Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today in support of S. 1316, the Safe Drinking Water Act Amendments of 1995, introduced by the Senator from Idaho, Senator Kempthorne. I am pleased to be an original cosponsor of this important legislation. The bill introduced by the distinguished chairman of the Subcommittee on Drinking Water, Fisheries, and Wildlife will provide the Nation with a more workable, rational, and flexible law that reduces the burdens placed on small, rural water systems while protecting public health and assuring a safe supply of drinking water. The Safe Drinking Water Act has been one of the most frequently mentioned examples of an unfunded mandate on America's small towns, and justifiably so. The Congressional Budget Office recently released a report entitled ``The Safe Drinking Water Act: A Case Study of an Unfunded Federal Mandate.'' Mr. President, that report documents what many of us already knew about the current law. It is especially burdensome on small water systems, such as most of the systems in my State. The CBO report states, ``Households served by small water systems are particularly likely to face high costs. Furthermore, compliance costs could increase significantly over time.'' Mr. President, it would be one thing if those costs were justified by a need for safety. But many of these costs have little or nothing to do with safety. In fact, they are regulation for regulation's sake. The Safe Drinking Water Act has also been roundly criticized as unnecessarily inflexible. The CBO report also addressed the flexibility concern, indicating that there are significant barriers to adequately using the flexibility provisions in the existing law. Mr. President, we can instill flexibility for our small communities into the Safe Drinking Water Act, and still ensure that our constituents are drinking safe, clean water. I believe the bill before us today inserts some much-needed common sense into the law, and frankly Mr. President, it is long overdue. But the current law is inflexible in other, unnecessary ways as well. For example, the current statute requires that EPA regulate 25 new contaminants every 3 years, regardless of the overall risk posed by these contaminants. Mr. President, that is absurd. That is unnecessary. That is regulation for regulations sake, and it should be stopped. The bill before us repeals the requirement that the EPA regulate 25 new contaminants every 3 years. Instead, the bill takes a flexible approach that requires the Administrator of EPA to develop a list of high-priority contaminants, and make regulatory decisions about at least five of those contaminants every 5 years. The bill does not mandate that EPA regulate additional contaminants on an arbitrary and costly schedule. This legislation takes the commonsense approach that says the EPA must analyze possible threats to public health. If no new threat exists, no regulation is necessary. This provision lets EPA consider risk, rather than simply imposing additional costs on water systems that may or may not increase protection of public health. The bill introduced yesterday includes a number of important provisions to address the shortcomings of the existing Safe Drinking Water Act. In addition to addressing the flexibility question, it authorizes a State revolving fund to give States funding to make grants or loans to water systems to help them comply with the Safe Drinking Water Act. In fact, the conference report for the fiscal year 1996 VA, HUD, and independent agencies appropriations bill provides $275 million for this SRF, providing we reauthorize the bill. While I would have preferred to see more resources go to this vital SRF, this funding is essential to small water systems to help them upgrade drinking water treatment systems, replace wells that provide unsafe drinking water, develop alternative sources of water, and comply with drinking water regulations. This funding will also help provide important technical assistance to local communities. Let me just say that the local communities have told me over and over how valuable that technical assistance is. I am pleased to say it is part of this new legislation. The State Revolving Fund is absolutely essential to our small communities so that they can adequately protect the health of the American public. The bill before us today gives a great deal of flexibility to small water systems so they can provide safe and affordable drinking water to their consumers. It gives States flexibility to reduce monitoring for contaminants that do not occur in their water system. That just makes common sense. States can also approve alternative treatment plans for small systems, taking into account affordability, without compromising the safety of the drinking water supplies. Last year, this body passed a balanced, flexible and workable bill to reform the Safe Drinking Water Act. I supported that bill. I was proud to do so. Unfortunately, we simply ran out of time at the end of the session before a conference committee could reconcile the differences between the House and Senate versions of the bill. I was extremely disappointed we could not pass a final version last year. I wish to applaud Senator Kempthorne for the significant effort he has put forward to craft a reasonable and responsible bill, and I commend him for his willingness to work with our colleagues on both sides of the aisle in drafting this legislation. Many people from State health department officials to managers of small rural water systems in my State have told me they believe this bill is even better than the bill we were addressing last year. I am proud to join the majority leader, the minority leader, the chairman and ranking members of the Environment Committee and the drinking water subcommittee in sponsoring this important piece of legislation. What could be more clear than the current legislation, the Safe Drinking Water Act, needs to be reformed. It is my hope that this bill will lead to the kind of flexible, workable solutions that have been needed for years. I urge my colleagues to support this commonsense legislation, and I urge our colleagues in the House to quickly turn to reforming the Safe Drinking Water Act. We cannot afford to let this opportunity slip away again during this session of Congress. I thank the Chair, and I especially thank my colleague from Idaho for really an excellent job in putting this legislation together. I yield the floor. Mr. KEMPTHORNE addressed the Chair.

Mr. CONRAD. I again thank my colleague from Idaho. It has been a pleasure to work with him. He has been open-minded and absolutely fair with respect to listening to both sides on this matter, and I really have appreciated the way he has addressed this matter. I can remember so well going to a meeting of county commissioners and mayors in my State, and them saying to me, you know, it is nuts; we are being asked to test for things that have never been present in our system for 20 years. We have had testing for 20 years. We have never had this contaminant show up, and we keep having to do tests that may cost us $20 or $40 a test every month. When you are talking Washington talk, $20 or $40 a month does not sound like very much, but if you have towns such as we have in North Dakota, we have four of them incorporated that have 10 people or less and when you are talking about $20 or $40 a test on things that are totally unnecessary that may have to be done on a quarterly or monthly basis, it mounts up and it becomes an absurdity. So again, I think it is absolutely time that this job gets done. I again wish to thank my colleague from Idaho for the job he has done. I thank the Chair and yield the floor. I note the absence of a quorum.

Mr. CONRAD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. CONRAD

Mr. CONRAD. Mr. President, I yield to the ranking member of the Budget Committee, Senator Exon, who is seeking to make a statement.

Mr. CONRAD

Mr. CONRAD. Mr. President, this is good news tonight. The impasse has been broken. It is certainly good news for the country, and good news for the hundreds of thousands of Federal workers who have been furloughed and who have been wondering if this Thanksgiving would be a happy one for their families. It is good news for citizens around the country who are wanting to have their Government back in action. Mr. President, now that we have achieved this breakthrough tonight, in what was really an initial skirmish on a much larger issue about how we bring balance to the budget, and how we bring the fiscal affairs of this country into balance, I think now, perhaps, is the time to start looking ahead at how we could achieve the greater agreement, how we could balance the budget in a unified way over the next 7 years, and how we could do it within the constraints of this agreement. I say to my colleagues that there are a number of ways that we could have a breakthrough on the larger debate that is underway. I urge my colleagues to look at CBO and OMB economic forecasts as one way out of the morass that we are headed into with respect to a long-term agreement. Mr. President, we could settle this dispute, balance the budget on a unified basis by 2002, but do it in a balanced way, in a way that was fair to all interested parties. Just so my colleagues have something to think about over the week break that we are about to have, I am going to put in the Record one possible compromise. I stress that it is a compromise, because this is not a proposal that will find favor among every Democrat, it is not a proposal that will find favor among every Republican; but I think we have to remember that a Democrat controls the White House, the Republicans control the Congress, and the President can maintain a veto with the number of Democrats that are in the House and in the Senate. So, ultimately, we are going to have to compromise between what the Republicans want to do and what the Democrats want to do. Both sides are moving from principle, both sides have strong views about what is in the best interest of the country. Ultimately, neither one is going to get everything they want. We are going to have to compromise. It will be a principled compromise when it is finally made, but I urge my colleagues to take a look at what I am going to outline this evening, as they take this break for Thanksgiving and see if it is not at least an outline of what we can achieve if we worked in good faith and sat down together and reasoned out a final agreement. Mr. President, first of all, you take the 7-year goal. I think the vast majority of Members of Congress agree that 7 years is an appropriate goal to bring balance to the unified budget of the United States. I want to stress that that is not the end of the job, because to achieve real balance, we are going to have to balance without using Social Security trust fund surpluses. But the first step is to achieve unified balance, and to do that in 7 years is a good goal. One of the great disputes we have had is whether we ought to use CBO economic forecasts or the OMB economic forecasts. I think a lot of people get lost and say: What is CBO? What is OMB? Simply, for those who are listening, CBO is the Congressional Budget Office; OMB is the Office of Management and Budget. The Office of Management and Budget is controlled by the President; the Congressional Budget Office is controlled by the two Houses of Congress. They have two different scenarios for what the economic growth is going to be in this country over the next 7 years. CBO says 2.3 percent; OMB says 2.5 percent. Interestingly enough, over the last 20 years, economic growth has averaged 2.5 percent. Interestingly enough, the Wall Street Journal, last week, endorsed the President's economic assumptions. But they said that both of them are too pessimistic. Well, what would happen if we just compromised between the OMB and CBO economic forecast? That would provide an additional $225 billion that we could distribute over the next 7 years, if we used the OMB economic forecast. Again, the Wall Street Journal says it is too pessimistic. If we did that and we went down the large categories of spending that we have to decide on, if we are going to achieve a balanced budget on a unified basis by 2002, one can see the possibility of a compromise that would look something like this: In the Republican bill, in domestic discretionary spending, they have achieved savings or cuts, if you will, of $440 billion over the next 7 years. In a potential compromise, we might have a hard freeze, and just freeze domestic discretionary spending for 7 years--freeze it. That would save $289 billion. We have had intense debates on this floor about Medicare. In the Republican proposal they have saved $270 billion out of Medicare. On a compromise that would balance on a unified basis in 7 years, we could have a savings of $140 billion. That would preserve and protect Medicaid. It would strengthen the program, and it would do what the trustees say is necessary. But it would not threaten to close rural hospitals in the same degree as the Republican plan. It would not put the same burden on beneficiaries as the Republican plan. I suggested to my colleagues a potential compromise. On Medicaid, the Republican plan calls for $163 billion of savings, or cuts, if you will, over the next 7 years. A compromise might follow more closely the commonsense plan introduced by conservative Democrats in the House and Senate, an $80 billion savings out of Medicaid. On agriculture, the Republican plan is to cut $12 billion. Here it is not restricting the rate of growth. Here it is a real cut--no question about it. It is $12 billion less in agriculture. An alternative would be the President's number of $4 billion. Mr. President, the Republican plan goes too far. It goes too far. They eliminate the authorization for an agriculture program that has been in the law since 1938. They eliminate it. I think everybody recognizes agriculture needs some changes, but we should not be eliminating the farm program in this country. We certainly should not, when our competitors are already spending three or four times as much as we are on agriculture, and just waiting for us to wave the white flag of surrender. That does not make sense. So I submit to my colleagues that perhaps a $4 billion reduction could be part of a final package that achieves balance on a unified basis by the year 2002. [[Page S 17497]] Student loans. The Republican package calls for a $5 billion reduction. Mr. President, this is one area where I think most Members on our side--certainly, I think every Member on our side--would say we should not cut student loans by a nickel. That is not good for the future of America, to restrict people's ability to go to college. So let us eliminate that one area of cuts--the $5 billion that is in the Republican plan. Welfare reform. The Republican plan has $107 billion. An alternative would be a number, about $47 billion, again, close to what was in the commonsense plan offered by conservative Democrats in the House and the Senate. I say to my colleagues, this difference is important because if we are serious about our rhetoric, if we really want people to go to work and not be on welfare rolls, we have to understand that will cost some money. The Republican Governor of Wisconsin has reminded people if you really want to put people back to work, you have to have the child care that will allow them to go back to work. We know that means a savings of less than what is in the Republican plan. In addition, in the Republican plan, they dramatically reduce the earned income tax credit. Ronald Reagan said the earned income tax credit was the best profamily, prowork program that ever came out of Congress. Mr. President, I do not think we want to be cutting the earned income tax credit that will actually mean a tax increase for some 7 million families in America. We should not be increasing their taxes. On veterans, the Republican plan calls for $7 billion of savings; the alternative, $5 billion. Now, some people are beginning to wonder, where do you get this extra money? First of all, remember, we have adopted a compromise between the economic assumptions of CBO and OMB. When we do that, we have $225 billion of additional resources that can be used over the next 7 years. I want to swiftly point out that every forecaster in the private sector has suggested that OMB is actually quite conservative with their economic forecasts. Most of the private-sector forecasts are more optimistic than either OMB or CBO. Another way we get additional resources is by an adjustment in the Consumer Price Index. The Consumer Price Index is used to adjust Social Security payments. It is used to index the income tax system. The whole idea of the Consumer Price Index and using it has been that we are adjusting to the cost of living. The experts are now telling us that the Consumer Price Index overadjusts for the cost of living. It is making too big an adjustment. In fact, we just had a commission that reported to the Finance Committee and said that we are overcorrecting from 0.7 of 1 percent to 2 percent a year in the Consumer Price Index. If we would adopt just a half-a-point correction, 0.5 correction in the Consumer Price Index, that would save $139 billion over the next 7 years. Other mandatory spending, the Republican plan, $16 billion of savings; this alternative that we propose, $58 billion. Then we go to revenues. Loophole closures: In the Republican conference report they call for $18 billion of loophole closures. In the alternative, we double that and call for $37 billion in loophole closures. I might just say to my colleagues, the biggest pot of money that we have are the tax entitlements. We have heard a lot of talk about reducing the spending entitlements--Medicare, Medicaid, a lot of talk that they are growing too fast. Indeed, they are. So we achieve savings in the spending entitlements of Medicare and Medicaid. The tax entitlements are the biggest pot of money of all. We are going to have $4 trillion of tax entitlements over the next 7 years, compared to $3 trillion spent on Social Security, about $2 trillion spent on Medicare. So the biggest pot of money of all is the tax entitlements. We could achieve $39 billion of savings out of a pool of $4 trillion without any heavy lifting around here. It ought to be done. Mr. President, the Republican plan calls for $245 billion of additional tax preferences--tax cuts. Very frankly, a compromise would require something less than that. There are many of us that do not see the wisdom of reducing revenue when we are adding $1.8 trillion to the national debt that already stands at $5 trillion. Why are we cutting taxes when we already have a debt of $5 trillion and we are adding $1.8 trillion to it over the next 7 years? We will have to borrow every penny of that tax cut. So compromise might be to reduce that proposed tax cut in the Republican plan from $245 to $131 billion. Then we get to the so-called fiscal dividends. In the Republican plan, the CBO says they get a fiscal dividend of $170 billion. Fiscal dividend, Mr. President, simply means that once we move toward balance, the markets in this country are going to adjust. They are going to lower interest rates. We are going to get greater economic growth, and that will produce a fiscal dividend of $170 billion. The alternative plan I am discussing tonight, that would be a fiscal dividend of $114 billion. Then, of course, because we substantially reduce the deficit under the Republican plan, there would be $150 billion of debt-service savings. Under this alternative plan that I am discussing tonight, the debt-service savings would be $113 billion. Then, of course, there is the difference in the economic assumptions that I mentioned at the beginning, the bridge between the Congressional Budget Office economic forecast and the Office of Management and Budget economic forecast. That is a difference of $225 billion. The bottom line: deficit reduction in the Republican plan of $1.131 trillion over the next 7 years. In the Democratic plan --I will not label it a Democratic plan because really this would be a compromise. This would be a compromise between the Democratic alternatives that have been offered previously, the Democratic priorities and the Republican priorities. Maybe we ought to call it the American plan. It would achieve deficit reduction of $1.121 trillion. It would achieve unified balance in the year 2002. We would have done it with much less in the way of cuts to Medicare and Medicaid, no cuts to education. We would have done it with much less in the way of cuts in reductions to food programs and agriculture. It would still be a tax reduction, but would not be as big as the Republicans have been calling for. There would be more money for highways and bridges. There would be more money for research, which I think is critical to the future of this country. Mr. President, I will ask that a table that outlines this potential compromise be printed in the Record. I hope my colleagues and the staffs of my colleagues would take a look at this over the break period, because at some point we will have to come together in the House and the Senate between the Congress and the White House. This is at least an outline, a suggestion, something to think about, about how we could bring the two sides together and achieve something great for America. I ask unanimous consent to have the table printed in the Record.

Mr. CONRAD

Mr. CONRAD. Mr. President, this is a critically important debate. It ought to be informed, I think, by fact and reason and by law. Mr. President, we have heard a lot of talk that what we have before us is a balanced budget. The fact is, the law says something different. The law says we do not have a balanced budget before the Senate. That is because if you look at subtitle C of Social Security, the off-budget status of Social Security trust funds, it makes very clear that Social Security surpluses are not to be included in any calculation of the deficit. The only way the Republican plan achieves balance is to use every penny of Social Security surplus generated between now and the year 2002 --$636 billion of Social Security surplus funds will be raided so that the Republicans can claim their plan is balanced. Mr. President, this is not just my view. This is, in fact, the certification from the Congressional Budget Office. We have been through this debate before, and on October 20, Senator Dorgan and I asked the head of the CBO, if we follow the law, a law that 98 Senators voted for, and excluded Social Security surpluses, what would the deficit look like in 2002 under the Republican plan? The head of the CBO responded by saying the deficit in 2002 under the plan presented would be $105 billion. In the conference committee that number has grown. We now have a deficit in the year 2002 under this plan, if we obey the law, of $111 billion. I think it is important to make that point for the record. This chart shows the looting of the Social Security trust fund that will go on during this period, from 1996 to 2002. These are the yearly totals that will be taken of Social Security surplus funds. This is the total over the 7-year period--$636 billion. Mr. President, we have heard from the other side assertions that the Democrats have no alternative balanced budget plan. It makes me wonder where some of our colleagues have been. We have had a series of alternatives offered on the floor of the Senate. The one I was most deeply involved in was the Fair Share balanced budget plan we offered during the budget resolution. It was an honest balanced budget plan but with a substantially different set of priorities than those contained in the Republican plan. Let me talk about some of the differences. The Fair Share Plan balanced the budget, without counting Social Security surpluses, by the year 2004--9 years without counting any Social Security surpluses. It produces more deficit reduction in 2002 than the Republican plan. In fact, the Fair Share Plan that 39 Democrats in this body voted for had $100 billion more in deficit reduction than the Republican plan. [[Page S 17257]] At the same time, it had a substantially different set of priorities than the Republican balanced budget plan. The Democratic balanced budget plan restored $100 billion of the $270 cut in Medicare. I know many on the other side of the aisle have said they are not cutting Medicare. I ask them this simple question: If they are not cutting Medicare, how is it that they have achieved $270 billion of savings from what current law provides in Medicare? How can it be, if they have not cut anything, that they have saved $270 billion over the next 7 years? Of course they have cut. They have cut in quality and service what our seniors will receive through that program. Some say, ``I hear the Republicans saying they are spending more money on Medicare.'' Yes, that is true. They are spending more money. Of course they are spending more money. There is 7 years of medical inflation that has to be covered. Medical inflation is growing at three times the rate of normal inflation. In addition, there are 5 million new people who are going to be eligible for Medicare during this 7-year period. So of course they have to spend more. But the fact is, they are not spending as much more as would be required in order to provide the same level of quality and services as the current program provides. That is why they have $270 billion of savings out of the Medicare Program. But those savings are going to mean less quality, less service to seniors than the services and quality of service they receive now. In addition, the draconian changes that the Republicans have proposed for Medicare are going to mean we are going to have rural hospitals all across America forced to close. In my own State, the hospital association tells me 26 of the 30 rural hospitals are going to negative margins on their Medicare-eligible patients. Of course, most of their patients are Medicare eligible. That means many of those hospitals will be forced to close. That is the harsh reality of what is being proposed here. Do we need to generate savings out of Medicare in order to balance the budget over 7 years? Absolutely. But $270 billion of reductions is too much. It is draconian. It is extreme. It will have severe consequences. The plan that 39 Democrats voted for restored $100 billion of the $270 billion of cuts in the Republican plan. In addition, we restored about $40 billion of the cuts to Medicaid. Let me just indicate, we now have a new analysis from Consumers Union that indicates we are going to see 12 million people lose their medical coverage because of the serious reductions to the Medicaid Program provided for in this Republican plan. Education? The plan that 39 Senate Democrats voted for did not cut education. We did not have a dime of cuts in education because we believe education is the future. If there is one place that should not be cut it is those funds that make it more possible for people to develop their full potential through education and all of the opportunities that education creates, not only for the individual but for all of the rest of us who benefit from what people are able to achieve who have gotten as much education as they possibly can. Nutrition and agriculture? We restored $24 billion in order to have less of a cut to food programs and to agriculture programs. Let me just say with respect to agriculture, the Republican program is to indicate they are going to kill all agriculture programs after 7 years. They have now come forward and admitted what their plan really is. We will not have an agriculture program after 7 years. They are destroying the foundation of the agriculture programs of this country by ending the authorization that exists in law that has been there since 1938. Let me just say, the Republican plan for agriculture is not a plan for American farmers. It is a plan for the French farmer. It is a plan for the German farmer. It is a plan for the farmers of every country with whom we compete, because that is who is going to benefit from the Republican farm plan. One of the ways we were able to have a balanced budget that 39 Democrats voted for and to be able to restore some of the draconian spending cuts contained in the Republican plan, was to eliminate tax cuts. We did not have any tax cuts. Because under the Republican plan, disproportionately those tax reductions go to the wealthiest among us. I just do not think it makes much sense to say to somebody who is in the top 1 percent of income earners in this country, you get a $10,000 tax reduction, but if you are somebody who is earning less than $30,000 a year who qualifies for earned-income tax credit, you are going to get a tax increase. Mr. President, 7.7 million families in America under the Republican plan are going to get a tax increase. Those who are at the top of the income ladder, the top 1 percent on average are going to get a $10,000 tax cut. I do not know how they justify it. It is not my idea of targeted tax relief. But that is in this plan. Finally, in the Fair Share plan that 39 Senate Democrats voted for, we asked the wealthiest among us to participate in this battle to reduce the budget deficit. We asked them to curtail the growth of the tax entitlements that they primarily benefit from. If we are going to reduce the growth of the spending entitlements, and we must, then why not reduce the growth of the tax entitlements, $4 trillion of tax entitlements? It is the biggest single pot of money in the whole Federal budget. This chart shows entitlement spending from 1996 to 2002. Tax entitlements, $4 trillion--much bigger than the next biggest entitlement, Social Security. That is nearly $3 trillion over the next 7 years. Medicare is $2 trillion over the next 7 years, and Medicaid is about $1 trillion. But the biggest one of all is the tax entitlements, the tax preferences, the tax loopholes. We say if we are going to reduce the rate of growth of the spending entitlements, let us reduce the rate of growth of the tax entitlements as well. Let us reduce that growth to inflation plus 1 percent. Our friends on the other side say there is no tax entitlement, no tax preference, no tax loophole that we want to close. We want to keep them all. We think they are all valid. We think they are all essential. We, on our side of the aisle, do not. Mr. President, these are critical issues that will be decided for the first time tonight. But I think we should all remember, the President is going to veto this bill, as he should, and then the real debate is going to begin. Then the real discussion, the real negotiation will start. One of the key issues will be, should we really be providing a tax cut when we are adding $1.8 trillion to the debt under this Republican plan? That is what is going to happen. We have $5 trillion of debt now. Under this plan, we are going to add another $1.8 trillion, which means every penny of this tax cut is going to have to be borrowed money. Does that make sense to anybody in this country? We have to borrow money in order to give a tax cut? Give a tax cut when we are adding $1.8 trillion to the debt? I thought the idea was to eliminate the growth of the debt, to reduce the growth of the debt. Why do we add to it? Mr. President, I think one of the things we have to start focusing on is what is happening to the distribution of wealth in America, because what we have seen is a dramatic change. In 1969, the top 1 percent of households in America held about 20 percent of the wealth. In 1979, the top 1 percent had increased their share of the wealth of America to 30 percent. In 1989, the top 1 percent of the income earners in this country held nearly 40 percent of the wealth of this country. The other side accuses those of us on this side of wanting to redistribute the wealth. Let me just say, our friends on the other side of the aisle are the champions at wealth redistribution. But their idea is to redistribute the wealth upwards, upwards in our society. The history of that kind of concentration of wealth is very clear. It leads to political instability and it leads to trouble. We should not allow that to occur. U.S. News, in this quote from David Gergen, says: U.S. News & World Report reported last week . . . that the lowest 20 percent of the population would lose more income under these spending cuts than the rest of the population combined. At the other end, the highest 20 percent would gain more from the tax cuts than everyone else combined. He goes on to say: [[Page S 17258]] [N]o one disputes the basic contention that the burdens and benefits are lopsided. In a nation divided dangerously into haves and have-nots, this is neither wise nor justified. Mr. President, David Gergen has it right, but he is not alone in this observation. I will share with you the final part of my presentation, the observation of Kevin Phillips, Republican political analyst, who said: 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 business, all industry and the rich, people who have the big money, making the biggest sacrifice. Instead, it's the senior citizens, it's the poor, students, and ordinary Americans who'll see programs they depend on gutted while business, finance, and the richest 1 or 2 percent, far from making sacrifices, actually get new benefits, and tax reductions.

Mr. CONRAD. I thank the Chair. I yield the floor. Mr. ABRAHAM addressed the Chair.

Mr. CONRAD

Mr. CONRAD. Thirty-nine out of forty-six Democrats for a balanced budget.

Mr. CONRAD. Mr. President, I would just say that we had two proposals. One got 39.

Mr. CONRAD. Will the Senator yield for a question?

Mr. CONRAD. Yes.

Mr. CONRAD. I would like 15 as well.

Mr. CONRAD

Mr. CONRAD. Will the leader yield?

Mr. CONRAD. I would ask the Senator from South Dakota if he was aware that the Wall Street Journal this morning has endorsed the President's economic assumptions? Was the Senator from South Dakota aware that this morning the Wall Street Journal has said the estimates of both CBO and OMB are overly pessimistic, that both of them are wrong? Based on what? Based on what has actually happened the last 2 years. I would just ask the ranking member of the Budget Committee, who has brought charts that show the actual results the last 2 years, that demonstrate CBO and OMB have both been wrong with respect to what has actually occurred with economic growth, have both been wrong with respect to deficit reduction.

Mr. CONRAD. I would just ask my colleague from New Hampshire, who I have respect for on this issue, I think the Senator has made serious attempts to make serious proposals to reduce the deficit, and I would ask him, if the President agreed to a 7-year timeframe for balancing the budget but said to us, ``I would want to use the blue-chip private forecasters rather than CBO, because it turns out that they have been more accurate over the last 2 years than has CBO or OMB,'' would the Senator from New Hampshire say that is an unacceptable position?

Mr. CONRAD. Will the Senator yield for a question on that point?

Mr. CONRAD. Mr. President, I thank the Chair. I thank the ranking member. Republicans say they want to balance the budget in 7 years using CBO numbers. The fact is the Republican plan does not balance the budget, according to the Congressional Budget Office. Mr. President, this is a letter that I received on October 20, 1995, from the head of the Congressional Budget Office pointing out that, if we obey the law--that is, we do not count Social Security trust funds in the calculation--the Republican plan has a $105 billion deficit in 2002. Why is that? It is because the only way the Republican plan achieves balance is to take every penny of Social Security trust fund money over the next 7 years. The law--this is a copy of the law--specifically precludes that. Ninety-eight Senators voted for this law. This chart shows the looting of the Social Security trust funds that is going to occur, if we adopt what the Republicans call a balanced budget by 2002. We are going to be taking $636 billion of the Social Security trust fund surplus in order to call it a balanced budget. Mr. President, that is not a balanced budget by law. It is not a balanced budget by any serious economic standard. Some say, ``Where is your alternative? Why don't the Democrats have an alternative?'' Very simply, Mr. President, we do. During the budget resolution, I offered what I called the fair share balanced budget plan. Thirty-nine Senate Democrats voted for it. It achieved more deficit reduction by 2002 than the GOP plan. In fact, it achieved $100 billion more of deficit reduction in that period than the GOP plan, and it achieved true balance in 9 years without counting the Social Security surpluses. At the same time, it had different priorities. It did not slash Medicare, Medicaid, or education. In fact, we restored more than $100 billion of the $270 billion Republican cut to Medicare. We restored full funding for student loans, and provided additional discretionary funding for education at all levels. We had nutrition and agriculture restored by $24 billion, and veterans restored $5 billion so that we could have a better set of priorities. But we did have savings out of the spending entitlements. We had $156 billion of savings out of Medicare instead of the Republican plan of $270 billion. We also had savings out of Medicaid. So we had savings out of the spending entitlements. But we also recognized that the biggest entitlement of all is the tax entitlements. The tax entitlements, as this chart shows, amount to $4 trillion over the next 7 years. It is interesting to compare the tax entitlements--$4 trillion over the next 7 years. The Republicans never want to talk about the tax entitlements. They want to talk about the spending entitlements of Social Security. That is about $3 trillion over the next 7 years. Medicare, that is about $2 trillion over the next 7 years; Medicaid, $1 trillion. But the granddaddy of them all are the tax entitlements, $4 trillion. In the Democratic plan we said, yes. Slow the growth of the spending entitlements, absolutely--Medicaid and [[Page S 17125]] Medicare. But also slow the growth of the tax entitlements to inflation plus 1 percent. That is fair. That asks everybody in our society to contribute to deficit reduction. We don't just put middle class and working families into the front lines in the battle to balance the budget--we also ask the wealthiest among us to contribute to deficit reduction. That means no tax cut until we balance the budget. Mr. President, we are going to be adding under the Republican plan $1.8 trillion to the national debt over the next 7 years. Why would we be increasing that debt by borrowing money to give a tax reduction that disproportionately goes to wealthiest among us? Mr. President, we not only have the fair share plan that a group of Democrats offered. We also have the common sense budget plan. On the question again of no tax cut, there is no tax cut because it makes no sense to be adding to the debt, to be digging the hole deeper before we start filling it in. On the question of the Congressional Budget Office versus OMB, I think it is critically important to understand that the Wall Street Journal this morning made reference to that in their editorial. They said, ``The Congressional Budget Office predicts over the next 7 years 2.3 percent economic growth. OMB projects 2.5 percent.'' Listen to what the Wall Street Journal says. ``In our view, both growth assumptions are overly pessimistic. Corporate profits look cheerful. There is no reason this economy should not grow at three percent in good years as it has through much of the past. Government policies, whether monetary or fiscal, should not be designed to foreclose this result.'' Why did the Wall Street Journal come to this conclusion? Because they have looked at what actually happened over the last 2 years. And look at what has happened. This shows economic growth. The President's plan projects on the blue line what economic growth would look like. The Congressional Budget Office is the red line. The orange line shows what has actually happened. And what has really happened in the real world is both the Congressional Budget Office and OMB have been too conservative. They have been wrong. What are the results? Look at the deficit reduction. The President's plan shows the blue line. That is what he was predicting. The red line shows what the Congressional Budget Office was predicting. The yellow line shows what has actually happened. Again, both the Congressional Budget Office and OMB have been wrong. Let us break the gridlock. Let us agree to a plan to balance the budget, but let us base it on the best estimates of private forecasters. Let us use the blue chip forecasters, and break the gridlock. I thank the Chair.

Mr. CONRAD. That is the question. Was the Senator aware the Wall Street Journal has endorsed the President's economic assumptions, saying that both OMB and CBO are overly pessimistic?

Mr. CONRAD. I thank the Republican leader. I was going to alert the leaders that I, too, have an amendment on which I would be happy to take a short-time agreement. But I think it is important that an additional amendment be offered. I would like the time to do that. I would be happy to take a short-time agreement to do so.

Mr. CONRAD. Will the Senator yield for a question?

Mr. CONRAD. Will the Senator yield for a question?

Mr. CONRAD. Will the Democratic leader yield?

Mr. CONRAD. If the Senator will yield for a quick question, I ask if the Senator from New Mexico is aware that, this morning, the Wall Street Journal has endorsed the economic assumptions of the President, rather than the economic assumptions of the Congressional Budget Office. The Wall Street Journal this morning said: ``While the Congressional Budget Office predicted 2.3 percent annual economic growth, OMB boosted it to 2.5 percent.'' And, interestingly enough, the Wall Street Journal, this morning, said: ``In our view, both growth assumptions are overly pessimistic. Corporate profits look fairly cheerful. There is no reason the economy should not grow at 3 percent,'' according to the Wall Street Journal. ``Government policies, whether monetary or fiscal, should not be designed to foreclose this result.'' I wanted to know if the Senator from New Mexico was aware that the Wall Street Journal--this is perhaps the most conservative journal in the country with respect to these issues--has this morning endorsed the economic assumptions of the Office of Management and Budget--if you look at the last 2 years. I further ask, is it not true that the actual results of economic growth have exceeded both CBO and OMB assumptions, and that the actual results on deficit reduction have been better--the actual results--than CBO or OMB assumptions? In fact, both have been overly conservative, and that perhaps the Wall Street Journal has got it right in that both OMB and CBO are overly conservative.

Mr. CONRAD. Will the Senator yield just for a comment?

Mr. CONRAD

Mr. CONRAD. In the interest of time, the point-of-order I had planned to make against the BELT provision has been included in the omnibus Byrd rule point of order being made by Senator Exon. However, I believe it is important to highlight the impact of the BELT, because it is a potential disaster for the Medicare Program and has not received anywhere near the attention it deserves. The BELT amounts to what many of us have called a noose around the necks of older Americans. The BELT imposes artificial price caps on Medicare for the first time in history. And rather than work in a balanced fashion, the BELT only attacks fee-for-service Medicare. It cuts fee for service and ultimately forces seniors to use health plans they don't want and doctors they don't know. The reconciliation bill allows seniors to choose coverage options other than traditional Medicare fee-for-service. I support that. But I only support it as an option. Seniors should not be forced into managed care. Unfortunately, the BELT could ultimately make managed care the only option for Medicare beneficiaries. The BELT renders the so-called choice under Medicare an illusion. There will be more choice for a short time. But then the noose will tighten. It will slowly bleed fee-for-service Medicare dry. And if we learned anything from last year's health care debate, it is that health plans with insufficient resources will wither on the vine. And given yesterday's remarks by the Speaker of the House, that seems to be what some of my Republican colleagues have in mind for the Medicare Program. The BELT promises to make even more draconian cuts in Medicare fee- for-service than the Republicans have already proposed. As the BELT tightens, Medicare will have fewer resources to provide needed health care to our parents and grandparents. The quality of Medicare fee-for- service will deteriorate and seniors will have little choice but to move into managed care. Medicare fee-for-service will wither on the vine. During last year's health debate, we heard a great deal about artificial government cost controls. Harry and Louise told the Nation that arbitrary cost controls could bankrupt the insurance plans on which millions of Americans depend, leaving people without adequate insurance coverage. The BELT provision does to Medicare what Harry and Louise said artificial cost controls would do to the national health care system. It inflicts arbitrary cost controls on Medicare at a moment's notice, and without congressional oversight. And it will force seniors into health care plans that may not meet their needs. The letters I have entered into the Record expressed the concern of beneficiaries and providers, alike, that the BELT will erode the integrity of Medicare. The American Association of Retired Persons, National Council of Seniors Citizens, American College of Physicians, Healthcare Association of New York State, and North Dakota Hospital Association are only a handful of those who have expressed opposition to the BELT. The Congressional Budget Office has also said the BELT is unworkable and unwise, and I ask unanimous consent that CBO's analysis also be included in the Record. Mr. President, the BELT has no place in this bill. It promises to erode and eventually destroy the integrity of Medicare fee-for-service. I hope my colleagues will support the point of order and strike the BELT provision from the bill. [[Page S 16468]] Exhibit 1 North Dakota Hospital Association, Bismarck, ND, October 25, 1995. Senator Kent Conrad, Hart Senate Office Building, Washington, DC. Dear Kent: The members of North Dakota Hospital Association are in strong support of your amendment to strike the Medicare Budget Enforcement Limiting Tool (BELT) from the Senate Reconciliation Bill. It is our understanding that the proposed Senate Republican Medicare legislation to reach $270 billion in Medicare cuts reduces payments to hospitals by more than $86 billion over seven years. On top of that, legislation has been proposed to also reduce Medicaid funds to hospitals by $182 billion during that same amount of time. The magnitude of these reductions causes great concern for North Dakota, which has a large and growing population of citizens over 65 years of age. In visiting with our administrators, they are hard pressed to understand how they can cut budget or plan to serve this population and others, when the BELT provision would entail additional reductions based on whether or not certain savings are achieved. A number of our facilities, Cavalier County Memorial Hospital in Langdon; Jamestown Hospital in Jamestown, Tioga Medical Center in Tioga and Carrington Medical Center in Carrington have all publicly expressed concerns that the amount of proposed reductions, with lookbacks added, will mean that in seven years they cannot guarantee that their doors will be open. Half of our facilities are co-located with and include long-term care facilities. Those that care for a large percentage of Medicare patients in their hospital and mostly Medicaid supported residents in their nursing homes will receive a double hit from which they also might not be able to recover. In a rural state like ours, you can imagine that access becomes a critical issue if a void is left in an area where distances can mean the difference between life and death. It seems grossly unfair to single out healthcare providers as the group responsible for obtaining savings not achieved. It also seems grossly unfair to ask a particular segment of the business world in our country to operate with a system in which orderly business operations would be interrupted based on a compliance order not determined until the very last minute. Our facilities are operating as cost-efficiently as possible, while still maintaining the quality expected of them by their patients. We feel it is imperative to the solvency and survivability of many of our providers that the BELT provision be excluded. NDHA supports your efforts and hopes your fellow legislators will understand how detrimental this provision would be to the healthcare facilities in our state and also support you in this effort. Sincerely, Arnold R. Thomas, President.