Kent Conrad

Mr. CONRAD

Mr. CONRAD. I will just conclude by saying those Justices, as learned as they are, know nothing about what the defense systems are that are needed to maintain the security of this Nation. They know nothing about agriculture programs which are critical to my State. They know nothing about the budget disciplines that are fundamental to the writing of a budget document that is critical to the future of this country. This amendment by the Senator from Massachusetts ought to be adopted. The same type of amendment was adopted overwhelmingly in the last Congress when people recognized it was central to the functioning of any balanced budget amendment. I thank the Chair and yield the floor.

Mr. CONRAD

Mr. CONRAD. Mr. President, we have heard a novel argument just now from the other side with respect to Social Security. The argument is that the only way we can save Social Security is to raid it. The only way we can secure the future of Social Security is to loot it. Now, that is an argument that does not stand up to much scrutiny. The argument of the Senator on the other side is that if we take every penny of Social Security surplus funds as this balanced budget amendment that is before the body now contemplates, that once we have done that, we are then faced with a circumstance in which Social Security goes into deficits. Let me just say the one thing we know for sure is that we are running those surpluses. The one thing we know for certain is that each and every year we are taking in more money on Social Security than we are spending. That was designed so that we would save those funds to be ready for when the baby boomers start to retire. Instead, what we are doing is taking every penny and spending it on other programs. What we are going to find when the baby boomers start to retire is that there is a cupboard there, but the cupboard is bare, and the only thing in it is an IOU. The problem with that is then we are going to face draconian choices. Our friends on the other side who are defending this balanced budget amendment to the Constitution say that is OK. It is OK if we raid every penny of Social Security surplus between now and the year 2019. We take $1.8 trillion of Social Security surpluses to claim we have balanced the budget because later on in the sweet by-and-by when this thing starts to go negative, we will be including that, as well. That is an argument that frankly does not stand up very well because we cannot wait until Social Security goes negative. We cannot ever permit that to happen, not to the degree they have discussed on the other side, because you would never be able to meet your responsibilities and the promises that have been made. Those who have been taxed have been taxed in a regressive payroll tax in order to secure the promise that has been made. So the Congress is going to have to act and it is going to have to act soon to get our long-term fiscal imbalances addressed. What our friends on the other side are doing in the short term--and by short term I mean the next 20 years--is to take every penny of Social Security surplus, every penny, throw it into the pot, and claim they have balanced the budget. That is not a balanced budget. That would not qualify as a balanced budget in any organization that I know of. That would not pass the laugh test in any corporate board room in America. If in any corporate board room in the United States had a circumstance in which the chief executive officer came in and said, ``You know what, we have a little problem in the operations of this company, and what I am proposing is that we take the retirement funds of our employees, throw those into the pot, and call it a balanced budget,'' well, if you tried to do that, he would be in violation of Federal law. No. 2, he would be in violation of every accounting principle known to any financial expert in America. I say to my friends when you hear the sweet siren song that they are going to balance the budget, you better ask this question, you better ask this question: What budget is being balanced? Because what you will find, as shocking as it may seem, is that they are not talking about a real balanced budget at all. They are talking about taking every fund in sight, every trust fund known to man, and taking the income from those and throw them into the pot and then say they balanced the budget. As I said the other day, out in North Dakota we say you can call a pig a cow but it does not make it a cow. It does not make it a cow to call a pig a cow. You can call this a balanced budget. You can call it anything you want. It does not make it so. In fact, if you look, here is what you will find. They will take in 1998 $81 billion of Social Security surpluses, they will take every penny, throw it in the pot, and say they balanced the budget. By 1999, $169 billion, and by the year 2002 they will take $465 billion of Social Security surpluses to claim they have balanced the budget. They have not balanced the budget. They just said they did. That is exactly what people are tired of in Washington. That is Washington talk. You say something, you put a label on it, it does not matter if it is a true label, it does not matter if that really fits the description, but we just say it. That is what is wrong in Washington. We say things that do not mean what anybody understands them to mean in common parlance. All we have to do is look to the year 2002 to see how misleading this whole argument is. If we look at the year 2002, the year that they are claiming there is a balanced budget, they are claiming no deficit in the year 2002, but you pierce the veil, you look a little further, and what do you find? The on-budget deficit that excludes Social Security and postal service accounts is in deficit by $103 billion. The gross debt of the United States is going to increase in the year 2002 by $110 billion. They are claiming they balanced the budget. They are claiming they balance the budget and the debt is increasing by $110 billion. Senator Dorgan had a chart that shows $130 billion. That is last year's budget resolution. This is this year's budget numbers for the year 2002. That is the difference between them. The principle is identical. This, I think, shows how fraudulent this whole balanced budget amendment that is before the Senate now really is, because what they are trying to enshrine in the Constitution of the United States is the definition of a balanced budget that could not stand the light of day in any financial institution in America. There is not a single one that could take the retirement funds of their employees, throw those into the pot, and claim they have balanced their budgets. That is not a balanced budget. We ought to be straight with the American people and straight with ourselves as to what is happening. The best way for us to deal with what is before the Senate is to draft a balanced budget amendment that deals with the fatal flaws of this one. No. 1, define a balanced budget in an accurate and honest way. Let us say clearly to the American people, we are not going to loot every trust fund in sight. We are not going to raid every single surplus trust fund in America in order to claim a balanced budget. That is the kind of fire-sale approach that is just going to dig us a deeper hole for the future--in fact, a hole so deep we would never dig out. Mr. President, I yield myself another minute of my colleague's time. Won't he be surprised when he returns. Mr. President, let me just conclude by saying there is a better way. We have to deal with the fatal flaws. We don't loot trust funds. That ought to be principle No. 1. No. 2, we ought to provide for national economic emergencies. No. 3, we ought to have a circumstance that makes certain that the Justices of the Supreme Court don't write the budget of the United States. As I said yesterday, I can look through those doors and I can see a corner of the Supreme Court of the United States. Our forefathers never intended that Justices sitting around a table at the Supreme Court would write the budget of the United States. We ought to make certain they do not. The proposal by Senator Dorgan would address the first problem--the raiding of the Social Security trust fund to claim balance. I hope my colleagues will support it. I yield the floor.

Mr. CONRAD. Mr. President, I ask unanimous consent that the pending amendment be set aside so Senator Rockefeller's amendment can be called up.

Mr. CONRAD. I yield myself 8 minutes off the time controlled by the Senator from North Dakota.

Mr. CONRAD. I now send to the desk that amendent, and immediately after it is reported, I ask unanimous consent Senator Rockefeller's amendment be set aside.

Mr. CONRAD

Mr. CONRAD. Madam President, they don't just take every penny of the Social Security trust fund, they take every penny of every trust fund and throw it into the pot and say they have balanced the budget. It is like the story of the emperor who has no clothes and everybody is afraid to stand up and say it. But that is precisely what is going on here. When our colleagues come home and say to you, ``We are for a balanced budget amendment to the Constitution,'' I urge you to ask them this simple question: What budget is being balanced? Boy, that sounds awfully elementary, doesn't it? You would think this is a question that could be easily answered. Unfortunately, when you examine what is going on here, what you find out is that it is at great variance from the claims that are being made. Those who beat their chest and say they are for balancing the budget and that this balanced budget amendment to the Constitution will do that are engaged in an enormous hoax. Let's look at the language. It comes from section 7, and it says: Total receipts shall include all of the receipts of the United States Government except those derived from borrowing. Total outlays shall include all outlays of the United States Government except for those for repayment of debt principal. Very simple concepts. What they are saying is they are going to put all of the revenue of the Federal Government in the pot, and they are going to look at all of the expenditures of the Federal Government, and that will be a balanced budget. What is wrong with that concept is that they are including all of the receipts from the trust funds and using those, every penny of them, to claim that they have balanced the budget. Let me just show it in a different way. When I was growing up in our State, people would keep money in a pot. A farm wife would keep cash in a pot. I have this teapot to kind of show what is going on here, because into the teapot goes all of the taxes, all of the corporate taxes, all of the other taxes, but in this balanced budget amendment, they are also including all of the Social Security taxes--all of them, every penny goes into the pot. And then they are going to balance with what is being spent. All of the items that the money goes for in the Federal budget: Social Security is about 22 percent of the money; interest on the debt, 16 percent; defense, 16 percent; Medicare, 14 percent; Medicaid, 7 percent; all other Federal spending, 25 percent. Can you imagine that they are trying to claim that this is a balanced budget, and what they are doing is they are taking trust fund income, trust funds that are in surplus now, designed to be built up to be used when the baby boomers retire, and they are using the trust fund surpluses to claim they have balanced the operating budget. What a hoax; what a fraud. That is not a balanced budget. A balanced budget would be if you were saving your trust fund surpluses for the purposes intended and you are balancing your operating budget. That would be a balanced budget. This is not a balanced budget. Let me demonstrate how massive this hoax is, because it is really quite stunning in its breathtaking willingness to loot every trust fund of the United States of every penny. That is what is going on here, make no mistake, because if this thing is passed and is implemented, we are going to wake up and find there is no money in any trust fund; every surplus nickel has been taken. Look at what is happening. Some will say, ``Senator, that is what is going on now, that is precisely what is being done.'' That is true, that is what is happening, and it ought to be stopped, and it ought to be stopped now, because we are entering the period when those surpluses explode--they explode--because the baby boomers are getting closer to retirement, and so the surpluses are being built up for the purpose of being ready for them when they retire. Look at how massive these surpluses are. In 1998, $81 billion in that year alone. By 1999, in just those 2 years, it is up to $169 billion, and between now and the year 2002, when they are going to claim they have balanced the budget, they will have used $465 billion of Social Security trust fund surpluses and claim they have balanced the budget. Again, if any private company tried to do this, tried to take the retirement funds of their employees to balance the operating budget of the company, they would be in violation of Federal law. They would be headed for a Federal facility, and it would not be Congress. They would be headed for a prison. Yet this is what we are talking about putting in the Constitution of the United States. We are going to put in the organic law of our country the definition of a balanced budget, that if a private company were doing it, would be a violation of Federal law. I do not think so. Not with this Senator's vote. I would not vote, ever, to put that in the Constitution of the United States, the basic law of our country that has made this the greatest Nation in human history, the definition of a balanced budget that is so fraudulent that if any private company tried to do it, it would be a violation of Federal law. Now, that is a fact of the balanced budget amendment that is before the Senate. When I say that is breathtaking, breathtaking in what they are trying to put in the Constitution of the United States, I meant just that. The Social Security surpluses I indicated are increasing dramatically. Indeed, they are. From 1998 to 2013, we will have surpluses in Social Security, surpluses over and above what the expenditures are during that period, of $1.8 trillion. The folks who are advocating this balanced budget--I call it a so-called balanced budget amendment because this is not a balanced budget, no way. There is no serious definition of balance that would include this so-called balanced budget amendment because the fact is if you passed it, you implement it, the debt would continue to increase. They claim they have balanced the budget. What a fraud. They are going to take $1.8 trillion of Social Security surpluses, throw those into the pot, and claim they have balanced the budget. It is very interesting if you look at this in another way and try to determine who is telling it straight here, who is telling it straight, just looking at the growth of the Federal debt of the United States. If they are being straight with the American people and they are really balancing the budget, would that not tell you that in the year 2002, the year in which we will have claimed balance because that will be an amendment to the Constitution of the United States, that the debt would stop increasing? Would that not be a logical conclusion? If we are going to balance the budget in the year 2002, would you not expect, then, that the debt of the United States would no longer increase? You would no longer be running deficits because you would have balanced the budget. Well, testing that proposition, this chart shows the gross Federal debt of the United States. It shows what would happen if this so-called balanced budget amendment to the Constitution were passed and became effective by 2002. You can see this is the year 2002, the year in which it claims balance; this line shows what happens to the Federal debt. It keeps right on going up. The Federal debt keeps right on increasing. If we look at it another way, we can see just what a fraud and a hoax this really is. They call it a balanced budget amendment to the Constitution. They put this definition into the Constitution of the United States and let's see what would happen in the year 2002. They are claiming the deficit would be zero. But look what happens to the budget deficit in that year. When you look at Social Security and the postal service funds, the so-called on-budget deficit, what you see is not a zero. The budget is not balanced. The deficit is increasing $103 billion. If you look at the broadest measure of debt and deficit, you include all of the trust funds. What you find is that the debt and the deficit will increase in that year by $110 billion. Yet they are calling it a balanced budget, and they are putting it in the Constitution of the United States that this is a balanced budget. Who are they kidding? There is nobody that has had fifth grade arithmetic that cannot figure this out. There is nobody. My daughter, when she was 7 years old, and she was very good at math, I admit that, she would have been able to figure this out. Just because you are calling something a balanced budget does not make it one. That is like the old story in North Dakota, you call the pig a cow, it does not make it a cow. This is a balanced budget, they claim it is a balanced budget, but it is not one. The deficit keeps going up, debt keeps going up, they have looted every penny of every trust fund in sight and claimed they balanced the budget and put that definition in the Constitution of the United States. It does not belong there. If we want to do this as an amendment to the Constitution we ought to do it right. This amendment does not pass the laugh test. This amendment is not a balanced budget, No. 1. No. 2, it is fatally flawed in other ways, as well, because it does not provide enough protection in the case of a national economic emergency. In addition to that, it would put us in a circumstance in which the courts could write the budget of the United States. That was never contemplated by our forefathers, to have the Members of the Supreme Court--and I can look through the doors there and almost see the Supreme Court of the United States--I tell you, our Founding Fathers did not have in mind that the Justices of the Supreme Court would sit around a table and write the budget for the United States. That is what would happen under the amendment that is before the Senate. Let me just say the amendment by the Senator from Nevada, Senator Reid, addresses the first problem with the balanced budget amendment that is before the Senate. He would not permit the looting of $450 billion of Social Security surplus between now and the year 2002, to claim they balanced the budget. He would not permit the raiding of $1.8 trillion of Social Security surpluses between now and about the year 2019 and take all those moneys and throw them in the pot and claim they have balanced the budget. It is a substantial improvement over the so- called balanced budget amendment that is before the Senate now. On that basis, Senator Reid's amendment deserves support, because it would begin to address the fatal flaws in this amendment. I just end where I began. I really wonder what our forefathers who wrote the Constitution would be thinking about a Congress meeting in 1997 that has so little regard for the organic law of our country that they would put an amendment into that document that defines a balanced budget in a way that raids every trust fund surplus in the Federal budget, to claim that they had balanced the budget. America is a better country than that. We are a greater country than that, to put in our Constitution a definition of a balanced budget that is totally without merit, it is fraudulent, it is fake, it is false, it is not honest. We should not be putting that in the Constitution of the United States. When I took the oath of office, I swore to uphold and defend the Constitution of the United States. I took that pledge very seriously. I think it is the most serious thing we do as a Member of this body--swear to uphold and defend the Constitution of the United States. Well, I believe one responsibility in meeting that affirmative pledge is to protect the Constitution from amendments that are unworthy of that great document. I will ask any of my colleagues to read the amendment before us in the context of the Constitution. Get out your Constitution and then put this amendment down and read the two together and see how it fits, see how it reads, see if it makes any sense to you to have this constitutional amendment that is before us grafted onto the Constitution of the United States. It doesn't fit. It sticks out like a sore thumb. And it is, at its base, utterly fraudulent. It is wrong to put that amendment into our Constitution. I thank the Chair and yield the floor. Mr. HATCH addressed the Chair.

Mr. CONRAD. Mr. President, I thank the Senator from Vermont, and I thank him for his devotion on this issue, spending hours and hours on the floor to try to make certain people have heard both sides of the story before a vote is cast in this Chamber. Mr. President, I come at this issue with a deficiency, and that deficiency is I have a financial background. My education is in finance and business. My career was as a tax administrator, somebody who dealt with finances and budgets on a routine basis. And I must say, when I hear talk about the need to balance the budget, nobody could agree more than I do with that concept. I am absolutely in support of balancing the budget of the United States. It is imperative that we do that, because we are in a special circumstance. We are on the eve of the baby-boom generation starting to retire, and that will put enormous stress on the budget of the United States if we fail to get our fiscal house in order. In fact, I think I can say, without fear of contradiction, no Senator has offered more specific plans to balance the budget than I have. So I don't take a back seat to anyone with respect to a desire and a commitment to balance the budget. But when I see the balanced budget amendment to the Constitution that is before us now, I have to say what I believe to be the absolute truth. This is a giant hoax. To call this a balanced budget wouldn't pass the laugh test in any corporation in America. If anybody told a corporate board of directors that they were going to balance the budget by taking the retirement funds of the employees and throwing those into the pot, they would be in violation of Federal law, because that is fraudulent. It is fraudulent to take retirement funds of employees and use those to balance the operating budget of a corporation. That is not permitted under Federal law. And yet that is precisely what this so-called balanced budget amendment to the Constitution contemplates. They are going to take every penny of the Social Security trust fund surplus and throw those into the pot to claim that they have balanced the budget. (Ms. SNOWE assumed the chair.)

Mr. CONRAD

Mr. CONRAD. I am happy to yield to the Senator.

Mr. CONRAD. Mr. President, I have been listening to this debate with a great deal of interest. I was especially interested that the Senator from Utah described as a fiscal gimmick separating out the Social Security trust fund from the rest of the Federal budget, because, if I am not mistaken, the Senator from Utah himself voted for that very proposition in 1990. In fact, we had a vote right on the floor of the U.S. Senate on the specific question of whether or not we were going to count the Social Security trust fund as part of the overall budget or not. I believe separating out the Social Security trust fund received 97 or 98 votes. I believe the Senator from Utah was recorded in favor of the proposition that he now describes as a gimmick. I do not believe that he felt it was a gimmick then, and I do not believe that anybody who voted for it believed it was a gimmick then. It was a move to try to stop the nefarious practice of using Social Security trust fund surpluses to mask the true size of the operating deficit in this country. Now what they are seeking to do is put that flawed principle in the Constitution of the United States. I just note that back in 1990 when we had that vote, passed by a vote, as I recall, of 20 to 1 in the Senate Budget Committee.

Mr. CONRAD. If I could finish the thought, we are in a circumstance now where the Senator from Utah is advocating when he says locking into the Constitution is a risky matter, that is precisely what he is advocating. In 1990, he voted to keep Social Security separate from the rest of the budget. Now he is advocating a constitutional amendment that would force the two together. Mr. President, I think the Senator from Utah was right in 1990 when he cast that vote. I think he is simply mistaken in offering this constitutional amendment that puts the two together. What is the difference between the Social Security trust fund and other parts of the Federal budget? Mr. President, the primary difference is a dedicated revenue source. We withhold in the payroll of employees and employers specific amounts every month to go into a fund on the predicate they will then receive, when they retire, their Social Security benefit. Frankly, this proposal puts all of that at risk.

Mr. CONRAD. Mr. President, let me say I find this argument very interesting because the principle is identical. In 1990, we had a vote on the floor of the U.S. Senate to separate out the Social Security trust fund from the rest of the Federal budget. The Senator from Utah voted in favor of separating out the Social Security trust fund. Today, he says we ought to enshrine in the Constitution the reverse principle, that we ought to put them together, that the Social Security trust fund ought to be married to the rest of the Federal budget. What is wrong with that principle is what was wrong with it in 1990, and what I believe 98 Senators said, that we are not going to merge the two, we will not count the Social Security trust fund with the rest of the budget, because it is a risky financial move to put the two together. It masks the size of the deficits in the early years, and in the later years creates a whole series of other problems.

Mr. CONRAD

Mr. CONRAD. May I have 30 more seconds?

Mr. CONRAD. Let me complete my thought, and then I would be glad to.

Mr. CONRAD. On this question of national economic emergency, it is very interesting that all these arguments about supermajority go right out the window because they themselves provide for a simple majority in the case of a national security emergency but not in the case of a national economic emergency. That is a fatal flaw in this amendment. I thank the Chair and yield the floor.

Mr. CONRAD. Third point. The Senator from Utah says three-fifths vote, requiring that is an insult to those who serve here. Not at all. It has nothing to do with insults. I could turn that on the Senator from Utah and say his requirement of a three-fifths vote is an insult to democracy. In democracy, majority vote prevails. We do not have supermajorities. I do not choose to do that. I do not think it is a matter of insult. I think it is a matter of reality. Do we really want to be in a circumstance in which this country faces an economic emergency and we have to have a supermajority vote to respond when we know from our own past that it has been difficult to muster a three-fifths vote. Even on the eve of World War II, to institute a draft, we could not do it. I submit to this Chamber and to the American public, the wiser course is the amendment of the Senator from Illinois.

Mr. CONRAD. Madam President, just to respond to my distinguished colleague from Utah, the Senator from Utah says, well, it is OK for us to put in the Constitution of the United States a definition of a balanced budget which assumes that you are going to loot Social Security trust funds, and every other trust fund, for that matter, because the President did it in his budget submission. I say that is a mighty weak defense of a constitutional provision. We are not talking about a statute here. We are talking about the organic law of the United States.

Mr. CONRAD. Then I would be glad to yield. The fact is we are talking here about an amendment to the Constitution of the United States. This amendment does not lead to a balanced budget. The debt continues to increase even if this is passed. That is not a balanced budget, No. 1. No. 2, the President's budget, which is done on a unified basis in the same way as this constitutional amendment, is also not a balanced budget. And I have said that clearly.

Mr. CONRAD. I have said it publicly, and I have said it privately. It is not a balanced budget, because although this amendment claims balance and the President's budget claims balance, they are taking trust fund money in order to claim balance. That is not a balanced budget. It defies our own law. Our own law says you should not count Social Security trust funds. Second, the difference between Social Security and other funds is it has a dedicated revenue source. We impose a tax, a regressive payroll tax on the workers of this country and the employers of this country, and that fund is in surplus. And so when you mix it in with everything else, you are taking the surpluses generated by that stream of revenue that is being generated for a purpose. The purpose is to prepare for the baby-boom generation. But all the money is being spent. It is being spent for another purpose. That is wrong. And it is dead wrong to enshrine that flawed principle in the Constitution of the United States.

Mr. CONRAD. I thank the Chair and my colleague from Illinois. Madam President, first of all, I thank him for offering the amendment he has put up, which we will be voting on in just 2 hours. I think it is a critically important amendment. Before I discuss that amendment, I would like to talk about what I have heard here today, because I have heard a lot of talk about how we are going to balance the budget. I heard a lot of talk about how we are going to eliminate deficits, and all of it is going to be done with this balanced budget amendment to the Constitution. I thought to myself, maybe they really don't know that, in fact, this isn't a balanced budget amendment at all, because even if you pass this amendment, the debt will continue to rise. Isn't that surprising? We have heard all of this brave talk about how this amendment is going to balance the budget. We have heard all of this talk about how it is going to eliminate deficits. Yet, if we pass it, and if it is implemented, the debt will continue to rise. I asked June O'Neill, the head of the Congressional Budget Office, when she came to testify before the Senate Budget Committee, ``What is the deficit this year?'' She said, ``Well, Senator, the projected deficit for this year is $124 billion.'' I said, ``Is that right, $124 billion?'' She said, ``Yes, that's the deficit.'' I said, ``Well, how much is the debt going to go up this year?'' Well, she wasn't sure of the number. I looked it up in a table before I asked the question. I said, ``Well, would it surprise you to find out that the debt, subject to limit, will be increasing $255 billion this year?'' She wasn't surprised by that. Of course, none of us who serve on the Budget Committee are surprised by that. The difference is that the deficit they are talking about in this amendment and the deficit she was talking about before the Budget Committee is the so-called unified deficit. That is when you put everything into the pot--all the income, all of the outgo, and you call that the unified deficit. The problem with that is, every penny of Social Security surplus is going in. That is about $70 billion this year of trust fund money that they are using to say they have balanced the budget. That is not a balanced budget. In fact, by law, in the United States that is not a balanced budget. But they are going to put it into the Constitution of the United States that it is. Is that really what we want to do? Do we want to phony up what is a balanced budget and put a phony description of a balanced budget in the Constitution of the United States? Boy, I do not want any part of that game. Are we going to say in the Constitution of the United States that it is a balanced budget when you take every penny of Social Security surpluses and throw those into the pot and call it a balanced budget? If any private employer in this country tried to take the retirement funds of their employees and put them into the pot to balance their operating budget, they would be in violation of Federal law. That is called fraud. Yet, that is what we are talking about here. Their defense is, ``Well, we are doing it now.'' Yes, we are doing it now. We have been doing it for 13 years. It does not make it right. And it certainly is not something we should put in the Constitution of the United States. The first question the people of the United States ought to insist be answered by our colleagues on the other side of the aisle is, What budget is being balanced? We need to ask that question, the most basic question of all, because by any serious definition of a balanced budget this amendment to the Constitution of the United States that they are offering is not a balanced budget amendment at all. This is the description. It says, ``Total receipts shall include all receipts of the United States Government. Total outlays shall include all outlays of the United States Government.'' That seems to make common sense. But the problem is that you are taking all of those trust fund surpluses. Look at what they are. In 1998, the fiscal year that we are working on the budget, $81 billion of Social Security surplus. Under this amendment that they want to put in the Constitution of the United States, the organic law of our country, they want to take every penny it of it to claim they have balanced the budget. In 1999, $169 billion will be the cumulative surplus by that time of those 2 years; 2000, $263 billion; 2001, $361 billion of Social Security surpluses, every penny of it going into the pot to claim they have balanced the budget. What a hoax. What an absolute hoax to call this a balanced budget. By 2002, $465 billion of Social Security surpluses, and they will have taken every penny, they will have spent every penny, in order to claim that they have balanced the budget. That does not pass any kind of credibility test. For us to be entrenching that principle into the Constitution of the United States-- I thought about this very hard 2 years ago when it came down to my vote. I thought to myself, I don't know what the political ramifications are. I don't know how this will be read. But I know one thing. I am not putting my name on an amendment to the Constitution of the United States, the organic law that has made this the greatest nation in human history, and put my name on an amendment to the Constitution of the United States that says that a balanced budget is one that uses every penny of the Social Security surplus to call it a balanced budget. No. I am not signing up to that kind of deal. Look at what we are talking about. By the year 2013, $1.8 trillion of Social Security surpluses, and they are going to take every dime and claim they have balanced the budget. Let me turn now to the amendment of my colleague from Illinois, an amendment that I think is critically important because I think there are three failures to this balanced budget amendment that is before us today. No. 1, it raids Social Security surplus funds to claim balance; No. 2, it does not have adequate provision for a national economic emergency. Madam President, we know right now that the right thing to do is cut spending and balance the budget, without question. I have spent a great deal of my time offering balanced budget plans in this Chamber. I deeply believe it is the right thing to do to secure the economic future for our country. There is a right way to do it and a wrong way to do it, and unfortunately the amendment before us, the underlying constitutional amendment, is the wrong one; wrong because it loots Social Security trust funds; wrong because it does not have adequate provision for national economic emergencies. But let me be clear. While it is the right thing to do now to cut spending and balance the budget, that was precisely the wrong thing to do in the depths of the Depression. Cutting spending, raising taxes in the depths of the Depression would only have made that calamity last longer and be deeper. That is the economic reality. And we are passing an amendment here not just for today, not for the next 5 years, not for the next 10 years, but perhaps for the next 200 years. It ought to be an amendment that can stand the test of time. This one, the underlying amendment, fails that test. The Senator from Illinois, Senator Durbin, has come to us and recognized that we ought to amend the balanced budget amendment to take account of national economic emergencies. He is saying that when we get into a situation, especially a depression, this country ought to be able to take fiscal policy that would help this country emerge. The Senator from Illinois has put his finger right on it, one of the key weaknesses of this amendment. Henry Aaron, director of economic studies at Brookings Institution, says, ``One does not need to be a primitive Keynesian to believe that a requirement forcing tax increases or spending cuts during an economic slowdown could be catastrophic. Yet, the need to mobilize a three- fifths majority, not just in the Senate but in the House of Representatives as well, heightens the possibility that such policies would result because of incapacity to mobilize the necessity supermajority in both Houses.'' Some of my colleagues on the other side who are moving this amendment may say, ``Well, all we have to do is get a three-fifths vote to waive these provisions in the event of a national economic emergency.'' I think that is cold comfort, Madam President. All we have to do is look back at some of the decisive moments in history to see that it isn't easy to get a three-fifths vote in this Chamber. On the eve of World War II we could not get a three-fifths vote to institute a draft. If there ever was a national emergency, it was World War II, and we couldn't get a three-fifths vote to institute a draft. In fact, we couldn't get a majority vote to institute a draft. Madam President, we don't want to hold the economic future of America hostage at in a time of national economic emergency. That does not make sense. Robert Solow, the Nobel laureat from MIT, said, ``The balanced budget amendment would force perverse actions by Congress, easily turning a small recession into a big one and a big one into a disaster.'' We ought to pass the Durbin amendment because it makes economic sense. We ought to do that. This chart shows what we have learned in terms of evening out the economic cycles. This chart shows real economic growth from 1870 to 1995. You can see these wide swings, these wild swings, in economic activity up until about 1950. Then these economic stabilizers that we put in force in this economy eliminated these wild swings that lead to so much pain, so much suffering, and so much devastation. That is what the Durbin amendment addresses. It says let us not eliminate these economic stabilizers. Let us not be in a situation in which we handcuff the American economy in the midst of a national economic emergency. Let us not be in a circumstance in which we cannot do what we know works to eliminate disastrous economic consequences. That just makes common sense. I hope we will support the Durbin amendment. I thank the Chair and yield the floor. Mr. HATCH addressed the Chair.

Mr. CONRAD. Mr. President, words do not change reality. You can call it a balanced budget amendment to the Constitution of the United States. It is an amendment to the Constitution of the United States, but it is not a balanced budget. The simple fact remains, if you pass the amendment offered by the Senator from Utah and it is fully implemented, the debt continues to go up. You can say that is a balanced budget but it is not. It is simply not. The reason it is not is because the Senator from Utah is taking every penny of the Social Security trust fund surplus and throwing that into the pot and saying he has balanced the budget. It is not a balanced budget. No private employer could do that. It would be a violation of Federal law. On the question of three-fifths vote, it is very interesting----

Mr. CONRAD

Mr. CONRAD. Mr. President, before the Senate is the question of the balanced budget amendment to the Constitution of the United States. I testified 2 weeks ago before the Judiciary Committee on this question. I believe deeply in the need to balance the Federal budget. We have a responsibility to do that because just over the horizon, even with all the progress that has been made here, we have the demographic time bomb lying out there, and that time bomb is the retirement of the baby boom generation. When they start to retire, they are going to dramatically increase the number of people who are eligible for our major Federal programs. In fact, in very short order, they are going to double the number of people who are eligible for Social Security and Medicare and other programs like veterans' benefits. So, while enormous progress has been made, we have to do more. We have to do more. Some say the answer is an amendment to the Constitution. Properly crafted, I would support an amendment to the Constitution. But the one before us is not properly crafted. Let me just give three reasons why I believe it is not properly crafted. First, the balanced budget amendment before us in this Chamber will not balance the budget at all--not at all. Boy, would the American people be surprised to find out, if this passes, that come the year 2002, when the budget is supposed to be balanced, the debt is still increasing. Won't they be surprised after having been told that the Senate and the House have passed a balanced budget amendment to the Constitution of the United States. Why is that the case? Why would the debt be increasing even after the year 2002 if we have a balanced budget amendment to the Constitution? The answer is very simple. The definition of balanced budget that is in this amendment is not the definition of a balanced budget at all, because it includes every penny of Social Security surplus that is going to accrue to the Federal Treasury between now and the year 2002 and in the years thereafter. This balanced budget amendment, so-called balanced budget amendment, would loot and raid the Social Security trust fund of $450 billion over just the next 5 years, take every penny of Social Security surplus, throw that into the pot, and call it a balanced budget. No private employer in this country would be able to take the retirement funds of their employees and throw those into the pot and say they balanced their operating budget. In fact, that would be a violation of Federal law. That is what the Federal Government is doing today for Social Security trust fund surpluses, and under this so-called balanced budget amendment to the Constitution, that flawed principle would be enshrined in the Constitution of the United States. I often wonder, what would Thomas Jefferson think of putting in the Constitution of the United States a definition of a balanced budget that included every trust fund dollar and call that a balanced budget? I wonder what Benjamin Franklin would think of that. I do not think they would buy that, and we should not buy it. The second major problem with this balanced budget amendment is it makes inadequate provision for a national economic emergency. We know that the right policy today is to cut spending and balance the budget. That is precisely what we ought to do. That was precisely the wrong thing to do in the depths of the Great Depression, because raising taxes and cutting spending in the midst of the Depression simply would make the Depression longer and deeper. We have to pass an amendment here that can stand the test of time. The one before us now simply does not. The third and final point: The balanced budget amendment before us now assumes that the Court will enforce this amendment. Can you imagine? We can have a situation in which the Supreme Court Justices are sitting around a table, just a block from here --in fact, I can almost see the Supreme Court through those doors--and we would have the Justices of the Supreme Court sitting around a table writing a budget for the United States, deciding perhaps to raise taxes to balance the budget, deciding they are going to cut funding for transportation or education, deciding what is going to happen that affects America in a disaster, perhaps an earthquake in California or some calamity in Florida. We are going to have unelected judges sit around a table and decide the budget of the United States. Is that really what we are going to do? I can tell you this, I come from a rural State. I do not think any of those Justices know much about agriculture. I do not think they know much about farming. I do not think they know much about the cattle business. I do not think they know much about rural America at all. Most of them are from more populous areas. So I just say there are fatal flaws in this balanced budget amendment that is before us today, and we ought to take steps to improve it. I thank the Chair and yield the floor.

Mr. CONRAD

Mr. CONRAD. Mr. President, the President of the United States has now submitted his budget, a plan that extends for 5 years, a plan that continues us on the path of deficit reduction, a plan that will continue to reduce the role of the Federal Government in the life of the country, but one that will emphasize the priorities that he stressed in the most recent campaign--an emphasis on improving educational opportunity in the United States, a desire to preserve the important priorities of caring for our senior citizens through the Medicare Program, of also preserving the social safety net, and at the same time reforming the welfare program to provide that people who are in need of assistance go to work, where possible. All of these are contained in the President's latest budget submission. I have heard a fair amount of criticism from various circles about various elements of the President's plan. I think it's appropriate to respond to those criticisms so that people who are watching this debate unfold have a balanced view of what the President has proposed. One of the criticisms that I have heard is that the President is proposing significant increases in Federal spending. Mr. President, if one looks at the fairest measure of what is happening to Federal spending, one comes to quite a different conclusion. I have prepared this chart that shows what has happened since 1992, back when the deficit was $290 billion. It shows what has happened to Federal spending as a percentage of our national income. Also described is the gross domestic product. It is perhaps the fairest measure of what is happening to the Federal budget, because it looks, in inflation adjusted terms, at what is happening to Federal spending. One can see by this chart that back in 1992 we were spending, at the Federal level, nearly 22 percent of our national income. In fact, it was 21.8 percent. Because of the 1993 budget deal that has done a dramatic job in reducing the Federal deficit by both cutting spending and also raising income taxes on the wealthiest 1 percent in this country, you can see what has happened. Spending, as a share of our national income by the Federal Government, has gone down--20.8 percent in 1996. Revenue went up, narrowing the gap between spending and revenue, and as a result, reducing the deficit. You can see, according to the President's plan, that Federal spending stabilizes for 1 year at 20.8 percent of national income and then starts declining each and every year until Federal spending declines to 19 percent of our national income. Mr. President, that is dramatically lower than in any year under either the Reagan administration or the Bush administration. In fact, if you look back in terms of what the Federal Government was spending as a percentage of our national income in the years of President Reagan and President Bush, what you will find is that spending ranged between 22 and 23 percent of our national income. And so President Clinton's plan, which is to take us to 19 percent of our national income going to the Federal Government, is a dramatic reduction and put us at the lowest levels that we have experienced for a very long time. Another thing that we have heard is that the President's plan uses a rosy scenario. Mr. President, I am a former tax commissioner of my State. One of my jobs was to project the revenue of the State of North Dakota. One of the reasons I am here is I did a pretty good job of that. We are conservative. We were able to develop substantial surpluses because we had accurate projections of our income. That is critically important at the national level. And in order to make a determination as to whether or not this administration has been guilty of rosy scenarios perhaps it is most helpful to look at the record. What did they project and what has happened? Mr. President, the record is abundantly clear. This chart shows from 1993 to 1995 the projection for 1996 and what has happened. The blue line is the Office of Management and Budget controlled by the President. The red line is the Congressional Budget Office controlled by Congress. The green line is what has actually happened with the deficit. Interesting: What one finds is that both OMB and the Congressional Budget Office have been overly pessimistic. The fact is the deficit has declined much more sharply than either of them predicted. That is the fact. That is the record. The deficit during the term of this President has declined much more sharply--on average $50 billion a year more--than this administration predicted. No rosy scenarios here. They have adopted a very conservative fiscal outlook not only in the 4 years that they have had responsibility for it but also looking forward. In fact, they are right in the mainstream of the blue chip economic forecasters that our major corporations rely on for their forecasts. Mr. President, we have also heard criticism that the President's plan is back-end loaded; that is, 75 percent of the savings are in the last 2 years of this 5-year budget plan. Mr. President, I would like to see less back-end loading as well. I think it would be better if we have less in the way of back-end loading. But our critics on the other side of the aisle I think have a credibility problem because if you do a fifth of what they proposed last year in the budget resolution that they passed right in this Chamber, you take this deficit reduction path which is the blue line, and you fit President Clinton's 1998 budget submission in his proposed deficit reduction path and put the two together, look what you find. They are almost identical. This is what our friends on the other side of the Chamber here voted for just last year. It was OK then. But all of a sudden now the President proposes a deficit reduction path that is almost identical to the one they proposed, and all of a sudden it is a gimmick. I think we can test the credibility of that statement just based on the facts. If one looks at the historical record to make judgments on who has credibility with respect to deficit reduction and who does not, let us just look at the last three administrations. Let us look at the facts that nobody can dispute. These are the actual budget deficits year by year during the Reagan administration, the Bush administration, and the Clinton administration. Look what we see. In 1981 at the start of the Reagan administration the deficit was $79 billion. It exploded promptly. Two years later we were up to $208 billion. It kept going up to $221 billion. Only at the end did we see the deficit start to come back down. Then the Bush administration took over, and it was all red ink. He took the deficit from $153 billion and ran it up to $290 billion. This is historical fact. There is no question about these numbers. These are the official numbers of the Federal Government. In fact, these numbers come from the Congressional Budget Office. Then President Clinton came into office, and each and every year the deficit has declined. In fact, we have gone from a deficit of $290 billion in the last year of the Bush administration--this chart shows $116 billion deficit for the most recent year. Actually it was somewhat better than that. When the final numbers came in, the deficit was down to $107 billion. So there is a dramatic reduction in the budget deficit during the Clinton years. Another way of looking at that is to look at these deficits with what is really the best way to measure, and that is as a percentage of our national income. That is the best way to measure it because that takes account of the inflationary changes over time. So you are comparing apples to apples instead of apples to oranges. There we see the deficit record of this administration in comparison to the previous two administrations in an even more stark way. Because when President Reagan came into office, the deficit was 2.6 percent of our national income. Within 2 years, it was up to 6 percent of our national income. Then it worked its way back down to 3 percent. Again, President Bush took over, and in each and every year as a percentage of our national income the deficit went up--went up, went up until it was 4.7 percent of our national income by the last year of the Bush administration. And in the 4 years of this administration, each and every year, largely because of the 1993 budget deal, which every Democrat--or virtually every Democrat--voted for and every Republican voted against, we got the deficit going down; not talking about reducing the deficit but finally results. It went from 3.9 percent of our national income. And this chart shows down to 1.5 percent of our national income in the most recent year. Actually, it was somewhat better than that, as I indicated on the other chart. We actually got down to 1.4 percent of our national income. Not only is that good performance when we match against the historical record of the United States but, if we look at other industrialized countries, we see that we now have the lowest deficit of any of the major industrialized countries in the world as measured against the size of our national income. In fact, other countries in Europe have a deficit as much as 7 percent of their national incomes. Most of them are in the 4 and 5 percent range. So the United States has not only done well matched against its own historical record during the Clinton administration but has done remarkably well in comparison to what has happened in other major industrialized countries. Partly because we have had that kind of very successful deficit reduction, we have seen a remarkable economic progress in the United States. And the list is a long one of the positive economic results that have come because we put in place a plan that actually reduced the budget deficit. That took pressure off of interest rates, and that had the very helpful effect of spurring economic growth in this country. Let us just look at some of the very positive results. First of all, we have seen 11 million new jobs created in this country in the 4 years of this administration--11 million new jobs. That is a remarkable record. We have also seen unemployment come down. Unemployment has dropped a full 2 percentage points. caca dldllflldlksdklmcdl We have seen inflation at very low levels. In fact, we have the best record of sustained low levels of inflation in 20 years. Those are not the only outstanding economic results. We have also seen median household income up, the largest increase in a decade. We have seen the largest decline in income inequality in 27 years in this country. I think that is something of great concern to anybody who is worried about the future of America. That has happened as a result of an economic plan that was put in place in 1993. There are 1.6 million fewer people in poverty. That is as of last year. That is now over 2 million fewer people in poverty, the largest drop in 27 years. The poverty rate for the elderly in America is at 10.5 percent, its lowest level ever, lowest level of elderly poverty in the history of our country, and the biggest drop in child poverty in 20 years. These are facts. This is a remarkable economic record and one of which this administration can be justifiably proud. We used to talk in America a lot about the misery index. Our friends on the other side of the aisle always used to like to talk about the misery index and how bad a thing that was and how bad the situation was in America. Well, we have good news to report because the misery index, which is a combination of the unemployment and inflation rate, is at its lowest level in 28 years--lowest level since 1968. These are facts. These are facts of deficit reduction because of a plan that some of us had the courage to vote for in 1993, a plan that worked--a plan that has made dramatic progress in reducing the budget deficit but one that has also had extremely good effects in the rest of our economy, creating jobs, building economic growth, lowering poverty, and doing a whole series of things that have made America now the most competitive nation on the face of the globe. For a number of years there, we were very concerned that the United States could not remain competitive, and we thought the Asians were passing us. We thought the Japanese were passing us. We were concerned the Germans were on the march and on the move and we were stopped dead in our tracks. For the last 2 years, when the experts analyzed the competitive position of the countries, the major industrialized countries in the world, the United States was No. 1. We have resumed our top position. It is due in no small measure to the economic plan that we put in place in 1993. Some who are listening might say, well, this is a Democratic Senator speaking, and he is being partisan in terms of analyzing who should get the credit for what has happened since that 1993 financial plan was put into place. It is not just the view of this Senator. It is not just a review of the facts that lead us to this conclusion. Mr. Greenspan, testifying last year at about this time, said the deficit reduction in President Clinton's 1993 economic plan was: An unquestioned factor in contributing to the improvement in economic activity that occurred thereafter. Mr. Greenspan is not a partisan. Mr. Greenspan, in fact, I think is a prominent member of the other party, but he acknowledges what is true, and what is true is very clear. This administration has made the hard choices. They made them in 1993, when a lot of us stood up and joined them in making the hard choices, and we paid a terrible price in this party at the polls in 1994 because those hard choices did cut spending. Yes, they did raise revenue, raised incomes taxes on the wealthiest 1 percent in this country. I had a woman stop me the other day in Fargo, ND, and she said, ``You have to quit raising taxes down there in Washington.'' I asked her if she made $140,000 a year. She said, ``Oh, certainly not.'' I said, ``Well, you did not have your taxes raised. You did not have your taxes raised unless you are making $140,000 a year. Your income taxes have not gone up.'' That is the reality. That is the truth of the matter. I think as we go through this budget debate we ought to remember precisely how we got to where we are. The fact is that 1993 budget plan, which some of us voted for that has made such a profound difference, by the year 2002 will reduce the indebtedness that would have otherwise occurred by $2.5 trillion. Incredible. You look back to 1993. All of the projections were that the debt and deficits were going to skyrocket, they were going right off the charts. But we took action. Some of us voted for a plan that has produced real results, and the day before yesterday Mr. Raines, the head of the Office of Management and Budget in this administration, was able to report that by the year 2002 the 1993 budget plan will have reduced what would have otherwise occurred in terms of the growth of the debt by $2.5 trillion. Those were hard choices that had to be made in 1993, and they were made, and the result is that we are in very a fortuitous position of having more to do, we need to do more, but we are pretty close to where we want to get. Mr. President, how much time remains on our side?

Mr. CONRAD

Mr. CONRAD. I yield myself the time of the Democratic leader. If the Chair will alert me at the end of 15 minutes, I will appreciate that.

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today to salute Proctor Jones on his retirement from the Senate Appropriations Committee and to thank him for his many years of service to the Senate and the Nation. When Proctor retires at the end of this month after an amazing 35 years of public service, the Senate will lose one of its most distinguished staff members. Proctor will be remembered for his professionalism, dedication, and good judgment while working for the Appropriations Committee, and for his work as staff director for the Energy and Water Development Subcommittee for the past 23 years. Mr. President, I have greatly appreciated all the help Proctor has given my office since I came to the Senate in 1987. North Dakota has many water development needs, and the work Proctor has done on the Energy and Water Development Subcommittee has been critical to helping meet those needs. The Garrison Diversion Project was first authorized in 1965 and was reformulated in 1986 to ensure my State an adequate supply of quality water for municipal, rural, and industrial uses. Water development in North Dakota is also essential for economic development, agriculture, recreation, and tourism. The Federal Government promised the Garrison project to North Dakota to compensate my State for the permanent flood of over 550,000 acres due to the construction of the Garrison and Oahe Dams. Proctor has played an instrumental role in funding this essential project to meet North Dakota's unmet water development needs and fulfill the Federal Government's promise to my State. Mr. President, Proctor will be greatly missed by all who worked with him. I know we in the Senate will get our work done without Proctor's talent and ability, but filling his shoes will be a tremendous challenge for those who follow him. I am pleased to know that Proctor will remain in Washington, working with my good friend Senator Bennett Johnston. Mr. President, I am delighted to wish Proctor all the best upon his departure from the Senate. I thank the Chair and yield the floor.

Mr. CONRAD

Mr. CONRAD. Madam President, I was in the centrist coalition with Senator Cohen. I have enormously high regard for his integrity, his honesty, and his ability to work with others. A superb choice.