Date: 1982-05-21
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. the time has come to vote on the first budget resolution. and I will have to vote against it. in its present form. I will have to vote against cutting medicare by $18.3 billion. I will have to vote against new taxes that could take money from our veterans. I will have to vote against a budget which could require user fe is that unfairly burden our Nations coal and gas producers. I will have to vote against this budget because it continues the folly of KempRoth at the expense of the American working people and our Nations elderly. I will h.ave to vote against dipping once more into the shallow well of domestic spending to drain away education funds. railroad retirement. housing. and veterans programs. Millions of our most deserving and hardest pressed working citizens will be hurt by this unworkable and unfair KempRoth budget. I tried to delay the KempRoth tax cut for the wealthy until we could afford it. I tried to delay the tax cut rather than create $107 billion in new taxes in the middle o! a recession. as the Budget Committee proposes. These new taxes could raise the price of energy through user fees. oil import taxes. or other energy penalties. These new taxes could increase the burden of families struck by catastrophic illnesses. by denying them tax relief for their overwhelming medical expenses. These taxes could further threaten the ability of parents to send their children to college. In short. these $107.2 billion in new taxes the Budget Committee proposes would come largely out of the pockets of working men and women. Some people will be hurt by whatever decisions we make in this Chamber. but it did not have to happen this way. These terrible decisions must be. made because the KempRoth tax cuts and high interest rates have forced us into a deficitridden recession that is not abating. This week. the Federal Reserve Board reported that the productive use of our Nations factories and machinery slipped again in April. Nearly 20 percent of our available capacity now stands idle. waiting for the KempRoth supplyside magic to take hold. Industrial production. which is a basic indicator of our economic health. fell again in April. and now stands 8.6 percent below its prerecession level. Just yesterday. the Commerce Department announced that in the first quarter of this y ar. beforetax business profits dropped at a 29year record rate of 15.6 percent. while aftertax profits plunged 17.5 percent. On the same dhy. the Commerce Department announced that the GNP had dropped further in the first quarter than was originally thought. Instead of dropping 3.9 percent. there was actually a plunge of 4.3 percent. And if the present is bleak. the future is no brighter. In April. the conference boards survey of consumer confidence hit an alltime low of 53.1 percent. and consumer buying plans plunged 27 points during that month. Everyone knows that until consumers begin to buy again. no sustained recovery is possible. Why have consumers slashed their buying plans? Why have our Nations businesses slashed their capital investment plans so severely that they will invest 4.5 percent less this year than last? Why are our factories running almost 30 percent below their capacity? One ominous phrase answers all these questions: High interest rates. High interest rates have stifled investment. What business can afford to invest when real interest rates are running at a record rate of 15.5 percent? How many consumers can afford to buy houses. cars. or refrigerators at the current interest rates? Is it really any wonder that we find ourselves facing record deficits. a stubborn recession and proposals to take more from our Nations elderly. our Nations sick. and our Nations.working poor? None of us should be surprised that a contradictory policy of tight money and big deficits would lead to a recession and that deficits grow astronomically during bad economic times. There were plenty of storm warnings last year. Economists outside the administration were nearly unanimous in saying that huge tax cuts and tight money would damage our economy. Democrats in the Senate tried repeatedly to tie the third year of KempRoth to economic conditions. We did not want to elimitnate the tax cut. but to schedule it when we could best afford it. We argued that there was no sense in adhering to a doctrinaire timetable established by rigid ideologies. I went to the White House to say that the KempRoth plan should be more moderate. that it should pay attention to the needs of our people. not the needs of theory. Reasonable people can disagree on many things. and we did not agree with our Republican colleagues that the KempRoth tax cut could be swallowed whole. Our friends on the other side of the aisle stuck to the original KempRoth plan. and they did it with the best ol Intentions. I am convinced that my : .>ublican friends honestly believed the 3year plan was the best way to get America moving. and that the supplyside magic promised to them by Mr. Stockmans computers would be worked on schedule. They did not know that they were worshipping a false idol at that time. They did not know that the OMB computers were being fed manufactured data. and that the projections of sustained. low inflationary growth were made up out of whole _cloth. They did not know that the promised 1984 balanced budget was a willothewisp that would disappear as we drew closer to that year. No Republican Senator thought that his support for KempRoth would turn the silk purse of large tax cuts into the sows ear of massive deficits. But I also know that my friends should not be surprised that such a transformation has come to pass. We disagreed. honorably and honestlj. last year. but we disagreed nonetheless. Unfortunately. Democratic caution regarding KempRoth has turned out to be the wisest course. and our predictions of economic difficulties have unfortunately leen borne out. Last year. we kne. v that the KempRoth tax cut was a roadmap. but Republicans and Den ocrats disagreed about where that ma.% led. My Republican friends thought we were traveling a road paved with gold and headed for the paradise of strong economic recovery. My Democratic colleagues believed we were setting out on the road to higher deficits and higher interest rates. If only we Democrats had been wrong. there would be no need for this years Republican efforts to cut sodal security. medicare. student loans. and housing. But we should not say that the KempRoth tax cut is solely responsible for the recession. nor is it solely responsible for the record budget deficits that we face. deficits so large that we must struggle mightily to bring them down to the staggering figure of $100 billion in 1983. Our economy is too big. too resilient. and too creative to be destroyed with just one mistake. Unfortunately. there was 4 secona mistake that helped make the difference. Economic advisers to the adininistration pushed the Federal Reserve Board into pursuing the tightest money policy in memory. Last year. the basic money supply grew at only 2.3 percent. With inflation running at iO.4 percent last year. this neans that the real supply of money actually decreased by 8.1 percent. In other words. after we take account of inflation there were 8 percent fewer dollars at the end of 1981 than there were at the beginning. With that steep drop in money it is no surprise that a steep and long recession has sprung from this highinterestrate policy. Even the administrations economic advisers recognize that their monetary policy was responsible for the recession. In their annual economic report for 1981. they wrote: There decelerations in monetary growth led to a sharp decline in real output in the final quarter of the year. To their credit. these advisers did not. seek to hide behind the past or to blame others for their recession. The highinterestrate monetary policy caused the recession. they say. The administration remains committed to the same tight money policy in 1982 that it followed in 1981. and with the sam. results: Record real interest rates and continued recession. The combination of tight money and big defit its creates a -vicious cycle where tight money leads to high interest rates which lead to deeper recession which leads to larger deficits. These deficits. in turn. increase Interest rates as the Government sucks up more and more of the available credit from businesses and consumers. This spiral will not be stopped until we return to a policy of prudent tax cuts. prudent spending cuts. prudent defense increases. and prudent monetary policy. We need an economic policy of commonsense. not of uncommon rigidity. Right now. the KempRoth tax cut and the tight money policy are keeping interest rates up and keeping us in a recession. I hope we will do something about these problems during this budget process. We should delay the third year of KempRoth until we can afford it. I do not think the Government should promise tax cuts we have to borrow to afford. I also hope we can force the administration to loosen its grip on the money supply. There is no need to have negative real money growth in the middle of a recession. Slow money growth means high interest rates. and high interest rates guarantee continued economic weakness for our Nation. Bankruptcies are running at 50year record levels because businesses cannot afford to stay open at these interest rates. our citizens cannot afford to buy houses. cars. or appliances. and our industries cannot afford to invest. Mr. President. what more reason do *e need to change this destructive economic course? What more reason do we need to admit that the bestintentioned theories can go wrong in practice? How much longer must we endure this tragic. natbinal nightmare? I would hope that we will eventually set the stage for recovery by looking not just at veterans programs. housing. and student loans. but at the KempRoth tax cut and the high interest rate policies of the past 16 months. So. I will vote against this budget resolution. I will vote against it because it continues a tragically flawed policy that has kept real interest rates at record levels and has cost 10.3 million people their jobs. I will vote against it because it penalizes our elderly. our students. our veterans. and our children to save a Trojan Horse tax scheme that reduces taxes for the wealthy few. I will vote against this resolution because it raises new taxes by $107.2 billion in the middle of a recession that still has not hit bottom. Most of all. I will vote against this budget because it is bad tax policy. bad budget policy. and bad economic policy. It Is a compromise without a conscience. and a policy without a promise. I may not be the only one who has trouble with this oudget resolution. From recent press reports. the President himself seems to be backing away from this Republican budget plan. Yesterday. according to his spokesman. he decided to sit on the sidelines once more. I would like to know if the President supports this latest Republican proposal. or if he still demands that social security be cut as the price for his support? I would like to ask my good friend. the Senator from New Mexico. if he knows whether the President stands behind this budget or not? If even the President cannot support this plan. I do not know why the Senate wastes its time in voting for a budget anticipating legislation which will eventually be vetoed. I hope my colleagues on the other side of the aisle can enlighten me. and the rest of the American people about the Presidents feeling about his budget. Does he support it or does he not? That is the question. Perhaps it will be answered by the President in the days to come.