison construction...........   0.208   0.140
Reduce Coast Guard 10 percent...........................   0.208   0.260
Eliminate Manufacturing Extension Program...............   0.03    0.06 
Eliminate coastal zone management.......................   0.03    0.06 
Eliminate national Marine sanctuaries...................   0.007   0.012
Eliminate climate and global change research............   0.047   0.078
Eliminate national sea grant............................   0.032   0.054
Eliminate State weather modification grant..............   0.002   0.003
Cut weather service operations 10 percent...............   0.031   0.051
Eliminate regional climate centers......................   0.002   0.003
Eliminate Minority Business Development Agency..........   0.022   0.044
Eliminate Public Telecommunications Facilities Program                  
 grant..................................................   0.003   0.016
Eliminate children's educational television.............   0.0     0.002
Eliminate national information infrastructure grant.....   0.001   0.032
Cut Pell grants 20 percent..............................   0.250   1.24 
Eliminate education research............................   0.042   0.283
Cut Head Start 50 percent...............................   0.840   1.8  
Eliminate meals and services for the elderly............   0.335   0.473
Eliminate title II social service block grant...........   2.7     2.8  
Eliminate community services block grant................   0.317   0.470
Eliminate rehabilitation services.......................   1.85    2.30 
Eliminate vocational education..........................   0.176   1.2  
Reduce chapter 1 20 percent.............................   0.173   1.16 
Reduce special education 20 percent.....................   0.072   0.480
Eliminate bilingual education...........................   0.029   0.196
Eliminate JTPA..........................................   0.250   4.5  
Eliminate child welfare services........................   0.240   0.289
Eliminate CDC Breast Cancer Program.....................   0.048   0.089
Eliminate CDC AIDS Control Program......................   0.283   0.525
Eliminate Ryan White AIDS Program.......................   0.228   0.468
Eliminate maternal and child health.....................   0.246   0.506
Eliminate Family Planning Program.......................   0.069   0.143
Eliminate CDC Immunization Program......................   0.168   0.345
Eliminate Tuberculosis Program..........................   0.042   0.087
Eliminate agricultural research service.................   0.546   0.656
Reduce WIC 50 percent...................................   1.579   1.735
Eliminate TEFAP:                                                        
    Administrative......................................   0.024   0.040
    Commodities.........................................   0.025   0.025
Reduce cooperative State research service 20 percent....   0.044   0.070
Reduce animal plant health inspection service 10 percent   0.036   0.044
Reduce food safety inspection service 10 percent........   0.047   0.052
                                                         ---------------
    Total...............................................  36.941  58.402
------------------------------------------------------------------------

[[Page S7170]]

  Mr. HOLLINGS. Mr. President, government is big. But what is big is 
the interest costs on the national debt.
  I was here when we balanced the budget under President Lyndon 
Johnson. The gross interest cost at that time was $4 billion.
  Think of it, 36 Presidents, Republican and Democrats, all the wars 
from the Revolution, World War I, II, Korea, and a good part of 
Vietnam--the interest costs on the debt were only $4 billion. The 
interest costs on this year's deficit and debt are estimated at $340 
billion. The cost of Government as you and I know it, domestic 
discretionary, is $275 billion. That is the courts, the Congress, the 
President, the departments, FBI, DEA and all other non-defense 
appropriated accounts. Thus, even if you eliminate all of those 
departments, you still have a deficit.
  What you are doing in the Gramm amendment is a charade, requiring 
people to pay higher interest costs and saying you are giving it to 
them in a tax cut. We are misleading the people on the idea that the 
work is done.
  I agree that the people are better able to spend their money than we 
are. But they expect us to come to Washington and to be honest about 
budget matters. It is time to get out of the wagon and help us pull--
the trouble is that we here are in the wagon. It is the children who 
are doing the pulling.
  Mr. DOMENICI. Will the Senator yield?
  Mr. HOLLINGS. I will be delighted to yield, on your time.
  Mr. DOMENICI. I just want to make three unanimous-consent requests on 
my time.
  Mr. HOLLINGS. I am through with my time. But I would be delighted to 
get into a debate with my distinguished chairman.
  In closing, let me just reiterate that I really am tired of this 
fraud. The greatest fraud I know exacted on the American people is the 
idea we have choices. We are broke. And the single biggest government 
program that we have is the interest costs on the debt that we have to 
spend year after year. To honestly stop this hemorrhaging we have to 
freeze, we have to cut, we have to close loopholes and increase taxes. 
When we finally admit that, we will get on top of the problem.
  Mr. DOMENICI. Thank you, Senator.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that Senator 
Gramm be allocated 20 minutes on the Thurmond-McCain amendment, the 
upcoming amendment, to be subtracted from the Thurmond-McCain time on 
their amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, this has been cleared by the Democratic 
leader and by Senator Exon.
  I ask unanimous consent that just prior to the final vote on the 
budget resolution there be 30 minutes for debate to be controlled by 
the Democratic leader, to be followed by 30 minutes for debate to be 
controlled by the Republican leader, or the manager, Senator Domenici, 
this in addition to the time allotted under the Budget Act.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, I yield 2 minutes to the senior Senator 
from Arizona.
  Mr. McCAIN. Mr. President, I rise in support of the Gramm amendment. 
I would direct my remarks to my colleagues on this side of the aisle 
rather than the other side of the aisle, because, in 1993, the Senator 
from South Carolina and the Senator from North Dakota and the Senator 
from Illinois and the majority of those on that side of the aisle who 
were in the majority at that time voted in favor of the largest tax 
increase in the history of this country. That was their decision. And, 
because they were in the majority at the time, that was the will of 
Congress.
  In 1994, however, the American people repudiated that massive tax 
increase. The American people said they want their taxes cut and they 
said they want to keep some of the money for themselves.
  If the Senator from South Carolina does not think a $500 per child 
tax exemption would be appreciated by average Americans in this 
country, he is free to have his own views. The fact is, the people in 
Arizona, the families in Arizona, would be more than pleased to have a 
$500 a child tax cut and would have money to spend on their own 
children rather than to send to Washington.
  What this amendment is all about is whether we are going to have the 
status quo where we have accepted the largest tax increase in the 
history of this country, enacted in 1993, or whether we are going to 
carry out the message of the American people who said we want less 
Government, we want less regulation, we want less taxes.
  I see the Gramm amendment, frankly, as a real stark choice and 
perhaps the most important vote we will take in this budget debate, 
because it will determine basically the future--not of the party on 
that side of the aisle, but of the party on this side of the aisle--as 
to whether we intend to keep the commitment and promise we made to the 
people of this country.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, I yield 4 minutes to the Senator from North 
Dakota.
  Mr. DORGAN. Mr. President, in the old western movies we used to see 
these folks traveling around selling these bottles of tonic they 
claimed would cure everything from the hiccups to the gout. Of course, 
the bottle of tonic did nothing of the sort.
  This proposal--to cut taxes--reminds me of that. It is really dealing 
with myths. Let me deal with a couple of facts. People say, ``The 
budget is going to be balanced. Now let us talk about a tax cut.'' In 
the budget resolution in this Chamber today on page 7--this is a 
reproduction of page 7--it says ``Deficits.'' In the year 2002 the 
deficit is $113.5 billion. Balanced? Where?
  I want one person today on the majority side to come to the floor and 
tell us what this says, on page 7. It says a $113 billion deficit after 
7 years.
  Second, tax cut. Do not take it from me, take it from a Republican, 
Kevin Phillips, who says,

       Spending on government programs [speaking of this budget] 
     from Medicare and education to home heating oil assistance, 
     is to be reduced in ways that principally burden the poor and 
     the middle class while simultaneously taxes are to be cut in 
     ways that predominantly benefit the top 1 or 2 percent of 
     Americans.

  Do not take it from me. Take it from a Republican who tells it like 
it is.
  Here is the paragraph of what he is talking about on the tax cuts. 
They call it middle-class tax cuts. Families under $30,000 a year get 
$120. Families over $200,000 a year are given $11,200 tax cut. That is 
a middle-class tax cut? Not where I come from.
  No, this budget is clear. With this amendment calling for tax cuts 
for the wealthy, this budget says to working families: We are going to 
make it harder for you to send your kids to college because we do not 
have enough money but we are going to give a big tax cuts to the 
wealthy. It says to the elderly and poor: We are going to make it 
harder for you to get health care because we cannot afford it but we 
are going to give a big tax cut to the wealthy. It says to 2,000 
corporations that we will give a $2 million check to each one of them, 
because we are going to eliminate the alternative minimum tax.
  I do not understand those priorities. Those priorities make no sense 
at all. The first job in this Chamber is to balance the Federal budget. 
For those on the other side to stand up and say we do not care about 
balancing the budget, and then to offer an amendment that says, ``By 
the way, the budget is not in balance now that we have brought to the 
floor, but we also want to give very big tax cuts to those who need 
them least in this country and take it out of the hides of other folks 
who want to send their kids to school or to get health care or to buy 
home heating fuel in the cold winter,'' somehow I think those 
priorities do not sell very well back home, because the people see 
through them.
  This is a curious and tortured claim that is brought to the floor, 
that somehow if we do not support tax cuts for the rich we do not care 
about the Federal deficits. We are the ones who care about the Federal 
deficit. We want to balance this budget, but you do not balance the 
budget by trotting out [[Page S7171]] something that is popular, a big 
tax cut, call it a middle-class tax cut, and butter the bread of the 
wealthy in this country, and then tell other folks we are sorry, we 
cannot afford things that are essential for you.
  No, this does not fly. This does not make sense. I think the American 
people will see it for that. This is pure politics, pure politics.
  This budget resolution on the floor today does not balance the 
budget. It does not claim it does. On line 21 of page 7 it says the 
Federal deficit in the year 2002 is going to be $113 billion.
  Would that those who called themselves warriors in the past debate on 
the deficit not turn out to be wall flowers on this issue and better 
serve this country and their constituents by deciding if there is money 
to be achieved anywhere, any place, on revenue or the spending side, to 
use it to bring this down to zero and put this country back on track. 
Really balance the budget, really give us some truth in labeling. Yes, 
that would better serve this country's interests.
  I know it may not be the most popular thing, but I happen to think it 
is the right thing.
  Mr. President, I yield the floor.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER (Mr. Grams). The Senator from Texas.
  Mr. GRAMM. Mr. President, I have to give our dear colleagues on the 
left credit for one thing. They do not propose budgets. They do not 
vote for balanced budget amendments to the Constitution. They never 
propose cutting anything. But they can stand up in front of God and 
everybody else and say they are for balancing the budget. It is like 
Bill Clinton, who feels our pain and does not share with us that he 
causes it all the time.
  I believe that we have a clear and stark choice here. You can support 
or not support Senator Domenici's budget, but he makes the hard choices 
to balance the budget over the next 7 years. What my amendment does is 
make more hard choices, cut spending more so that in addition to 
balancing the budget, we can let the working men and women of America 
keep more of what they earn.
  Mr. DORGAN. Mr. President, will the Senator yield for a question?
  Mr. GRAMM. I yield to the distinguished Senator from New Hampshire.
  Mr. DORGAN. I wonder if the Senator will yield for a question.
  Mr. GRAMM. I will not yield.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SMITH. I thank the Senator from Texas.
  Mr. President, in one of his debates, Ronald Reagan said ``There you 
go again.'' And here we go again. This is a historic debate in this 
Chamber. At no point in recent times have the differences between the 
two political parties been more evident than right now. On the 
Republican side, you have somebody offering tax cuts, spending cuts, 
slowing the rate of growth, balancing the budget, and on the other side 
it is business as usual: More spending, more taxes, no alternatives.
  I was in this Chamber for many hours during the debate on the 
balanced budget amendment, and I heard it over and over and over again, 
speaker after speaker after speaker: We do not need the amendment. All 
we have to do is do it. What is the Republican plan? How come you do 
not tell us how you are going to do it?
  Well, here we are. We are saying how to do it. We are saying balance 
the budget. You would not give us the amendment because you would not 
give us enough votes. We are now offering the amendment. We are 
offering the opportunity to balance the budget without the amendment. 
What are you doing? Talking and walking. That is what they are doing, 
talking and walking over there.
  The Gramm amendment adds one more important component to the 
underlying Domenici proposal that has been missing, and that is very 
simply this. Either you want to let working Americans keep more of what 
they earn or you do not. You want to cut taxes for families and 
businesses so they can have more money to invest on their kids or in 
their businesses or you do not. That is what the Gramm amendment is all 
about. And I wish to commend the Senator from Texas for having the 
courage to come up with this bold proposal because the Senator from 
Texas knows that this is the essence of the Republican contract, the 
Contract With America, that was made with the American people, that put 
the Republican Senators in the majority in this Senate and put the 
Republicans in the majority in the House of Representatives. 
Republicans ought to be on this floor unanimously supporting the Gramm 
amendment today because without that contract and without that promise 
to the American people, you would not be in the majority. So if you 
want to break that contract, then vote against the Gramm amendment.
  I am talking to my colleagues on this side of the aisle because I 
know where my colleagues are coming from on the other side of the 
aisle. This amendment, the Gramm amendment, allows for a 3-percent 
growth in the overall budget--not a cut. The Domenici plan is 3.3. So 
for 0.3 percent, Senator Gramm is offering businesses and families more 
money to invest and to provide for growth.
  The Gramm amendment makes a statement. It says we need to enact 
incentives for Americans to save and invest, penalty free withdrawals 
for homes, for education, medical expenses, marriage penalty tax 
credit, cut the capital gains rate, and index it for inflation, and a 
$500 a child tax credit.
  This is the essence of the difference between the two parties, Mr. 
President, as I said. The tax cuts in the Gramm proposal are paid for 
with spending cuts. It does not undercut the Domenici proposal. It 
simply provides deeper cuts to provide the tax benefits to the American 
people.
  We have seen a lot of polls lately that suggest the American people 
really do not want tax cuts. They are asked whether we would rather 
have tax cuts or deficit reduction. Well, of course, people will say we 
would like to have both, and you can get both right here in this 
proposal. When it is offered either/or, they will say, fine, balance 
the budget. We do not need the tax cuts. We will sacrifice. Balance the 
budget.
  This is both. This is both. Ask the American people if they would 
support a budget that reaches balance and gives them a capital gains 
tax. Ask the American people if they would support a budget that 
reaches balance and allows penalty-free withdrawals for education or a 
downpayment on a loan. Ask the American people if they would support a 
budget that reaches balance and provides a $500 tax credit for each 
child. Ask them that and see what the answer is--not either/or, both. 
And that is what the Gramm amendment is all about. The choice is not 
between tax cuts and a balanced budget. The question is are you willing 
to cut spending enough to do both.
  And again, the word ``cut'' is used very loosely because we are 
asking our colleagues on the other side of the aisle and some of the 
colleagues on this side of the aisle to support a proposal that limits 
the growth of the U.S. Government over the next 7 years to 3 percent. 
That is what we are asking you to do.
  You were out in the Chamber time after time after time during that 
balanced budget amendment debate saying give us your plan; give us your 
plan; we do not need an amendment. All right, we did not get the 
amendment. Where is your plan? You defeated your President's plan 99 to 
nothing joining with us on the Senate floor. I have not seen yours. I 
am hearing all this talk, but I do not see any plan.
  Frankly, I think the American people are sick of it. They were sick 
of it in the elections in 1994, and they are going to be even sicker of 
it after this debate. We have an opportunity here. History shows us 
that tax cuts create jobs. It is not the Government's money. It is your 
money. You provide it to the Government. Give the Government less. 
Leave it in your pocket, and you will create jobs, and you will employ 
more people, and we will have more tax revenues, and we will balance 
the budget even more quickly.
  In closing, Mr. President, let me just say every Republican Senator 
and House Member, as I said, voted against that budget, the President's 
budget. The tax cuts included in the Gramm package total $173 billion. 
We are getting $173 billion back out of the $250 billion tax increase 
the President provided us last year. We do not even get as far at 
cutting taxes as Clinton went [[Page S7172]] in raising taxes. Now, 
that is not really too much to ask.
  So, Mr. President, let me conclude by complimenting Senator Domenici 
for his courageous decision to meet this head on, and again to 
compliment Senator Gramm for adding what I believe is a stronger 
amendment to this package to balance the Federal budget and to cut 
taxes, to do what the American people asked us to do when they elected 
us into the majority in November.
  I yield back the remainder of any time I may have.
  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, I thank him for his patience, and I am 
pleased to yield 4 minutes to my distinguished colleague, the senior 
Senator from Illinois.
  Mr. SIMON. Mr. President, I thank my colleague.
  I am pleased to stand up and say I think this is a bad amendment. 
Would I like a tax cut? Of course. We would all like a tax cut.
  I have three grandchildren. I face the choice of sacrificing a little 
bit or building a better future for my three grandchildren. That is the 
fundamental choice. I do not have a hard time making that choice, and I 
do not think the American people have a hard time making that choice.
  Let us move to a balanced budget. I commend Pete Domenici for moving 
toward a balanced budget. I do not happen to agree with the priorities, 
but he is moving in that direction. But the Gramm amendment would take, 
over a 10-year period, $594 billion in tax cuts.
  Our history on these things, on legislative answers--and this is why 
we need the constitutional amendment--is they last for about 2 years, 
as our friend from Texas knows better than anyone else, and then they 
blow up in our face.
  The danger is the Domenici plan will last 2 years and then we will 
discard it because it becomes too politically potent and we will keep 
the tax cut.
  When the Senator from Arizona, Senator Kyl, says you cut taxes and 
you get more revenue for the Federal Government, in 1981 we had both a 
Republican--the Ronald Reagan plan--and a Democratic plan to do 
precisely that. I voted against both the Republican plan and the 
Democratic plan. But I can remember Ronald Reagan saying, ``If you pass 
this, by 1984 we are going to have a balanced budget in our country.'' 
It did not make sense. This amendment does not make sense now.
  And to cut back from the Domenici numbers, $40 billion in Medicaid--
who are Medicaid recipients? Half of them are poor children. Forty 
billion dollars we are going to get here. If anyone thinks that $40 
billion is not a tax cut, talk to any hospital administrator. That 
means we are going to cut back on what hospitals get for Medicaid. And 
what will hospital administrators do? They will shift it to the non-
Medicaid, non-Medicare payment to the insurance companies, and our 
insurance rates go up all over the country.
  If anyone thinks that is not a tax increase, they are just fooling 
themselves.
  Oh, this is great politics. And my friend from Texas is good at 
politics. I commend him for standing up frequently on the courageous 
side of things. But this one is wrong. He is wrong. It is not in the 
national interest and his amendment should be defeated.
  Ms. MOSELEY-BRAUN addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. EXON. Mr. President, I yield 4 minutes to the junior Senator from 
Illinois.
  The PRESIDING OFFICER. The Senator from Illinois.
  Ms. MOSELEY-BRAUN. Thank you very much.
  Mr. President, at the outset of my remarks, I would like to point out 
to the sponsor of this amendment that, without this broad-brushing, 
these issues that a number of us on--the Senator said ``on the left''--
on this side of the aisle voted for and supported the balanced budget 
amendment. In fact, Senator Simon, my senior Senator, who is leaving 
the floor now, was an original sponsor of the balanced budget amendment 
and continued to press for that matter over the years. And so, this is 
not a partisan issue.
  Mr. President, we ordinarily consider tax cuts when our economy needs 
economic stimulus, but economic growth is strong, so strong, in fact, 
that the Federal Reserve raised interest rates seven separate times to 
ensure that the economy would not overheat. And unemployment is low; 
our economy has created 6 million new jobs. Jump-starting the economy, 
therefore, is unnecessary at this time, and cannot be the motive for 
this amendment.
  What is behind this amendment--as the chart over there indicates--is 
the notion that the Federal Government is too big. Now, that is 
something of an arguable point. It is true, for example that national 
defense consumed $81 billion in fiscal 1970, and increased to over $281 
billion by fiscal 1994. However, in 1970, the $81 billion financed over 
3 million soldiers, sailors, Air Force personnel, and marines, whereas 
the $281 billion we spent last year financed Armed Forces only about 
half that amount. The large dollar increases, therefore, do not really 
represent growth at all.
  It is true, of course, that as a percentage of the economy, 
Government has grown. The Federal Government accounted for about 19.2 
percent of the economy in 1959, and 22 percent last year. That is an 
increase of about 14 percent over the past 35 years. Where did that 
money go. Well, most of it went to Medicare and Social Security. These 
two programs alone increased from 2 percent of the economy in 1959 to 
over 7.2 percent in 1994--that is, they more than accounted for all of 
the growth in Government over the last 35 years. Everything else--
discretionary spending, cash, nutrition, and housing assistance for the 
poor, agriculture--almost everything else went down. The only other 
Federal activities to increase in size as a percentage of the economy 
since 1959 are interest expense and Medicaid.
  What these numbers all mean is that, to the extent the Federal 
Government has grown over the past 35 years, it has grown because 
Social Security and Medicare have become mature programs over that 
period. If you ask Americans whether they would prefer a tax cut, or 
whether they would prefer to reduce their retirement or health care 
security, the answer is, I think quite obvious.
  Now, this amendment does not quite ask that question, but it does 
raise another one: would Americans rather have a tax cut, and sacrifice 
long-term medical care for the elderly, and medical care for the poor, 
and investment in our children's education, or would they rather give 
up the tax cuts, balance the budget, but continue to make essential 
public investments in education, and in health. I think the answer to 
that question is equally obvious. While Americans would very much like 
to balance the budget, they want to do so in a way that preserves 
essential investments in our future.
  They know that the reason balancing the budget is so important is 
because we do not want to deprive future generations of their 
opportunity to live the American dream. And they know that trying to 
balance the budget in a way that reduces educational opportunity and 
cuts access to health care does not meet our obligation to our 
children--and their children. They know that simply is not fair. They 
know that it hurts both individuals and our country, because our future 
is diminished if every American does not have the opportunity to strive 
for the American dream.
  And it is not just individual Americans who know that America's 
future depends on making the right choice. Financial markets know it 
also. If the Senate adopts this amendment and the tax cuts become law, 
we will have undermined our commitment to real deficit reduction, and 
we will have ignored our responsibility to the future of Americans and 
to America. The results of that will be continued declines in our 
national wealth, a renewed fall of the dollar, a widening of the gap 
between rich and poor, and diminished opportunities for many Americans 
and for our Nation as a whole.
  The simple truth is that we are all in this together--we are all 
Americans--and the way we balance the budget should reflect that fact. 
A tax cut that is unneeded to stimulate our economy makes no sense. A 
tax cut that creates confusion in the minds of financial markets as to 
whether the United States is committed to deficit reduction makes no 
sense. And a tax cut [[Page S7173]] that undermines the essential 
purpose of balancing the budget in the first place--protecting future 
opportunities for our children and our country--is not what Americans 
want and must be defeated.
  I would point out, my previous colleague made the point that fiscal 
year 2002 still has a deficit here of $113 billion. It seems to me that 
a $113 billion deficit is like being just a little bit pregnant. I 
believe we should focus our attention on deficit reduction instead of 
irresponsible promises of a chicken in every pot to make political 
points.
  I urge my colleagues, therefore, to defeat this amendment.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  Mr. GRAMM. Mr. President, I yield 10 minutes to the distinguished 
Senator from Mississippi.
  The PRESIDING OFFICER. The Senator from Mississippi is recognized for 
10 minutes.
  Mr. LOTT. Mr. President, I want to thank the distinguished Senator 
from Texas for yielding me this time.
  I rise in support of the Gramm amendment to the 1996 concurrent 
budget resolution. I have said on the floor of the Senate before that, 
along with balancing the budget, which is very important, we need to 
provide some tax relief for all Americans, especially families.
  Slowing the rate of growth in Federal spending is not just a 
political exercise or an accounting endeavor. The Federal Government is 
financed by the hard work of the people. If Government is to be made 
smaller and, thus, costs less, then Americans should be able to keep 
more of their hard-earned cash.
  As I listened to the debate here in the Senate, it seemed to me that 
there are Senators or a Senator that will speak for almost every group 
in the country, many times for good reasons: whether it is education or 
Medicare or the elderly or the defense program. But rarely do we have 
people that stand up here in the Senate and speak up for the working 
taxpaying Americans.
  Who among us is willing to do that? Senator Gramm of Texas is willing 
to do that.
  It seems to me if we are going to control the rate of growth in the 
Federal Government spending by over $1 trillion over the next 7 years, 
should not the people that are paying the bills, carrying the load, 
doing the work, get just a little bit of the relief?
  And I want to ask my colleagues: What is it you object to in this 
list of tax cuts? I felt very strongly that we should have had these 
tax cuts in the body of this resolution. I am pleased that we have the 
dividend that is designated for tax cuts. But I really think we should 
make it clear that we want some of these changes. And what we are 
talking about is some tax cuts that will encourage growth.
  Whatever happened to the idea that one of best ways to reduce the 
deficit is to have growth in the economy? We have heard that for years. 
President Clinton has even talked about that.
  And the economists all indicate they are worried about savings. How 
about the idea of letting the people get a little consideration to 
encourage them to save more?
  So let us encourage investment and growth and savings. That is what 
these tax cuts do.
  And, also, how about a little more fairness in the Tax Code?
   There are so many problems with the Tax Code you cannot begin to 
enumerate them all. But when you start talking about things like 
allowing wives working in the home to be able to have an individual 
retirement account, who is against that? That is fundamental fairness. 
Everybody can have an individual retirement account at certain levels 
of income, but not the spouse working in the home. To me, correction of 
this is just basic fairness.

  How about the marriage penalty credit? For years, Congress has talked 
about how we need to get rid of this marriage penalty, and yet it just 
lives on. This tax cut would deal with that problem.
  What about the idea of our elderly? We have a lot of our elderly who 
would like to keep working. But now if they keep working, many times 
when they need it and when we need them, they get penalized.
  These tax cuts would include, among other good things, raising the 
Social Security earnings test threshold. We should do that. I would 
like to eliminate it, but this proposal would take the threshold up to 
$30,000.
  So you see, we are talking about some things that will help families 
and wives, married couples, small businesses and our elderly in a real 
way.
  We have a provision in here that would provide small businesses 
estate and gift tax relief. The people who own small businesses run the 
risk of losing everything they have or affecting what they do because 
of these tax penalties.
  And we should have the capital gains tax rate cut. When I go home and 
I ask the people of all backgrounds and economic stations in life, 
should we have a capital gains rate cut, ``Absolutely,'' they say, we 
should do that. It never ceases to amaze me that in Washington, DC, a 
capital gains tax rate cut is fought. But out where people are creating 
the jobs and when they want to be able to sell timber or timberland, 
they understand that a capital gains tax rate cut would help them and 
would help the economy and would create jobs. But not in Washington, 
no.
  What about the $500 tax credit per child? Why do we not want to let 
the families with children keep a little bit more of their own money, 
let them decide how they want to spend money for clothing and schools 
and food for their children? Oh, no, it is much better to have a 
program from Washington that does it for you or tells you how you must 
do it. This would allow the decisions to go back to the families with 
children. Let them decide how to spend their money.
  I want to point out that this is not an insignificant consideration 
either. It really would make a difference in the family income. I would 
like to have printed in the Record, Mr. President--it may have already 
been done, but I want to make sure it is in here--an article in the 
Washington Post on May 16 by James K. Glassman entitled ``Yes, Cut 
Taxes.'' I ask unanimous consent that that be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                             Yes, Cut Taxes

                         (By James K. Glassman)

       Critics of the Republican budget in the press, Congress and 
     the White House may be drastically underestimating the 
     power--both political and economic--of those tax cuts the 
     House passed in April. I know I did.
       First, a little history. The Republicans won the November 
     congressional elections, using a contract that pledged a 
     balanced budget and a tax cut.
       President Clinton figured they couldn't do it, so his 
     strategy was to sit back and let them take the heat for 
     overreaching. His February budget opted for the status quo, 
     which means annual deficits of $200 billion-plus forever.
       Now, the Republicans are offering their official budget 
     plans, and--whaddaya know?--they show they can indeed balance 
     the budget by their target year, the palindromic 2002. And 
     they can do it by increasing spending in each year by an 
     average of $45 billion.
       But skeptics see two problems. The first is Medicare. 
     Republicans want to increase spending on the program by about 
     6 percent annually instead of 10 percent. In Washington 
     parlance, this is a ``cut'' of $280 billion, so it's not 
     expected to be easy to sell.
       The second problem is tax cuts. Sen. Pete Domenici (R-
     N.M.), who heads the Senate Budget Committee, said Sunday, 
     ``We don't have a tax cut until we balance the budget.'' But 
     his House counterpart, Rep. John Kasich (R-Ohio), things, the 
     country can have both at the same time.
       The trouble with tax cuts is that they're hard to justify 
     at the same time you're ordering painful limits--and some 
     outright reductions--in spending. Also, it's likely that a 
     total restructuring of the tax system (a flat tax or a 
     national sales tax) will be a big issue in next year's 
     presidential election. So why piecemeal changes now?
       In the past, I made these same arguments in urging Congress 
     to shelve the tax cuts. But that was before I did something 
     that most journalists (and even politicians) still haven't 
     done: I took a close look at the tax bill.
       Now I'm changing my mind. The tax changes are a political 
     plus--and likely an economic plus as well. Once Americans 
     understand them (and few do now) they're apt to become very, 
     very enthusiastic. Reluctant politicians risk being trampled.
       The two main provisions of the tax bill, H.R. 1215, are 
     these:
       (1) Nearly every family with children can reduce its final 
     tax bill by $500 per kid.
       For example, the average household headed by a married 
     couple has an income of about $50,000 a year. If that family 
     has three children, its current federal income tax bill, 
     according to a study by Price Waterhouse, is $4,643.
       But if H.R. 1215 becomes law, the family's tax bill well be 
     reduced by $1,500--to $3,143, a [[Page S7174]] cut of a 
     whopping 32 percent. Such a family with two children would 
     save 20 percent, with four children, 47 percent.
       These are huge cuts, perhaps unprecedented in U.S. fiscal 
     history. Yet I doubt that most Americans know much about 
     them. The press coverage of H.R. 1215 earlier this year was 
     dominated by a specious controversy over whether tax relief 
     benefited the wealthy. Of course, it does--but only if the 
     rich are willing to invest their money, not spent it. Which 
     brings us to the second element . . .
       (2) Taxes on capital gains will be cut dramatically.
       This is the part that's meant to encourage investing, and 
     it's a fact that most investing is done by families with 
     higher incomes. But the capital gains cuts in H.R. 1215 
     aren't a replay of the Reagan tax cuts, which didn't work as 
     advertised.
       Those 1986 cuts lowered the tax rates on income (salaries, 
     bonuses, interest on bonds) but actually raised the rates on 
     capital gains (profits from the sales of assets like stocks 
     and real estate). As a result, the changes encouraged 
     consumption, but not investment. In fact, the paltry U.S. 
     savings rate actually fell.
       The changes in the tax bill the House passed in April are 
     directly targeted at investment--and they're extremely 
     powerful.
       The bill does two things: First, it reduces a family's 
     capital gains rate to one-half of its income-tax rate. So, if 
     you're in a 28 percent bracket (taxable income of $38,000 to 
     $92,000 for a couple filing jointly), you'll pay just 14 
     percent on your stock profits.
       Second, the bill indexes capital gains, which means that 
     you only pay taxes on real profits, not on inflation. 
     Indexing can produce huge tax savings--but only for long-term 
     investors. And long-term investors are what the U.S. economy 
     desperately needs; they provide the capital that creates good 
     jobs.
       Consider a family with taxable income of $80,000 a year 
     that buys 200 shares of Wal-Mart at $25 a share, holds the 
     stock for six years, then sells it for $50 a share--a profit 
     of $5,000.
       Right now, taxes would be $1,400 (28 percent of $5,000). 
     But under H.R. 1215, if inflation over those six years 
     averaged about 3 percent, the family would pay tax only on 
     its ``real'' (non-inflationary) gain--on $4,000 rather than 
     on $5,000. And the rate would be just 14 percent. So the tax 
     bill would be $560 instead of $1,400, a reduction of 60 
     percent.
       Would capital gains cuts of that magnitude entice Americans 
     to save and invest rather than to consume? It's a good bet.
       The tax changes in H.R. 1215 would mean that the Treasury 
     would receive about $80 billion less revenue in 2002 than it 
     now expects. That's a shortfall of about 4 percent that would 
     have to be met with extra spending restraint. is the trade-
     off worth it? It's more and more clear the answer is yes.

  Mr. LOTT. Mr. President, I quote from that article I think the most 
pertinent part:

       (1) Nearly every family with children can reduce its final 
     tax bill by $500 per kid.
       For example, the average household headed by a married 
     couple has an income of about $50,000 a year.

  Not rich folks; these are middle-income, working people.

       If that family has three children, its current Federal 
     income tax bill, according to a study by Price Waterhouse, is 
     $4,643.
       But if--

  This amendment is added to the budget resolution--

       The family's tax bill will be reduced by $1,500--to $3,143, 
     a cut of a whopping 32 percent. Such a family with two 
     children would save 20 percent, with four children, 47 
     percent.

  This is a significant move to help families with children.
  So, Mr. President, when I look down the list of provisions in this 
tax cut, I ask--in fact, I challenge--Senators to come out here and 
tell me which one of these they are against.
  Are you against providing tax incentives for the purchase of long-
term care insurance? How about a home office deduction for small 
business men and women, individual entrepreneurs that work out of their 
homes? Everybody else gets a deduction for office expenses but not if 
you work in your home. More and more Americans are doing that, are able 
to do that, or are going to have to do it in the future.
  So I think there are many good provisions in this legislation. I urge 
the Senate to support it. It does have the support of a number of 
groups that are interested in encouraging growth and savings in the 
business community. The Heritage Foundation indicated that 490,563 
children in my State of Mississippi would be eligible for the per child 
credit that I spoke of a moment ago. That means almost $245.3 million 
of this hard-earned cash would be returned to the families in my State.
  In President Clinton's home State of Arkansas, there are 458,547 
children who would benefit from the per child tax credit. That is about 
$229 million more than Arkansas families will get back without this tax 
credit.
  So I think, Mr. President, we have an opportunity to really help the 
economy and to help the families in this country. We should add this 
amendment to the resolution. Then, when we go to conference, while 
there still would be some differences, we could work out those 
differences and have tax relief in this very important legislation.
  So I urge the support of the Gramm amendment.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, I ask unanimous consent to print a series 
of letters in the Record in support of the amendment by the National 
Taxpayers Union, by Citizens for a Sound Economy, by the Christian 
Coalition, by Traditional Values Coalition, by the Family Research 
Council, by Concerned Women of America, by the Business and Industrial 
Council, and by the National Federation of Independent Business.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                     National Taxpayers Union,

                                     Washington, DC, May 22, 1995.
       Dear Senator: The 300,000-member National Taxpayers Union 
     (NTU) strongly supports the FY 1996 Budget Resolution (S. 
     Con. Res. 13) as reported by the Senate Budget Committee. A 
     vote FOR the Committee's Budget Resolution will be scored as 
     one of the most heavily-weighted pro-taxpayer votes in our 
     1995 Rating of Congress. NTU opposes any attempts to increase 
     the spending projected in the Budget Resolution. ``No'' votes 
     on such amendments will likewise be included as pro-taxpayer 
     votes in our Rating.
       We are pleased that for the first time in fifteen years the 
     Senate Budget Committee has reported a Budget Resolution to 
     balance the budget without raising taxes. While the Budget 
     Committee has outlined significant spending cuts, the final 
     proposals will be drafted by the authorizing and 
     appropriations committees. The Committee has made suggestions 
     that NTU has supported for many years, including the 
     termination or privatization of many government programs. It 
     also begins the long-overdue process of reforming Medicare, 
     which is headed for bankruptcy in a few years.
       Unless current trends change soon, funding increases in 
     major entitlement programs will slash the after-tax income of 
     the average American worker by almost 60% over the next 45 
     years. After-tax income would plunge from $19,000 in 1995 to 
     $7,821 in 2040. As bleak as this projection may seem, it is 
     based on an optimistic assumption that pre-tax incomes will 
     rise faster over the next 45 years than they have over the 
     past 20. This spending growth is not sustainable, and if 
     allowed to grow unchecked will permanently damage our 
     children's hope for a better future.
       In the world economy, the advent of the Information 
     Revolution will give a huge advantage to efficient 
     governments. Because computers allow most economic 
     transactions to occur literally anywhere, competition between 
     jurisdictions expands by the day. That necessitates a 
     revolution in the way government is financed and a radical 
     downsizing of its activities. The budget restraint in this 
     resolution will force necessary reexamination and reform of 
     many government programs.
       While we fully support the Budget Resolution, we are 
     disappointed that it does not project passage of the 
     important tax reduction proposals that the House passed last 
     month. Therefore, we support an amendment by Senator Phil 
     Gramm and others that would further restrain spending growth, 
     accommodate most of the House-passed tax cuts, and still 
     balance the budget by 2002. It is vitally important that 
     Congress also reduce the tax burden on middle-class taxpayers 
     and the present tax disincentives for savings, investment, 
     and economic growth. The typical American taxpayer has to 
     work until May 6 this year just to pay his federal, state, 
     and local taxes. Overburdened taxpayers expect and deserve 
     substantial relief from this crushing tax load. A vote for 
     the Gramm amendment will be included as pro-taxpayer vote in 
     our Rating.
       Through almost 200 years of American history, our leaders 
     strove to follow Thomas Jefferson's wise advice: ``We shall 
     consider ourselves unauthorized to saddle posterity with our 
     debts, and morally bound to pay them ourselves.'' Passage of 
     the Budget Resolution is essential if Congress hopes to 
     restore a fiscally sound future for the next generation.
           Sincerely,
                                                    David Keating,
     Executive Vice President.
                                                                    ____

                                                    Citizens for a

                                                Sound Economy,

                                     Washington, DC, May 17, 1995.
     Hon. Phil Gramm,
     U.S. Senate, Washington, DC.
       Dear Senator Gramm: I am writing on behalf of the 250,000 
     members of Citizens for a Sound Economy (CSE) to register our 
     support for your proposal to balance the budget by 2002 by 
     cutting taxes and slowing federal spending 
     growth. [[Page S7175]] 
       In order to encourage a growing economy that creates new, 
     high-paying jobs and rising living standards for our children 
     and grandchildren, we must bring federal spending under 
     control. Your proposal does this by limiting federal spending 
     increases to 3.3 percent per year. Cutting taxes and capping 
     the dollars available for the federal government to spend 
     would mean more dollars for American families to spend. 
     Letting Americans spend and invest their money as they like, 
     instead of allowing the government to spend their money for 
     them, is one of the best things Congress could do to 
     strengthen our economy.
       Americans are faced with chronic federal budget deficits 
     because of ever-increasing government spending. CSE strongly 
     supports your plan because it would cut taxes and help bring 
     federal spending under control, thereby resulting in the 
     first balanced budget in a generation.
           Sincerely,
                                                     Paul Beckner,
     President.
                                                                    ____

                                              Christian Coalition,

                                          Capitol Hill Office,

                                      Washington, DC, May 8, 1995.
       Dear Senator: On behalf of the 1.5 million members and 
     supporters of the Christian Coalition, I am writing to urge 
     your support for Senator Phil Gramm's proposed substitute 
     amendment to the Concurrent Budget Resolution for FY '96 when 
     it comes to the floor next week. This amendment will provide 
     for tax relief and growth incentives as promised in the 
     Contract With America.
       The American family has repeatedly been promised tax 
     relief, only to see those promises broken. That is why the 
     recent passage by the House of Representatives of the family 
     tax relief promised in the Contract With America was 
     particularly gratifying. But the American people do not make 
     differentiations between the House and the Senate--they only 
     know that Republicans campaigned on the Contract With America 
     and that the 1994 elections were a mandate to the Republican 
     party to pass the Contract. That is why we are writing today 
     to urge the Senate to stick with the tax relief promised in 
     the Contract With America.
       Although all Americans have been impacted by today's high 
     taxation level, families with children have particularly felt 
     the impact due to the diminished value of the personal 
     exemption. The personal exemption protected 68 percent of the 
     average family of four's earnings from taxation in 1948, but 
     it has not kept up with inflation and higher income. If it 
     had done so, it would today be between $7,000 and $8,000. The 
     American family pays more in federal, state, and local taxes, 
     than it does for food, clothing, and housing combined.
       It is important to remember that in asking for the $500 per 
     child tax credit, families are not asking for a new subsidy, 
     a new entitlement, or a new spending program from the 
     government. They are asking to keep more of their own hard-
     earned income in order to raise their families.
       We urge the Senate to put families first and support the 
     Gramm substitute amendment when it comes to the floor next 
     week. This is the family dividend of budget reduction. Thank 
     you for your attention to our concerns.
           Sincerely,
                                               Ralph E. Reed, Jr.,
     Executive Director.
                                                                    ____

                                 Traditional Values Coalition,

                                                     May 12, 1995.
     Hon. Phil Gramm,
     U.S. Senate, Washington, DC.
       Dear Senator Gramm. Next week the Senate will begin 
     consideration of the budget resolution. On behalf of 
     Traditional Values Coalition's 31,000 member churches I am 
     writing to urge you to support Senator Phil Gramm's 
     amendment.
       For too long special interests have had more clout and 
     control over the budget process than working families. In 
     addition, over the last few decades Washington has shown a 
     lack of financial discipline, forcing working families to 
     shoulder the burden of increased government spending and 
     higher taxes. Traditional Values Coalition believes that it 
     is now time for Congress to change its priorities and focus 
     by providing tax relief to the parents of 52 million 
     children. With the passage of the Contract with America, the 
     Houses has acknowledged this injustice toward working 
     families. I hope the Senate will as well.
       Senator Gramm's amendment will restrain the growth in 
     federal spending by $94 billion over five years and provide 
     desperately needed tax relief for 29 million hardworking 
     families. TVC believes cuts in wasteful government spending 
     will pay for the family tax relief. These spending cuts 
     should come from eliminating hundreds of programs ranging 
     from the Uranium Enrichment program ($1.6 billion) to the 
     National Endowment for the Arts and Humanities ($1.4 billion) 
     and by privatizing the Corporation for Public Broadcasting 
     ($1 billion).
       In the 1950's, the average American family paid 3% of their 
     income in federal taxes. Today, the average family sends 25% 
     of its income to Washington. It is outrageous that the 
     average working family pays more to the tax man than it 
     spends on shelter, food and clothing.
       Traditional Values Coalition believes that working families 
     are better equipped to make decisions on how to spend their 
     own money than bureaucrats in Washington. Working families 
     are not asking for anything special or an entitlement. They 
     are simply asking for the government to return what 
     rightfully belongs to them--their hard earned money.
       Traditional Values Coalition considers Senator Gramm's 
     amendment pro-family and pro-growth. Last year Congress put 
     spending first, this year put families first.
           Sincerely,
                                            Rev. Louis P. Sheldon,
     Chairman.
                                                                    ____

                                      Family Research Council,

                                     Washington, DC, May 10, 1995.
       Dear Senator: I am writing to express my support for an 
     amendment Senator Gramm plans to offer to the budget 
     resolution when it reaches the Senate floor later this month. 
     The amendment would significantly reduce the tax burden on 
     America's families by adopting a $500 per-child tax credit 
     and a variety of other tax measures (including a deduction 
     for adoption expenses, spousal IRA benefits, etc.) which are 
     very much needed.
       The Gramm proposal allows the Senate to adopt the ``crown 
     jewel'' of the House GOP's Contract With America. It 
     recognizes that the electoral revolution that occurred last 
     November 8 was driven in no small part by a desire on the 
     part of the American people to see the size of government 
     reduced and the amount of disposal income available for their 
     use increased.
       As you know, the 1986 White House Working Group on the 
     Family that I chaired for President Reagan had as its central 
     recommendation a dramatic increase in per-child tax benefits. 
     The Senate has an historic opportunity to address this long 
     overlooked area of tax law and to demonstrate to the American 
     people that it is working to make the kinds of changes 
     Americans voted for last November.
       While I recognize that some legislators perceive tax relief 
     to be at odds with the important goal of deficit reduction, 
     it is important to point that the Gramm proposal--like the 
     House GOP Contract--provides both significant tax relief and 
     significant deficit reduction. As such, it recognizes that 
     these two important goals are not mutually exclusive.
       I urge you, therefore, to enthusiastically support Senator 
     Gramm's efforts. Please let me know if you would like 
     additional information about this subject from me or any 
     member of my staff.
           Sincerely,
                                                    Gary L. Bauer,
     President.
                                                                    ____

                                                   Concerned Women

                                                  for America,

                                     Washington, DC, May 12, 1995.
     Hon. Phil Gramm,
     Russell Senate Office Building, Washington, DC.
       Dear Senator Gramm: Concerned Women for America is the 
     nation's largest pro-family women's organization with over 
     600,000 members. For many years CWA has worked on legislative 
     efforts to allow American families to keep more of their 
     hard-earned money. Thus, we have worked diligently in favor 
     of the $500-per-child tax credit, homemaker IRA equity, and 
     tax credits for adoption expenses.
       We are very disturbed by the increased tax burden on 
     families which often compels both parents to enter the work 
     force in order to make financial ends meet. In 1948 the 
     median family of four paid only two percent to of its income 
     to the federal government in taxes. However, in 1989 the same 
     family paid nearly 24 percent in federal taxes. Adding on 
     state and local taxes, over one-third of that family's income 
     will be spent on taxes.
       Families in your state need you to stand firm on their 
     behalf. The House GOP ``Contract With America'' was passed 
     because the voters made their voices heard last November. Tax 
     relief for families was a vital component that helped to 
     spark that revolution. Now it is time for the Senate to do 
     its part to fight for families. Otherwise, the Senate will 
     shoulder the voters' outrage and become the weak link in the 
     fight for smaller government and less taxes.
       CWA cannot compromise on this principle. This issue is not 
     about class warfare. It is arrogant and baseless to assert 
     that government cannot afford to allow families to keep more 
     of their own money. Families should not have to suffer for 
     the appalling lack of discipline and will in Congress to cut 
     federal spending!
       Please join Concerned Women for American in supporting the 
     Gramm amendment to the Senate Budget. CWA members in your 
     state, and all America's families, will remember your vote.
           Sincerely,
                                                   Beverly LaHaye,
     President.
                                                                    ____

                                                     United States

                              Business and Industrial Council,

                                     Washington, DC, May 16, 1995.
     Hon. Phil Gramm,
     U.S. Senate, Washington, DC.
       Dear Senator Gramm: In recent testimony to the 
     Congressional Joint Economic Committee, Milton Friedman has 
     calculated the aggregate cost of direct and indirect 
     government expenditures at a staggering 50 percent of 
     national output. About half of the [[Page S7176]] U.S. Gross 
     Domestic Product is taken in taxes by the government at the 
     federal, state, and local levels, including the costs of 
     complying with excessive government regulations. Moreover, 
     the Institute for Policy Innovation states that 50 percent of 
     the average family's budget goes to pay taxes to all levels 
     of government. Clearly, the federal government is far too big 
     and is taking too much from our economy. The Congress needs 
     to drastically cut spending and also cut taxes.
       USBIC strongly supports your proposed amendment to the 
     Senate Budget Resolution which would cut spending further in 
     order to achieve the crucially important tax cuts already 
     passed by the House as part of the Contract with America. 
     Your amendment would combine the savings from lowering non-
     defense discretionary spending ($117 billion over seven 
     years) beyond the reductions already in the Senate Budget 
     Committee Resolution, with Medicaid savings derived from 
     accelerating the decrease in the rate of growth in Medicaid. 
     In addition, your amendment would use the ``dividend'' 
     projected by the Congressional Budget Office resulting from 
     balancing the budget by 2002. All of these additional 
     spending cuts and savings would be combined to pay for $173 
     billion in tax reductions over five years. We are delighted 
     that your amendment would preserve the following crucial tax 
     cuts already in the Contract--capital gains tax reduction and 
     indexing, small business estate and gift tax relief, small 
     business expensing, and repeal of the corporate alternate 
     minimum tax. USBIC believes that the capital gains tax cut 
     alone, if scored dynamically rather than statically, will 
     increase revenues by $150 billion over five years, thereby 
     in-and-of itself almost paying for all the other tax cuts yet 
     a second time.
       We represent 1000 small and medium-sized, mostly family-
     owned businesses nationwide. As you know, such businesses 
     employ half of our nation's workforce and create two thirds 
     of all new jobs. Such businesses are the bedrock of the 
     nation's economy, yet they are being severely squeezed by 
     high taxes and excessive regulations. Your amendment 
     preserving the vitally needed House tax cuts will strongly 
     improve the nation's economy by stimulating investment, 
     growth, and new jobs.
           Sincerely,
                                                  Kevin L. Kearns,
     President.
                                                                    ____

                                            National Federation of

                                         Independent Business,

                                     Washington, DC, May 16, 1995.
     Hon. Phil Gramm,
     U.S. Senate, Washington, DC.
       Dear Senator Gramm: On behalf of the more than 600,000 
     members of the National Federation of Independent Business 
     (NFIB), I am writing to support your amendment, the Contract 
     with America Tax Fairness and Deficit Reduction Act, to the 
     FY 1996 Budget Resolution.
       For the first time in decades, the Congress is debating a 
     resolution that puts the federal budget on a permanent path 
     to a balanced federal budget. Your amendment would make 
     possible significant tax relief for American families and 
     small businesses while balancing the budget by the year 2002. 
     It returns hard-earned money to families and small businesses 
     who know best how to spend it.
       NFIB members strongly support a balanced federal budget and 
     believe their taxes should be reduced. High taxes 
     consistently rank at the top of the list of concerns for 
     small business owners in surveys conducted by the NFIB 
     Education Foundation.
       Important tax relief for small business includes: small 
     business and family farm estate tax relief, incentives for 
     retirement savings, and capital gains tax reduction and 
     indexing. Your plan includes all of these proposals and more.
       We applaud your efforts and look forward to working with 
     you.
           Sincerely,

                                           John J. Motley III,

                                                   Vice President,
                                   Federal Governmental Relations.

  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, I yield 4 minutes to the Senator from 
Connecticut.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized for 
4 minutes.
  Mr. DODD. Mr. President, I thank my colleague from Nebraska.
  Let me just begin by stating something that may put me within the 
minority here. I am opposed to all tax cuts in this bill, not because I 
am opposed to tax cuts. I think they ought to all be postponed--that is 
my own view--whether they come from one source or another. If we are 
honestly dealing with deficit reduction, tax cuts ought not be on the 
table.
  But I do want to rise and express my opposition to the particular 
proposal being offered today because I think it is particularly 
egregious and creates serious problems for our country.
  My colleague from Texas, with whom I serve on the Banking Committee, 
has often and very colorfully talked about who is in the wagon and 
outside the wagon. I raise here a picture of the good old chuck wagon. 
I call it the Republican tax cut wagon.
  I am going to use the wagon metaphor to explain to people, if I can, 
what we are talking about with this proposal. The wagon metaphor is a 
potent one.
  If we apply it to the Contract With America's tax cut, I think people 
will get a clear picture of what we are talking about. If you take off 
the wagon's cover and show what is inside this tax-cut wagon, you get a 
clear picture of what is occurring.
  More than 51 percent of those riding in this tax-cut wagon are the 
wealthiest 12 percent of our population in this country earning more 
than $100,000 a year. In fact, the richest 1 percent, the best off of 
the population, of those earning over $350,000 will reap, under this 
proposal, an average windfall of $20,000 in tax breaks. People earning 
over $200,000 will receive a tax break in excess of $11,000. Is it any 
wonder that a recent Wall Street Journal article described the House 
GOP tax-cut package, much of what we are voting on today, in these 
words, and I quote the Wall Street Journal:

        Don't do anything yet, but start salivating. The tax bill 
     passed Wednesday by the House of Representatives could turn 
     out to be the biggest tax-saving bonanza in years for upper-
     income Americans.

  While the tax-cut package represents a bonanza to the very well off, 
families earning $20,000 to $30,000--this area down here, Mr. 
President--will have their tax cut by only $247 per year. Those earning 
$30,000 to $50,000 will get a tax cut of $569 a year. That is about 
$1.50 a day.
  Collectively, these families, shown in orange on the chart, represent 
35 percent of all American families, but they will receive less than 15 
percent of the benefits under this tax cut.
  The least affluent, 25 percent of American families, earning less 
than $20,000 a year, shown in red, Mr. President, this thin column 
here, will receive a tax cut of $20 to $90 a year.
  Now that we have a better understanding of who is riding in the 
wagon, let us take a look at who is truly pulling the weight. The 
contract's tax cut package will cost $345 billion over 7 years and $639 
billion over 10 years. How is this going to be paid for? By some of the 
most draconian, in my view, cuts presented on the floor of this body. 
Medicare recipients who have a median income of $17,000 will pay an 
additional $3,200 in the next 7 years.
  I do not argue the fact that Medicare needs to be addressed, but we 
might be more creative in solving that problem than using those dollars 
to pay for a tax cut, as I pointed out earlier, that goes to upper-
income people. After decades of hard work, the seniors face retirement 
years full of anxiety--all of us know it--and squeezed by medical 
bills. Medicare problems are a symptom of a larger problem. It did not 
create the problem. More than 12 million working families will have to 
pay higher taxes because of the Republican proposal to cut some $21 
billion from the earned income tax credit, a program that President 
Ronald Reagan called ``one of the best programs we can possibly have to 
offer to the working poor in this country.''
  In Connecticut, these cuts will increase taxes on 87,000 working 
families by an average of $1,400 over 7 years. College students, Mr. 
President, will see the cost of a diploma rise by anywhere from $2,000 
to $5,000 as a result of cuts in the student loan interest subsidy and 
other programs.
  Mr. President, in my opinion, it is the height of hypocrisy to bemoan 
the fact that some Americans are riding in the wagon while others are 
pulling and then turn around and offer a massive tax cut and ask 
working families, students, and seniors to foot the bill for a tax 
break for the more affluent in our society.
  Mr. President, I just feel, here again--and I say this with all due 
respect to my colleagues that are proposing this--this is not a time 
for this kind of a tax cut here at all. We cannot afford it. Deficit 
reduction ought to be the name of the game. If we are going to have 
deficit reduction, if we are going to ask people to pay, then to offer 
12 percent of the American population to become a beneficiary of 51 
percent of this break, it seems to me ill-advised and wrongheaded. 
[[Page S7177]] 
  My hope is that this amendment will be rejected and we will come 
together around a sound budget alternative. I thank my colleague from 
Nebraska.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, I would like to say to my dear colleague 
from Connecticut that that is a fine looking wagon.
  Mr. DODD. Not if you look on the inside of it.
  Mr. GRAMM. It is beautiful both inside and out.
  I would like to make a couple of simple points. No. 1, our colleagues 
always get confused when we are talking about tax cuts. They are always 
thinking about welfare. So they cannot understand when we cut taxes 
that people who do not pay any taxes do not get a tax cut. Those people 
are already riding in the wagon. I did not see 40 million people on 
welfare riding in that wagon. I did not see $350 billion taken away 
last year from working people to give to the people riding in the 
wagon.
  When our colleague says that someone with a certain income level only 
got a $120 tax reduction, since the credit is $1,000 for a two-child 
family, that means they were only paying $120 in taxes. Tax cuts are 
for people who are paying taxes. In terms of all this business about 
rich people, I go back to my point: How can we be a country that loves 
jobs and hates the people that create them? The only way rich people 
will benefit from the capital gains tax rate is to invest money and be 
successful. If they invest money and they are successful and they do 
create jobs and the Federal Government takes a substantial portion of 
what they earn, why should they not benefit? What is wrong with 
profits? Is America the only country in the world as we are going into 
the 21st century where capitalism is a dirty word?
  This is something I do not understand. This is a different 
perspective on America than I have ever seen. Again, I think it does 
clearly define the vision that I am talking about versus the old and 
tired vision which has dominated American Government for 40 years. It 
is almost as if it is better to have people in misery as long as we can 
rub everybody's nose in it, rather than trying to create incentives for 
economic growth. Redistributing wealth does not solve poverty. Creating 
wealth does solve it, and that is what the debate is about.
  I reserve the remainder of my time.
  Mr. EXON. Mr. President, I yield 4 minutes to my colleague from 
Arkansas.
  Mr. BUMPERS. Mr. President, I thank the distinguished floor manager. 
Let me say, first of all, capitalism is not a dirty word. Crazy 
budgeting is what is crazy. It is not dirty, but it is crazy. Everybody 
in this body is always saying, ``This is what the people want. They 
want term limits, and they want a constitutional amendment to balance 
the budget.''
  Let me show you what 70 percent of the people in this country want. 
This chart shows a USA Today poll which asks, ``Do you prefer deficit 
reduction or tax cuts?'' Seventy percent say that if we are going to 
cut spending, we should apply it toward deficit reduction. That's 
almost three times the number of people who prefer tax cuts.
  So what are we doing here? We are thwarting the obvious will of the 
people. The amendment of the Senator from Texas reminds me of turning a 
child loose in a candy store. I cannot think of anything in this 
amendment that I would not love to vote for, except the very regressive 
part of the tax which rewards the rich and takes from the poor. The 
Senator's amendment has a new IRA, it has a deduction for caring for 
the elderly. It has all kinds of tax breaks that I would love to vote 
for. But Mr. President, we cannot afford this, and the people of this 
country do not believe it is possible to have these tax cuts and 
balance the budget, too.
  When I ride home on an airplane, I talk to the people around me, and 
they say, ``Senator, the thing that troubles me about you Democrats is 
you engage in class warfare.'' I hear that very often. I suppose Rush 
Limbaugh has talked about it, otherwise, so many people would not be 
talking about it.
  But who is really engaging in class warfare here? Look at what the 
amendment of the Senator from Texas does. It gives a whopping $124 a 
year to people who make zero to $30,000 a year. That is a pizza every 
third Friday night. And when you take away the earned income tax 
credit, they pay a lot more. They not only do not get the $124, they 
wind up losing a substantial amount every year. But what about people 
who make over $200,000 a year? What kind of tax cut would they get out 
of this amendment? They would get a cut of $11,266. Why, Robin Hood 
would be whirling in his grave--taking from the poor to give to the 
rich.
  They say, ``You Democrats talk too much about class warfare.'' If 
that is not class warfare, I do not know what is.
  Mr. President, the last time we had a balanced budget was when Lyndon 
Johnson dumped the Social Security trust fund into the budget. And 
since that time, we have had integrated budgets. Social Security has 
been counted. Otherwise, the deficit would have been much, much bigger. 
So what do we do under this budget? We are going to take $600 billion 
of Social Security funds over the next 7 years to pretend to the 
American people that we have achieved a balanced budget.
 And the Senator from Texas comes with an amendment that will only cost 
$350 billion--talk about deja vu. I heard all of this in 1981, $3.5 
trillion ago, how we can cut taxes and balance the budget.

  Mr. President, I divinely hope our colleagues will not accept this 
amendment. I yield the floor.
  Mr. EXON. Mr. President, I have one or two speakers scheduled to 
come. I will make a few comments before recognizing those who indicated 
they would like to speak on this subject.
  Let me say that the debate has been very interesting and very 
challenging. I will simply say that I hope all Senators will realize 
and recognize that this is a very key amendment that we must defeat if 
we are going to truly balance the budget and not try to fool the 
American people.
  Time and time again, it has been said that we cannot have a tax cut 
and balance the budget, too. I reference once again the fact that I was 
hearing the same story on the floor of the Senate in the early 1980's 
when a massive tax cut was proposed at the same time the President of 
the United States was going to balance the budget in 4 years.
  Now, I think the President of the United States at that time was just 
not well informed. I happen to think that the numbers simply will not 
add up. I think most realistic people will say, while it would be 
nice--this Senator and everyone on this side and certainly everyone on 
that side would like to have the opportunity to provide a tax cut--the 
overriding problem in America today is the deficit.
  Certainly, this Senator would be the first one to join the bandwagon 
for a tax cut that was targeted at middle-income America. Certainly, 
the $500 credit for school-age children would be one that I would be 
attracted to.
  I have to say, as a fiscal conservative, and I think no one can 
question that, as one who voted for the balanced budget amendment, the 
last big vote we had in the Senate with regard to who wants to get 
things done, I simply say that I believe the measure being offered by 
the Senator from Texas, which is an incorporation of Speaker Gingrich's 
crown jewel of America, as far as the Contract With America is 
concerned, is simply unrealistic. I hope very much it will be defeated.
  Mr. DORGAN. Mr. President, I wonder if the Senator will yield to me 
for a question.
  Mr. EXON. I am happy to yield.
  Mr. DORGAN. Mr. President, I used this chart a while ago and the 
Senator from Texas did not yield for a question. This chart is page 7 
of the budget resolution that is before the Senate.
  I ask the Senator from Nebraska if this is not accurate. I notice 
that the Senator from Texas says, ``With this plan of ours, the budget 
is balanced. So now, we will go give tax cuts.'' Of course, tax cuts 
for the wealthy but, nonetheless, tax cuts.
  Page 7 of the budget resolution says ``Deficits.'' On line 21, the 
year 2002, a $113 billion deficit remaining in the year 2002.
  Is it not true that this budget resolution does not come to the floor 
saying we balanced the budget; it comes to the floor saying we have a 
$113 billion deficit in the year 2002?
  Mr. EXON. Mr. President, I answer my colleague from North Dakota by 
[[Page S7178]] saying he is absolutely correct. The figures that he 
cites are in the budget resolution.
  What I think the Senator from North Dakota fails to recognize is that 
the tooth fairy is going to take care of that deficit. With that 
explanation, I am sure that the Senator will be fully satisfied.
  I reserve the balance of my time.
  Mr. GRAMM. I guess one of the things that is always frustrating about 
political debate is that it is so seldom that we will really talk about 
the issues that are involved. So we have drifted far afield from those 
issues.
  I would like to go back and try to set them all in perspective. I am 
going to reserve my final moments to conclude the debate, and I will 
allow the Democrats to speak until their time has expired.
  First of all, this is not a debate about balancing the budget versus 
cutting taxes. I am not proposing to cut taxes, except to the degree 
that spending is being cut beyond the level contained in the budget 
resolution.
  I am proposing, if we look at this chart, very simply to do this: The 
red line here starts off with the Federal Government spending roughly 
$1.5 trillion this year. It shows how much the Government can spend 
over the next 7 years and still balance the unified budget of the 
United States of America.
  What I am proposing is to cut spending below that level so that 
rather than the Federal Government investing in the education of our 
children, families can invest in the education of our children; only 
the families will know the names of the children they are investing in. 
Only the families will have a stake directly in those children.
  My proposal is to cut Government spending on things like Government 
subsidies to business, so we can cut the capital gains tax rate, so 
that we can provide incentives for investment decisions to be made by 
people who are going to benefit or lose in those investment decisions, 
so that the marketplace, based on competition and efficiency, can make 
investment decisions.
  With regard to the debate about the income level of the people paying 
the taxes, the point is if we give a $500 tax credit per child in 
America, if someone is not paying $500 worth of taxes, they do not get 
the tax credit.
  But then what we are trying to do is to deal with a problem that in 
1950, the average family with two children was sending 1 out of every 
$50 it earned to Washington for the Congress to spend; today the 
average family in America with two children is sending $1 out of every 
$4 to Washington for the Congress to spend. I want to let families 
spend more of their own money on their own children for their own 
future. That is what this debate is about.
  If we ask people if they want to balance the budget or cut taxes, 
they say balance the budget. I agree. If we ask do I want my children 
to be healthy or do I want them to go to college, I want them to be 
healthy. When their health is secured, I then want them to go to 
college. I do not have only one objective for my children.
  We have set out a budget that balances the budget. What I am 
proposing to do is to cut Government spending further, eliminate the 
Federal Department of Education, reduce subsidies to business and cut 
taxes by that amount so that families can invest more of their own 
money rather than having Government spend their money for them, and cut 
the capital gains tax rate and let businesses invest their money as 
they see fit, rather than us subsidizing businesses to invest money 
where we would like it to be invested.
  That is what this debate is about. I reserve the balance of my time.
  Mr. EXON. Mr. President, I yield 6 minutes to the Senator from New 
Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey is recognized for 
6 minutes.
  Mr. LAUTENBERG. Mr. President, I thank my friend and colleague, the 
ranking member of the Budget Committee.
  I think we are getting down to where this debate is all going to be 
in the Record and the decisions will have been made. It focuses or 
centers around a couple of fairly narrow issues, as I see them.
  We can discuss forever whether there were tax cuts intended when the 
Budget Committee passed the resolution on the floor, or whether there 
were not; and at times, it was said in the slip of a tongue that, yes, 
they were for tax cuts; no, they were not for tax cuts because the 
Finance Committee was going to be making its decision. It was just 
going to be kind of set aside, $170 billion set aside that would be 
there to provide savings, but everybody knew it was there, but for the 
wink of an eye was reserved for tax cuts.
  Today we have heard a debate about the real thing. We have come face 
to face, finally, with what the issue is. The issue, very simply, is 
whether or not we are going to deprive people of programs that are 
essential; that is, to take care of those seniors who are beneficiaries 
of Medicare, to make sure that Medicaid has the funding so that in 
places like Newark, NJ, and throughout this country, hospitals that 
derive 60 percent, 70 percent, 80 percent of their income from Medicaid 
because they serve a poverty-stricken population will not have to 
close.
  We want to do that, as I hear the argument today, so that we can take 
care of the tax cuts that benefit primarily those in the upper income 
levels.
  As a matter of fact, roughly, for every person earning $350,000 it is 
estimated by Treasury that there will be a $20,000 reduction in taxes. 
That is a pretty hefty present at the end of the year, $20,000, while 
they are asking senior citizens who, on average, 75 percent of them, 
make $25,000 a year or less, who are totally dependent on $25,000 a 
year or less for their income and, on top of that, are having to 
supplement their Medicare Program with about 20 percent of their 
income, or roughly $5,000, for that group that is at the $25,000 level. 
It does not leave much for ordinary living. And heaven forbid that a 
nursing home long-term care program is involved. That is the end of it.
  But we want to do that so we can take care of the tax cut, a tax cut 
primarily for those who are at the top of the income ladder.
  The question resolves itself very much, whose side are you on? On 
this side of the aisle we are on the side of the working Americans, the 
people who are doing their darnedest to try to keep home and family 
together, to try to provide for the education of their children, to 
give them a hand up so when it is their turn to takeover family 
responsibilities and leadership in the country they are prepared to do 
it.
  An America falling behind competitively is not a sight that is 
pleasant to see. An America whose health, whose longevity is declining 
compared to other nations in the world is not a pleasant sight to see. 
An America who is 25th among nations in foreign aid --25th among the 25 
most advanced nations in this world. They leave us behind. When there 
are not only important diplomatic objectives to be gained but important 
commercial objectives to be gained as well.
  We see what happens. We need border guards. We know the State of 
Texas likes to see more border guards to help curb illegal immigration. 
We need more FBI agents, as we have seen very recently.
  We have to change the way we deal with security issues. But, no, all 
of those things are put on hold so we can take care of a tax reduction 
for those who in many cases do not need it.
  Yes, when you get to the middle class Americans, when those who are 
in the level of income where they need all the help they can get, that 
is a worthwhile consideration. But for someone who is making $150,000 a 
year, $350,000 a year, or more? That is not necessary, in my view, when 
it comes to considering the price that is paid for it.
  The statement was made just a few minutes ago about whether we would 
like to see our children healthy or educated? I could not agree more 
with what the Senator from Texas said. I would like to see the kids 
healthy first. But I also want my kids to be secure. I want them to 
know in the next century that instability within our society was not 
created by the elimination of some programs to give people job 
training, a decent education, an opportunity for full participation in 
our society. Instead of pretending we are going to be able to shield 
off some of the problems that we have.
  The PRESIDING OFFICER (Mr. Kyl). The 6 minutes of the Senator has 
expired.
  Mr. LAUTENBERG. I close with the question very simply put on this 
chart, [[Page S7179]] and that is: Whose side are we on? We here are on 
the side of the average American and our friends on the other side of 
the aisle want to take care of those who have enough, who have enough 
power, to give them an extra edge they do not need.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. EXON. Mr. President, what is the remaining time on each side?
  The PRESIDING OFFICER. The Senator from Nebraska has 2 minutes and 22 
seconds. The Senator from Texas, 4 minutes.
  Mr. EXON. Is the Senator from Texas ready to yield back his time?
  Mr. GRAMM. No, I am going to be the final speaker. I intend to use my 
last 4 minutes.
  Mr. EXON. Mr. President, winding up the debate, I just want to 
reiterate, if I might, some very fundamental points that have been made 
over and over again.
  First, we have high hopes that this particular amendment that is 
universally opposed on this side of the aisle is also substantially 
opposed on that side of the aisle and, therefore, this might well be 
the first victory that we have had in the whole series of debates on 
the budget, inside the Budget Committee and on the floor of the Senate.
  I hope my optimism about this vote is not ill founded, because if the 
amendment offered by the Senator from Texas comes to pass and is agreed 
to by this body, I think it is going to cause such havoc that the 
conference with the House of Representatives would be essentially 
meaningless. If we pass this what I think is an ill-advised amendment, 
regardless of the fact that it passed in the House of Representatives, 
regardless of the fact that it is the so-called crown jewel of the 
Contract With America, regardless of the fact that I see no reasonable 
person could sit down and pencil out the figures and come up with any 
conclusion that we could possibly balance the budget by the year 2002 
then if we proceed not to vote down the amendment offered by the 
Senator from Texas, the House and the Senate in conference would be 
placed in a position to where I think it would be nearly impossible to 
work out anything that would be halfway reasonable.
  I think under those circumstances it would be a foregone conclusion 
that whatever system eventually passes through the authorization and 
through the appropriations process would be vetoed by the President of 
the United States.
  This is the time for reason. This is the time for reality. Let us 
vote down the amendment offered by the Senator from Texas.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Texas.
  Mr. GRAMM. Mr. President, if this amendment is adopted, both the 
House and the Senate will have adopted the tax cut in the Contract With 
America. We will have cut the growth in spending sufficiently to 
balance the Federal budget and to let working men and women keep more 
of what they earn to invest in their future, to invest in their 
children, to invest in their businesses. If we reject this amendment we 
will have a budget in the Senate that spends $175 billion more on 
nondefense spending over the next 7 years than the House budget does, 
and by not reducing spending as much, we will not give a tax cut to 
working families, we will not cut the capital gains tax rate, we will 
not transfer spending authority back to parents. We will continue to 
take the position, as this budget does, that the Congress of the United 
States knows better how to spend $175 billion than parents would know 
how to spend it, if they got to keep it to invest in their own 
children;
 that we, by spending $175 billion more than the House in this budget, 
believe we can do more to help the economy through Government subsidies 
than the private sector can do by cutting the capital gains tax rate 
and by having real investment in the private sector of the economy.

  A new day is dawning in the House of Representatives. They did 
something virtually unheard of in the modern era of American politics. 
They set out in black and white what they would do if we gave them a 
majority in the House of Representatives, as we did in the Senate, and 
then they did it. What we are doing here is fulfilling only half of our 
contract.
  Now, I know from having talked to enough of my colleagues that the 
fix is in, that there is talk about coming up with a compromise. There 
is discussion of cutting a deal so that we can go on in the Senate 
spending substantially more than the House is spending and yet we are 
going to act as if we are giving a tax cut, possibly in some kind of 
temporary tax-cut proposal.
  I do not believe that is what Americans had in mind when for the 
first time in 40 years they gave us a majority in both Houses of 
Congress.
  I think they believe that we were going to change the way our 
Government does our business. This amendment gives us a very, very 
clear choice. If you support the Contract With America, if you want to 
control spending so we can balance the budget and so that we can let 
working men and women keep more of what they earn to invest in their 
own children, in their own businesses, in their own future, then vote 
for this amendment and guarantee that the Contract With America will be 
embodied in the final budget we adopt.
  But if you want the Senate to be able to spend $175 billion more than 
the House budget, if you think we can spend money better than the 
people who earn it, then you want to vote no. I think that coming back 
later with some temporary tax cut, with some cut-a-deal proposal, 
undermines what we committed to the American people we would do, and I 
am opposed to it. I support this amendment, and I urge my colleagues to 
vote for it.
  The PRESIDING OFFICER. The time of the Senator has expired.
  All time on this amendment has expired.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I understand under the sequencing that 
the next amendment is Senator Exon's amendment, and I ask unanimous 
consent that time on the Exon amendment be limited to the following: 15 
minutes under the control of Senator Exon, 5 minutes under the control 
of Senator Domenici, and there be no second-degree amendments in order 
to the Exon amendment.
  The PRESIDING OFFICER. Is there objection? The Chair hears none, and 
it is so ordered.
  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. At this time I would like to yield for purposes of a 
statement on the budget to the Senator from Montana for 10 minutes. And 
then we will proceed, if it is all right with the manager of the bill, 
with the Exon amendment.
  Mr. DOMENICI. I thank the Senator.
  Mr. President, let me just ask, if I could, we have made some 
commitments that after the Senator from Nebraska we have a defense 
amendment. Then after that the Senator has told us Senator Feingold----
The Senator has no plan beyond that?
  Mr. EXON. No plan.
  Mr. DOMENICI. We would like very much to try to reduce the time. We 
are going to have Senator Thurmond reduce the time to one-half hour and 
maybe we can start doing half hours or less regularly. But that will be 
the next one after this.
  I thank the Senator.
  Mr. EXON. Mr. President, with regard to the vote on the Gramm 
amendment, I ask unanimous consent that the vote in relation to the 
Gramm amendment occur in the stacked sequence at a time to be announced 
by the two leaders and that no second-degree amendment be in order 
thereto.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. DOMENICI. I should have made that request. I failed to, and I 
thank the Senator for making it for me in my behalf.
  Mr. EXON. I yield 10 minutes to the Senator from Montana.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I rise to discuss the Budget Resolution.

                     protecting the american dream

  The Budget Committee has given us a sound accountant's budget. It 
calls for the downsizing or elimination of many programs that have 
outlived [[Page S7180]] their usefulness. It uses much more realistic 
assumptions than the House budget.
  It would put us on the path toward a balanced budget. That is a goal 
I strongly support. And I hope we will write it into the Constitution 
by passing the balanced budget amendment.
  But, as we work to live more within our means, it is more important 
than ever that we set the right priorities.
  A budget is, after all, more than numbers and programs. It is people. 
It is middle class Americans working harder than ever just to make ends 
meet. It is middle class parents who scrimp and save in order to 
realize the dream of sending their kids to college.
  It is our seniors--that generation of Americans who worked so hard to 
build our economy while, at the same time, winning World War II and the 
cold war. They have earned a right to live with the independence and 
dignity that Medicare and Social Security help provide.
  And it is our farmers--the families who have worked so hard and so 
successfully to feed America and the entire world.
  For me, the ultimate test of any budget is how it affects these 
ordinary middle class Americans. Are they being treated fairly? And, if 
they work hard and play by the rules, will they share in the American 
dream of building a better life for themselves and for their children?
  At the outset, let me provide one example where I firmly believe this 
budget sets the wrong priorities. It proposes to cut just over $10 
billion from the farm program. This will make American agriculture less 
competitive in foreign markets and cause serious financial hardship for 
our farmers.
  At the same time, it recommends funding an even greater amount for 
the NASA space station--a scientific boondoggle that has a long history 
of cost overruns. It is time to get our priorities back down to Earth 
by eliminating the space station and restoring funding for the farm 
program.
  While I believe there is room to make such commonsense changes to 
this budget, it contains a more fundamental flaw. While the very 
wealthy get a free ride--and maybe a big tax break--working families 
and the elderly are called upon to sacrifice.
  The commentator Kevin Phillips--a Republican--recently pointed this 
out. Here is what Mr. Phillips had to say about this budget process:

       [This] legislation . . . especially as put forward by the 
     House of Representatives--has major overtones of special-
     interest favoritism and income redistribution. Spending on 
     government programs--from Medicare to home-heating oil 
     assistance--is to be reduced in ways that principally burden 
     . . . the middle-class while, simultaneously, taxes are to be 
     cut in ways that predominantly benefit the top one or two 
     percent of Americans. . . . We should be talking about shared 
     sacrifice. Instead, it's senior citizens . . . and ordinary 
     Americans who will see programs they depend on gutted while 
     business, finance and the richest one or two percent--far 
     from making sacrifices--actually get new benefits and tax 
     reductions.

  Over the past 25 years, the rich in this country have gotten a lot 
richer. Back in 1969, the wealthiest 1 percent of Americans controlled 
about 20 percent of our national wealth. Yet today, this figure has 
skyrocketed to nearly 40 percent. And that leaves a smaller piece of 
the pie--a smaller piece of the American dream--for the middle class.
  Wealth is no crime. We should encourage risk taking and investment by 
business. But it is time for the most wealthy Americans to get out of 
the wagon and help the rest of us--seniors, working families, farmers, 
and students--pull it across the line to a balanced budget.

                montanans are already pulling the wagon

  And most Montanans are already doing all they can to pull this wagon.
  Montana is a great place to live. But it can be a tough place to make 
a living. The average Montana family works hard, but takes in less than 
$25,000 each year.
  That is not a lot of money to put food on the table, to pay the 
mortgage, to make the car payment, and to save for the kids' education.
  And, with each passing year, things get even tougher. Prices rise; 
but wages stay flat. Last year, for instance, working Montanans just 
barely kept pace with inflation. And, if you lived in a fast-growing 
community with skyrocketing housing prices--places like Missoula, 
Bozeman, Hamilton, or Kalispell--you almost certainly lost ground.
  It is every bit as difficult for most of our senior citizens. All too 
often, Montana seniors living on fixed incomes just cannot make it. 
When you go into a fast-food restaurant or convenience store in 
Montana, you are just about as likely to be waited on by a senior 
citizen as you are by a teenager.
  It is not that Montanans are afraid of hard work. In good times and 
bad, we have always done what it takes to make ends meet and build a 
better life for our children.
  But we cannot do that when the Government keeps reaching into our 
wallets and gives nothing back in return. And, when you get to the 
bottom line, that is what this budget means to most Montanans. It is a 
tax; a tax on our seniors; a tax on our property owners; a tax on our 
parents; a tax on our students; a tax on our consumers; and a tax on 
our working families:
  The cuts in Medicare are a back door tax on Montana seniors who will 
end up paying an additional $900 each year for health care. And, sadly, 
some seniors living on fixed incomes will be forced to rely on their 
children and grandchildren to make up the difference.
  The cuts in education are a back door tax on Montana students, 
parents and property owners. This budget would eliminate 33 percent of 
the Federal investment in educating our children. Consequently, States 
and local school districts are bound to face the prospect of raising 
local property taxes in order to make up the difference.
  Beyond this, the proposed increased costs for the student loan 
program amount to nothing more than an increased tax on our students 
and parents working to send their kids to college. For example, the 
costs of a $17,000 undergraduate student loan are estimated to increase 
by almost $5,000 over the life of the loan. And it you are a teacher in 
a rural Montana school district making--let us say--just $17,000 a 
year, that translates into a large chunk of your monthly paycheck just 
to pay off your student loan.
  And, finally, this budget includes an expensive surprise for electric 
ratepayers in eastern and central Montana. The proposed sale of the 
Western Area Power Administration [WAPA] will increase their electric 
bills, probably by about a third. And, ironically, WAPA is not 
subsidized. It is a program that protects ratepayers while also making 
money for the Government.

               forget politics: use a little common sense

  Despite these flaws, I believe this budget could be salvaged. Many of 
the cuts it proposes make sense. All it would take is agreement--
bipartisan agreement--to rethink our priorities and find a way to 
protect rural America and restore funding to education and Medicare.
  If we put partisanship aside, we could get the job done. All it would 
take is a little common sense.
  First, let us bring our priorities down to Earth. Let us kill the 
space station and protect the family farmer. The costs are about the 
same. But the benefits of providing a stable supply of food and fiber 
for America and the world are far greater.
  This budget also sets aside $170 billion to eventually provide tax 
relief--most of it probably going to the very wealthy. It is just 
common sense that we should use these funds to protect Medicare and 
education. If we did that, this budget would be a good start; something 
I could work with.
  Unlike some in my political party, I do not believe we should spare 
just about every domestic program and take a meat ax to the defense 
budget. There must be real cuts in a broad range of Federal programs.
  Here are seven areas where we can make a good start:
  First on my list is foreign aid. I am sick and tired of seeing the 
United States pay more than its fair share to support wasteful 
organizations like the United Nations and the World Bank. It is high 
time we demand that other countries pay their fair share of the U.N. 
budget. Moreover, I was pleased to see that this budget calls for a 
significant cut in funding for the U.S. Agency for International 
Development.
  Second, I am tired of seeing the United States spend billions of 
dollars for the defense of countries like Korea and Japan. While those 
countries do all [[Page S7181]] they can to keep our products out of 
their market. It is time that they share more in the burden of their 
own national defense.
  Third, I also agree with the Budget Committee's call to abolish the 
Arms Control and Disarmament Agency. We do not need to spend an 
additional $60 million on this agency when we already have the Defense, 
State, and Energy Departments to do the same thing. It is time to get 
rid of it.
  And the same is true of a boondoggle called TV Marti, a wasteful 
Federal program that attempts to broadcast sitcom reruns to Cuba.
  Fifth, I was encouraged to see that the Budget Committee recommends 
the abolition of the Department of Commerce. This bureaucratic 
behemoth--a mish-mash of agencies ranging from the National Institute 
of Standards and Technology to the National Marine Fisheries Service--
has long lacked a clear mission.
  Let us move those Commerce programs that are worth saving--like the 
Economic Development Administration that just helped create over 700 
high-wage jobs in Butte--to other departments. And let us scrap the 
bureaucratic over head and the Commerce programs that have outlived 
their usefulness.
  Sixth, I also believe the Budget Committee missed another opportunity 
to clean house by abolishing a second Cabinet Department. There is no 
better example of a failed Great Society program than the Department of 
Housing and Urban Development.
  HUD's history is one of scandal, waste, and failed housing projects; 
places where drug dealers and other criminals intimidate and prey upon 
women and children. I believe we can find ways, through block grants 
and tax incentives, to promote good, affordable housing without HUD's 
expensive and too often failed bureaucracy.
  And seventh--last but certainly not least--welfare is another place 
we must make savings. I intend to work on the Finance Committee to 
bring the costs of this program down. And, just as importantly, we must 
restore the value of the American work ethic to our welfare program. I 
hope Democrats and Republican can work together to make this happen.

                               conclusion

  In closing, we all need to make sacrifices. We need to bring the 
budget into balance and give our children some relief from debt.
  I go home just about every weekend. And I hear it time and time 
again, Montanans are willing to do their part to bring down the 
deficit. In order to get this done, they are willing to make great 
sacrifices.
  They ask only one thing in return: fairness. They want to know that 
no one region or class of people is getting a free ride; that we are 
all pulling the wagon together toward a balanced budget.
  I wish that were the case with this budget resolution. But it is not. 
We can do better. We can be fair. We can set the right priorities. And 
we owe the people we represent nothing less.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. BAUCUS. I thank the Chair and I thank the Senator from Nebraska.
  The PRESIDING OFFICER. Who yields time?

                           Amendment No. 1124

   (Purpose: To restore funding for seniors, education, agriculture, 
  working families, veterans, and other Americans, using amounts set 
                          aside for a tax cut)

  Mr. EXON. Mr. President, I send an amendment to the desk on behalf of 
myself and Senators Lautenberg, Harkin, Kennedy, Murray, Breaux, 
Daschle, and Dodd, and ask for its immediate consideration.
  The PRESIDING OFFICER. Without objection, the Gramm amendment is 
temporarily set aside.
  The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Nebraska [Mr. EXON], for himself, Mr. 
     Lautenberg, Mr. Harkin, Mr. Kennedy, Mrs. Murray, Mr. Breaux, 
     Mr. Daschle, and Mr. Dodd, proposes an amendment numbered 
     1124.

  Mr. EXON. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 74, strike beginning with line 12 through line 12 
     on page 77 and insert the following: ``budget, the 
     appropriate budgetary allocations, aggregates, and levels 
     shall be revised to reflect--
       ``(1) $100,000,000,000 in budget authority and outlays of 
     the additional deficit reduction achieved as calculated under 
     subsection (c) for legislation that reduces the adverse 
     effects on medicare and medicaid of--
       ``(A) increased premiums;
       ``(B) increased deductibles;
       ``(C) increased copayments;
       ``(D) limits on the freedom to select the doctor of one's 
     choice;
       ``(E) reduced quality of health care services caused by 
     funding reductions for health care providers;
       ``(F) reduced or eliminated benefits caused by restrictions 
     on eligibility or services;
       ``(G) closure of hospitals or nursing homes, or other harms 
     to health care providers; or
       ``(H) other costs to beneficiaries;
       ``(2) $18,000,000,000 in budget authority and outlays of 
     the additional deficit reduction achieved as calculated under 
     subsection (c) for legislation that reduces the adverse 
     effects on discretionary spending on education and 
     $12,000,000,000 in budget authority and outlays for 
     legislation that reduces the adverse efforts on direct 
     spending for education;
       ``(3) $10,000,000,000 in budget authority and outlays of 
     the additional deficit reduction achieved as calculated under 
     subsection (c) for legislation that reduces the adverse 
     effects on direct spending within the jurisdiction of the 
     Committee on Agriculture;
       ``(4) $17,000,000,000 in budget authority and outlays of 
     the additional deficit reduction achieved as calculated under 
     subsection (c) for legislation that restores the full current 
     law earned income tax credit under section 32 of of the 
     Internal Revenue Code of 1986;
       ``(5) $3,000,000,000 in budget authority and outlays of the 
     additional deficit reduction achieved as calculated under 
     subsection (c) for legislation that reduces the adverse 
     effects on programs for veterans; and
       ``(6) $10,000,000,000 in budget authority and outlays of 
     the additional deficit reduction achieved as calculated under 
     subsection (c) which shall be subject to allocation by the 
     Committee on the Budget, by majority vote.

     The amounts provided by paragraphs (1) through (6) shall be 
     proportionally adjusted based on any increase or decrease in 
     the projected allowance of $170,000,000,000.
       ``(b) Revised Allocations and Aggregates.--Upon the 
     reporting of legislation pursuant to subsection (a), and 
     again upon the submission of a conference report on such 
     legislation (if a conference report is submitted), the Chair 
     of the Committee on the Budget of the Senate may submit to 
     the Senate appropriately revised allocations under sections 
     302(a) and 602(a) of the Congressional Budget Act of 1974, 
     discretionary spending limits under section 201(a) of this 
     resolution, budgetary aggregates, and levels under this 
     resolution, revised by an amount that does not exceed the 
     additional deficit reduction specified under subsection (d).
       ``(c) CBO Revised Deficit Estimate.--After the enactment of 
     legislation that complies with the reconciliation directives 
     of section 6, the Congressional Budget Office shall provide 
     the Chairman of the Committee on the Budget of the Senate a 
     revised estimate of the deficit for fiscal years 1996 through 
     2005.
       ``(d) Additional Deficit Reduction.--For purposes of this 
     section, the term ``additional deficit reduction'' means the 
     amount by which the total deficit levels assumed in this 
     resolution for a fiscal year exceed the revised deficit 
     estimate provided pursuant to subsection (c) for such fiscal 
     year for fiscal years 1996 through 2005.
       ``(e) CBO Certification and Contingencies.--This section 
     shall not apply unless--
       ``(1) legislation has been enacted complying with the 
     reconciliation directives of section 6;
       ``(2) the Director of the Congressional Budget Office has 
     provided the estimate required by subsection (c); and
       ``(3) the revisions made pursuant to this subsection do not 
     cause a budget deficit for fiscal year 2002, 2003, 2004, or 
     2005.

     ``SEC. 205. SCORING OF EMERGENCY LEGISLATION.

       ``Notwithstanding section 606(d)(2) of the Congressional 
     Budget Act of 1974 and beginning with fiscal year 1996, the 
     determinations under sections 302, 303, and 311 of such Act 
     shall take into account any new budget authority, new 
     entitlement authority, outlays, receipts, or deficit effects 
     as a consequence of the provisions of section 251(b)(2)(D) 
     and 252(e) of the Balanced Budget and Emergency Deficit 
     Control Act of 1985.''.

  Mr. EXON. Mr. President, this amendment is very concise; it is very 
clear. We have cut down the time to 15 minutes on our side and 5 
minutes for the opposition.
  Essentially, this amendment would take $160 billion from the $170 
billion reserved in the Republican budget for tax cuts for the rich and 
redistribute $100 million to Medicare and Medicaid; $30 billion to 
education; $17 billion to the earned income tax credit; $3 billion to 
Veterans Affairs; and $10 billion to agriculture.
  The largest part of this amendment has been offered in part or in 
total in previous amendments to alleviate the hit that we think is 
unfair on many of the programs as they were produced out of the Budget 
Committee.

[[Page S7182]]

  We have discussed at length the distribution of taxes contained in 
the House Republican passed tax bill. It provides a $20,000 tax cut for 
taxpayers earning over $350,000. Fully 51 percent of the Republican tax 
cuts go to Americans with incomes over $100,000.
  We have to get our priorities back on track and that is what my 
amendment does.
  Let me walk my colleagues through the reasons for the redistribution 
of the $170 billion contingent fund.
  First is Medicare and Medicaid. My amendment restores $100 billion of 
the overall cut in Medicare and Medicaid is intended to reduce the 
adverse effects of increased premiums, deductibles and co-payments on 
beneficiaries.
  Most, if not all, of these add-backs would affect part B of the 
program and would not--I repeat--would not worsen the solvency of the 
HI trust fund.
  My amendment states that any add-backs will be structured in such a 
way to ensure that the fund remains solvent for the same time period 
attained through cuts made in this year's reconciliation bill.
  I am restoring these reductions in order to protect the 1 in 4 
Medicare beneficiaries who rely on Social Security for their only 
source of income.
  Second is Medicaid. Two-thirds of all Medicaid dollars are spent on 
seniors and disabled people. This is the only program which pays for 
long-term care.
  Many middle-income people who develop disabling conditions--like 
Alzheimer's or Parkinson's--end up spending all of their incomes for 
care. They often have nowhere else to turn but Medicaid.
  Under the Republican budget, nearly 1 million seniors and disabled 
people could lose their coverage. This amendment would add back
 funding to reduce the hit on that population.

  The funding in my amendment could also be used to reduce the cuts to 
children.
  Third, is education which would receive $30 billion through this 
amendment. Over 500,000 graduate and professional students currently 
receive subsidized loans. Nearly 50 percent of full-time, full-year 
students rely on the subsidized loans to pay for their education.
  Eliminating the in-school interest subsidy means graduate and 
professional students could have their total debt increase by $3,000 to 
$6,600 depending on how long they are in school. The subsidy is 
critical for these students, most of whom are independent and going 
back to school to pursue higher learning that is critical to the future 
of our Nation.
  My amendment also helps restore some of the Republican budget cuts to 
the impact aid program.
  Impact aid is a critical program that provides funds to school 
districts that educate children of military personnel, children who 
live on Indian lands, and children who live in federally subsidized 
housing.
  For school districts with large areas of Federal property within 
their boundaries, raising sufficient revenue to provide for the 
education of these children is a daunting challenge. Federal land is 
exempt from local property taxes--the mainstay of local education 
finance--causing a greater tax burden on the residents and owners of 
non-Federal land.
  In my own State of Nebraska, Bellevue School District relies upon 
impact aid funding for almost 25 percent of its annual operating 
budget. Cuts in impact aid would be devastating to the quality of 
education for children of military personnel in Bellevue. My amendment 
softens the blow.
  Fourth is the EITC which would receive $17 billion. The EITC helps 
keep working families off of welfare. It also assists middle-class 
families who have sudden losses of income.
  The Republican budget cut for the EITC is particularly cruel since 
real wage growth has been slow, and many people are having to take 
lower-wage jobs as a result of downsizing and restructuring.
  Fifth, is veterans. My amendment adds $3 billion back to veterans 
programs.
  This Republican budget is a sad tribute to America's men and women 
who have worn their country's uniform.
  Let us be clear, by funding the VA's medical system at the 1995 level 
for the next 7 years, the Republicans are dramatically cutting access 
to health care services for veterans' across the country.
  The Republican budget also increases veterans' contributions for GI 
bill education benefits. It increases the co-payment for prescription 
drugs for higher-income vets.
  Finally is agriculture. Mandatory agriculture spending is already 
projected to decline by 17 percent over the budget resolution 
timeframe. The Republican budget would cut an additional 20 percent 
from these programs primarily CCC commodity programs.
  This amendment would ensure that farm programs make a fair 
contribution to deficit reduction without devastating the entire farm 
economy and severely hampering the ability of the Agriculture Committee 
to draft a workable farm program and a workable farm bill in the 
future.
  Finally, it would reduce the reconciled cut to the committee by $10 
billion and thus lessen the overall projected cuts from farm commodity 
programs from $12 billion to $2 billion.
  Finally, I would note that if the CBO scores this surplus 
differently, the numbers provided would be adjusted accordingly.
  The amendment does not allocate $10 billion of the projected $170 
billion tax cut now in the Republican budget.
  I intend to leave that amount open to be used to restore cuts in 
other programs that may have been unfairly hit. Or, it could be used as 
a cushion to further reduce the deficit and help us reach a balanced 
budget.
  Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. DOMENICI. Is the Senator finished with his time?
  Mr. EXON. No, I have time.
  The PRESIDING OFFICER. The Senator from Nebraska has 5-\1/2\ minutes 
remaining, and the Senator from New Mexico has 5 minutes.
  Mr. DOMENICI. Actually, I only want to use 2 minutes. If the Senator 
will let me do that in wrap-up, I will let him finish and I will use 
only 2 minutes.
  Mr. EXON. Mr. President, I believe the arguments can be made pro and 
con and have been made pro and con on this amendment. Very simply in 
the time remaining--I will consider yielding back after making these 
closing statements.
  Once again, we are not attempting to change the date that we would 
balance the budget as prescribed in the Republican budget, we are not 
adding to the deficit, we are not adding to the national debt. We have 
been staying, as we have through all of these amendments--all of these 
amendments--within the parameters laid down, the overall figures of the 
Budget Committee.
  What we are simply saying is that rather than provide a kitty, if you 
will, in the Senate budget, which is clearly earmarked for tax cuts and 
is so established by the chairman of the committee in this resolution, 
an earmark of $170 billion dollars which could come, according to CBO, 
if we balance the budget by the year 2002, to simply take a portion of 
that $170 billion and, instead of cutting taxes, cut the hit on these 
programs that I have outlined. This amendment merely alleviates the 
substantial and unfair cuts in each and every one of them.
  I reserve the remainder of my time and may be in a position to yield 
back after the Senator has made his statement.
  Mr. DOMENICI. Mr. President, how much time do I have?
  The PRESIDING OFFICER. The Senator from Mexico has 4-\1/2\ minutes.
  Mr. DOMENICI. Let me speak very briefly, after which when time has 
been used up on the amendment, Senators should know that I plan to 
raise a point of order.
  Mr. President, what we have now is, as I view this, we have the 
budget resolution produced by the gallant 12 budgeteers from the 
Republican side. We have a budget resolution that gets to balance. In 
that, we decide that many programs have to be reformed, changed, some 
eliminated, but we say we are going to stop spending in the red. We are 
not going to charge our children with our bills any longer. In 2002, we 
stop that.
  Now it just so happens, Mr. President, I say to fellow Senators, that 
in 2002, according to the Congressional Budget Office, according to 
their economists and other economists, that [[Page S7183]] essentially 
when you put down a balanced budget and you make it enforceable and you 
pass a whole batch of laws that change current entitlements so less is 
spent and they certify that for you and say you have a balanced budget, 
there is a dividend--the dividend could be in the neighborhood of $170 
billion--an economic dividend for doing what is right.
  What is right? What is right is to get in balance by the year 2002. 
So by doing what is right, the Republicans on the Budget Committee, and 
Republicans and hopefully some Democrats, when they vote for this 
budget resolution, have earned something for the American people. What 
have they earned?
 They have earned reduced long-term interest rates for starters --very 
significant for homeowners, auto buyers, for everyone, including 
business people and mothers and fathers sitting around talking about 
student loans. If they are affluent enough to pay their own student 
loans, there is less interest on those loans. That is what we get from 
that side.

  Indeed, there is a bonus of $170 billion that is kind of a surplus 
sitting there. We are now in the black and we have this surplus. What 
the Republicans say at this point in time is that we should transfer 
that $170 billion from a reserve fund to the tax writing committee and 
say to them, give the American people a modest dividend by cutting some 
taxes. Now, not rich people, not $300,000 earners. We have said in this 
budget resolution that it will go--90 percent--to middle-income 
Americans. That is the Senate's position if they adopt ours.
  Let me say that, in a nutshell, Senator Exon would then say instead 
of doing that with that $170 billion, let us spend it. So we have a 
balanced budget and my good friend from Nebraska says, now, spend $100 
billion of it on Medicare, spend $30 billion on education, spend $10 
billion on agriculture, spend it on et cetera, et cetera. We hardly get 
to balance and we hardly get the dividend for Americans that they are 
entitled to, because most of them say, ``Give us a balanced budget.'' 
They are entitled to a bonus when we do what they have been telling us 
to do. So we say leave it there for a possible tax cut for Americans.
  Senator Exon would say for all of these good things, let us spend it, 
and all of a sudden we start spending again after we got in balance, 
and we add $170 billion in spending.
  The purposes are good. Senators pick some very, very interesting 
programs that Americans are interested in but everybody is worried 
about. He says, use the dividend for them. We have explained them in 
detail. We believe we are going to make the Medicare trust fund 
solvent. We believe education is not going to get harmed under our 
assumptions. We believe we have been fair to agriculture, and on down 
the line.
  So I do not believe we ought to adopt the amendment. It is out of 
order under the Budget Act. When my time comes, I will so move.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. How much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 3\1/2\ minutes.
  Mr. EXON. I will be very brief. I simply want to say that I have 
listened once again to my good friend and colleague from the State of 
New Mexico, my chairman. We do not happen to agree on this matter, but 
we happen to agree on many, many things. Time and time again, I have 
heard that those of us who realize that these programs are taking a 
considerable hit are being accused of being spenders if we do not try 
to alleviate some of the unfairness that I see in the Republican 
budget.
  When this debate first started, I complimented my talented friend 
from New Mexico for the courageous job he has done. Time and time 
again, I have said that we in the amendments that we offered in the 
committee, and the amendments we have offered on the floor, have not 
done anything to reach the goal that the Senator from New Mexico is 
espousing. We are simply asking, do we honestly feel that we should 
make some changes in the approaches on certain programs? I do not 
believe it is fair to say, nor do I think the American people are 
particularly concerned because their main worry is balancing the budget 
and keeping it balanced and to quit borrowing more money, which is 
crippling America with the interest we are paying on that borrowing. 
Suffice to say that we really believe that we can work with the 
Republicans, with Senator Domenici, if they would just listen to some 
of our pleas.
  I really think that the people of America would be most satisfied if 
we realistically face the challenge that we have to balance the budget 
and reduce the deficit. That is primarily the only thing that most of 
them are looking for. With that, I yield the remainder of my time and 
urge support of the amendment.
  Mr. DOMENICI. Mr. President, I yield myself 30 seconds off the bill.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. DOMENICI. Mr. President, it would be interesting to search the 
souls and hearts and minds of those on that side of the aisle to see, 
if this amendment were adopted, if they would vote for this budget 
resolution. It is most interesting. Take the dividend created through 
all of this hard work, tell us now here is how we would like it spent, 
then prevail on that and watch the budget go down in flames, because 
clearly we would not get very much support from that side of the aisle. 
We might get Senator Exon, but I will not even ask him.
  Mr. EXON. If the Senator will yield--
  The PRESIDING OFFICER. The Senator has yielded himself 30 seconds.
  Mr. EXON. Off of my time. The Senator has made an interesting 
proposition. I would say to him that with all of the reservations that 
I have, if he will accept this amendment, he will at least get one vote 
on this side and, I think, considerably more. That may be a partial 
answer to his question, and I am acting in very good faith.
  Mr. DOMENICI. I agree. We may get one.
  Mr. DASCHLE. Mr. President, the Exon-Daschle amendment would reorder 
and re-balance the spending priorities in this proposed budget.
  Specifically, the amendment would shift funding from a proposed tax 
cut for the wealthiest Americans to several key programs upon which our 
national interests depend. The Exon amendment would restore $100 
billion to Medicare, $30 billion to education, $17 billion to the 
earned income tax credit, $3 billion to veterans' programs, and $10 
billion to agricultural programs. The amendment would also exclude the 
proposed sale of the country's Power Marketing Administrations, 
including the Western Area Power Administration, from the budget. All 
of these are important priorities for our Nation and, especially, for 
rural America.
  This amendment, like the amendments we offered yesterday, are 
completely paid for. It does not add one penny to the deficit.
  Yesterday I spoke of the importance of the restoration of Medicare 
funding, and, earlier today, I referred to the importance of the earned 
income tax credit. So, today, I will focus on the other elements of 
this amendment.
  First, the amendment would restore $30 billion in education funds. 
The underlying budget resolution proposes to balance the budget at the 
expense of educating our youth. That is unacceptable. It is myopic, and 
it is a false economy. The next generation cannot afford to be 
shortchanged in this manner. Educational investments are one of the 
best investments this country can make, especially as our youth prepare 
for the 21st century.
  This amendment, which provides $30 billion to restore funding for 
critical education programs, will help young Americans and their 
families by restoring funding in student loans and education programs.
  The $30 billion restores funding for the student loan in-school 
interest subsidy and other critical programs such as Title 1, Pell 
grants, Impact Aid, special education, and Safe and Drug-free Schools.
  Impact Aid is especially important to South Dakota. Last year the 
program received a $70 million reduction in fiscal year 1995 funding. 
Further reductions are intolerable. These funds--which represent the 
money the Federal Government is obligated to pay to reimburse local 
school districts for Federal displacement of the local tax 
[[Page S7184]] base--are absolutely critical to over 50 schools in my 
State, and hundreds of schools throughout the country, that depend on 
Impact Aid to meet our children's basic educational needs.
  The Impact Aid program provides critical dollars to over 50 schools 
in South Dakota. These payments are not a Government subsidy. Quite 
simply, their purpose is to compensate school districts for the loss of 
taxable revenue from what once was local taxable land. The message in 
the continued trend of decreased funding is that Congress has decided 
we do not need to uphold our obligation to the school districts that 
rely so greatly on these funds.
  In the McLaughlin school district in South Dakota the Impact Aid 
funds represent approximately 37 percent of the school's budget; in the 
Lake Andes school district, 20 to 25 percent of their budget
 comes from Impact Aid monies; 30 percent of the Dupree school's 
general fund revenue budget is generated by Impact Aid funds; in Smee, 
South Dakota, if Impact Aids funds continue to dwindle, they will be 
unable to operate; in Pollock, South Dakota, they would have to close 
their doors if this funding is eliminated.

  The list goes on and on, Mr. President. This means that teacher pay, 
books, facilities, desks, buses--everything it takes to run a school--
is dependent on whether this Congress lives up to the commitment that 
was made to these schools when the lands in their districts were taken.
  I simply ask this question of my colleagues. Is it fair to eliminate 
a program that was designed to help alleviate a very clear Federal 
burden that was imposed on certain local communities and school 
districts because the Federal Government decided to acquire land in 
their particular district? The answer is no. This is a Federal 
responsibility, not a Federal subsidy.
  The Exon-Daschle amendment would also restore $3 billion in funding 
for veterans' programs, including veterans' health care. In light of 
the budget's proposed Medicare cuts, the cuts in VA funding are 
especially egregious, for reduced Medicare funding will undoubtedly 
lead to increased pressure on, and a shift in costs to, the VA health 
care system. As my colleagues know, the VA health care system is an 
already overburdened and underfunded one, so I fail to understand how 
the majority justifies this proposal.
  The $3 billion in this amendment would ease some of that pressure and 
help us ensure that our fundamental commitment to the men and women who 
have served this Nation is fulfilled. To do otherwise sends exactly the 
wrong message to veterans and the men and women who currently serve in 
the Armed Forces.
  While Senator Exon and I will talk more about the budget resolution's 
treatment of agriculture tomorrow, when we will offer an amendment to 
restore some of the agricultural funding cut in the Republican budget, 
I want to take a moment to speak on that issue today. This amendment 
would restore $10 billion of the agricultural funding cut in the budget 
proposal.
  The amendment directs the funding where it is most needed--to farmers 
who struggle each year to stay on the farm, to keep producing America's 
food and fiber supply, and to families who strike a rough patch when 
there is job loss or other bad luck, people trying to put food on the 
table and keep their families together.
  The Republican budget, on the other hand, raids rural America to aid 
the comfortable. The Republican budget proposal would cut $45.9 billion 
out of the Agriculture Department over the next 7 years. That is likely 
to translate to around $12 billion in direct cuts to farm programs. It 
is a 20-percent cut in farm spending. It will contribute to the further 
deterioration of the economic and social fabric of rural America. No 
other sector of American life is being asked to absorb such a hit. We 
can not have a prosperous urban America riding on the back of an 
impoverished farm America. Yet that is what Republican budget cuts will 
provide.
  Farmers in South Dakota would see a devastating decline in their 
income of over $57 million. Other rural States will suffer similar 
pain. This budget is short-sighted for rural America and self-
interested for the best-off. It is not a balanced, fair proposal. It is 
not a budget that sustains the American tradition of building a strong 
farm sector, a tradition that has enjoyed bipartisan support until this 
Republican majority.
  Finally, this amendment would prevent the budget resolution from 
counting the sale of the power marketing administrations and other 
assets toward deficit reduction. This would remove the incentive to 
sell the Power Marketing Administrations [PMAs] in order to balance the 
budget, and
 would help ensure that decision is made on the basis of what would be 
the best policy for the United States. Since the sale of PMA's makes no 
economic sense, this amendment would substantially hinder their sale.

  I have been concerned because the Clinton administration has 
announced plans to sell three of the five PMA's, including the Western 
Area Power Administration [WAPA], which markets power from the main 
stem dams on the Missouri River to South Dakota utilities and 
cooperatives. The administration has stated it intends to sell WAPA in 
1998.
  Despite the fact that the administration stated in the budget that 
``the proposal will provide customer protection from significant rate 
increases,'' I am deeply concerned that if this plan is approved by 
Congress and goes forward, then significant rate increases will be 
inevitable, affecting consumers and the overall economies of rural 
states such as South Dakota.
  The PMA's are an example of a Government program that works well. 
South Dakota, the Western Area Power Administration, which markets 
power from the main stem dams along the Missouri River, has ensured a 
consistent and affordable supply of electricity. The program is being 
run on a sound financial basis, as it recovers all expenses relating to 
its annual operation and the initial construction expenses, with 
interest. By providing low-cost power, the PMA's have substantially 
assisted in the economic development of many States.
  Any one-time savings from the sale of WAPA would be offset by long 
term revenue losses. The administration and the Republicans expect a 
one-time budget savings from the sale, that over the long-run, will not 
save the Federal Government any money at all. Since the operational and 
capital costs of the program are more than paid back currently, the 
sale simply allows the Federal Government to collect the debt faster. 
But since the debt is being paid back with interest now, there is no 
long-term financial benefit to the Government. Long-term revenue losses 
from the sale offset the near-term revenue gains.
  Some claim that the power marketing administrations can be sold 
without causing substantial rate increases. In reality, today's rates 
are set at the lowest possible level, while still ensuring that the 
debt is paid off. If the power marketing administrations are sold, then 
it is likely that rates will increase substantially. Those who buy the 
PMA's will attempt to maximize the return on their investment. And 
electric rates for existing Federal power customers will rise as a 
result. Some predict rate increases as much as 300 percent for some 
communities.
  This sale will not only affect the economy of South Dakota or a few 
western States. Power marketing administrations sell power in 34 States 
across the country. I would ask all of my colleagues from these States 
to consider the impact of the sale of PMA's before they cast their 
vote.
  In conclusion, Mr. President, we need to reduce the deficit. No one 
argues that point. This amendment restores essential funding--upholding 
our obligation to rural America, children, and the elderly--and is 
completely offset with the reserve fund set aside by the GOP to pay for 
tax breaks for the wealthy. Again, the amendment does not contribute 
one penny to the deficit.
  I urge the adoption of the amendment.
  Mr. DOMENICI. The pending amendment is not germane to the provisions 
of the budget resolution pursuant to section 305(b)(2) of the Budget 
Act. I raise a point of order against the pending amendment.
  Mr. EXON. Mr. President, pursuant to section 904 of the Congressional 
Budget Act of 1974, I move to waive section 305 of the act for the 
purpose of the pending Exon amendment.
  I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? [[Page S7185]] 
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. DOMENICI. I ask unanimous consent that this amendment also be 
stacked pursuant to the previous order, subject to leadership control 
on when we vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. EXON. Can I inquire of my friend at this time?
  Mr. DOMENICI. Yes.
  Mr. EXON. We have stacked a series of votes now. I do not believe we 
have indicated when we might start our voting so that everybody would 
be properly advised. Are we going to start voting in an hour, 2 hours, 
3 hours? Could the Senator give us some information on that?
  Mr. DOMENICI. That is a very good question. I thank the Senator. We 
are, hopefully, going to get through with the Thurmond-McCain 
amendment, which is next, and then we will start voting about 4 p.m. 
That is the best I can give you at this point.
  Mr. EXON. I thank my friend from New Mexico.
  The PRESIDING OFFICER. Who yields time?
  Mr. DOMENICI. I understand Senator Thurmond is next. I yield to him 
to offer his amendment.

                           Amendment No. 1125

(Purpose: To restore adequate defense budget levels and to provide for 
   offsetting reductions from nondefense discretionary spending and 
               nondefense spending in the defense budget)

  Mr. THURMOND. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from South Carolina [Mr. Thurmond], for 
     himself, Mr. McCain, Mrs. Hutchison, Mr. Warner, Mr. Coats, 
     Mr. Inhofe, Mr. Kempthorne, Mr. Lott, Mr. Smith, Mr. Cohen 
     and Mr. Santorum, proposes an amendment numbered 1125.

  Mr. THURMOND. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 11, line 7, increase the amount by $9,600,000,000.
       On page 11, line 8, increase the amount by $4,000,000,000.
       On page 11, line 14, increase the amount by 
     $15,900,000,000.
       On page 11, line 15, increase the amount by $8,300,000,000.
       On page 11, line 21, increase the amount by 
     $17,700,000,000.
       On page 11, line 22, increase the amount by 
     $10,800,000,000.
       On page 12, line 3, increase the amount by $15,100,000,000.
       On page 12, line 4, increase the amount by $11,700,000,000.
       On page 12, line 10, increase the amount by 
     $11,300,000,000.
       On page 12, line 11, increase the amount by 
     $11,500,000,000.
       On page 12, line 17, increase the amount by 
     $11,400,000,000.
       On page 12, line 18, increase the amount by 
     $11,600,000,000.
       On page 12, line 24, increase the amount by 
     $11,300,000,000.
       On page 12, line 25, increase the amount by 
     $10,000,000,000.
       On page 54, line 20, decrease the amount by $9,600,000,000.
       On page 54, line 21, decrease the amount by $4,000,000,000.
       On page 55, line 2, decrease the amount by $15,900,000,000.
       On page 55, line 3, decrease the amount by $8,300,000,000.
       On page 55, line 9, decrease the amount by $17,700,000,000.
       On page 55, line 10, decrease the amount by 
     $10,800,000,000.
       On page 55, line 16, decrease the amount by 
     $15,100,000,000.
       On page 55, line 17, decrease the amount by 
     $11,700,000,000.
       On page 55, line 23, decrease the amount by 
     $11,300,000,000.
       On page 55, line 24, decrease the amount by 
     $11,500,000,000.
       On page 56, line 5, decrease the amount by $11,400,000,000.
       On page 56, line 6, decrease the amount by $11,600,000,000.
       On page 56, line 12, decrease the amount by 
     $11,300,000,000.
       On page 56, line 13, decrease the amount by 
     $10,000,000,000.
       On page 65, line 14, increase the amount by $9,600,000,000.
       On page 65, line 15, increase the amount by $4,000,000,000.
       On page 65, line 17, decrease the amount by $9,600,000,000.
       On page 65, line 18, decrease the amount by $4,000,000,000.
       On page 65, line 21, increase the amount by 
     $15,900,000,000.
       On page 65, line 22, increase the amount by $8,300,000,000.
       On page 65, line 24, decrease the amount by 
     $15,900,000,000.
       On page 65, line 25, decrease the amount by $8,300,000,000.
       On page 66, line 3, increase the amount by $17,700,000,000.
       On page 66, line 4, increase the amount by $10,800,000,000.
       On page 66, line 6, decrease the amount by $17,700,000,000.
       On page 66, line 7, decrease the amount by $10,800,000,000.
       On page 66, line 10, increase the amount by 
     $15,100,000,000.
       On page 66, line 11, increase the amount by 
     $11,700,000,000.
       On page 66, line 13, decrease the amount by 
     $15,100,000,000.
       On page 66, line 14, decrease the amount by 
     $11,700,000,000.
       On page 66, line 17, increase the amount by 
     $11,300,000,000.
       On page 66, line 18, increase the amount by 
     $11,500,000,000.
       On page 66, line 20, decrease the amount by 
     $11,300,000,000.
       On page 66, line 21, decrease the amount by 
     $11,500,000,000.
       On page 66, line 24, increase the amount by 
     $11,400,000,000.
       On page 66, line 25, increase the amount by 
     $11,600,000,000.
       On page 67, line  , decrease the amount by $11,400,000,000.
       On page 67, line  , decrease the amount by $11,600,000,000.
       On page 67, line 6, increase the amount by $11,300,000,000.
       On page 67, line 7, increase the amount by $10,000,000,000.
       On page 67, line 9, decrease the amount by $11,300,000,000.
       On page 67, line 10, decrease the amount by 
     $10,600,000,000.
       On page 68, after line 12, add the following new paragraph:
       (3) It is the sense of the Senate that the Senate should 
     waive all points of order that would preclude increasing non-
     defense spending in any one fiscal year by up to $2 billion 
     and, at the same time, decreasing defense spending in any one 
     fiscal year by up to $2 billion, from the levels of 
     discretionary spending in this section. It is further the 
     sense of the Senate that defense spending may not be reduced 
     by more than a total of $10 billion and non-defense spending 
     may not be increased by more than a total of $10 billion over 
     the seven years of the resolution, from the levels of 
     discretionary spending in this section.

  Mr. THURMOND. Mr. President, I have been asked ``What do Americans 
expect of their Armed Force?'' I believe Americans expect a capable and 
ready force, ready to meet our Nation's security needs, able to 
safeguard our national interest and maintain our position as a world 
leader. The budget resolution from the Senator from New Mexico was a 
good effort. It required many hard decisions. The problem remains that 
the planned defense budget, as offered in the budget resolution, does 
not meet the needs of our Armed Forces or give us the ability to meet 
our global commitments.
  We live in a dangerous world. It is our responsibility not to repeat 
history and drastically reduce defense. This path will leave our forces 
in a dangerously unprepared state, and we will pay the price in the 
future. The international environment requires the United States to 
maintain a strong defense to deter aggression and maintain our vital 
interests. The Armed Services Committee has already received 
indications that the Defense Department is planning further end 
strength reductions to pay for needed modernization. The Bottom-Up 
Review described a minimum force, said to be necessary to support our 
military strategy. This review was not based on strategy. Force 
structure levels were too low, and the required modernization was 
mortgaged.
  Over the last year, the Armed Services Committee has continued to 
hear testimony concerning present and future readiness problems. Lack 
of funds is placing combat readiness in danger. The ability of our 
commanders in the field to maintain their forces is being jeopardized 
by an underfunded program. GAO and other sources have estimated 
shortfalls in defense to range from $20 billion to $150 billion over 
the next 6 years. Defense spending has been reduced every year since 
1985, and as a percentage of gross domestic product is at pre-World War 
II levels. Modernization and procurement accounts remain at 50-year 
lows as modernization projects are continually pushed farther into the 
future or canceled all together. This is a trend that cannot continue. 
The defense budget, in the budget resolution, simply does not provide 
the minimum resources necessary to sustain our force or meet the 
Department's pressing needs. [[Page S7186]] 
  At the same time, requirements for our service men and women have not 
decreased. Instead, contingency operations and other deployments have 
increased requirements for American forces, placing greater stress on 
our service members, family members, and their equipment. These 
deployments have a price and are taking a toll on our force readiness. 
We must support our forces and not cripple our Nation's defense.
  Our responsibility is to ensure that the bill for these funding 
shortfalls is not paid for by the sacrifice of men and women in our 
Armed Forces. These young Americans have been asked to live without 
proper housing and barracks, to make do with constrained training, and 
do without new systems and technology, because we cannot afford it. 
Quality-of-life programs have been ignored to support increasing 
operating tempos. Benefits are continually under review for further 
reductions. We should expect increasing recruiting and retention 
problems, if we do not support these young Americans who are serving 
our Nation.
  I am strongly in favor of cutting Federal spending and reducing the 
deficit, but we must meet our national security needs. The first 
responsibility of government is to provide for its defense. This 
amendment reverses a dangerous trend and provides for that commitment. 
It does not increase the deficit in Senator Domenici's budget 
resolution. The amendment improves the balance between current and 
future readiness. We provide for an adequate quality of life for 
service members and their families. We can take care of shortfalls in 
important new systems such as national and theater missile defense 
systems. We must not allow our Nation's defense needs to be decided by 
purely fiscal considerations. If we do, then sooner than we may 
realize, a bill is going to come due. Hopefully, that bill will not be 
paid with the lives of our service men and women, and great harm to the 
Nation.
  Mr. President, how much time is remaining?
  The PRESIDING OFFICER. The Senator from South Carolina has consumed 5 
of the 7 minutes.
  Mr. THURMOND. Mr. President, I reserve the remaining 2 minutes.
  I yield to the Senator from Arizona, Mr. McCain.
  Mr. McCAIN. I thank my distinguished leader and chairman of the Armed 
Services Committee, Senator Thurmond, and I also want to thank my 
colleague from Texas, Senator Hutchison, for their leadership, 
especially Senator Thurmond's leadership, on this very important 
amendment.
  Mr. President, I am sorry we are short of time. This amendment 
deserves a great deal more consideration if Members believe, as I do, 
that the first priority of any government is to preserve the security 
of its citizens.
  Senator Thurmond has described the amendment. I would just like to 
remind my colleagues for 2 years, Republicans have charged that the 
administration has failed to maintain a defense adequate to confront 
the myriad challenges we face in this period of instability. Now it is 
our responsibility to correct that failing.
  I am disappointed that the budget resolution submitted to this body 
by Republicans is the Clinton numbers, the same numbers that we 
attacked so vociferously for 2 years.
  Mr. President, no decade in this century began more auspiciously than 
the 1990's. That gross impediment to human liberty, the Berlin Wall, 
was breached by the stronger forces of human yearning. The central 
security problem of our time, the possible clash of East and West on 
the plains of Germany, was resolved by the dissolution of the Warsaw 
Pact, the reunification of Germany, and the collapse of the Soviet 
Union.
  The euphoria that accompanied these events anticipated the imminent 
arrival of a new world order of independent democracies engaged only in 
peaceful commercial competition with one another.
  The resurrection of ancient conflicts and hideous barbarism in the 
Balkans; the reappearance of other incidents of irrational nationalism 
that had been sublimated by the cold war; the haunting familiarity of 
Zhirinovsky's odious appeal to perverse patriotism; the accelerating 
proliferation of weapons of mass destruction; and the waging of over 50 
conflicts around the world have dimmed our hopes for a more just and 
tranquil world, and reminded Members that we have interests and values 
that are still at risk in this promising but uncertain world.
  The world is still a very dangerous place. American vigilance and 
struggle are required now more than ever. There are numerous potential 
threats to our national security in the world today:
  In North Korea, one of the world's remaining Communist dictatorships 
seeks to acquire nuclear weapons, and this administration has failed to 
exercise the decisive leadership necessary to halt, once and for all, 
the threat of nuclear warfare on the Korean Peninsula.
  In Asia, China has laid claim to the entire South China Sea and 
enhanced its claim with a massive buildup of its armed forces, 
including the acquisition of new submarines, marine forces, and 
aircraft carriers.
  In the Middle East, Iran poses a serious threat to the security of 
the region with their own efforts to acquire nuclear weapons, their 
longstanding support of terrorist movements, and their aggressive 
military buildup in the Straits of Hormuz.
  Iraq remains a potential trouble spot as Saddam Hussein maintains a 
stranglehold on political and economic power in that state.
  Russia's involvement in its ``near abroad,'' the ongoing horrible 
conflict in Chechnya, and its advocacy of changes in stable arms 
control agreements causes serious concerns.
  Ethnic conflicts continue to rage from Sri Lanka to Rwanda.
  And in Bosnia, United States military personnel may soon be sent in 
harm's way to assist in extracting international forces from the failed 
U.N. peacekeeping effort in that State.
  These and many other examples of instability in the world today make 
it imperative that we support an adequate national defense posture in 
this Nation.
  Mr. President, the defense budget has declined 35 percent in real 
terms between 1985 and 1994. President Clinton promised in his State of 
the Union Address in January of 1994, ``* * * we must not cut defense 
further.'' Yet, his fiscal year 1996 defense budget submission cuts 
defense for 4 more years, totaling another 10 percent decline by 1999.
  Mr. President, what we are faced with is a Hobson's choice. We are 
spending money to maintain a ready force. That money is well spent, and 
we still have the finest and highest quality men and women this Nation 
can recruit and maintain in our Armed Forces. However, in exchange for 
that, we are sacrificing totally, the modernization of our force.
  In 1985, we procured 325 tactical aircraft; in 1996, we will procure 
289. In 1985, we procured 80,000 missiles; in 1995 we procured 3,000. 
In tanks, in 1985, we procured 2,680 tanks and other vehicles; in 1995, 
34 tanks and vehicles. Ships, in 1985, we procured 34; in 1996, we will 
procure 3.
  Mr. President, we cannot--we cannot--maintain the capability that won 
the Persian Gulf with the kind of lack of modernization that is part 
and parcel of this proposal.
  The PRESIDING OFFICER. The Senator from Arizona had 5 minutes, and 
has 4 minutes remaining.
  Mr. McCAIN. Mr. President, I, not unlike other Members of this body, 
am a student of history. I am certainly a confirmed believer in the old 
adage that those who ignore the lessons of history are doomed to repeat 
them.
  In 1917 the United States of America was not prepared to go to war. 
In 1941, on December 7, America was not prepared to go to war. In June 
of 1950, when North Korea attacked across the 38th parallel, the United 
States was not prepared to go to war. In the 1970's, when we had a 
hollow Army, the United States was not prepared.
  We must understand that what we are doing here is mortgaging the 
blood and treasure of America by adopting a proposal which cannot meet 
our national security requirements and needs. It is an enormous 
responsibility of this body, to assume a responsibility in 
contravention to the knowledge, wisdom and advice of our military 
leaders and all objective observers, and that is that we cannot 
modernize our forces so victory, if conflict comes, can only be 
purchased through enormous [[Page S7187]] expenditure of treasure, and 
far more important than that, American blood.
  Mr. President, I reserve the remainder of my time. I will use it at 
the end of the debate.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. How much time does Senator Thurmond or McCain have 
remaining?
  The PRESIDING OFFICER. The Senator has 27 minutes and 45 seconds 
remaining.
  Mr. DOMENICI. I am in control, technically, of the time in 
opposition. But, frankly, I want to give that opposition time to the 
distinguished Senator from Nebraska for his side. They are going to 
have the time in opposition, not the Senator from New Mexico.
  But I will reserve, now, before I give that over--I will keep 10 
minutes for myself and Senator Lott. He, I understand, will not be able 
to fit in, in the time allotted. I will arrange to give him that time, 
not in opposition but in favor. Is that correct?
  Mr. LOTT. That is correct.
  Mr. THURMOND. I yield 3 minutes to Senator Warner.
  Mr. WARNER. Mr. President, over the past several days, I have 
listened closely to the debate over this budget resolution which, I 
believe, has the potential to set our Nation on the road to fiscal 
responsibility. I want to commend the Senator from New Mexico, Senator 
Domenici, for his courageous proposal which will balance the Federal 
budget by the year 2002. I support what he and the other Republicans on 
the Budget Committee intend to do with this budget resolution--
eliminate the Federal deficit and relieve the enormous burden of debt 
that we are currently loading on the backs of our children and 
grandchildren. However, I take exception with the spending levels for 
defense included within the budget resolution before the Senate.
  Mr. President, I am concerned about the security of our Nation and 
the risks we face in a world that--despite the demise of the cold war--
remains a very dangerous and unpredictable place. As we speak, our 
Armed Forces are preparing for the possibility of a mission to assist 
in the withdrawal of U.N. forces from the former Yugoslavia. Whether or 
not you believe that we should put U.S. forces at risk to carry out 
this mission, I am certain that every Senator in this Chamber would 
support funding to ensure that our forces are trained and equipped to 
facilitate the rapid accomplishment of this mission with minimal risk 
to the lives of U.S. military personnel. We learned in Operation Desert 
Storm that well-trained troops equipped with modern weapons and 
equipment suffer fewer casualities.
  Today we are facing a world proliferating with new threats based on 
centuries-old ethnic, racial and religious hatreds.
  The problem with preparing our forces to defend against threats in 
this new world of disorder is that we may not be able to anticipate 
where and whom we will have to fight. We will have to be prepared for 
the unexpected, for major regional crises that arise suddenly--in other 
words, for contingencies. The case in point is the gulf war. Prior to 
August 1990, no one ever expected we would end up in a major land war 
against Iraq.
  Fortunately, we had a superior military capability that was more than 
a match for Iraq. But, in the past, this has not always been the case. 
The outbreak of World Wars I and II and Korea found us woefully 
unprepared, and the result was many thousands of Americans lost in the 
opening days of those conflicts. Consequently, in an era of 
uncertainty, combined with multiple potential dangers, the No. 1 threat 
could be our own unpreparedness.
  Mr. President, the administration's ways of dealing with these 
uncertainties was to conduct a Bottom-Up
 Review which resulted in a force structure that is supposed to be able 
to fight and win two nearly-simultaneous major regional contingencies. 
It is highly questionable, however, whether or not this planned force 
will be capable of meeting this requirement. There is also general 
agreement that the administration's future years defense plan [FYDP] is 
inadequate. The General Accounting Office estimated that the FYDP may 
be underfunded by as much as $150 billion.

  The administration has made readiness a high priority at the expense 
of modernization of our military. They have kept personnel and 
readiness accounts funded at high levels, but because the overall 
budget is underfunded, modernization--the R&D and procurement 
accounts--have paid the bills. Procurement is at intolerably low 
levels. A Marine Corps general officer testifying at an Armed Services 
Committee hearing recently stated that the Marine Corps procurement 
budget was only about one-third of what it should be for the third 
straight year. ``You can't modernize on pocket change,'' he told the 
committee.
  I should also point out that even with all of the administration's 
emphasis on readiness, significant readiness problems have occurred 
within our military over the past year.
  Last September, three Army divisions reported readiness levels of C-
3. Not since the days of the Carter administration, have that many 
divisions reported such poor readiness levels.
  Overall readiness for active Navy aviation squadrons declined from 
about 75 percent in fiscal year 1990 to 61 percent last year.
  Funding shortfalls in the 2d Marine Air Wing's flying hour program 
resulted in 11 of 30 squadrons reporting in the two lowest readiness 
categories (C-3 or C-4) for the 4th quarter of fiscal year 1994.
  Admiral Boorda, the Chief of Naval Operations stated recently, ``We 
have gone to the well and it is dry. We must fund training if we are to 
prevent a `hollow force.'''
  Mr. President, I believe it is clear that our military services are 
underfunded in the administration's proposed budget and future years 
defense plan. For the past 2\1/2\ years, members of the Armed Services 
Committee have been expressing that view. Every Republican on the Armed 
Services Committee signed a letter to the chairman of the Budget 
Committee recommending that fiscal year 1996 funding for defense be 
frozen at last years level, adjusted for inflation. This would result 
in a $12.5 billion increase over the President's
 request for fiscal year 1996.

  Unfortunately, the Budget Committee's proposal accepts the 
administration's recommended budgets now and in the outyears for 
defense. If we accept the administration's budgets, then the 
responsibility for shortfalls in defense funding and the resulting 
deficiencies in our Armed Forces will lie with those of us in the 
Congress.
  Mr. President, in his State of the Union Address in 1994, the 
President implored the Congress not to cut defense further--that 
defense had been cut enough. Then, this year, in his budget request for 
fiscal year 1996, the President recommended $5.7 billion less than he 
recommended last year--in real terms, this is over $13 billion less 
than last year. Mr. President, that sounds like a cut to me.
  There are those who state that defense should pay its fair share. Mr. 
President, I maintain that defense has already paid more than its fair 
share--that defense has already been cut too deeply. Fiscal year 1996 
represents the 11th consecutive year of declining defense budgets--the 
longest continuous decline in post WW II history. DOD spending as a 
share of the Federal budget has declined from 42 percent in 1968 to 18 
percent in 1994 and continues to decline.
  As I indicated earlier, Defense procurement spending has suffered 
greatly under the Clinton administration. During the hollow force days 
of the mid-1970's, procurement spending was only about $46.7 billion; 
in 1985, at the height of the Reagan buildup, procurement spending 
reached $120 billion; in 1995, procurement spending is down to $39.4 
billion--representing a 67-percent decrease from fiscal year 1985 and 
16-percent less than the mid-1970's low point.
  Mr. President, when we fail to modernize our forces with new weapons 
and equipment, we not only cause maintenance and operating costs to 
rise, but more importantly, we condemn our future soldiers, sailors, 
airmen, and marines to fight their battles with obsolete weapons and 
equipment.
  Mr. President, when I asked an old Marine sergeant, who was a combat 
veteran of several wars, why he was so sure there would be another war, 
he replied, ``There always has been.'' It is certain that our forces 
will be called upon again to go into battle. The time 
[[Page S7188]] may be sooner than we think. I hope the Congress will 
not put our servicemen and women at greater risk because we cannot find 
additional funds from a budget of almost $1.3 trillion.
  I support the Thurmond-McCain amendment and urge my colleagues to 
vote for it also.
  Mr. DOLE. Mr. President, I rise today in support of the Thurmond-
Stevens-McCain amendment. I commend my colleagues for their efforts to 
ensure an adequate defense budget. Under this amendment, defense 
spending would be increased to meet the levels approved by the House 
last week. However, the measure is deficit neutral in each year of the 
resolution, and keeps us on path to achieve a balanced budget by the 
year 2002.
  We are committed to cutting Federal spending. But we must ensure that 
our military is prepared to meet future challenges. Over the past few 
years, the Clinton administration has sacrificed the readiness and 
modernization of our forces. However, around the world, potential 
enemies are increasing and modernizing their military capabilities.
  For the past 2 years, the administration has justified its reduction-
in-force structure by promising to provide our troops with the most 
modern technology available. During last year's hearings on the fiscal 
year 1995 budget, General Shalikashvili stated, and I quote:

       The structure is adequate only if we stick with two 
     linchpins: We must improve our capabilities, and we must 
     improve and maintain our readiness.

  Unfortunately, this has turned out to be empty rhetoric. Procurement 
spending and procurement rates are at their lowest levels in 45 years. 
Despite promises to enhance force capabilities, modernization has come 
to a virtual standstill. The result is that our Armed Forces are 
smaller, but not more capable.
  Where President Clinton has failed to recognize the long-term needs 
of the military, we in Congress must take the lead. Our defense budget 
must balance our need to maintain near-term readiness and our need to 
provide enhanced capabilities for the future. It must prepare us for 
tomorrow's challenges. Failure to do so will jeopardize the security of 
this Nation. I urge my colleagues to support this amendment.
  Mr. COHEN. Mr. President, much of the debate over the defense budget 
in recent weeks and months has been based on misperceptions and half-
truths.
  A good example can be found in one editorial entitled ``Grasping the 
Obvious,'' which lashed out at defense spending, claiming that 
President Clinton wanted to increase the defense budget and that:

       The Defense Department has somehow become untouchable, 
     taking a place alongside Social Security and Medicare in the 
     pantheon of sacrosanct Federal enterprises.

  The editorial went on to argue that defense budgets should be reduced 
just as much if not more than other areas of Federal spending, and that 
the Pentagon and the White House would have to realize that in a time 
of ``diminishing military threats,'' deep cuts would have to be made.
  The writer is not alone in failing to grasp the obvious. The post-
cold-war period has seen a proliferation of efforts to cut American 
defense budgets dangerously deeply. These efforts have been accompanied 
by accusations that, in an era of budget balancing and deficit 
reduction, the military is not absorbing its fair share of cuts.
  Nothing could be further from the truth.
  Far from being placed on a pedestal, protected from America's budget 
cutting zeal, defense spending has already been subjected to a frenzy 
of profound and often damaging reductions. The defense budget has been 
cut every year for the past decade, for an overall real decline of some 
35 percent. In contrast, real spending on Medicare and Social Security 
over the same period has increased 63 and 23 percent, respectively.
  The portion of the defense budget used to buy weapons and other 
equipment has already suffered a reduction of more than two-thirds over 
the past decade:
  A decade ago we purchased 720 tanks a year. Today, we buy none.
  Annual purchases of ships and aircraft have declined 80 and 87 
percent respectively.
  Dozens of major weapons programs and more than a hundred smaller ones 
have been terminated.
  As the nonpartisan Congressional Budget Office has put it, the 
Pentagon has entered a ``procurement holiday.''
  For the past decade, it has been defense that has borne the blows of 
the budget cutting axe as domestic spending has steadily grown.
  The very real reductions in defense budgets over the past decade may 
not seem important from the vantage point of defense spending critics, 
but for those whose job it is to ensure military readiness and to 
guarantee American security, the cuts have already made their tasks 
difficult to the point of being almost impossible. The question for 
these
 professionals is whether minimum levels of reliability and readiness 
can be ensured, given current spending cuts.

  Earlier this year, Gen. Carl Mundy, Commandant of the Marine Corps, 
warned:

       We are stretched thin. Actual operational commitments over 
     the past 3 years have actually grown steadily and have 
     greatly exceeded those predicted by either the Marine Corps 
     assessment or the Bottom-Up Review * * *. We have not to date 
     received sufficient resources to fund * * * minimum essential 
     requirements * * * to provide a reasonable assurance that we 
     can meet our commitments with operationally ready and 
     effective forces, not only today, but throughout the program 
     years.* * *

  This assessment has been echoed by senior officers in all of the 
Nation's armed services. It illustrates the well-founded concerns of 
those who understand the importance of readiness and modernization in 
military planning, especially in today's uncertain world.
  The past few years have shown that the end of the cold-war standoff 
with Soviet Russia has not simplified and brought harmony to the world, 
rather it has increased uncertainty and made the world more susceptible 
to a host of festering regional conflicts. Many of these conflicts have 
the potential for escalation, spillover, and major destabilization in 
areas critical to the security and interests of the United States and 
our closest allies.
  While the United States is not the world's policeman, we are the only 
global power, and we have global interests that can be threatened by 
regional powers, great and small. Defending our interests requires us 
to station forces abroad and to be able to project power around the 
globe.
  A brief glance around the world shows the variety of dangers the 
United States must be prepared to meet:
  Russian troops are turning Chechnya into a wasteland and Russian 
neighbors into colonies, while Russian engineers prepare to build 
nuclear reactors in the terrorist theocracy of Iran and Russian 
officials threaten the independence of the Baltics;
  China also plans to sell Iran nuclear reactors and seems intent on 
becoming a regional hegemon, claiming sovereignty over the strategic 
South China Sea, extending its coastal defense perimeter 10-fold out to 
2,000 miles, and backing these claims up with military deployments;
  Iran is aggressively pursuing nuclear weapons while also deploying 
Russian-built submarines and Chinese- and North Korean-built missiles 
in order to gain control of the Persian Gulf and dominate its 
neighbors;
  North Korea has violated last October's nuclear agreement and 
continues to mass troops and artillery on the DMZ, making an Asian 
nuclear arms race and another Korean war real possibilities.
  NATO is edging closer to intervening in Bosnia in order
   to rescue the U.N. troops deployed there, which would put some 
25,000 United States troops in the midst of a seemingly intractable 
war.

  Those who view this as merely a list of hypothetical risks unlikely 
to require American military deployments would do well to recall that 
since the end of the cold war, U.S. Armed Forces have been sent into 
action repeatedly on some 2\1/2\ dozen operations.
  While members of the Armed Services Committee are on record as 
favoring increases in the defense budget, this amendment would merely 
slow the decline in defense spending over the next 7 years. Even if 
this amendment is adopted, defense spending will continue to decline in 
real terms for another 7 years, resulting in 17 straight years of cuts 
in the defense budget.
  Given the tremendous cuts imposed on the defense budget in recent 
years [[Page S7189]] and the great uncertainty we face around the 
world, we cannot continue to gut America's Armed Forces. The military 
is already strained by the unprecedented number of peacetime operations 
it is being ordered to undertake.
  Mr. President, listening to the leaders of our Armed Forces and 
looking around the world, we are compelled to conclude that putting the 
brakes on military spending cuts is not merely a wise position, it is a 
national security imperative.
  I urge my colleagues to support the Thurmond amendment.
  Mrs. MURRAY. Mr. President, I rise in strong opposition to the 
Thurmond-McCain amendment, which seeks to increase defense spending by 
$68 billion over the next 7 years, and pay for that increase by making 
further cuts in domestic programs.
  In this era of shared sacrifice where no one is spared the budget 
ax--not children, seniors, nor veterans--I fear that those who would 
now ask the Senate to increase the level of defense spending simply do 
not understand the true war this country is fighting.
  Mr. President, it is America's families who are on the front lines 
today, fighting to find a safe place to live, a sound education for 
their children, affordable health care, and job security.
  It is the war against crime, poverty, ignorance, and AIDS that needs 
to be this country's priorities as we approach the next century.
  During the cold war, Americans made sacrifices here at home so that 
our national resources could be used to defeat communism around the 
globe. The Berlin Wall fell in 1989, and with it, the Warsaw Pact. The 
Soviet Union officially dissolved in 1991. We fought the war, and we 
won.
  In the aftermath of the cold war, I believe American families deserve 
to live in a safer and more stable world. They deserve to know that 
more of their tax dollars are going to educate their children and 
police their streets.
  The Republican budget before us today, which outlines their spending 
priorities for the next 7 years, makes deep cuts in programs for 
children, the poor, veterans, and the elderly, while insulating defense 
spending from cuts.
  And now we are asked to support an amendment which would add $68 
billion more in defense spending, and to pay for that increase, 
American families would have to accept yet deeper cuts in domestic 
programs.
  Even without this amendment, let us remember what the Republican 
budget is asking of American families.
  Teachers and students are asked to accept dramatic cuts in education 
spending, worker training programs, and student loan assistance.
  Preschoolers and their parents must accept a 30-percent cut in Head 
Start funding, which will deny as many as 100,000 low-income children 
the benefit of a preschool education.
  Rural Americans will be asked to accept 20-percent cuts in mandatory 
agriculture spending.
  Children and the elderly will be asked to shoulder $400 billion in 
Medicare and Medicaid cuts. In America today, one in four children, and 
one in three infants, are covered by Medicaid.
  The earned income tax credit, a program to help keep working families 
off welfare, will be cut by 11 percent.
  Our Nation's scientific community must accept $25 billion in cuts for 
basic research.
  The budget blueprint before us increases the veterans' contribution 
for GI bill education benefits, and freezes funding for the VA's 
medical system at the 1995 level for the next 7 years, cutting access 
to health care for veterans around the Nation. Under the Republican 
proposal, the VA will be forced to close the equivalent of 35 of its 
170 hospitals and deny care to over 1 million of our Nation's vets.
  And if we accept the amendment now pending before the Senate, 
American families would be asked to accept even deeper cuts in 
education funding, crime control, and other important domestic 
programs.
  Proponents of this amendment point to recent declines in defense 
spending with alarm. While spending for our military is down from the 
mid-1980's level, we must keep this trend in perspective. The United 
States today has the largest military budget and the most powerful 
military force in the world.
  The combined military budgets of Russia, Iraq, China, North Korea, 
Libya, Iran, Syria, and Cuba total $95 billion annually. That is one-
third the level of U.S. defense spending. Each year, the United States 
spends more than the next nine of the world's biggest military spenders 
combined.
  In fact, this country spends so much for defense, even the Pentagon 
can't keep track of it all. According to the GAO and the Pentagon's 
inspector general, as well as the Pentagon's
 Controller John Hamre, billions of defense dollars are lost year after 
year due to poor recordkeeping and lax accounting practices at the 
Department of Defense.

  According to GAO, each year the pentagon pays private contractors up 
to $750 million it does not owe them--with businesses often paid twice 
for the work they have done. And at this point, according to the 
Pentagon, there is really no way to retrieve these lost funds, or to 
stop the massive overpayments.
  Billions of dollars simply lost in the system, Mr. President, in an 
era when we are saying no to university scientists looking for cures to 
devastating diseases.
  Billions of dollars lost in the system when we are saying no to 
preschoolers who need HeadStart programs.
  Billions of dollars lost in the system, when we are saying no to our 
Nation's elderly, who thought they could rely on Medicare in their 
final years.
  Billions of lost dollars when we are saying no to basic scientific 
research, which has fueled our economy for decades.
  At the very least, Congress should hold defense spending to the 
President's level until the Pentagon can fix their payment procedures 
and bring some accountability to the system. We owe that much to the 
Nation's taxpayers.
  Our debate today is about deficit reduction--which requires hard 
choices. Under the Senate budget plan, the United States will continue 
to maintain the strongest military in the world. Today the military's 
share of the gross domestic product is 4.6 percent, which is higher 
than the entire Federal domestic discretionary budget combined 3.7 
percent.
  And in the current international climate, where the United States 
remains the only military superpower, we are also the dominant economic 
and political actor on the stage. In this role, we must increasingly 
emphasize nonmilitary solutions to global conflicts--diplomatic 
negotiations, multilateral efforts, and regional responses.
  But most of all, in order to project strength abroad, we must gain 
strength here at home. Our national security, in my view, will not be 
strengthened by yet more guns and missiles. We need to restore global 
economic leadership. We must invest in our children and their future--
in their education and their health. We must rebuild our cities and our 
infrastructure, and invest in technology and scientific research.
  We must ensure that the economy our children inherit in the next 
century is sound and growing.
  Mr. President, I will end with a quote from Dwight Eisenhower, who 
observed in 1953,

       Every gun that is fired, every warship launched, every 
     rocket fired signifies, in the final sense, a theft from 
     those who hunger and are not fed, those who are cold and are 
     not clothed. The world in arms is not spending money alone. 
     It is spending the sweat of its laborers, the genius of its 
     scientists, the hopes of its children.

  General Eisenhower had it right. Mr. President, I urge my colleagues 
to defeat the Thurmond-McCain amendment.
  Mr. COATS. Mr. President, I am a supporter of this historic budget. 
But I want briefly to comment on the level of defense spending it 
recommends--a level I believe is clearly inadequate to retain our long-
term readiness and the quality of life of our men and women in uniform.
  Balancing the books is one of the most important duties of 
Government. But it is not the first duty of Government. That duty is 
the defense of our country, this means more than defending our borders. 
It means shaping a security environment that will be favorable to 
America in the future. It means providing our troops with the training 
they need and the equipment they require.
  The Armed Services Committee has spent a good deal of time and effort 
this spring, through hearings and briefings, exploring the current and 
future needs of our military. [[Page S7190]] 
  Although the cold war is over--we have found that the demands we 
place on our military have not diminished. If anything, they have 
expanded--into quick deployments, in high-risk situations, under 
tremendous danger and strain. For example:
  Our shrinking forces in Europe--from 314,000 prior to the fall of the 
Berlin wall and now rapidly approaching 100,000--have been deployed in 
more missions in the last 5 years than in the previous 45 years.
  The average soldier now spends approximately 138 days each year away 
from home on extended, short notice deployments. This must be combined 
with extensive training to maintain key skills.
  Our Navy surface ships, and the men and women who man them, are 
deploying and training at tempos that keep them away from home in 
excess of 130 days per year, on average.
  The Marines currently have 24,000 people deployed overseas carrying 
out 911 fast reaction assignments. Just to give you some concept of the 
pace of change in the Marines, the total manning level for the Marines 
has been stabilized at 178,000. During the last 5 years, the Marine 
Corps downsized 24,000 personnel--the same figure which is currently 
deployed.
  The Air Force has gone from 18 active fighter wings to 13 wings 
resulting in a four-fold increase in deployment obligations over the 
last 7 years--while drawing down the overall end strength by one third. 
These commitments have required a quadrupling of the total number of 
people deployed over the last 5 years.
  My point is this: A serious gap is opening between the military 
mission we define and the level of funding we provide. Unfortunately, 
the budget resolution before us continues this dangerous trend, which 
may leave our forces without the tools, training or equipment to 
fulfill future tasks we will ask of them.
  The Gulf war is our benchmark of American military success. It is an 
effort we must be able to duplicate, well into the future. But even 
that war was conducted under the most favorable circumstances.
  We had 6 months to move equipment and troops into the region. It is 
very unlikely we will enjoy that sort of advantage in other situations.
  Our training and logistics were given extensive time to put into 
place.
  Our opponent had inferior technology, and no known weapons of mass 
destruction.
  All the surrounding countries in the region were friendly.
  The international community was solidly behind us.
  As we plan for the next war--a war we hope will never come--it would 
be foolish to base our strategy on advantages we enjoyed in the last 
one. And I am deeply concerned we have squandered some of the 
advantages we can control.
  If we attempted today to engage in a major regional conflict, I 
believe we have placed artificial handicaps on our ability to project 
American power. Future enemies have gained from the lessons learned by 
Iraq, and will not allow a protracted buildup to take place. We would 
not be able to conduct such a war because the shortfalls in air and sea 
lift capabilities would prevent it.
  The drawdown in personnel over the last 4 years is another critical 
element in this debate. The proposed budget levels will not allow us to 
adequately address these shortfalls. We need additional funding in 
defense to develop capable and modern equipment, and allow our men and 
women to do the job assigned to them.
  In addition, with this continued decline of our defense, we are 
sending the wrong message to the world, especially to our allies--a 
message of retreat and withdrawal. America has world-wide commitments 
and national interests which must be maintained. Our ability to back-up 
those obligations, with a strong and viable military, should be one of 
our highest priorities.
  If we build our economic security but cripple our military capability 
in the process, then we will have failed both our children and our 
Nation. Maintaining America's national strength is our best assurance 
of peace--and that peace is worth the price.
  Mr. President. I support the Thurmond amendment. It is an effort to 
reverse a dangerous trend, and restore a national resource--the 
strength of our Nation. I urge the Senate adopt the amendment from the 
Senator from South Carolina.
  Mr. THURMOND. Mr. President, before the Senate votes on this 
amendment, I want to be sure that my colleagues on both sides of the 
aisles understand the importance of this vote.
  If the Senate elects not to support an increase in defense spending, 
then the responsibility for underfunding defense for the last 2\1/2\ 
years will no longer rest with the administration. By accepting the 
Budget Committee recommendation to accept the administration's proposed 
defense budgets we, the Members of the Senate, must bear full 
responsibility for decreasing readiness and the lack of modernization 
in our Armed Forces.
  The Armed Services Committee has received a large number of letters 
requesting assistance and support for items in the defense budget or 
funds to be added in the authorization process. I want to make it clear 
that it will be very difficult to include any new programs or proposals 
that add money to existing defense programs without the increase in 
funds this amendment provides. Furthermore, resources to provide 
additional equipment for the National Guard and Reserves will not be 
available. Programs within the budget that are already at jeopardy such 
as the third Seawolf submarine are at greater risk without the increase 
this amendment provides.
  Mr. President, this is not a threat but reality. I hope all my 
colleagues will consider this amendment carefully and vote to provide 
the funds needed for an adequate defense for our Nation.
  Mr. ABRAHAM. Mr. President, I rise in support of the Thurmond-McCain 
amendment to increase the level of defense spending to a reasonable 
level. Throughout my campaign, I promised the voters to oppose 
additional cuts in defense, and sufficiently fund important weapons 
systems modernization programs needed to ensure our forces' 
technological supremacy. Although there may no longer be a monolithic 
threat to our existence, there are a myriad of threats and strategic 
interests which warrant a United States military force level capable of 
protecting them.
  In defining and protecting the U.S. strategic interests, the Clinton 
administration has been negligent. It has consistently failed to 
request the funds necessary to field, maintain and train the forces 
necessary to carry out its own National Security Strategy. Estimates of 
this budget shortfall range from almost $50 billion to over $480 
billion during the next five years. In fact, the President's budget 
will allow military spending to fall below the anemic levels provided 
to the hollow forces of the Carter administration. From 1985 to the end 
of the Clinton administration's budget in 2001, critical procurement 
modernization programs will fall over 57 percent, while research and 
development spending is cut by almost 40 percent.
  Therefore I believe our military capability is seriously compromised. 
Senator McCain's February 1995 Report on Military Capabilities and 
Readiness stated that although smaller forces can still be militarily 
effective, they must also be ``continually enhanced through 
modernization.'' The former service Chiefs of Staff who conducted this 
study found military modernization at a standstill, while procurement 
and research and development budgets were insufficient to maintain our 
force's technological superiority.
  Mr. President, in light of these conditions, I find it imperative to 
support the amendment proposed by Senator Thurmond. This amendment 
would increase defense spending by $67.9 billion over seven years and 
finance it by an equivalent reduction in non-defense discretionary 
spending. As I mentioned during the debate on the Gramm tax cut 
amendment, I agree that it is possible to reduce discretionary spending 
further than what is proposed in the budget resolution. However, I do 
not think it is prudent to do so on a proportionate across-the-board 
basis. In my judgement, additional program eliminations and 
consolidations in targeted areas of the budget is the proper course to 
follow.
  In closing, providing for the Nation's defense is the Federal 
Government's first and primary responsibility. To [[Page S7191]] allow 
the President to deplete our military below that level necessary to 
protect our strategic interests is irresponsible and ill-advised. We 
must increase the funding to the National Defense account and we must 
do it now.
  The PRESIDING OFFICER (Mr. Abraham). Who yields time?
  Mr. DOMENICI. Mr. President, I think the time is getting out of 
balance in terms of those in favor and those opposed. Do we have any 
people who might speak in opposition?
  Mr. EXON. We will have somebody in just a moment.
  There has been some misunderstanding on time. At the present time, 
will the Chair advise the Senate how much time is allocated and 
remaining to the proponents of the amendment, and what is the split on 
the time with regard to the other side?
  The PRESIDING OFFICER. The proponents have 25 minutes remaining. The 
opponents, the Senator from Nebraska, would have 50 minutes.
  Mr. EXON. Mr. President, I did not hear the time in answer to my 
question.
  The PRESIDING OFFICER. I am sorry. The proponents would have 25 
minutes remaining. Senator Domenici would have 10 minutes. And you 
would have 50 minutes remaining.
  Mr. EXON. I thank the Chair.
  Mr. DOMENICI. Did Senator Thurmond want to yield some time or did he 
want to wait?
  Mr. THURMOND. I will wait and let them speak.
  Mr. DOMENICI. I think that would be fair.
  Mr. EXON. I inquire of the Senator from Iowa, [Mr. Grassley], who 
asked for some time, is he prepared to offer his remarks at this time?
  Mr. GRASSLEY. Yes, I am.
  Mr. EXON. How much time does the Senator from Iowa wish?
  Mr. GRASSLEY. Could I have 5 minutes for the moment. I may want some 
time later on.
  Mr. EXON. I yield 5 minutes, and if the Senator needs more time I 
will be glad to yield it.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, this is a battle that is mainly being 
fought on the Republican side. There are Republicans who are bent on 
pumping up the defense budget once again. There are a lot of 
Republicans on this side who are of the opinion that that should not be 
done. They may not speak as well about that issue, so I am going to do 
what I do quite often, oppose the efforts by my distinguished 
colleagues on the Republican side of the aisle, to make sure that we do 
not spend any more money on defense than what is in the very well-
crafted compromise put together by the distinguished chairman of the 
Budget Committee, Senator Domenici.
  The proposal to pump up the defense numbers makes no sense at all. I 
think it defies all reason and all understanding. I am baffled by their 
proposal; more important, baffled by the number of $92 billion, higher 
than anything I had heard spoken of behind the scenes over the last 
month that might come up at this particular time.
  What they are doing is starting back on the slippery slope towards 
higher defense budgets that is a license for further waste and 
mismanagement. Not only that, but the world situation does not call for 
spending more money at this particular time. The Soviet threat is gone. 
The cold war is over. But the debate in Congress for spending more for 
defense is reminiscent of that era.
  There has been a dramatic decrease in the primary threat to our 
national security as we knew it. We have rewritten our national 
security goals, but the budget that my colleagues want the increase for 
is defined in those cold war terms.
  The defense budget is coming down, and it should be coming down. So 
why do they say that it needs to go up? Why and for what? There is no 
good reason. The bureaucrats at the Pentagon say that they need more 
money, and they say they need it right now. That is the reason. That 
happens to be the only reason.
  Once again I wish to remind my colleagues what happened on May 2, 
1985. The Reagan administration was trying to continue the pumped up 
defense numbers that had been in existence for 3 years at that 
particular time. They were trying to push defense spending from around 
$255 billion in fiscal year 1985 to around $300 billion in fiscal year 
1986, and then to $400 billion, and then to $500 billion in the years 
beyond.
  Now, that was at the height of the cold war and the height of Soviet 
military power. The rise in the Soviet military power was the principal 
driver behind the plan to push the Pentagon budget to $500 billion by 
the year 1990. But on May 2, 1985, the Senate rejected this Reagan 
defense budget buildup even in the face of massive Soviet military 
power.
  This measure, the fiscal year 1986 budget resolution, put a brake on 
that, effectively ending the planned growth of the Pentagon budget. If 
we rejected a defense budget buildup to those numbers in 1985 when we 
were confronted with a serious military threat, why would we now move 
to pump up the budget when that threat has literally evaporated? Why 
would we do that?
  As we learned back in the 1980's, higher defense budgets only bring 
higher costs, more overhead, and more waste, as long as the Department 
of Defense management leadership remains AWOL. More money for defense 
when the threat to our national security has decreased dramatically 
cannot be justified. The numbers before us in this amendment then 
cannot be justified.
  May I have 2 more minutes?
  Mr. EXON. I yield 2 additional minutes.
  Mr. GRASSLEY. The international situation today as we know it points 
to decreasing threats and a call for defense numbers to stay flat. If 
we pump up the budget now, we will be buying weapons that we do not 
need, weapons like the Sea Wolf submarine, the F-22 fighter, more B-2 
bombers, Comanche helicopters, all designed to defeat a threat that no 
longer exists. The Sea Wolf, the F-22, the B-2 and the Comanche are all 
cold war relics. The cold war warriors are trying to buy cold war 
weapons on a post-cold war budget. That is the only reason we are 
having the debate on this amendment today.
  This kind of defense policy will give us another hollow force like we 
had in the 1970's. We will end up with another hollow force because the 
cold war warriors have to rob the readiness accounts to pay for the 
cold war relics. They have to rob the readiness accounts because all 
the cold war weapons are underfunded. They are underfunded because this 
outrageous price tag cannot be justified in the absence of a Soviet 
military threat.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. I yield 12 minutes to the Senator from West Virginia.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. BYRD. Mr. President, I thank the distinguished Senator from 
Nebraska. I congratulate him on his excellent work on this measure.
  Mr. President, a number of recent newspaper articles, in the 
Washington Post and the Baltimore Sun, have reported on the extent of 
financial mismanagement in the Department of Defense. These reports 
indicate that this mismanagement has resulted in at least $28.8 billion 
lost in overpayments to defense contractors or simply unaccounted for 
over the past decade. Unbelievably, this amount is down from $48.7 
billion in 1993. The current Department of Defense comptroller, Mr. 
John Hamre, has had the unenviable task of trying to sort out the 
extent of the problem and the multiple causes for it. He is to be 
commended for his diligence and honesty in dealing squarely with this 
issue, and he deserves our support as he attempts to correct the 
underlying morass of multiple and confusing payment and accounting 
systems that created the current crisis. But the fact is, the 
Department of Defense cannot adequately safeguard the roughly $260 
billion that it is entrusted with each year. Yet the amendment before 
us would increase the money entrusted to the Department of Defense by 
$92 billion over 7 years. This amendment would cut deeper into the 
shrinking accounts for energy, agriculture, education, and law 
enforcement programs--programs that directly benefit every American 
citizen--in order to pour more money into [[Page S7192]] a defense 
money bucket that has so many holes in it that it might better be 
described as a money sieve.
  According to the press reports, which also cite Department of Defense 
Inspector General and the General Accounting Office reports, basic 
accounting and record-keeping procedures, required of even the smallest 
private office, are not widely followed in the Department of Defense 
and the military services. Invoices and payment records are not 
reconciled, yearly tracking of funds spent on equipment or programs is 
not done, and program managers are authorized to write checks on the 
Department of Defense account without checking the balance in the 
central registry. And the Department of the Treasury covers the 
Department of Defense's bad checks, so no one is ever held accountable 
for their profligate spending. Charles A. Bowsher, the Comptroller 
General of the United States for the General Accounting Office, has 
stated in written testimony before the Appropriations Subcommittee on 
Defense that ``none of the military services or major DoD components 
have produced reliable financial statements since the passage of the 
CFO [Chief Financial Officers] Act of 1990.''
  According to the DoD Inspector General, $14.7 billion cannot be 
accounted for with invoices, so the Department of Defense cannot say 
that it is not buying unneeded or unnecessary items. Over $7 billion 
worth of goods and services were purchased by military offices in 
excess of the amounts authorized by Congress. Every year, the 
Department of Defense overpays defense contractors by $500-750 million. 
According to the General Accounting Office,
 while contractors generally notify the Department of Defense when they 
are overpaid, they may not return the payments unless instructed to do 
so. As of July 1994, a sample of large and small defense contractors 
were holding approximately $231.5 million in contract overpayments, 
including one that had been outstanding for about 7 years, costing the 
government about $5 million in interest. This is not a system that 
needs more money added to it.

  While many of these appalling examples of waste are due to the 
problems inherent in antiquated and confusing accounting systems, 19 
different payroll systems, and over 200 different contracting systems, 
there are also troubling examples of potential fraud that are being 
investigated. One involves an investigation into whether Air Force 
officials used money from various weapons programs to construct a golf 
course. In today's difficult fiscal environment, it is essential that 
every defense dollar goes toward maintaining the readiness of our 
fighting forces and is not diverted to golf courses or to purchasing 
items in excess of defense needs because we cannot keep track of our 
money.
  Secretary of Defense Perry and Mr. Hamre have made great progress in 
correcting this mess, which stretches back over decades but was 
exacerbated during the defense buildup in the 1980's. The number of 
accounting programs are being reduced, the financial staff is being 
halved and consolidated from 300 offices nationwide to 25, and a system 
is being implemented to check all payments against invoices. The number 
of different military and civilian pay systems have also been reduced.
  These are important steps, and they are necessary steps. In his 
written testimony before the Senate Appropriations Defense Subcommittee 
this morning, Mr. Hamre estimated that through the consolidation and 
standardization of its financial systems and operations, the Defense 
Finance and Accounting Service will achieve substantial savings in its 
own operating costs, on the order of $57 million in fiscal year 1997. I 
would hope that these savings would be put to use further upgrading and 
consolidating the Department of Defense accounting systems into a 
smoothly functioning system. Improvements in financial management at 
the Department of Defense should whittle down the current $28.8 billion 
in so-called ``problem disbursements.'' These savings should fund 
increases in defense programs, not false savings brutally carved with a 
meat axe from already lean energy, agriculture, education, and law 
enforcement programs.
  Mr. President, I urge my colleagues to vote against this amendment, 
and I say that with all due respect to the cosponsors thereof.
  Mr. President, I ask unanimous consent that the articles to which I 
referred in my statement be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record as follows:

                 [From the Baltimore Sun, May 17, 1995]

   Pentagon Unable to Account for $28.8 Billion; Error-Prone Payment 
                              System Cited

                       (By Gilbert A. Lewthwaite)

       Washington.--The Pentagon is facing an accounting gap, with 
     discrepancies on its books totaling $28.8 billion, its top 
     financial officer told Congress yesterday.
       The problem includes a $13 billion imbalance between checks 
     the Pentagon has written over the past 10 years and the 
     vouchers it can produce to account for those payments. The 
     other $15 billion is from a variety of bookkeeping 
     shortcomings.
       Pentagon comptroller John Hamre said $1 billion worth of 
     ``problem'' disbursements were being made monthly without 
     being properly matched to invoices.
       ``We got into this sad state of affairs because we designed 
     a system where you pay now and account later,'' he told the 
     Senate Armed Services subcommittee on readiness. ``It isn't 
     that we have wicked people trying to screw up, it's that we 
     have a system that's so error-prone that good people working 
     hard are going to make mistakes.''
       The Pentagon's finances are in such bad shape that Sen. 
     Carl Levin, a Michigan Democrat, said the Defense Department 
     may need the sort of financial control board imposed on the 
     District of Columbia.
       ``This is totally unacceptable. There is a lot of money 
     here which is going through the sieve,'' said Mr. Levin, 
     adding that voters experienced ``frustration, disappointment, 
     indeed, anger'' over reports of continuing Pentagon waste, 
     fraud and abuse, particularly at a time when Congress was 
     ordering major spending cuts in other programs.
       Mr. Hamre, in an effort to explain the accounting 
     difficulties, said the Pentagon each month processes 2.5 
     million invoices, spends $9.2 billion and issues 10 million 
     paychecks.
       ``So that's 10 million times to get things screwed up,'' he 
     said.
       His own pay, he said, had been miscalculated six times in 
     the 18 months he has spent in the department, adding: ``And 
     it's really bad when you screw up your boss' pay. And I've 
     done that a couple of times.''
       Mr. Hamre's boss, Defense Secretary William J. Perry, has 
     made financial reform a priority in an effort to save money, 
     which can be spent on improving the combat readiness of the 
     armed forces.
       The Perry plan calls for reducing the 250 accounting 
     systems the Pentagon operates, halving of the financial staff 
     of 46,000 to 23,000 in five years, and consolidating 300 
     accounting offices nationwide into 25 financial centers.
       To phase out the practice of paying first and accounting 
     for the payment later, beginning July 1 any Pentagon payment 
     of more than $5 million will have to be checked against an 
     invoice, said Mr. Hamre. After October 1, the new rule will 
     apply to payments of more than $1 million. Eventually it will 
     apply to all payments.
       The military pay systems for uniformed personnel has been 
     reduced from 18 in 1991 to six today, and will be down to two 
     in 1997. Civilian pay systems have been reduced from 18 to 
     10. By 1998 there will be a single civilian pay system.
       Mr. Hamre said the Defense Department was also screening 
     its retirement rolls after 1,000 military pension recipients 
     in the Philippines failed to turn up at the U.S. Embassy to 
     confirm their status. They were then struck from the rolls.
       The Senate panel heard that in fiscal 1994 the Pentagon was 
     accountable for more than $1 trillion in assets, 3 million 
     military and civilian personnel, and $272 billion in 
     expenditures--approximately equivalent to 50 percent of the 
     federal government's discretionary spending.
       ``It's big bucks,'' said Sen. John Glenn, a leader in the 
     decade-old campaign to reform the Defense Department's 
     accounting systems. ``If any of the civilian agencies on the 
     chopping block had [the Pentagon's] record on financial 
     management, they would probably be at the top of the hit 
     list.''
       Charles A. Bowsher, U.S. comptroller general and the top 
     federal financial watchdog, said the Perry blueprint for 
     financial reform was ``a good overall plan,'' but he added 
     that only ``modest progress'' had been made in implementing 
     it.
       Asked about overpayments of an average $750 million yearly 
     to defense contractors, Mr. Bowsher said that frequently it 
     was the contractors themselves who revealed the overpayments 
     to the Pentagon.
       An accounting firm, hired by the General Accounting Office 
     to check on 5,000 defense contracts since 1990, found $285 
     million in overpayments. To date the Pentagon has demanded 
     repayment of $133 million, but has actually collected only 
     $85 million, a GAO official said.
       Mr. Bowsher also pointed to the ``Byzantine'' process of 
     obtaining a military travel voucher, which involved 40 
     transactions costing the defense department 30 cents for 
     every travel dollar. Administrative charges in the private 
     sector were down to 1 cent for every dollar, he said.
                                                                    ____

[[Page S7193]]

                [From the Washington Post, May 14, 1995]

               Billions Go Astray, Often Without a Trace

                            (By Dana Priest)

       Each year, the Defense Department inadvertently pays 
     contractors hundreds of millions of dollars that it does not 
     owe them, and much of the money is never returned.
       In addition, the department has spent $15 billion it cannot 
     account for over the past decade.
       And Pentagon purchasing agents appear to have overdrawn 
     government checking accounts by at least $7 billion in 
     payment for goods and services since the mid-1980s, with 
     little or no accountability.
       Unlike the infamous $7,600 coffee pot and $600 toilet seat 
     pricing scandals of years past, these problems, and many 
     more, are the result of poor recordkeeping and lax accounting 
     practices that for years have characterized the way the 
     Defense Department keeps track of the money--$260 billion 
     this year--that it receives from Congress.
       According to a series of investigations by the department's 
     inspector general and the General Accounting Office, and 
     ongoing work by Pentagon Comptroller John J. Hamre, the 
     Department's systems of paying contractors and employees are 
     so antiquated and error-prone that it sometimes is difficult 
     to tell whether a payment has been made, whether it is 
     correct, or even what it paid for.
       Just how much money does the poor accounting waste?
       Former deputy defense secretary and new CIA Director John 
     M. Deutch wouldn't hazard a guess. ``Lots,'' he scribbled 
     recently on a reporter's notebook in response to a question.
       For months after he took the job as chairman of the Joint 
     Chiefs of Staff in late 1993, Gen. John Shalikashvili 
     received paychecks for the wrong amount. In the last year and 
     a half, Comptroller Hamre counted six problems with his own 
     pay.
       A paper-based system in which items frequently are 
     misplaced or lost and computers that often cannot talk to 
     each other are part of the problem. But there are other major 
     systemic weaknesses. A lack of basic accounting procedures--
     such as matching invoices and payment records, or keeping 
     track of money spent on a given piece of equipment from one 
     year to the next--has made it impossible to determine how 
     billions of dollars have been spent by each of the service 
     branches.
       In addition, Hamre explained, tracking the money has been 
     nearly impossible because 300 different program directors--
     the Air Force F-16 fighter program director, the commanding 
     officer of an aircraft carrier, the head of a maintenance 
     depot, for example--have had separate checkbooks, each one 
     free to write checks without regard to the balance in the 
     Pentagon's central registry.
       The U.S. Treasury has always paid the bills, even when 
     there was no money in a given project's account, because it 
     assumes any error was unintentional and someday would be 
     corrected, said Pentagon officials and inspector general 
     investigators.
       ``There's this huge pot of money over there in the Treasury 
     that you can keep drawing down,'' said the Deputy Inspector 
     General Derek J. Vander Schaaf. ``As long as your [overall] 
     checkbook's good,'' he said, meaning the Treasury, ``nobody 
     screams.''
       The problems were created over several decades and made 
     worse during the 1980s Reagan administration defense buildup 
     during the latter days of the Cold War, when there was little 
     political will to scrutinize the record sums being spent.
       Today, however, even ardent defense hawks have become 
     disturbed over the mismanaged flow of funds. Some Republicans 
     who looked deeply into the matter are suggesting a freeze on 
     military spending until the Pentagon's corroded payment 
     system can be permanently fixed.
       ``The defense budget is in financial chaos,'' said Sen. 
     Charles E. Grassley (R-Iowa), who is advocating a freeze. 
     ``The foundation of the defense budget is built on sand.''
       A Senate Armed Services subcommittee is scheduled to hold a 
     hearing on the problems Tuesday. It will be chaired Sen. John 
     Glenn (Ohio), a Democrat, who was authorized by Republicans 
     to conduct it because of his long-standing interest in the 
     subject.
       Among the problems detailed by the Defense Department, the 
     Pentagon inspector general and the GAO:
       Of the 36 Pentagon departments audited by the inspector 
     general (IG) in the last year, 28 used ``records in such 
     terrible condition'' as to make their annual financial 
     statements--an accounting of money collected and money 
     spent--utterly worthless, said Vander Schaaf.
       Financial officials cannot account for $14.7 billion in 
     ``unmatched disbursements,'' checks written for equipment and 
     services purchased by all military units within the last 
     decade. This means that accountants know only that a certain 
     amount of money was spent on the overall F-16 jet account, 
     for example, but not how much was spent on F-16 landing gear 
     or pilot manuals because they cannot find a purchase order 
     from the government to match the check.
       ``You don't know what you're really paying for,'' Vander 
     Schaaf said.
       The $14.7 billion represents ``hard-core problems'' where 
     department accountants have tried but failed to find the 
     records. ``We could be paying for something we don't need or 
     want,'' said Russell Rau, the IG's director of financial 
     management.
       In the last eight years, various military offices appear to 
     have ordered $7 billion worth of goods and services in excess 
     of the amount Congress has given to them to spend. These 
     ``negative unliquidated obligations'' may indicate that a 
     bill has been paid twice or mistakenly charged to the wrong 
     account because bookkeepers at hundreds of maintenance 
     depots, weapons program offices and military bases did not 
     keep track of payments they made, said Vander Schaaf.
       Of the $7 billion ``the government has no idea how much of 
     this balance is still owed,'' Rau said.
       Hamre has threatened to take part of the $7 billion out of 
     the military services' current operating budget if they 
     cannot find documentation for the expenditures by June 1.
       Every year the Defense Department pays private contractors 
     at least $500 million it does not owe them, according to 
     Vander Schaaf. The GAO believes the figure is closer to $750 
     million.
       The payment system is in such bad shape that the Pentagon 
     relies on contractors to catch erroneously calculated checks 
     and return them. Many of the overpayments are due to errors 
     made on a paper-based system in which harried clerks are 
     judged by how quickly they make payments. And because there 
     is no adequate way to track the amount of periodic payments 
     made on a contract, businesses often are paid twice for the 
     work they have done.
       Defense Department finance officials believe they are 
     recouping about 75 percent of the overpayments, although they 
     admit they have no way of knowing exactly how much is being 
     overpaid.
       Today, after an 18-month struggle by Hamre to turn the 
     situation around, the department still has 10 payroll systems 
     and 200 different contracting systems.
       Hamre, who wins praise from Republicans and Democrats for 
     his efforts, has undertaken a major consolidation of payroll 
     and contracting offices. He has opened more than 100 
     investigations into whether individual program managers or 
     service agencies violated the law by using money appropriated 
     for one program for something else or for paying contracts 
     that exceeded their budget.
       He has frozen 23 major accounts and has stopped payment to 
     1,200 contractors whose records are particularly troublesome. 
     In July, clerks will be prohibited from making payments over 
     $5 million to any contractor ``unless a valid accounting 
     record'' of the contract can be found. By October, the amount 
     drops to $1 million, which means it will affect thousands 
     more contracts.
       According to Hamre and Rau, a number of cases are under 
     investigation for possible violations of the Anti-Deficiency 
     Act, the law that governs how congressionally appropriated 
     money must be spent. Penalties range from disciplinary job 
     action to criminal prosecution. Investigators are trying to 
     determine:
       Why there is an unauthorized expenditure of around $1 
     billion on the Mark 50 torpedo, and the Standard and Phoenix 
     missiles. Hamre and Rau suspect that Navy officials used 
     money appropriated for other items or wrote checks on empty 
     accounts to pay contracts from 1988 and 1992.
       Whether Air Force officials used money from various weapons 
     programs to build a golf course at Wright-Patterson Air Force 
     Base in Ohio beginning in 1987.
       What happened when some programs ran out of money. ``There 
     are some [cases] in the Air Force now that really stink,'' 
     Hamre said. When money for the Advanced Cruise Missile ran 
     out, Air Force officials simply terminated the existing 
     contract and rewrote another, more expensive one the 
     following day, Pentagon investigators recently concluded. In 
     order to pay for cost overruns associated with the new C-17 
     cargo plane, contract officials simply reclassified $101 
     million in development costs as production costs.
       Hamre said the services allowed such money mingling to go 
     on partly because of the complexity of the yearly 
     congressional appropriations process. ``People want to find 
     an easier way to get the job done,'' he said. ``They are 
     trying to get some flexibility in a very cumbersome system.''
       But, he added, some services also have resisted correcting 
     problems and punishing wrongdoers. ``I'm very frustrated by 
     it,'' he said. ``In the past, they just waited until people 
     retired. It was the old boy network covering for people.''
       The Defense Department is unlike any government agency in 
     scope and size. It sends out $35 million an hour in checks 
     for military and civilian employees from its main financing 
     office in Columbus, Ohio. And it buys everything from 
     toothbrushes to nuclear submarines; about $380 billion flows 
     within the various military purchasing bureaucracies and out 
     to the private sector each year.
       It takes at least 100 paper transactions among dozens of 
     organizations to buy a complex weapons system. Some supply 
     contracts have 2,000 line items and, because of the 
     congressional appropriations process, must be paid for by 
     money from several different pots.
       Fixing the problems without throwing the entire system into 
     chaos, Hamre said, ``is like changing the tire on a car while 
     you're driving 60 miles per hour.''
       But some argue it has never been more important to make the 
     fixes quickly.
       ``Here we are in a period of reduced spending, it's 
     critically important today that we [[Page S7194]] get a 
     bigger bang for the buck,'' said Sen. William V. Roth Jr. 
     (R.-Del.), chairman of the Government Affairs Committee, 
     where many of the current problems were first revealed. 
     ``We've got to put pressure on to expedite it. At best, it 
     will take too long.''
       But in the world of Defense Department financing, time is 
     not always a solution, as one small example illustrates.
       In 1991, because of a computer programming error, the 
     department's finance and accounting service centers 
     erroneously paid thousands of Desert Storm reservists $80 
     million they were not owed. When officials realized the 
     mistake, they began to send letters to service members to 
     recoup the overpayments. Many veterans complained to 
     Congress, which then prohibited the Pentagon from collecting 
     any overpayment of less than $2,500 and made it give back 
     money collected from people who received less than that 
     amount.
       To comply, the Defense Finance and Accounting Service 
     (DFAS) payment centers in Cleveland, Denver, Indianapolis and 
     Kansas City created new computer programs to cancel the debts 
     and issue refunds. But they did not adequately test the new 
     programs, IG and GAO investigators found.
       As a result, the appropriate debts were not canceled, and 
     improper amounts of refunds were issued, often to the wrong 
     service member. The DFAS center in Denver, for example, 
     canceled $295,000 that service members owned it for travel 
     advances. In all, the botched effort to follow Congress's 
     direction cost taxpayers an additional $15 million, Pentagon 
     officials said.
       ``It isn't possible now'' to recoup the money, Hamre said. 
     ``We can't reconstruct the records. We admit were really, 
     really bad. We don't do it again.'' The IG's office has 
     agreed that it would be too costly to reconstruct the records 
     and recoup the loss.
       As he often does when he testifies about these matters on 
     Capitol Hill, Hamre confessed to the Senate Armed Services 
     Committee recently: ``We've made a lot of progress. But we've 
     got a long way to go.''

  Mr. BYRD. I yield back the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. THURMOND. Mr. President, I yield Senator Nunn 5 minutes.
  Mr. NUNN. I thank my friend from South Carolina.
  Mr. President, I rise in support of the Thurmond-McCain amendment to 
increase the defense spending levels in this budget resolution.
  For over 2 years, I have been expressing my concern that projected 
defense budgets are not sufficient from four standpoints: First, to 
maintain the current readiness of our forces; second, to provide the 
standard of living that military personnel and their families expect 
and deserve; third, supporting the force structure necessary to carry 
out the full range of missions that we expect our military forces to be 
able to perform; and fourth, to provide for the modernization that is 
the key to the future capability of those forces. The modernization of 
our forces, which is essential to future readiness, is an area of 
increasing concern, Mr. President, and this is an area where we are 
most deficient today.
  The men and women in the military continue to perform superbly every 
time they are called on, and we are calling on them all the time. We 
owe it to them to give them the support they need to do their job. We 
also have to ensure that the men and women who will be called on 5, 10, 
or 20 years from now will have the same advantages vis-a-vis their 
opponents that our forces have today, including the technological 
superiority that played such a key role in Operation Desert Storm and 
plays such a key role everywhere our forces are deployed today.
  While I am encouraged by the funding for readiness, military pay 
raises, and quality of life initiatives Secretary Perry has recommended 
in the President's budget, I think there are clearly insufficient funds 
going into modernizing the force. Modernization, for the most part, is 
delayed into the outyears under the current future years defense 
program. We all know how illusory these budget projections become 4 or 
5 years down the road.
  Under the current budget, 1996 and 1997 will be the second and third 
straight years during which the Air Force will not purchase a single 
new fighter aircraft. The Air Force has no
 bomber program. Our leading standoff weapon program has been canceled, 
yet the budget, at this stage, contains no funds to replace that 
capability. The number of navy ships is not nearly enough to replace 
even a 300-ship Navy. and the Marine Corps is years away from having a 
replacement for its aging amphibious assault vehicles. It would not 
take long to list the Army's modernization programs, but it would take 
a long time to list the deficiencies in that program.

  The fiscal squeeze on the defense budget is already intense. As we 
seek to balance the budget, and properly so--especially if we try to 
enact tax cuts, which I think are ill-advised, and which I hope this 
body will vote against this afternoon--if we do that, however, the 
pressure is going to get more and more intense on the defense budget. 
This gives me even less confidence in the outyear funding predictions 
that show funds for defense modernization increasing.
  In my view, we need to increase the defense topline now particularly 
in the outyears, to restore the balance to our defense program. We also 
need to reinstate the firewalls.
  And I congratulate the chairman of the committee and the members of 
the Budget Committee for doing this in the resolution. That is 
enormously important to protect any defense increases we are able to 
achieve and to provide some stability in the defense budget. Firewalls 
have not and will not mean that defense cannot be cut. What it does 
mean is that these cuts will not be shifted to other programs, and that 
means that if there are defense cuts and the firewalls are in, then the 
cuts will go to deficit reduction. I believe that is appropriate, and I 
think that is the way that defense is best protected.
  We have been reducing the defense budget for a long time. The current 
builddown started during President Reagan's second term, even before 
the fall of the Berlin Wall, and continued, accelerated, throughout the 
Bush administration and the current administration. I believe the time 
has come to stabilize the defense budget as much as possible, since the 
defense budget has already made a greater contribution to deficit 
reduction than any other part of the budget; I might add, than all of 
the budget combined.
  In my judgment, the administration needs to restore some balance to 
the defense program but Congress' recent action are a good news/bad 
news story.
  The good news is that the House budget resolution provided an 
increase for the defense budget. This amendment would do the same in 
the Senate budget resolution. And the Senate budget resolution, unlike 
the House version, contains firewalls. But there has been bad news for 
defense as well.

            the senate resolution does not increase defense

  First, although there have been a lot of statements that the 
President's defense budget and Bottom-Up Review force structure are 
inadequate, this resolution as reported out by the Budget Committee 
contains no increase for defense above the levels proposed by the 
administration--in fact in the final 2 years it is lower than the 
administration's plan.
  And while the House version of this resolution does increase defense, 
the House voted earlier this year in their tax cut bill to pay for the 
tax cut largely by cutting discretionary spending, which includes 
defense, and the House did not include firewalls in either the tax cut 
bill which reduced the discretionary caps or in their budget 
resolution. So the House has put discretionary spending on the table to 
pay for cutting taxes, which certainly makes it more difficult to find 
the money to increase the defense budget.

         requirement that dod absorb the cost of contingencies
  Second, despite the frequent complaints about the cost of contingency 
operations and their effect on readiness, the defense supplemental 
enacted earlier this year required the Department of Defense to absorb 
almost the entire cost of these contingency operations--the very 
practice that had been criticized in the past. In fact, the House 
leadership wrote to the President earlier this year stating their 
intention that as a matter of policy all future supplementals would 
have to be offset.
  This resolution would essentially adopt that same approach by 
requiring 60 votes for any future emergency supplementals, instead of a 
majority vote as has been the case in the past. Of course this only 
applies to discretionary funding, since entitlement programs could 
continue to increase without even requiring votes, let alone 
supermajority votes.
  Mr. President, I have several concerns with the approach the Congress 
[[Page S7195]] has taken on supplementals so far this year. The defense 
supplemental did not provide the net increase in defense spending for 
readiness that was requested by the Clinton Administration, despite the 
concerns many of my colleagues have expressed about readiness. The cost 
of these contingencies were made up almost entirely by cutting 
elsewhere in the defense budget, and those cuts came in modernization.
  So the scorecard so far in this new Congress is that the defense 
budget, as it now stands, counting the supplemental, is below what 
President Clinton had asked for. So to those in the Congress of the 
United States who are saying the Clinton defense budget is too low, and 
people on both side of the aisle are saying that, I say to them we are 
cutting below the President's budget, not in this resolution, but in 
the overall supplemental and that approach.
  I am also troubled by the impact that a policy of making DOD absorb 
the full cost of these contingencies could have on the
 defense budget and on defense management. It largely defeats the 
purpose of having supplementals, and I can already predict some of the 
problems we are going to have with this policy.

  I am not sure we have really thought through the impact of what we 
may be doing to the military with this 100 percent offset approach. 
Earlier this year, Gen. Gordon Sullivan, the Chief of Staff of the 
Army, told the Armed Services Committee that if the Congress adopts a 
policy of forcing the military to completely offset the costs of any 
contingency operation:

       * * * it is just going to destroy our training programs, 
     our quality of life programs, and it is going to be difficult 
     to manage the readiness of the force * * *. It is going to 
     come out of reducing real property maintenance. We may have 
     to furlough civilians, terminate termporary employees, 
     curtail supply requests, park vehicles, reduce environmental 
     compliance. It is going to have a major impact.

  General Sullivan said that in the event the military is told to 
assist a large-scale evacuation of U.N. personnel from Croatia:

       I just have to stop training, and I will have to move money 
     around from elsewhere to keep that operation going since 
     obviously what you expect me to do is to fight and win you 
     wars. So, I will have to get the money from people who are 
     not doing that to support it.

  Now that may sound like an exaggeration to some, but if you 
understand the laws that govern the defense budget, you will see why 
General Sullivan's comments are right on target. The cost of an 
operation, such as paying for the airlift to get there, the fuel, spare 
parts, and so on, must come out of the operating budget. The military 
does not have the authority to fund contingency costs by diverting 
funds from the procurement of weapons, or from research or military 
construction or military personnel accounts, even if they wanted to.
  And even within the operating budget, there are further constraints. 
A large portion of the operating account is civilian pay, so you cannot 
save money there without firing civilians. And you cannot cut really 
cut the money to operate the bases--you have to pay the light bill. So 
the areas General Sullivan is talking about--training, maintenance and 
repair of the buildings on our military bases--are the only areas where 
the military has the flexibility to change its plans halfway through 
the year. And in fact that is exactly what happened last year--money 
had to be diverted from training.
  In addition to my concerns about the financial impact on the Defense 
Department if this bill is viewed as a precedent, I also
 share the concerns expressed by my friend Senator Inouye about the 
long-term policy implications of telling the military any future 
contingency they are involved in is going to come out of their budget 
dollar for dollar. This is going to have an impact on their ability and 
their willingness to respond to situations like Haiti or Cuba, or 
especially a much more expensive operation like peace enforcement in 
Bosnia, in the future. In effect, we could have our funding and 
budgeting procedures dictating our foreign policy and our decisions on 
the use of force.

  I hope we do not set in concrete a policy of making the Defense 
Department absorb the costs of contingency operations, because if we 
are telling the Department of Defense that any time there is an 
emergency that comes up and they come over and request supplemental 
funds that they are going to have to provide a 100-percent offset, then 
we are going to change the nature of the responsiveness of the 
Department of Defense itself to the missions that may, indeed, be 
crucial to our Nation's security.
  If the Department of Defense is told that any unanticipated operation 
they undertake, either unilaterally or with NATO or the United Nations, 
is going to have to be completely offset within the defense budget, 
which means they are going to have to basically kill or substantially 
alter crucial defense programs in order to absorb those costs, then the 
result is going to be a very strong signal that the United States is 
not going to be as involved as we have been in world affairs, including 
commitments to our allies and commitments that we have voted for at the 
U.N. Security Council.

              modernization funds are the first to be cut

  The future readiness and future capability of the Defense Department 
requires modernization and it requires research and development, and 
those are the programs that were cut to fund the defense supplemental 
earlier this year, and those are the programs that will continue to be 
hurt by this policy of requiring complete offsets for contingency 
operations. Five or ten years from now, people will have a very serious 
problem with readiness if we continue to declare there is no emergency 
even when our forces are responding to the unanticipated events that we 
all know will take place somewhere in the world from time to time.
  This is why I am supporting this amendment to increase the defense 
topline number. We have cut the defense budget so much already that 
there is very little flexibility left to deal with the unexpected, even 
though we all know that the Defense Department always has to be ready 
for the unexpected--we expect them to be ready for the unexpected. And 
I am very concerned that as we struggle to live within these 
drastically reduced budgets without further reducing our military 
capability, the
 Congress will, acting in good faith to preserve readiness, make cuts 
that will cause great harm over the long term.

  You need look no further than the supplemental enacted earlier this 
spring to see the warning signs. What was cut to offset the cost of 
contingency operations? Basic science and technology research. Dual-use 
technology programs that are designed to better integrate our defense 
and civilian technology bases in order to get the Defense Department 
better technology at lower cost. In other words, programs that will pay 
off in the long term but seem easy to cut in the short term.
  Another example is environmental cleanup at military installations, 
which was cut by $300 million in the supplemental. Is this program as 
important to our combat capability as funding training and 
modernization? Of course not. But the reason that environmental cleanup 
costs are so high now is that for years these problems were ignored. 
And if we push them under the rug again, we are only going to wind up 
with an even bigger bill down the road.

                               Conclusion

  In conclusion, Mr. President, so far we have seen a lot more talk 
than action about enhancing our national security and increasing the 
defense budget. Many of my colleagues share my concern that we have cut 
the defense budget too far, too fast and that we are mortgaging our 
future by sacrificing the capability of our forces 10 years down the 
road in order to fully fund current readiness. The Thurmond-McCain 
amendment represents real action to enhance our national defense while 
at the same time putting us on a path to a balanced budget, and I urge 
my colleagues to support it.
  I ask unanimous consent that a table showing real reductions in the 
defense budget be printed in the Record.
  There being no objection, the table was ordered to be printed in the 
Record, as follows:

                                                                        
[[Page S7196]]
                                                        FISCAL YEAR 1996 SENATE BUDGET RESOLUTION                                                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    1980       1985       1990       1995       1996       1997       1998       1999       2000       2001       2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nat Def BA (current dollars)...     $143.9     $294.7     $303.3     $263.5     $257.7     $253.4     $259.6     $266.2     $276.0     $275.9     $275.9
DOD fiscal year 1996                                                                                                                                    
 deflators\1\..................     0.5383     0.7130     0.8378     0.9727     1.0000     1.0294     1.0595     1.0900     1.1195     1.1494     1.1801
NAT Def BA Const (1996 dollars)     $267.2     $413.3     $362.0     $270.9     $257.7     $246.2     $245.0     $244.2     $246.5     $240.0     $233.8
GDP (CBO estimates)............     $3,746     $4,207     $4,853     $7,036     $7,370     $7,747     $8,152     $8,572     $9,013     $9,843     $9,978
Defense BA as percent of GDP...        3.8        7.0        6.2        3.7        3.5        3.3        3.2        3.1        3.1        2.8        2.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\CBO assumes higher inflation.                                                                                                                        

                            Real Changes

                                                           (In percent)
1980-85............................................................54.6
1985-90...........................................................-12.4
1990-95...........................................................-25.2
1995-2000..........................................................-9.0
1980-1990..........................................................35.4
1985-1995.........................................................-34.5
1990-2000.........................................................-31.9
1980-1995...........................................................1.4
1985-2000.........................................................-40.3
1980-2000..........................................................-7.7
1980-2002.........................................................-12.5
1985-2002.........................................................-43.4
1990-2002.........................................................-35.4
1995-2002.........................................................-13.7

  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. NUNN. Mr. President, I thank my colleague from South Carolina and 
my colleague from Arizona for sponsoring this amendment. I urge my 
colleagues to support the amendment.
  The PRESIDING OFFICER. Who yields time?
  Mr. THURMOND. Mr. President, I yield 5 minutes to the distinguished 
Senator from New Hampshire.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. SMITH. I thank the Senator from South Carolina, the chairman of 
the Armed Services Committee, for offering this amendment, along with 
Senator McCain.
  I commend both of my colleagues for this amendment to restore much 
needed funds to our defense program and to do it without adding to the 
deficit but by setting priorities throughout the budget, including the 
defense budget. I might add that that also has priorities shuffled 
around in order to help with this amendment.
  I want to emphasize from the outset, again, it does not undermine the 
objective of a balanced budget by the year 2002. This amendment will 
not change that objective in any way. We still get to a balanced budget 
by the year 2002.
  But what this amendment does do is to help stave off terrible 
shortfalls in military readiness training and modernization. We owe it 
to our troops in the field to have the training and modernization that 
they deserve if we are going to ask them to go into harm's way.
  The defense reductions under President Clinton's budget, frankly, are 
wreaking havoc on our military capability. Most of us in this Chamber 
know that, especially those of us who are on the Armed Services 
Committee who see it every day.
  I hope that my colleagues would listen carefully to those of us on 
the Armed Services Committee in both parties who have spoken so 
eloquently on this matter. This body simply cannot and must not 
legitimize a blueprint for disaster by approving these kinds of defense 
numbers.
  Mr. President, I am troubled that the Budget Committee has endorsed 
the Clinton defense numbers. These spending totals are simply 
inadequate to safeguard our national security. And they are already 
having a very serious effect on readiness.
  I am also troubled that the President has chosen to blame Congress 
for current deficiencies in military readiness. I would emphasize that 
this is the same administration that entered office and immediately cut 
defense by $178 billion, the same administration that has dramatically 
underfunded operations, maintenance, and readiness modernization and 
quality of life programs for our military families.
  This is the same administration that has turned our Armed Forces into 
a 911 force all over the world on behalf of the United Nations, and yet 
we ask more and more and more and give them less and less and less.
  This is the same administration that committed our military forces to 
occupy Haiti without the consent of Congress, costing taxpayers 
hundreds of millions of dollars.
  This is the same administration that turned our naval base at 
Guantanamo into a refugee camp leaving the Defense Department stuck 
footing the bill to feed, clothe and bathe thousands of refugees 
indefinitely while subjected to the insults of many of them.
  This is the same administration that has pledged $4 billion in 
nuclear reactors for North Korea at the time we are spending tens of 
billions of dollars to defend against a North Korean military threat.
  I find these types of inconsistency preposterous. The truth is that 
the Clinton defense program is decimating our Armed Forces. Personnel 
tempo is going through the roof, our troops are being constantly 
deployed all over the world from Haiti to Somalia to Southwest Asia and 
back home, with little or no time to spend with their families, and 
they are out again going someplace else.
  I urge my colleagues to talk to them, talk to the military personnel, 
talk to their families and find out how tough this is.
  Depot maintenance backlogs are increasing; critical modernization 
programs are being terminated; morale is down; retention is down; 25 
percent of our Army divisions were recently classified as unprepared to 
meet their mission requirements.
  Mr. President, if Senators support this blueprint, which is so 
devastating our military capabilities, then they ought to oppose the 
Thurmond-McCain amendment. It is as simple as that. If you do not want 
to give our Armed Forces what they deserve, then go ahead and oppose 
the amendment. But if you share the view of the majority of Americans 
that this President has gone too far with these military reductions and 
our international security is in jeopardy, you should support the 
Thurmond-McCain amendment.
  In conclusion, I want to emphasize this amendment does not add to the 
deficit, it will not undermine the balanced budget, and it will restore 
much needed funds back to our defense program to stave off an imminent 
disaster in military readiness.
  I yield back any time I may have.
  The PRESIDING OFFICER. Who yields time?
  Mr. THURMOND. Does the opposition have any speakers, Mr. President? 
Mr. President, we will have to charge time over there.
  The PRESIDING OFFICER. Who yields time?
  Mr. THURMOND. Mr. President, I ask again, does the opposition have 
any speakers?
  Mr. EXON. Mr. President, I suggest the absence of a quorum and the 
time be equally charged.
  Mr. McCAIN. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. THURMOND. Mr. President, I yield 5 minutes to Senator Lott.
  Mr. DOMENICI. We have an additional 10 minutes we can yield, too. Why 
do I not yield 5 of the 10 I have to Senator Lott.
  Mr. LOTT. Mr. President, if I could make a parliamentary inquiry, but 
not counted against my time, what is the status? Are we going to try to 
get some debate back and forth, or should I proceed at this point?
  Mr. DOMENICI. I do not see how we can make them do that if they do 
not--the best we can do is put a quorum call in. When you put a quorum 
call in, under the statute, it is charged equally to both sides.
  The PRESIDING OFFICER. It is charged to the side who suggests it.
  Mr. DOMENICI. We have two alternatives. We can wait around and see if 
they suggest it or, if they do not, then we can just let the time run 
and it is equally charged. The Senator asked that it be equally charged 
under a UC?
  Mr. EXON. Yes.
  Mr. DOMENICI. Yes. What we are attempting to do is unsnarl a 
potential problem. If we can have a moment to talk we might be able to 
unsnarl it.
[[Page S7197]]

  Mr. DOMENICI. Mr. President, I ask unanimous consent that we have 5 
minutes charged to no one.
  Mr. EXON. There is a suspicion somebody is trying to fool somebody 
else.
  Mr. DOMENICI. Five minutes charged to neither side.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I suggest the absence of a quorum and 
that the time be charged to neither side.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DOMENICI. 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. DOMENICI. Mr. President, we have to advise Senators that the time 
has come to start a vote shortly. So I ask unanimous consent that at 
3:45 p.m., the Senate proceed to vote on the stacked votes that had 
been postponed earlier today, in the following sequence: The Bradley 
motion to waive; on or in relation to the Roth amendment; on or in 
relation to the Gramm amendment; on or in relation to the Exon 
amendment.
  I further ask unanimous consent that the first vote in the voting 
sequence be 20 minutes and that thereafter they be limited to 10 
minutes each.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I further ask unanimous consent that 
following the conclusion of the stacked votes, the Senate resume the 
pending amendment, which would be placed in status quo.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. I suggest the absence of a quorum until 3:45 p.m.
  The PRESIDING OFFICER. With the time to be equally divided?
  Mr. DOMENICI. That is fine.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DOLE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER. The vote on the Exon motion to waive the 
Budget Act is in order.
  The yeas and nays have been ordered.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The yeas and nays resulted--yeas 47, nays 53, as follows:

                      [Rollcall Vote No. 176 Leg.]

                                YEAS--47

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Bradley
     Breaux
     Bryan
     Bumpers
     Byrd
     Conrad
     Daschle
     Dodd
     Dorgan
     Exon
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Harkin
     Heflin
     Hollings
     Inouye
     Jeffords
     Johnston
     Kennedy
     Kerrey
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Nunn
     Pell
     Pryor
     Reid
     Robb
     Rockefeller
     Sarbanes
     Simon
     Wellstone

                                NAYS--53

     Abraham
     Ashcroft
     Bennett
     Bond
     Brown
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Cohen
     Coverdell
     Craig
     D'Amato
     DeWine
     Dole
     Domenici
     Faircloth
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hatch
     Hatfield
     Helms
     Hutchison
     Inhofe
     Kassebaum
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Packwood
     Pressler
     Roth
     Santorum
     Shelby
     Simpson
     Smith
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner
  The PRESIDING OFFICER (Mr. Gorton). On this question, the yeas are 
47, the nays are 53. Three-fifths of the Senators duly chosen and sworn 
not having voted in the affirmative, the motion is rejected.
  The point of order is sustained.
  The amendment falls.
  Mr. DOMENICI. Mr. President, I move to reconsider the vote.
  Mr. BRADLEY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Iowa.

        privilege of the chair--senate concurrent resolution 13

  Mr. HARKIN. Mr. President, I ask unanimous consent that Don Wiberg 
from the American Association for the Advancement of Science, a science 
fellow in my office, be granted the privilege of the floor for the 
duration of debate on this bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                       vote on amendment no. 1121

  The PRESIDING OFFICER. The question is on agreeing to the Roth 
amendment, No. 1121. The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative clerk called the roll.
  The PRESIDING OFFICER. Are there any Senators in the Chamber who 
desire to change their votes?
  The result was announced, yeas 50, nays 50, as follows:

                      [Rollcall Vote No. 177 Leg.]

                                YEAS--50

     Abraham
     Ashcroft
     Baucus
     Bennett
     Biden
     Bond
     Brown
     Campbell
     Chafee
     Coats
     Cochran
     Coverdell
     Craig
     D'Amato
     DeWine
     Dole
     Faircloth
     Feingold
     Frist
     Gramm
     Grams
     Grassley
     Gregg
     Hatch
     Helms
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Packwood
     Pressler
     Roth
     Santorum
     Shelby
     Simpson
     Smith
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond

                                NAYS--50

     Akaka
     Bingaman
     Boxer
     Bradley
     Breaux
     Bryan
     Bumpers
     Burns
     Byrd
     Cohen
     Conrad
     Daschle
     Dodd
     Domenici
     Dorgan
     Exon
     Feinstein
     Ford
     Glenn
     Gorton
     Graham
     Harkin
     Hatfield
     Heflin
     Hollings
     Inouye
     Johnston
     Kassebaum
     Kennedy
     Kerrey
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Nunn
     Pell
     Pryor
     Reid
     Robb
     Rockefeller
     Sarbanes
     Simon
     Warner
     Wellstone
  So, the amendment (No. 1121) was rejected.
  Mr. GLENN. Mr. President, I move to reconsider the vote.
  Mr. LEVIN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.

                       Vote on Amendment No. 1123

  The PRESIDING OFFICER. The question now occurs on agreeing to the 
Gramm amendment, No. 1123.
  Mr. GRAMM. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The result was announced--yeas 31, nays 69, as follows:
                      [Rollcall Vote No. 178 Leg.]

                                YEAS--31

     Abraham
     Ashcroft
     Bennett
     Brown
     Campbell
     Coats
     Coverdell
     Craig
     Dole
     Faircloth
     Frist
     Gramm
     Grams
     Hatch
     Helms
     Hutchison
     Inhofe
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Nickles
     Roth
     Santorum
     Shelby
     Smith
     Thompson
     Thurmond

                                NAYS--69

     Akaka
     Baucus
     Biden
     Bingaman
     Bond
     Boxer
     Bradley
     Breaux
     Bryan
     Bumpers
     Burns
     Byrd
     Chafee
     Cochran
     Cohen
     Conrad
     D'Amato
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Exon
     Feingold
     Feinstein
     Ford
     Glenn
     Gorton
     Graham
     Grassley
     Gregg
     Harkin
     Hatfield
     Heflin
     Hollings
     Inouye
     Jeffords
     Johnston
     Kassebaum
     Kennedy
     Kerrey
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Nunn
     Packwood
     Pell
     Pressler
     Pryor
     Reid
     Robb
     Rockefeller
     Sarbanes
     Simon
     Simpson
     Snowe
     Specter
     Stevens
     Thomas
     Warner
     Wellstone
  So the amendment (No. 1123) was rejected.

[[Page S7198]]

  Mr. DOMENICI. Mr. President, I move to reconsider the vote by which 
the amendment was rejected.
  Mr. EXON. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.

                      Unanimous-Consent Agreements

  Mr. DOMENICI. Mr. President, I want to put several unanimous-consent 
requests which will finish out the day and set the amendments in order 
for today and early morning.
  I ask unanimous consent that all the time be yielded back on the 
Thurmond amendment and that the Senate proceed to a vote on that 
amendment without any intervening action or debate after the 
disposition of the Exon amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, further, I ask unanimous consent that 
immediately following the disposition of the Thurmond amendment, 
Senator Harkin be recognized to offer an amendment on which there be 15 
minutes under the control of Senator Harkin and 5 minutes under the 
control of Senator Domenici; that no amendments be in order to that 
amendment; and that following the conclusion of the time on that 
amendment, it be laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I further ask unanimous consent that 
following the debate on the Harkin amendment, Senator Feingold be 
recognized to offer an amendment on which there be 20 minutes under the 
control of Senator Feingold, 20 minutes under Senator Domenici's 
control, 10 of which will belong to the Senator from Alaska, Senator 
Murkowski; that no amendments be in order to the Feingold amendment; 
and that following the conclusion of time it be laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that the first 
vote on the Harkin amendment be limited to 20 minutes, followed by a 
10-minute vote on the Feingold amendment, to occur Wednesday at a time 
to be determined by the two leaders.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that following 
the conclusion of the debate on the Feingold amendment this evening, 
Senator Snowe be recognized to offer an amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The majority leader.
  Mr. DOLE. Mr. President, what is the pending business?
  The PRESIDING OFFICER. The motion to waive the Budget Act for the 
consideration of the amendment by the Senator from Nebraska [Mr. Exon].
  Mr. DOLE. Following that, there will be a vote on the amendment by 
the Senator from South Carolina [Mr. Thurmond] and the Senator from 
Arizona [Mr. McCain]?
  The PRESIDING OFFICER. The next vote would be a vote on the Thurmond 
amendment, debate on which is not yet concluded.
  Mr. DOLE. As I understand, time has been yielded back.
  The PRESIDING OFFICER. Time has been yielded back by consent.

                           Order of Procedure

  Mr. DOLE. Mr. President, I advise my colleagues, that will be the 
last vote today. We will continue to work on the measure until we are 
down to 4 hours remaining, but there will be no more votes.
  Mr. HARKIN. Mr. President, is it still in order to reserve the right 
to object? We could not hear the unanimous-consent requests.
  Mr. DOMENICI. It says ``on the amendment.'' It means up or down. We 
had agreed to that and that was in the unanimous-consent request.

 Vote on Motion to Waive the Budget Act for Consideration of Amendment 
                                No. 1124

  The PRESIDING OFFICER. The question occurs on agreeing to the motion 
to waive the Budget Act for the consideration of amendment No. 1124, 
offered by the Senator from Nebraska [Mr. Exon]. The yeas and nays have 
been ordered. The clerk will call the roll.
  The yeas and nays resulted--yeas 47, nays 53, as follows:

                      [Rollcall Vote No. 179 Leg.]

                                YEAS--47

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Bradley
     Breaux
     Bryan
     Bumpers
     Byrd
     Conrad
     Daschle
     Dodd
     Dorgan
     Exon
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Harkin
     Heflin
     Hollings
     Inouye
     Jeffords
     Johnston
     Kennedy
     Kerrey
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Nunn
     Pell
     Pryor
     Reid
     Robb
     Rockefeller
     Sarbanes
     Simon
     Wellstone

                                NAYS--53

     Abraham
     Ashcroft
     Bennett
     Bond
     Brown
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Cohen
     Coverdell
     Craig
     D'Amato
     DeWine
     Dole
     Domenici
     Faircloth
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hatch
     Hatfield
     Helms
     Hutchison
     Inhofe
     Kassebaum
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Packwood
     Pressler
     Roth
     Santorum
     Shelby
     Simpson
     Smith
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner
  The PRESIDING OFFICER. The point of order is sustained and the 
amendment falls because it is not germane to the underlying resolution.

                       Vote on Amendment No. 1125

  The PRESIDING OFFICER. The question is on agreeing to the Thurmond 
amendment, numbered 1125.
  Mr. THURMOND. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The clerk will call the roll.
  The bill clerk called the roll.
  The PRESIDING OFFICER (Mr. Brown). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 40, nays 60, as follows:

                      [Rollcall Vote No. 180 Leg.]

                                YEAS--40

     Abraham
     Ashcroft
     Bennett
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Cohen
     Coverdell
     Craig
     Dole
     Faircloth
     Frist
     Gramm
     Grams
     Hatch
     Heflin
     Helms
     Hutchison
     Inhofe
     Kempthorne
     Kyl
     Lieberman
     Lott
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Nunn
     Santorum
     Shelby
     Smith
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--60

     Akaka
     Baucus
     Biden
     Bingaman
     Bond
     Boxer
     Bradley
     Breaux
     Brown
     Bryan
     Bumpers
     Byrd
     Conrad
     D'Amato
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Exon
     Feingold
     Feinstein
     Ford
     Glenn
     Gorton
     Graham
     Grassley
     Gregg
     Harkin
     Hatfield
     Hollings
     Inouye
     Jeffords
     Johnston
     Kassebaum
     Kennedy
     Kerrey
     Kerry
     Kohl
     Lautenberg
     Leahy
     Levin
     Lugar
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Packwood
     Pell
     Pressler
     Pryor
     Reid
     Robb
     Rockefeller
     Roth
     Sarbanes
     Simon
     Simpson
     Specter
     Wellstone
  So the amendment (No. 1125) was rejected.
  The PRESIDING OFFICER. Under the previous order of the Senate, the 
Senator from Iowa is recognized to offer an amendment. The time is 
divided, according to that agreement, 15 minutes for the Senator from 
Iowa and 5 minutes for the Senator from New Mexico.

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