Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, today we celebrate an important organization in the modern history of American politics. The League of Women Voters, a active participation in the political process, celebrates its 75th anniversary. The League of Women Voters is open to all of American voters. The League of Women Voters is an established grassroots organization; encouraging and enabling individuals to become true participants in the important public policy and political debates of our time. The League of Women Voters has an active presence in each of the 50 States. In North Dakota, the League of Women Voters has had an active presence for the past 45 years. The North Dakota League of Women Voters' activities include preparing voters' guides which explain ballot measures, helping communities draft governing documents, and supporting bills before the State legislature. The North Dakota League of Women Voters is a valuable asset to my State. Mr. President, I join my Senate colleagues and the American people in congratulating the League of Women Voters on its remarkable achievements. I wish the League of Women Voters many years of continued success. the 75th anniversary of the league of women voters

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today in strong support of the amendment to the balanced budget amendment to the Constitution that has been offered by the senior Senator from Nevada, Senator Reid, and others of us. The purpose of the amendment is to protect the Social Security trust fund from being looted as part of an effort to balance the budget. Mr. President, I think it is important for people to ask when we are considering a balanced budget amendment to the Constitution: What budget is being balanced? That is what this first chart asks. What budget is being balanced? In order to answer that question, I think it is helpful to go to the actual language of the balanced budget amendment that is before us. And if you look at the language, it says very clearly: Total receipts shall include all 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. So, Mr. President, it is very clear that what we are dealing with with respect to the balanced budget amendment to the Constitution is that all of the moneys coming into Federal coffers are being jackpotted. They are all being put in the same pot. Whether they are trust funds or not trust funds, it is all being put in the same pot. And then we are going to look at those total receipts and compare it to total outlays. I prepared this chart. This is kind of the teapot of the Federal Government budget. It shows the revenue that goes into the pot, and the revenues are the individual income taxes that are raised. That provides about 45 percent of the revenue of the Federal Government. All social insurance taxes go into this pot, including the revenue that is taken out of people's paychecks every month that is supposed to be for Social Security. All of that money is going into the pot. Social insurance taxes are about 37 percent of the revenue of the Federal Government. Corporate income taxes go into the pot. That is about 10 percent of the revenue of our Government. All other taxes are 8 percent. And then we look on the other end of the ledger. We look at what comes out of the spending spout of the Federal Government. And here is the spending breakdown. About 22 percent of the outlays of the Federal Government go for Social Security, 16 percent is interest on the debt, 16 percent for defense, 14 percent for Medicare, 7 percent for Medicaid, and other, 25 percent. So one can see in the balanced budget amendment that is before us what goes into the pot is all of the revenue and what goes out the spending spout are all of the outlays. The problem with this balanced budget amendment is that in using all of the Social Security income in counting whether or not you are balancing the budget, Social Security is not contributing to the deficit. Social Security is in surplus. And Social Security is in surplus for a reason. The reason is to prepare for the time when the baby boom generation retires. Because then these Social Security surpluses are going to turn to massive deficits. And for the time when the baby boomers retire. The problem is, the money is not being saved. The problem is, under the balanced budget amendment that is before us, we are going to put into the Constitution of the United States that those Social Security surpluses, instead of being saved, will be looted in order to give us a balanced budget or contribute to balancing the budget. Mr. President, this chart shows, just over the 7 years that the balanced budget amendment is to lead us to a balanced budget, how much of the Social Security surplus will be taken each and every year. This is the amount of Social Security trust fund money that will be looted in order to balance the budget. In 1996, $73 billion of Social Security surplus will be taken. We can see each and every year those surpluses are mounting. They are increasing. Under the terms of the balanced budget amendment that is before this body today, unless it is altered by the Reid amendment, every one of these dollars is going to be taken. Every one of these dollars will be looted in order to contribute to balancing the budget. That is profoundly wrong, Mr. President. We can see, as I said, $73 billion of surplus from Social Security in 1996, $78 billion in 1997, $84 billion in 1998, $90 billion in 1999, $96 billion surplus in the year 2000, $104 billion of Social Security surplus in the year 2001, and $111 billion of surplus in the year 2002. Every nickel of that surplus taken, not to have a fund that is available when the baby boomers retire; but no, every penny taken in order to contribute to balancing the budget. Mr. President, let me just say that if any chief executive in this country stood up before his board of directors and announced that in order to balance the operating budget of the company, he was intending to loot the retirement funds that were held in trust for his employees, he would be headed for a Federal facility, and it would not be the Congress of the United States. I said the other day that this amendment, as drafted, the balanced budget amendment before Members, as drafted, would make the Rev. Jim Bakker proud. Remember Rev. Jim Bakker? He went to a Federal facility, the Federal prison. He went to Federal prison for fraud. The fraud he was conducting was to raise money for one purpose and to use it for another. That is precisely what is being contemplated in the balanced budget amendment to the Constitution that is before Members today. That is fraud. It is fraudulent to tell people you are raising money for one reason, namely, to build a trust fund surplus that is available for them when they retire, but on the other hand not to create the surplus at all but to loot the fund and to use it for other spending. We would be putting in the Constitution of the United States that that is what would be done. Mr. President, that is so profoundly wrong I cannot even fathom how those who have written this amendment think it ought to be included. There is not any financial institution in this country that would accept for one moment the notion that we should take trust fund moneys and use them to balance an operating budget. Mr. President, I showed the surpluses, $636 billion, that are contemplated under the balanced budget amendment that is before Members today to be used to help balance the budget over the next 7 years. That is a small part of the story. That is just the next 7 years. The real larceny, the real theft, the real fraud, is far in excess of $636 billion. That is just what will be taken in the next 7 years. We know Social Security is going to be running surpluses for much longer than the next 7 years. In fact, it will be running surpluses out past the year 2020. When we look at the projected size of the Social Security trust funds out until the time the baby boomers have retired and start to draw down those surpluses, what one sees is simply staggering. These bars on this chart show the Social Security surplus as it accumulates. It shows by the year 2000, there will be almost $1 trillion of surplus. By the year 2010, $2.1 trillion--not million, not billion--trillion. This is real money, 2.1 trillion of surplus; $2.8 trillion by 2015; $3 trillion of surplus by the year 2020. Mr. President, when the baby boomers go to the cupboard to get their surplus, their retirement, they will find the money is all gone. It has all been used. It has all been looted to help balance the rest of the budget of the United States. This will create a financial catastrophe for the future. That financial catastrophe will be when the baby boomers retire. Having been made a promise, they will find no one can keep the promise, because in order to pay back this money, the tax increases would have to be so draconian, or the cuts in benefits so draconian, that the people of the United States would simply revolt. Mr. President, this chart shows what has happened in terms of the growth of payroll taxes both for Social Security and Medicare from 1940 out until the present. What one can see is that these regressive taxes have been increased very dramatically over this period of time in order to make these funds supposedly add up. The problem again, of course, is that these increases, these increased taxes that have been levied on the American people, have been used. And they have been used to balance other parts of the Federal budget. Or at least to reduce the deficit of other parts of the Federal budget. One reason that this is profoundly unfair is because, in essence, what has happened is people are being taxed on their payroll, on the amount of their wage earnings, and they are having an increasing amount taken out. They are being told, ``We are taking this increasing amount because we have to run a surplus; we have to get ready for the time when those of you who are in the baby boom generation retire.'' That makes sense. Unfortunately, what we say and what we do are two completely different things. We are not running surpluses in order to prepare for the time when the baby boomers retire. Instead, we are taking that money, we are taking those surpluses, and we are using it to offset other spending. So, in effect, what we are doing is levying a regressive payroll tax and using part of it, the part that makes up the surplus, to fund the other operations of Government. In fact, 73 percent of all taxpayers today are paying more in payroll taxes than they are paying in income taxes. I think this may come as a shock to many people. It is true: 73 percent of all taxpayers are paying more Social Security payroll taxes than they are paying in income taxes. They are doing it because we have told them the money is needed to create surpluses to prepare for the time when the baby boomers retire. The fact is that that is not what we are doing. We are taking the Social Security surpluses, we are looting them, in order to reduce the deficit. Now we have a proposal before Members in the balanced budget amendment to the Constitution of the United States, the organic law of this country, that would take this practice and enshrine it in the Constitution of our country. I cannot think of anything more inappropriate than to put into the Constitution of the United States that we are going to take trust fund surpluses and use them to help balance the operating budget of this country. Mr. President, I come from a financial background. If anyone, as I was being schooled and taught how to properly manage finances, had told me, ``You take trust fund money and you use that to balance other parts of a budget,'' that person would have been run out of the financial institution because everyone understands that that is absolutely inappropriate. For Members to put into the Constitution of the United States that we will take trust fund surpluses and use them to balance the other parts of the budget is profoundly wrong. That is the reason the Reid amendment is so important, because it gives Members the chance to protect Social Security trust funds from being looted for other purposes. Mr. President, I do not know of anything more basic than this concept. I do not know of anything that is more important when we are considering a balanced budget amendment to the Constitution than to make certain the trust fund moneys, Social Security trust fund surpluses, are not looted in So, Mr. President, let me just conclude by thanking my colleague, Senator Reid from Nevada, for offering this amendment. There are others of us who have joined with him in offering this amendment, and I urge my colleagues to support it. I thank the Chair and yield the floor.

Mr. CONRAD

Mr. CONRAD. Mr. President, the reason this debate is so important is because we are talking about issues that have enormous implications for the future, and the implications are a balanced budget amendment to the Constitution of the United States that would have, as its predicate, that we would loot the Social Security trust funds of $636 billion over the next 7 years in order to have the operating budget of the United States balanced. That is just a fundamentally flawed strategy. It is not right. Any CEO in this country, if they went before their board of directors and said that their corporation was to loot the trust funds of their employees, that individual would be on his or her way to a Federal facility and, as I said moments ago in the press gallery, it would not be the U.S. Congress, it would be the Federal facility they would be headed for. They would be headed for a Federal penitentiary because that is fraud. Unfortunately, that is what is occurring with respect to the budget of the United States now. Social Security trust fund surpluses are being used to fund the operating expenses of the United States. What is fundamentally wrong about that is that we are using a regressive payroll tax to fund not the retirement systems of Americans but instead we are using those funds to understate the real budget deficit we confront in this country. And now we have a constitutional amendment before us that would take that approach and put it in the Constitution of the United States. Mr. President, that cannot be the result of this balanced budget amendment debate. We should never allow a trust fund to be looted in order to achieve balance, and we should never put that kind of construct into the Constitution of the United States. That is profoundly wrong. I am just very hopeful that we can get to a vote and a debate on the amendment that Senator Reid and others of us will be offering. It is an amendment Senator Reid and I offered last year, along with my colleague Senator Dorgan. I understand that there are others who are proposing an alternative mechanism and vehicle for the implementing language. Let me just say, this Senator would never accept that kind of pale imitation. That is not going to suffice. We are talking about an amendment to the organic law of the United States: The Constitution of the United States. That is the document that each of us swore to uphold when we took the oath of office. We are talking about a Contract With America; that is the contract with America that counts. I thank the Chair and yield the floor. I suggest the absence of a quorum.

Mr. CONRAD

Mr. CONRAD. Mr. President, I want to specifically draw the attention of my colleagues to the letter of support for this legislation from the American Medical Association--I was pleased to have the president of the American Medical Association at the press conference this morning announcing this legislation--the support from the National Association of Secondary School Principals; the support of the National Coalition on Television Violence; the support of school principals who recognize that the epidemic of violence on the streets of America is spilling over into the schools of America and their belief that media violence is contributing to that violence; the support from the National Association for the Education of Young Children; the strong statement of support from the National PTA; the support of The Future Wave, which is made up of producers and writers themselves who recognize that television violence, media violence, is contributing to violence in our society; and the support of the National Alliance for Nonviolent Programming. All of these groups have specifically endorsed, now, the legislation that I am introducing today. [Exhibit 1]

Mr. CONRAD. Mr. President, today I rise to introduce the Children's Media Protection Act of 1995. Mr. President, last Tuesday, the President in his State of the Union Address, asked Americans to take responsibility for their lives, to keep families together, and to keep communities from falling apart. As part of that challenge, the President expressed his continuing concern over media violence and challenged the media industry by saying, You do have a responsibility to assess the impact of your work and to understand the damage that comes from the incessant, repetitive, mindless violence and irresponsible conduct that permeates our media. Mr. President, I agree, and so do the experts. Let me quote the Guggenheim Foundation from the study of ``Violence in Society.'' They said, ``The scientific debate is over. A recent summary of 200 studies published through 1990 offers convincing evidence that the observation of violence as seen in standard, every day television entertainment, does affect the aggressive behavior of the viewer.'' Mr. President, while the scientific debate is over, the public policy debate continues into its fifth decade. Let me just turn to a chart which shows that violence in our society is far above that of any other industrialized nation. This chart is titled ``Crime Across the Globe, Murders Per 100,000 in 1990.'' The United States, 9.4; Canada, 5.5; Denmark, 5.2; France, 4.6; Australia, 4.5; Germany, 4.2; Belgium, 2.8, and on it goes down to Japan at 1.2. Mr. President, we have a problem in this country. No one is suggesting that violence in the media is the sole cause; certainly, it is not. But to deny that it plays a part is to deny what all of us instinctively understand. We learn by watching what others do, and many children in our society are spending 6 hours a day watching television. What do they see? One thing they see is endless acts of mindless, gratuitous violence. Mr. President, it has an affect and it is a bad affect. It teaches children that one way to deal with problems is to engage in acts of violence. And in many cases it teaches them that there are no consequences, there is no pain. People are blown away and it does not make a difference. We know better. We know it does make a difference, and we know this is not what we should be teaching our children. Because of a lack of action on this issue, I formed the Citizens Task Force on TV Violence, comprised of 28 national organizations representing medical professions, parents, educators, law enforcement, and churches. We formed that group in June 1993. In December of that year, the Attorney General, Janet Reno, asked us for a set of recommendations. We submitted seven recommendations to the Attorney General. Those recommendations called for the adoption of a tough entertainment-media violence code, support for technology that would permit parents to more effectively monitor children's viewing of television. We recommended strengthening the Children's Television Act of 1990, scheduling hearings by the FCC on television violence, convening a White House Conference on Violence, curbing viewing of violent television programming in prisons, and the continuation of television industry discussions as authorized under the Television Program Improvement Act of 1990. Shortly after these recommendations were submitted, the American Medical Association's house of delegates called for the adoption of a television violence code. They had a rating system for films, video, and audio entertainment. Following the outcry last year over the violent content of television and cable programming, the major TV networks and cable initiated voluntary assessments of violent content in their program. These assessments began with the 1994-95 television viewing season. Additionally, the major television networks agreed to display viewer warnings on some television programming containing violent content. They deserve credit for these steps. There is progress on other fronts, as well. Even the leaders of the entertainment industry have come to believe that violence in the media is a problem. In a survey of entertainment industry leaders in U.S. News & World Report on May 9, 1994, nearly 9 out of 10 media entertainment industry leaders said that violence in entertainment contributes to the level of violence plaguing the Nation. Mr. President, even though there has been a recognition, even though there has been a public discussion about media violence and the contribution it makes to violence in our society, nothing is happening. The media mayhem continues. I cite the alarming report of the Center for Media and Public Affairs that was done in August of last year. The center, working with the Guggenheim Foundation, reported that television is considerably more violent in 1994 than it was 2 years previous. Mr. President, I direct your attention to the chart that we have prepared that shows what has happened to the daily violence on television, a comparison between 1992 and 1994. This shows the incidents of violence per hour that are going out over the media. Networks in 1992 had 25 violent acts per hour on average. In 1994, that had increased to 43 acts of violence per hour. Cable was even more egregious. Cable had 55 acts of violence per hour in 1992. That escalated to 75 acts of violence per hour on average in 1994. Only Public Broadcasting had modest levels of violence and was stable in the acts of violence portrayed between the years of 1992 and 1994. Mr. President, although there has been a lot of talk about doing something about violence in the media, there has been precious little action. I believe the American people do not want their children and families exposed to the extraordinary violence that is occurring in the entertainment media on a daily basis. Now, we here in the Senate do not watch a lot of television because we wind up being here most of our time or in our States going from town to town. And so opportunities for watching television are somewhat limited. I would just ask my colleagues to turn on the television, watch what is happening, and ask yourselves: Can it possibly be the case that we can have children watching 6 hours of television a day and seeing endless repetitive mindless acts of violence and it has no effect on them? It cannot be. It has to be having an effect on them. And virtually every study that has been done says it is having an effect on them. Mr. President, I recognize that the violence in our society is not just because of media violence. Certainly, that is not the case. There are many contributors. But the time has come for us to reduce the violence in the entertainment media. The trend to glamorize violence must stop. I am pleased by the voluntary efforts the media has undertaken. But let us face it. The job is not getting done. I do not believe that voluntary initiatives are sufficient to reduce media violence. incorporates the principal recommendations of the Citizens Task Force. The legislation includes means to empower parents to help them make choices. It provides for new television sets being required to contain a V-chip that would permit parents to block television programming with violent content. The cost of the V-chip is now down to about $5 per television set--$5 --to give the parents an ability, to empower parents to help make choices for their children. That makes sense. Second, the legislation contains a violent programming rating provision. This provision requires the FCC to prescribe, in consultation with the broadcasters and cable operators, private interest groups and concerned citizens rules for rating the level of violence in television programming. These ratings would apply to the V- chip technology. Third, the legislation contains a children's safe harbor provision which requires the FCC to initiate a rule that prohibits commercial television, cable operators, and public telecommunications entities from broadcasting television programs that contain gratuitous violence between the hours of 6 a.m. and 10 p.m. at night. Mr. President, if there is one thing we have heard all across this country it is that there ought to be a safe harbor, there ought to be a period within which kids are watching television that parents can have some assurance they are not being exposed to this mindless gratuitous violence. Finally, the bill contains the Children's TV Act compliance provision which requires the FCC, when granting or renewing TV licenses, to assure the applicant is in compliance with the Children's Television Act of 1990. These provisions are consistent with the FCC's current examination of television violence in children's television programs and the implementation of the Childrens' Television Act of 1990. Mr. President I have supported voluntary efforts in the past and I continue to support and commend these efforts. But it is absolutely clear--absolutely clear--that those efforts are not sufficient to achieve the result that I think the vast majority of Americans would like to see achieved. The President challenged us last Tuesday to understand the impact that this constant stream of mindless violence is having on our families and children. I applaud the President, and I hope he will continue to draw public attention to the corrosive effect that violence in the entertainment media is having on our families and on our children. Mr. President, I welcome cosponsors to my legislation. I urge my colleagues to carefully examine the issue of media violence as it relates to violence in our society. I ask unanimous consent that the text of my bill, the recommendations submitted to Attorney General Janet Reno by the Citizens Task Force on TV Violence, the names of the national organizations in the task force that endorse the recommendations, and the press release announcing the action by the American Medical Association's house of delegates, its article, entitled ``A Kinder, Gentler Hollywood,'' in the May 1994 issue of the U.S. News & World Report, the findings of the study by the Center for Media and Public Affairs, along with the press release announcing the study, and the report of the study of the findings of 200 studies of violence, along with the endorsements of task force members that supported this initiative, be printed in the Record at the conclusion of my remarks.

Mr. CONRAD

Mr. CONRAD. Mr. President, I suggest the absence of a quorum.

Mr. CONRAD. I thank the Chair. (The remarks of Mr. Conrad pertaining to the introduction of S. 332 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.)

Mr. CONRAD

Mr. CONRAD. I thank the Chair. (The remarks of Mr. Conrad pertaining to the introduction of S. 293 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'') Mr. SIMON addressed the Chair.

Mr. CONRAD

Mr. CONRAD. Mr. President, today I rise to introduce the State Veterans Home Act of 1995. The bill extends discretionary authority to the Department of Veterans Affairs to provide a per diem payment for adult day health care for veterans. The bill also authorizes the use of funds from the Extended Care Facilities Grants Program, section 8131, to construct or renovate existing facilities to provide adult day care for veterans. The legislation I am introducing today is similar to S. 852 introduced at the beginning of the 103d Congress. In the last Congress, S. 852 was reported to the Senate as section 205 of S. 1030--Veterans Health Programs Improvement Act of 1993--and passed by the Senate on May 25, 1994. Regrettably due to the legislative log-jam at the end of the 103d Congress, it was not incorporated into the veterans health benefits measure, H.R. 3313, that passed the House in the closing days of the 103d Congress. today is cosponsored by Senators Daschle, Dorgan, Akaka, Jeffords, Pell, and Graham. This legislation received support in the 103d Congress from veterans and their families in North Dakota, and from all major national veterans organizations during a hearing by the Senate Committee on Veterans' Affairs on June 23, 1993. I am hoping the 104th Congress will act expeditiously to pass this important health care measure for veterans. I am enclosing a letter of support from the National Association of State Veterans Homes. Currently, under section 1741, the Department of Veterans Affairs is required to pay a per diem to States for each veteran that is assisted through the State Home Facilities Program with hospital, nursing home, or domiciliary care. The per diem payment is $15.11 for domiciliary care, and $35.37 for nursing home and hospital care. Under section 8131, State home facilities, the Department of Veterans Affairs is also authorized to provide matching grant assistance for the construction, expansion, or remodeling of existing facilities for domiciliary, nursing home, or hospital care for veterans who are eligible to reside in State veterans facilities. Under the legislation that I am introducing today, the State Veterans Home Program would be amended to authorize a per diem payment for veterans that are assisted by States who provide adult day care including health care as needed. States would also be authorized to apply for matching grant assistance to provide facilities for adult day care. In fiscal year 1995, Congress appropriated $47.3 million under the State Home Facilities Program for the construction or expansion of State extended care facilities for veterans. Mr. President, I have discussed the proposed legislation to amend the State Veterans Home Program relating to adult day care health care with State veterans officials in North Dakota and representatives of the National Association of State Veterans Homes. The arguments in support of amending the State Veterans Home Program to authorize adult day health care are compelling. The opportunity for adult day health care services for veterans during the daytime hours in a community setting would enable many veterans to remain at home with their families in a supportive environment as an alternative to nursing home placement. I ask my colleagues, how many people do each of us know who are in this circumstance? If the family could get relief during the day for a veteran who is ill or who is starting to fail, and would have a chance to have a place to go during the day, the family could take care of that individual at night, thereby preventing nursing home placement. For a veteran who may be in the early stages of Alzheimer's disease or require limited supervision in a post-operative period, the opportunity for adult day health care would meet the requirements of a growing number of our veterans population, and at less cost than nursing and residential home care. Equally important, adult day health care would provide respite for the primary care givers of veterans. People have often said to me: Senator, if we just had a chance to have a break, if we just had a chance to be able to go to work and have our loved one be able to be at home with us in the evening, we would be able to take care of him. We would be able to save a lot of money for the Government. There is no sense putting all these people in nursing homes. Our family would love to be able to take care of our grandfather or our father. We would love to have him at home but we work during the day, both spouses work during the day. The kids are at school. Nobody is home. If we had a chance to have that veteran in a setting where he could be cared for during the day we would take care of him at night and save lots of money--save money for the families, save money for the Government. Mr. President, as the health care requirements of our veterans population change, and the demands on limited Department of Veterans Affairs resources increase, I believe it important that States have the flexibility to provide adult day health care services for veterans. We have heard a lot in the last 24 hours about State flexibility. Why should they not have flexibility with respect to a program like this? They are asking for it. Why do we not give it to them? The 71 State veterans homes across the country have a proven record of providing excellent domiciliary, nursing home, and hospital care. They also have the expertise in geriatrics, and specialized health care that is required to provide the adult day health care services. I urge the Senate Committee on Veterans' Affairs to support these amendments to the State Veterans Home Program, and to report legislation to authorize adult day health care services for veterans as soon as possible. I ask unanimous consent Mr. President, that the full text of my bill along with a letter in support of this initiative from the National Association of State Veterans Homes be printed in the Record.

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today to express my support for S. 1, the unfunded mandates bill. I am a cosponsor of S. 1 because, although I recognize that mandates can serve important purposes, it is time to ensure that we fully understand the consequences of unfunded mandates for States and localities. Unfunded Federal mandates have caused a tremendous impact in the communities of North Dakota. For example, Safe Drinking Water Act testing requirements cost some small North Dakota communities over $100 per year per household. Water rates in Grand Forks, ND, increased by over 30 percent from 1990 to 1993. Water rates in Langdon, ND, doubled in 1994. While the goal of the Safe Drinking Water Act is desirable, I believe that the legislation has to be flexible and that the Federal Government must be responsible while enacting unfunded duties upon small communities. Mandates, including some unfunded mandates, have resulted in valuable and legitimate accomplishments. We benefit from a clean environment. We applaud school desegregation. We have made great progress toward addressing health and safety concerns. The Federal Government has also worked in partnership with local governments to achieve important objectives. As the Washington Post reported on January 22, 1995, the Federal Government will provide $230 billion in grants to State and local governments this year. This partnership has worked in the past and it is my hope that it will continue to work in the future. However, at times, this partnership has lost the notions of balance, common sense, and responsibility. As the Federal Government has tried to reduce spending and cut the deficit, responsibilities have been passed on to State and local governments, who are also struggling to operate their budgets in the black. For example, it is estimated that the Safe Drinking Water Act will cost North Dakota communities almost $50 million per year in construction costs alone. Where will this money come from? The Federal Government has not provided the answer--nor the funds. So, while we recognize that there are good mandates and difficult mandates, the question remains: Where do we find the balance? In short, how do we restore common sense to the Federal legislative process: First, we must recognize that there are no ``one size fits all'' solutions. The water policy or contaminant requirements that work for New York City, population 10 million, do not make sense for Hazelton, ND, population 240, or Underwood, ND, population 976. In this regard, I am pleased that S. 1 provides for the analysis of rural communities' special needs in 3 separate areas; the CBO Director's study of intergovernmental mandates; the CBO Director's study of private sector mandates; and an agency's analysis of a regulation. These provisions are found in section 103 and section 202 of S. 1. Second, we must make sure that the Congress is making fully informed choices when it considers mandates. That is what S. 1 does; it adds an informative step in the consideration of legislation. This step simply provides that the Congress will know the financial impact of the legislation. The point of order mechanism in S. 1 will not prohibit the Federal Government from passing along a mandate, but it will ensure that Congress has an idea of what the legislation may cost State and local governments before the laws are passed. We will exercise our legislative duties with informed responsibility. While I am proud to be a cosponsor of this bill, I am also pleased that my colleagues are taking the time to offer amendments to ensure that it will legislation considered after January 1, 1996. We should therefore work together in a bipartisan fashion to assure that the new process works smoothly and has no unintended consequences. The new point of order process, as outlined in S. 1, should be open to suggestions for improvement. That is what the legislative process is all about. Partisan accusations that Democrats are stalling or obstructing passage of S. 1 are without merit. This important piece of legislation went through introduction, hearings, and markup in 4 legislative days, came to the floor without a report, and meaningful amendments are immediately faced with a motion to table. While we must be responsive to States and localities, we must remember that we represent individuals. We owe it to the people of this country to pass the best possible legislation, and, like it or not, quality takes careful deliberation. For example, a sunset provision should be considered not as an effort to weaken the bill; but rather as a responsibility to improve the bill as it proves necessary over time. In conclusion, Mr. President, this legislation represents a new sense of responsibility in Washington. November 8 was not about giving a mandate to partisan politics; rather it was the manifestation of a hope that the Federal Government will truly represent the people of the country, without regard to partisan politics as usual. Therefore, we must be responsible to other levels of government and work on maintaining a good working relationship among Federal, State, and local governments. As water rates doubled in some small rural communities, North Dakota local governments faced the new mandates and struggled to budget responsibility. S. 1 will ensure that we at the Federal level legislate which contains an unfunded mandate. I urge my colleagues to support S. 1 and accept this responsibility.

Mr. CONRAD

Mr. CONRAD. I thank the Chair and I thank the Senator from South Carolina as well. Let me just say that talk is cheap in this body. We have heard a lot of examples of this as we talk about a balanced budget. I think perhaps the American people deserve to know the gap between Republican rhetoric and Republican reality with respect to a balanced budget. Mr. President, I brought this chart to show what is required to balance the budget over the next 7 years. The blue line shows what is needed if we do not do anything to make the problem worse before we start solving it--1 trillion 35 billion. That is not million, that is not billion. That is 1 trillion--1,000 billion --in cuts that are necessary if we do not do anything to make it worse. But the Republican Contract With America says the first thing to do is cut taxes $364 billion. That makes it a $1.4 trillion problem. And then they say spend another $82 billion on defense. That makes it a $1.48 trillion hole to fill. Mr. President, the Republican credibility gap, as I calculate it, is shown by the difference between what is necessary to balance the budget over 7 years--nearly $1.5 trillion--and the paltry $277 billion of spending cuts they have come up with in their Contract With America. They are $1.2 trillion short. Mr. President, let me just end with this chart that talks about famous gaps. Famous gaps. We have the Grand Canyon. That is a mile deep. That is a big gap. But the biggest gap we have in America today is the Republican credibility gap. It is $1.2 trillion, the difference between what is needed to balance the budget and what they have identified by way of cuts. That is one of the most famous gaps in America today, the Republican credibility gap. They need to fill it in. I thank the Chair. Mr. FEINGOLD addressed the Chair.

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today to issue a warning to those in Congress who are suggesting we eliminate or deeply slash the Federal farm programs. These programs have given American consumers the lowest price and highest quality food in the world. These programs have helped make America's farmers preeminent among the world's food producers. They have helped agriculture produce a $17 billion surplus in trade, one of the largest of any American industry. These programs are the foundation of a $950 billion industry employing over 23 million Americans that delivers food and fiber to American families. To those who would kill our farm programs, I say this amounts to unilateral disarmament in the battle for world agricultural markets. It is an unwise dismantling of our successful national food policy. Our agriculture programs are the foundation on which much of our ability to meet international competition is based. They are also the foundation for our national food policy, which has helped us become the most richly abundant nation in the world. No one would have suggested we do away with our missile defenses during the cold war. Yet some now suggest we do away with the farm programs that work for millions of Americans in the food industry and for all American consumers. Let me just explain very clearly why U.S. farm policy is right for America. First, our agriculture policy is vital for preserving our international competitiveness. Second, agriculture is a fundamentally unique type of business. Third, Federal farm programs are crucial for American consumers. Despite these compelling arguments, some people assume farm programs are an appropriate place to slash and even eliminate America's commitment to our most basic industry. Why do they assume this? Mr. President, I believe it is complacency. We have been so well have forgotten why we created the system. I am here to remind America that the farm programs are part of an extraordinarily successful strategy to bring ample, affordable food to consumers and help us compete in a tough international fight for markets. Yet there remains a gap between our Federal agricultural policy and an appreciation for the food on our tables. Complacency has allowed critics to create myths about agriculture. Myth 1 is that farm programs are not necessary in the world economy. Myth 2 is that agriculture is like every other type of business. Myth 3 is that consumers will benefit from the elimination of farm programs. I am here today to dispel those myths. I say to those who are pointing their finger at agriculture, they should think twice. They are suggesting a reversal of the policy that has made our Nation the world leader in agriculture. They are seeking to dismantle the policy that has provided American consumers with the highest quality, lowest priced food in the world. They are jeopardizing an American industry that is the envy of every other country in the world. They must explain why we should fix a system that is not broken. Mr. President, myth 1 about agriculture is that we do not need farm programs to compete in the world market. What many critics do not understand is that today there is an intense worldwide battle for agriculture market dominance. Our primary competitor is Europe. They have a plan. They have a strategy to win the world agricultural trade battle. They provide high levels of support to their producers to encourage surplus production. They dump those surpluses on the world market, undercutting our producers and grabbing international market share. They are on the march. They are on the move. Make no mistake. Meanwhile, we sleep. We are blissfully unaware that our markets are being stolen from us day by day. One day we may awaken to learn that Europe has done to us in agriculture what Japan has done to us in automobiles and electronics. The Europeans understand that there is a war being waged for markets, and they believe ultimately there will be a cease-fire. They believe there will be a cease-fire in place, and they want to occupy the high ground. The high ground is dominating world market share. And, oh, how well their strategy is working. In a few short years, Europe has transformed itself from the largest net importer of wheat to the No. 2 exporter. This chart shows precisely what has happened from 1960 to 1992. The red line shows European exports of wheat. The blue line shows imports. As one can see, Europe that was once the largest importer has now moved to the No. 2 exporter in the world. They have a plan. They have a strategy. Let me just tell you what we are up against. The Europeans support their producers at rates 2 to 20 times the level of support we give our farmers. For example, the Europeans spend $119 per metric ton to support their wheat producers; 2\1/2\ times the U.S. level. This chart shows the difference. This is just government levels of support. Europe, $119 per ton, the United States, $46 per ton; over 2\1/2\ times our level of support. It does not stop with wheat. The same is true for beef producers. Again, they support their producers at 2\1/2\ times the level we support our producers. Again, not surprisingly, Europe is No. 2 in beef exports. This chart shows European support versus U.S. support for beef. This is in dollars per metric ton. Europe is $2,274 per metric ton. The United States is $878 per metric ton. Europe is supporting their producers at 2\1/2\ times the level that we are supporting our producers. If that is not bad enough, Mr. President, let us look at oilseed. They give their oilseed producers 23 times the level of support we give our oilseed producers. While world oilseed demand and acreage have increased over 40 percent in the past 15 years, U.S. oilseed plantings have increased a minute 0.3 percent. European plantings have skyrocketed 330 percent. Mr. President, this chart shows European support in oilseeds versus U.S. support--a dramatic difference. It is $329 a metric ton in Europe, $15 a ton in the United States. And we wonder why Europe is capturing market after market. Mr. President, I hasten to point out that these examples demonstrate how much the European governments are supporting their producers. It does not count European consumer subsidies to their producers, which would make the levels of producer subsidy much higher. Mr. President, this is not a level playing field. This means that American farmers must not only compete against French and German farmers. American farmers must compete against the French Government and the German Government. This means that Europeans take income from American farmers. This means that Europeans take jobs from Americans working in processing, transportation, and the input industry. We can see how well this European strategy is working in trade negotiations, as well. While Europe supports their farmers at high levels, we consistently slash agriculture spending in this country. My colleagues should remember the early stages of the Uruguay round of GATT. The European GATT negotiators sat back, watched us cut our own programs and then toughened their negotiating position. We could have won more for our farmers and our agribusiness industry if we had not unilaterally cut our farm programs. Instead of a level playing field, Europe held out for equal percentage reductions from these unequal levels of support. That assures they will remain on top. Mr. President, again, I emphasize to those who are listening, the Europeans have a plan and a strategy to dominate world agricultural markets. Their plan, their strategy is to continue high levels of support--much higher levels than ours--on the assumption that at some point in this world trade battle, there will be a cease-fire. They believe there will be a cease-fire in place. They want to occupy the high ground. So in area after area, we see the European strategy playing out. Oh, how well it is working. We let them take advantage of us. We cannot allow that to happen again. The Europeans support their producers at high rates for simple yet compelling reasons. They've been hungry. They know what it is like to go through war and not have a stable food supply. They have made conscious decisions to avoid that ever happening again. They also know that every field of wheat and every field of sunflowers creates jobs and processing, transportation and input industries. I admire them for their foresight and commitment. Against these odds, agriculture in America is still one of the few sectors of the economy that contributes positively to our balance of trade. While the rest of the economy is heading for a $180 billion trade deficit, agriculture is producing a $17 billion trade surplus. The farm programs are the foundation on which our farmers are able to compete against these overwhelming odds. Remember, if American farmers do not grow it here, American workers do not transport, process and market it here. I repeat, we are in a worldwide battle for market dominance. The Europeans hope the United States will give up and give in. They hope we will roll over. They hope we will flinch. Mr. President, I am here to deliver a message. We must not back down. We must not unilaterally disarm. We must not retreat. We must fight if we are to preserve jobs and economic activity in this country. The current battle in this global market is crucial for millions of American jobs. That is precisely what is at stake--American jobs. The question is this: Will we stay in this fight? We cannot win the battle with our hands tied behind our backs. If we give in, we lose. This is not a question of subsidies. It is a question of whether we are going to stand behind our farmers in this global market battle. It is a question of whether we are going to stand for American jobs. Today, we are at a crossroads. We are beginning debate on the 1995 farm bill, a bill that will set American agriculture and food policy into the 21st century. At the same time, debate on another round of GATT will begin in retreat. Mr. President, myth two about agriculture is that it is like every other type of business. That is simply not the case. Unlike any other sector, farmers produce a basic human need: food. To sustain that abundant food supply, we maintain a reserve of basic commodities to fulfill our food and feed needs in times of shortfall. The reserve is a national food security system, an insurance policy for consumers against shortfalls in crop production. Inherently, reserves depress prices and reduce farmers' incomes. For many decades, the people of this Nation have believed that maintaining a stable reserve of critical commodities is in our national interests. For decades, we have believed that we should maintain producers' incomes at levels sufficient to sustain a stable supply. That is why we have farm programs. Not only do farmers produce a basic human need and maintain large inventories, but farmers must also deal with a highly volatile factor-- the weather. In other parts of the world, droughts have killed hundreds of thousands of people. Thankfully, our Nation has always been spared famine. We have had a rational food policy. Americans need not think long to recall the last time weather had a disastrous impact on U.S. agricultural production--the last time we made a claim on our national food insurance policy. The 1993 flood reduced corn production by one- third. Luckily for the American consumer, we had stocks of grain on hand, a land reserve to increase plantings, and favorable weather in 1994 to replenish our supply. How much would consumers have spent on higher food costs without a farm program? The answer is billions of dollars. On top of the billions of dollars consumers saved in 1993, food stocks in hand during the 1988-1989 drought saved consumers some $40 billion in higher food costs. That is how a national food policy should work, and that is how our national policy does work. Moreover, the research that agriculture supports has given consumers a second insurance policy. Insects and disease have always presented formidable and destructive problems to agriculture. For example, 1993 wheat production in some counties in North Dakota was cut 50 percent by disease. Farmers burned literally millions of acres of wheat destroyed by that disease. Researchers are now hard at work to prevent the spread and find a cure. We can remember what happened in other times, in other countries that did not have such a vigorous effort, such an insurance policy. The potato famine of the mid-19th century in Ireland provides a dramatic example of the importance of disease research. One single fungus destroyed Ireland's potato crop, forcing many into starvation. Fortunately for U.S. consumers today, food production research in the U.S. targets disease early, limits the spread, and prevents that type of human devastation. Mr. President, myth three about farm programs is that their elimination will benefit consumers. The purveyors of myth three ignore clear evidence to the contrary. First, American citizens enjoy a safe, high-quality, abundant, and stable food supply. Second, we spend less of our disposable income on food than any other consumers in the world. I have brought this chart to show what we pay in this country versus what other consumers in other countries pay. I think it is very revealing. This shows the percentage of income that goes for food. In Italy, 26 percent of their country's income goes for food--26 percent. In Australia, 23 percent; in Japan, 19 percent; Germany, 19 percent; France, 16 percent; the United Kingdom, 12 percent; Canada, 11 percent; and in the United States, 8 percent of our income goes for food, the lowest cost food in the world. And there are those who suggest we eliminate the underlying programs that make this possible. Mr. President, that makes no sense. We have been in a time when we spend less of our income for food than do the consumers of any nation, but at the same time we have achieved that result, we see food prices continuing to fall. According to the USDA, consumer spending has dropped from 10 percent of income in 1970 to 8 percent today. So not only have we achieved the lowest cost food in the world, but we have also kept food costs going down. In 1970, 10 percent of the average American's income went for food. In 1991, it was down to 8 percent. And of that declining percentage, only 22 cents of each dollar goes to the American farmer. Further, the cost of marketing food has been the principal factor affecting consumer costs. Let us just look for a moment at the price of bread. This chart shows what has happened with U.S. wheat prices versus what happened to bread prices. Wheat prices have been relatively stable. Bread prices have continued to rise. In other words, there is virtually no relation between the consumer cost and the price the farmer receives. Clearly, the increase is not going into the farmer's pocket. To further illustrate, from 1983 to 1993, 85 percent of the rise in consumer food costs went to the marketing bill, not to farmers. Returning to our examples of the 1993 flood and the 1988-89 droughts, while production dropped sharply, consumer prices remained stable. Again, this is how the farm programs are supposed to work and it is how they do work--protecting consumers against the dramatic fluctuations in supply that can occur because of weather-related and disease-related disasters. What would happen if farm programs were eliminated? Very likely, reserves of grains would be reduced, prices would fluctuate, and consumers' cost of food would increase. Does that sound like something that is good for the American consumer? Absolutely not. Mr. President, we are now engaged in a debate about how to reduce the budget deficit. I support a balanced budget. I have not only voted for deficit reduction measures, I have offered my own plans, as a member of the Senate Budget Committee, every year I have been in the U.S. Senate. But let us look at what you get if you eliminate agriculture spending. You do not get much. Agriculture represents less than 1 percent of the entire Federal budget. This chart shows Federal outlays from 1996 to 2002, the period about which we are talking about balancing the Federal budget. Here is interest on the debt, nearly $2 trillion over that period; defense, over $2 trillion; Social Security is nearly $3 trillion; domestic discretionary spending, just over $2 trillion; Medicare, almost $2 trillion. Where is agriculture? Where is agriculture, Mr. President? It is this little, tiny slice right here. You almost cannot see it. That is because, of the $13 trillion that we are projected to spend over the next 7 years, $87 billion is for agriculture--$87 billion out of $13 trillion, far less than 1 percent of Federal spending. Mr. President, I repeatedly encounter press reports of someone suggesting we cut agriculture and that cutting agriculture will somehow solve our deficit problems. It simply will not. Not only is it a small pot of money, it is a dwindling pot. Agriculture spending has suffered dramatic cuts in recent years. In constant dollars, farm spending dropped a full two-thirds since 1986. Still, some continue to point their finger at agriculture as the cause of our deficits. Nothing could be further from the truth. Mr. President, this chart shows in constant dollars agriculture program spending: In 1986, expressed in 1994 dollars, $35 billion; in 1994, down to less than $12 billion, a dramatic reduction. In fact, if other parts of the budget had suffered the same reductions that agriculture has experienced, there would be no deficit problem. We would be in surplus. Mr. President, many critics of farm programs suggest that because some forms of agriculture production in the United States survive without Government programs, all commodities should be able to operate in that manner. Most often mentioned are livestock and fruits and vegetables. Let us just take livestock off the table right away. Anyone who suggests the livestock industry operates without the benefit of feed prices stabilized by our farm program is sorely misinformed. Fruits and vegetables are another case. Fruits and vegetables are perishable. While a reserve would be highly impractical, the prices of many such commodities are stabilized through do have price stabilization programs for the vast majority of agricultural commodities. That is why consumers enjoy stable supplies, high quality, and modest food prices. Mr. President, I believe I have demonstrated how important farm programs are to consumers. Now let us take a hard look at how the elimination of farm programs would affect producers. Who are these producers? They are good citizens. They are hardworking people. They get up early. They work late. They support their communities. They pay taxes. And, Mr. President, far from the media- generated image of wealthy folks, the average net farm income in North Dakota is $20,000 a year. I know that is hard to believe when one sees portrayed over the media these images of wealthy farmers who are farming the mailbox. Mr. President, that is not the way it is. I come from North Dakota. I go across the State of North Dakota, through cities and towns, visiting farmsteads. I get a chance to see what the condition is in rural America. The hard reality is that the average farmer in my State is earning $20,000 a year. They have strong families. Farming is a family business. They raise good children; children that grow up with a strong work ethic, a good education, and good values. But those children rarely come back to farm because they do not see a future in it. They do not see a good opportunity. They do not see a secure and profitable profession. They see a struggle. They see a struggle to raise a good crop, a struggle to withstand low prices, a struggle to persevere through hail, drought, or flood. They watch their parents struggle and they ask why. Mr. President, I think we find farm families staying on the land not because it makes sense financially, because the rate of return for agriculture is as low as any industry one can find. I believe they stay with it because it is a way of life. What will the cuts that some people are suggesting do to this way of life? In North Dakota, the effect would be dramatic. According to USDA statistics, in 1993, farm program payments represented 82 percent of net farm income--82 percent of net farm income represented by Federal farm program payments. Nationally, startling statistics from the U.S. Department of Agriculture provide a clear picture of what is happening on the farm. Let me quote: * * * recently, entry has fallen fastest for farms operated by those under 35. They go on to say: * * * the most noticeable change in the 1992 census (of Agriculture) was among 35-to-44 year-old farmers. Farm exits for this age group increased * * * What does this tell us? It tells us that farming is not an economically attractive business. It is high risk, not high income. Again, according to USDA: Approximately 90 percent of all farm operator households received some income from off-farm sources. If farming were such a profitable business, far fewer households would have to search for alternative sources of income to meet their needs. Finally, the difference between the Consumer Price Index and the prices received for farm commodities clearly portrays the pressure that farmers face. Mr. President, this chart shows the farmers' financial squeeze. The Consumer Price Index rises much faster than farm prices. This chart shows from 1982 to 1993 the relationship between the Consumer Price Index, the prices that farmers pay for things, and farm prices, the prices that farmers get. This chart tells us a very clear story: From 1982 to 1993, the red line shows farm prices. It has been relatively stable. The blue line shows what has happened to the Consumer Price Index. It has risen each and every year on a steady course. So the gap between what farmers pay and the prices they receive has steadily grown. Farmers are being squeezed by low farm prices and rising costs. Further, agricultural program cuts will damage rural America in profound and irreversible ways. At a time when we need sustained economic growth in both rural and urban areas, the needs of rural America cannot be ignored. It would be flawed economic policy. In conclusion, let me restate why we need to maintain our agriculture policy. First, agriculture programs are the foundation for our international competitiveness. Without them, we unilaterally disarm in the world trade battle. That would harm American farmers, eliminate American jobs and threaten America's economic security. Second, agriculture programs are insurance policies for consumers. Without farm programs, consumers lose security over a basic human need: Food. Finally, agriculture is a fundamentally different form of business. To work properly, it must maintain a reserve, but that reserve depresses prices for farmers and benefits consumers. Because of agriculture's differences, farm programs are essential. We as a nation have maintained an agriculture policy for decades to protect producers and consumers. This is not blind generosity. This is not aimless policymaking. This is not luck. Those who seek to destroy the farm program must demonstrate why their way is right for America. The burden of proof is on them. I think the facts prove they are dead wrong. Our agriculture policy works. We have proof that it works. We must not destroy a program that is proven to deliver an abundance of low- cost, high-quality food. We must not destroy a program that has made America the world leader in agriculture. We must not destroy a program that has worked. We must not unilaterally disarm. I thank the Chair, and I suggest the absence of a quorum.

Mr. CONRAD

Mr. CONRAD. I thank the Chair.

Mr. CONRAD

Mr. CONRAD. Mr. President, I just want to go further on this point. It just strikes me there are those of us who very much want a balanced budget. I am in that camp. The Senator from West Virginia knows that I feel strongly that we ought to balance this budget; we ought to do it the right way.

Mr. CONRAD. I think we should say that that 1993 package has, in fact, reduced the deficit. We had a Federal budget deficit in 1992 of $290 billion. In 1993, that was reduced to $255 billion. Last year, it was further reduced to just over $200 billion. This year, the estimate is it will be further reduced to some $176 billion. The fact is, on that plan that the Senator from West Virginia and I both voted for, we did not get a single vote from the other side of the aisle; not a single vote. And voting for that plan took political courage, because it did cut spending. It cut over 100 programs by over $100 million. It also raised taxes on the wealthiest 1 percent. People, of course, do not want to pay more taxes. I do not want to pay more taxes. I levied more taxes on myself in that vote; I wound up paying more in taxes. But I did it because I recognized we have a national crisis. We have to get our fiscal house in order. And if we are to do that, it requires a plan. The point I wanted to make is that our friends on the other side of the aisle say they are for a balanced budget, but they have not come forward with a plan to do it. Talk is cheap. Talk is cheap. It is easy to say, ``I am for it.'' The difficult thing is to put down a plan that actually starts to do it. I think it is terribly important that the American people know that there is this extraordinary gap between what our friends on the other side have said they are going to do and what they have identified to get the job done--a $1.2 trillion gap. I said last week that gives a whole new meaning to the phrase, ``don't ask, don't tell,'' because that is what they are asking here. ``Don't ask, don't tell'' the American people. They are saying to the people, ``We are going to pass this balanced budget amendment, but we are not going to tell you how we are going to do it. We are not going to tell you where we are going to make $1.2 trillion in cuts over the next 7 years.'' I think the American people deserve better; I think our colleagues deserve better. I know the Senator from West Virginia believes that they have an obligation to come forward and be specific. I think that ought to be central to any debate we have. I again thank the Senator from West Virginia for his courtesy and just ask him once again: Does not the other side have an obligation to come forward with a plan? Do not the American people deserve to know where they intend to cut $1.2 trillion over the next 7 years? Do not the people have a right to that plan?

Mr. CONRAD. Will the Senator yield further?

Mr. CONRAD. I am interested in the Senator's reaction to the credibility gap I have detected. This chart shows we need $1 trillion over the next 7 years if we do not do anything to make the situation worse before we start to solve the problem. But look what happens with our Republican friends' plan. The first thing they do is propose $364 billion of tax cuts, not spending cuts, but $364 billion of tax cuts. This is according to the Treasury Department. So now the $1 trillion problem over the next 7 years is nearly $1.4 trillion. The next thing they do is say, well, we want to cut spending someplace. We do not want to be too clear on exactly where we are going to cut spending, but before we start cutting spending, we want to increase spending. We want to increase spending on defense by $82 billion. So now the problem that started out as a $1 trillion problem has turned out to be a $1.48 trillion problem. That is the amount that would have to be cut in order to balance the budget over the next 7 years. We start with $1 trillion, and we add their $364 billion in proposed tax cuts, according to the Treasury Department, then we add the $82 billion of increased defense spending, and the problem now is $1.481 trillion. That is a big number. That is not a million; that is not a billion; that is a trillion. The interesting thing is to look at what they have come up with by way of specific proposals to cut spending. This is where we get to what I call the credibility gap. The credibility gap really is a chasm, because we need to find $1.481 trillion of cuts. But so far the Republican side has identified $277 billion in specific spending cut proposals. It is a paltry amount in comparison to what is needed to get the job done. So I say to the Senator from West Virginia, it looks to me like they have what is necessary to balance the budget over 7 years and what they have outlined to balance the budget over 7 years. I say to my colleague from West Virginia, $1.2 trillion--that is one thousand two hundred billion--is a lot of money. Even in Washington talk that is a lot of money. I think our friends on the other side owe it to us, and they owe it to the American people, to come forward with a plan to tell us specifically, precisely, how are they going to cut an additional $1.2 trillion. Are they going to take it out of Social Security? They say not. Are they going to take it out of Medicare? They say not. They say they are not going to take it out of defense. They cannot take it out of interest on the debt. That means well over half of all Federal spending is off the table. I ask the Senator from West Virginia for his reaction to what I see as this enormous credibility gap by our friends from the other side.

Mr. CONRAD. I am asking a question. First of all, with respect to what the Governor from Michigan was saying, I would say to him, look, if the Federal Government raises the money, the Federal Government is going to have something to say about how the money is spent. If the Governors want to make all the decisions on how the money is to be spent, then they raise the money. That is an appropriate State-Federal relationship. It is ridiculous and extreme to say that the Federal Government should levy the taxes and raise the money but the States will decide how it is spent. I will follow up with a question on the matter of a plan to balance the budget. Last week, I came down to the floor and gave a speech on something I have detected that I call the Republican credibility gap. It is more than a gap now. It is a chasm. In fact, it is approaching Grand Canyon size. This chart shows what would need to be done to balance the budget over the next 7 years. According to the Congressional Budget Office, we would need over $1 trillion in cuts over the next 7 years. That is if we did nothing to make the problem worse before we started.

Mr. CONRAD. Will the Senator yield on that point?

Mr. CONRAD. Mr. President, I wanted to inquire of the Senator if he had perhaps seen the testimony of the Governor of Michigan in the House of Representatives last week. I saw it replayed this weekend. As we start out the discussion of the proper relationship between the Federal Government and the States, his testimony in the House is very important. He told the House of Representatives that the role that he saw for the Federal Government was just to send the money. He said, you in the Federal Government, you just send the money back and we will decide how it is spent at the State level. I must say I was very troubled when I saw this notion of what the Federal-State relationship is supposed to be. I was very troubled by the Governor of Michigan, who was on the committee determining the welfare reform policy for the party on the other side of the aisle, suggesting that the role ought to be that the Federal Government levies the taxes, raises the money, and has nothing to say about how the money is spent. Now, if that is not a perverse notion of Federal-State relations, I do not know what is. I told my staff this morning, ``in his dreams,'' as far as this Senator is concerned. My own notion is that there should never be a separation between the responsibility for raising the money and the responsibility for spending the money. That ought to be a fundamental principle that we adhere to in this Chamber. And I believe that because, if we raise the money and the States decide how to spend it, it is free money for the States. They did not have to go through the political risk of levying the taxes to raise the money. They just eat the dessert. They just spend money. Oh, no. That is not going to be the relationship, at least if this Senator has anything to say about it. I must say that I thought it was arrogant in the extreme for a Governor to say all we ought to do is write the checks. We raise the money, levy the taxes, and then send them the money and they will decide how to spend it. I was going to ask the distinguished Senator from West Virginia his reaction to this notion that we raise the money, and then have no say in how it is spent. We just send it back to the States and they will decide how to divvy it up. I am very interested in the Senator from West Virginia's reaction to that notion.

Mr. CONRAD. Mr. President, will the Senator yield on that point for a question?

Mr. CONRAD

Mr. CONRAD. I thank the Senator for his response to the question. Mr. GLENN addressed the Chair.

Mr. CONRAD. So in that case, it would seem to me, it would not qualify because the Congress is not taking any action with respect to a Federal Reserve action. And so we would not have a legislative vehicle before us that would relate to an action by the Federal Reserve. If I might ask a third and final question that has been asked of me and, in this case, was asked of me yesterday. Utilities back home have now become concerned about this legislation. At least they have expressed concern to me. The concern that they have raised is, ``Look, if public units can be in a position to avoid mandates, let's say certain provisions of the Clean Air Act or other environmental legislation that might be considered by Congress, and the private sector is not exempt, that could put us at a competitive disadvantage against public power authorities.'' And so private sector companies have contacted me in the last 24 hours and have said, ``Gee, we're concerned about this. Are we going to be put in a position in which we are placed at a competitive disadvantage over and against public power authorities?'' Will the Senator have any answer for that question?

Mr. CONRAD. I thank the Senator from Ohio, and I thank the Senator from Idaho.

Mr. CONRAD

Mr. CONRAD. Mr. President, ever since the November 8 election, the Republican majority and the media have been talking about the Contract With America. The contract sets out the Republican agenda for the first session of the Congress, and it has many good elements in it. For example, I strongly support the Congressional Accountability Act, which will ensure that Congress lives by the same rules it imposes on everyone else. That is something that we almost passed in the last Congress and that is something we will pass in this Congress. I support the unfunded mandates bill, which will make it more difficult for Congress to mandate State and local governments to establish programs unless Congress appropriates funding to pay for them. That also makes common sense. And it is also something we were working on in the last Congress. But when it comes to the budget and tax elements of the contract, there are two big problems. First, the numbers just do not add up. There has been a lot of talk about what will not be cut, but the specific proposals on what Republicans believe should be cut fall far short of what is needed to balance the budget. And if the math does not work, the contract will balloon our deficits, explode the national debt, slow our economy, and leave future generations to clean up the mess. Second, the tax cuts proposed by the Republicans are unfair because they are clearly designed to benefit the wealthiest among us far more than average Americans. And the program cuts necessary to finance these tax cuts, or the higher interest rates that will result when the Republicans fail to balance the budget as promised, will hurt the middle class. Let me explain why the contract does not add up and why it is unfair to average Americans. We first have to look at the current budget outlook. The contract calls for a balanced budget amendment to the Constitution, which would require a balanced budget by the year 2002. I strongly support this goal. Deficit reduction has been at the top of my agenda since I came to the Senate in 1986, and I have spent an enormous amount of time working on the Federal budget, learning about it, and devising plans to put our fiscal house in order. Every year I have been in the Senate, I have offered comprehensive plans in the Budget Committee, or far- reaching amendments in the Budget Committee or on the floor of the Senate, to achieve more ambitious deficit reduction goals. Unfortunately, the rest of the Republican contract that is before us makes it far more difficult to meet the balanced budget goal. According to the Congressional Budget Office, it will take more than $1 trillion in cuts over the next 7 years to reach a balance by the year 2002. That is what this chart shows. This is what is necessary to achieve balance by the year 2002--over $1 trillion in budget cuts. This is not millions of dollars; this is not billions of dollars-- this is a trillion dollars, one thousand billion dollars. And that is only if we do not do anything to make the problem worse before we start to solve it. But the contract makes things far more difficult because it promises hundreds of billions of dollars in tax cuts, most of which would benefit the wealthy far more than average Americans. The Republicans call it the Contract With America. I call it a Contract on the Middle Class. In order to pay for the tax cuts, the Republicans will have to cut an additional $364 billion in the next 7 years, much of it from programs that benefit middle income families. So let me be clear. If we do not do anything to make the problem worse before we begin to solve it, we need $1 trillion in cuts over the next 7 years to the first thing we do is not to cut the spending, but to cut taxes by $364 billion over 7 years. So they have dug the hole deeper. Instead of a $1 trillion problem to solve, they present us with a $1.4 trillion hole to fill. This chart shows that. The blue indicates the $1 trillion necessary to bring the budget into balance. And if you add the $364 billion of tax cuts Republicans have called for, you then see we have a $1.4 trillion problem to solve. In fact, the effects of these tax cuts will be worse than it appears from these charts. By design, the tax cuts are structured so that the adverse effects are not readily apparent until after the end of the 5- year budget window that Congress uses to measure the effect of proposed changes in taxes and entitlements. In the first 5-year period the tax cuts would cost $197 billion. But between fiscal years 2001 and 2005, their cost more than doubles to $514 billion. Over the 10-year period, those tax cuts cost $712 billion. This is at a time when we already have a $1 trillion problem to solve over the next 7 years. Without going further on that point, let me just say this means we will have to make additional cuts after 2002 to keep pace with the growing cost of these giveaways to the wealthy and corporate America. In addition, the contract calls for more spending on defense. Everyone wants a strong national defense, but the world has changed. We now spend more on defense than the next top 10 countries combined, even though there is far less danger to defend against than just a few years ago. In fact, we are the only remaining superpower in the world. Certainly we see this to be true when we look at the Russian Army that cannot even effectively deal with one element of its country that is in revolt. The extra $82 billion the Republican defense buildup will add to our budget will raise the total cost necessary to reach balance by 2002 to a staggering $1.48 trillion--$1.48 trillion. So we start with a $1 trillion problem and the Republicans immediately proceed to add $364 billion of tax cuts and $82 billion of additional defense spending, making the hole deeper, making the problem bigger, and making the prospects of success more remote. Just to put that in context, the entire Federal budget this year for everything but interest on the Federal debt is $1.36 trillion. That is, to reach balance by 2002, to pay for all of the proposals in the Republican contract, will require the equivalent of eliminating every Government program--except interest payments--for more than 1 year. That would be a tough enough problem to address and to solve even if the Republicans in their contract did not do other things to make it even more difficult. But after all the Republican goodies are added on top of our current fiscal problems, we need to cut nearly $l.5 trillion in order to reach a balanced budget by 2002. Clearly that will not be easy. You have heard our friends on the other side of the aisle suggest over and over that they are going to close this budget gap by cutting agriculture, maybe eliminating farm programs completely and by cutting welfare. Mr. President, that is less than 5 percent of the Federal budget. They have a long, long way to go. The only thing they have come up with so far is welfare, foreign aid, and agriculture, a small fraction of overall spending. This chart shows where the money is going in the 7 years leading up to 2002. We are going to be spending--if we do not make changes--and clearly we must--some $13.2 trillion over the next 7 years. Where is the money going? Interest is just over $2 trillion, and defense is just over $2 trillion. In fact, we are going to be spending more on interest than we are going to be spending on defense over that 7-year period. Medicaid will be about $1 trillion. Social Security will be almost $3 trillion. Foreign aid will be $162 billion, a little sliver of the spending pie. Domestic discretionary spending will be $2 trillion. Medicare will be nearly $2 trillion. And agriculture, that I hear the other side talking about so loudly, is far less than 1 percent of the budget over this period, only $87 billion. This little tiny sliver here on the chart is agriculture. All other Federal spending over that period will be about $1 trillion. Mr. President, it's clear we cannot balance the budget just by cutting agriculture programs, cutting foreign aid, and cutting welfare. That is less than 5 percent of what we spend. That is not going to do the job. Once again, we have public statements that sound good but just do not stand up to budget reality. They just do not add up. What we have is a Republican credibility gap. Unfortunately, instead of giving us a detailed plan that tells us what they are going to cut in order to reach their goal, the Republicans have been telling us what they will not cut. First, they say we cannot cut interest payments on the Federal debt. Of course, that is true. If we did try to cut interest payments, the Federal Government would default and the economy would be thrown into turmoil. This takes over $2 trillion off the table of the $13 trillion we are going to be spending over the next 7 years. Second, the contract authors say they are not going to cut Social Security. That takes an additional $2.9 trillion off the table. Third, the contract authors have promised to increase rather than decrease defense spending. So cuts in defense spending are also off the table. That removes another $2.1 trillion from consideration. In fact, after the contract authors have finished making their promises, more than half of the budget is off the table. More than half of the budget cannot be considered in order to solve the budget problem that we face. On the other side of the ledger, the Republicans have detailed only $277 billion in spending cuts over the next 7 years. Mr. President, I earlier outlined the extent of the problem. If we are going to balance the budget over the next 7 years we have to make cuts of $1.48 trillion, almost $l.5 trillion. The Republicans have so far identified $277 billion of cuts. That leaves the Republicans with a credibility gap of $1.2 trillion--not million, not billion, but trillion. The size of the problem is $1.5 trillion but they have identified less than $300 billion of budget cuts. That means somewhere out there is $1.2 trillion of budget cuts our Republican friends have failed to identify. We have heard the good news from our Republican friends. But as Paul Harvey would ask, ``What is the rest of the story?'' They have only two choices. Either the Republicans detail Draconian cuts in programs to close this gap or they fail to balance the budget by 2002. This failure to talk about specific spending cuts sounds like deja vu all over again. We have heard it all before, Mr. President. History reminds us of the failed trickle down economics of the 1980's. They can say it is a new Contract With America. They can put new clothing on it, but it is the same old trickle down theories, the same old voodoo economics. History also tells us that faced with a choice between making tough specific spending cuts to pay for their proposals and letting the budget run out of control, the Republican Party will balloon the deficit and run up more and more red ink. In the 1980's President Reagan came to town promising huge tax cuts, increased defense spending, and a balanced budget. Does it sound familiar? Well, it is. It did not work then. It is not going to work now. Instead, during that period the average annual deficits under Presidents Reagan and Bush were five times that under President Carter. The national debt tripled under President Reagan, from $900 billion to $2.6 trillion, and grew by half again under President Bush to $4 trillion. Mr. President, all we have to do is go back and look at what happened when we previously relied on this economic theory. Here is the budget deficit line. From 1940 to 1980, the national debt of the United States was relatively stable. But the Republicans came to town in 1980 with this theory that they could cut taxes, increase defense spending, and somehow the budget would be balanced--even though it was not balanced when they began. It proved to be a complete fraud and hoax. Mr. President, this is what happened. We very nearly destroyed the economy of this country by creating a fourfold increase in the national debt. in our future. Instead, they reduced our national savings. The result was record high real interest rates. This chart shows exactly what happened to interest rates as a result of those failed economic policies. From 1968 to 1973, real long-term interest rates, the difference between the interest people paid and the rate of inflation, was less than 1 percent. From 1974 to 1979, real interest rates, the difference between inflation and the interest rates people paid was a negative point 6 percent. But look at what happened from 1980 to 1989 to real interest rates. The difference between the level of inflation and the interest rates people paid was 5.5 percent-- record high real interest rates. What did that do? It stopped economic growth in its tracks, it killed job creation in this economy, and it weakened us for the future. Record high real interest rates means that we invested less in the 1980's than in previous decades resulting in less economic growth for the future, stagnating wages, and a bigger struggle for the average guy to get ahead. It is true. The rich got richer but the middle class got nothing in the 1980's. These policies squeezed the middle class while better off Americans, the top 20 percent of earners, saw their incomes increase. In fact, this chart shows the changes in family after-tax incomes by income group from 1977 to 1992. Here is what happened. The bottom 20 percent in our country, the lowest one-fifth in terms of income, saw their after-tax incomes decline 12 percent. The next 20 percent in our country saw their incomes decline 10 percent. The next 20 percent of the income ladder in this country saw their incomes decline 8 percent. This is the harsh reality of what occurred under a flawed economic policy and plan. Those 60 percent of Americans in the lowest income categories saw their incomes decline during this period. The next 20 percent of the people in this country saw their incomes rise a modest 1 percent. But look what happened to the top 1 percent. The top 1 percent saw their incomes increase 136 percent. The facts are startling. Working men without college degrees--about three-fourths of all working men--saw a 12-percent decline in real wages since 1979. It is no wonder they are angry; it is no wonder they are upset; it is no wonder they are anxious about the future. Average weekly compensation has actually fallen to its lowest level since 1960. The only reason that real median family income stayed level overall is because families have added additional earners. My family is an example. I was raised by my grandparents and grew up in a middle class, extended family, with three uncles and aunts and their families in my hometown. In our family--like most middle-class families at that time--the mothers were able to stay home until the kids went to school. Now, in my generation, with 13 grandchildren--all with advanced degrees--every single family has both spouses working to maintain the same middle-class existence. This is not just the reality of the Conrad family. It is the reality of every family in America, and it is, in part, because of a flawed economic policy and plan that was put in place in the 1980's--a plan that proved to be an economic disaster for this country. Meanwhile when middle-class incomes were falling, the cost of health care, a college education, and homes were rising faster than inflation, squeezing the middle class. Middle-class incomes are buying less and middle-class families are saving less. At the same time, the pay of the average chief executive officer of a corporation, has risen from 29 times as much as the average worker in 1979 to 93 times as much as the average worker today. It is no wonder, I suppose, that a major corporation gave $2.5 million to the Republican Party in the last campaign. They like this policy. This policy is good for them. I understand that. They are looking out for their economic self-interest. Mr. President, our obligation here in this Chamber is to look out for all Americans, not just the wealthiest 1 percent, not just those at the top of the income ladder, but everyone. If we look at the tax provisions of the contract, we see more of the same trickle down economic theory. I would like to focus for a few minutes on some of the tax provisions proposed in the contract, because they point so clearly to why the contract is not fair, why it is more of the same old trickle down economics that hurt the middle class in the 1980's. Middle-income Americans are being led to believe that the tax changes proposed by the Contract With America are directed primarily at them. Nothing could be further from the truth. In fact, only 46 percent of the contract's proposals benefit families with incomes under $100,000. Mr. President, this chart shows that reality. A majority of the benefits--54 percent--go to families with incomes greater than $100,000, only about 3.5 percent of all Americans. Put another way, only 46 percent of the proposed Republican tax cuts go to benefit the 96.5 percent of Americans who earn less than $100,000, while 54 percent of the benefits go to 3.5 percent of the people who earn more than $100,000 per year. That is the old trickle down economics. That is the way it worked then and that is how it would work now. It is no wonder the middle class got left behind in the 1980's. And if such a policy is enacted now, they would be the first ones hurt in the 1990's. All in all, almost one-third of the benefits under the Republican plan go to households with incomes of more than $200,000. That is how the Republicans targeted this plan--with one-third of the benefits going to the top 1 percent. Mr. President, I think it is useful to look more closely at a few of the tax proposals--the major ones--that our friends in the Republican Party have proposed. Let's examine them and see who benefits. The most costly of the tax cuts in the contract are aimed at the very wealthy. For example, 95 percent of the benefits from the expanded IRA provision would accrue to the top 20 percent of income earners, at a net cost of $45 billion over 10 years. This chart shows how that works. Ninety-five percent of the benefits of the IRA tax incentive they have proposed go to the top 20 percent of income earners who are more likely to already benefit from other tax-favored pension and retirement plans, while only 5 percent of the benefits go to 80 percent of the population. Capital gains tax relief, which has also been proposed, strikes a chord with many Americans, including some of my constituents who are small business owners or farmers. The proposal in the contract is not a reasonable relief measure, however. Again, it benefits primarily the wealthy. In fact, almost half of the benefits from the capital gains provision would accrue to the wealthiest 1 percent of the population. It should be pointed out that, through indexing and direct exclusion, taxes would be eliminated on most capital gains profits. The overwhelming winners would be higher income individuals who hold stocks and bonds, while no change would be made in the treatment of interest income from the savings accounts that ordinary middle-class Americans hold. For interest earnings, no adjustment for inflation or exclusion from taxation would be provided. This is the reality of the Republican Contract With America. Mr. President, I do not know what can be more clear. This shows that the top 1 percent of income earners receive 50 percent of the benefits of the proposed capital gains tax cut. The other 50 percent goes to the other 99 percent. This is the Republican idea of equity. It is not my idea of equity, not my idea of fairness, not my idea of an economic plan that is right for America. Tax cuts that benefit primarily the wealthy are particularly ironic in view of the fact that I mentioned earlier--income for the top 20 percent of the population has dramatically increased over the past 20 years. I am glad to see that. But what happened to the rest of the folks in this country? As I noted earlier, the next 20 percent saw a 1 percent gain, and the income of the bottom 60 percent in this country actually declined. This is the reality. In fact, the wealthy are taking home the largest share of national income ever. Yet, the contract proposes tax cuts to ensure that the wealthiest become even wealthier. that while upper income families are receiving the benefit of the lion's share of these tax cuts, they secure a much smaller percentage of their income from Government benefits than average families at lower- and middle-income levels. Upper income families would be affected the least by budget cuts necessary to balance the budget and pay for further tax cuts, primarily for their benefit. We are giving these benefits to the wealthy at a very high price to the country. At a time when we should be focusing on fiscal restraint, further deficit reduction and spending cuts, the Republicans instead are focusing on tax cuts. The proposals in the contract are simply a recycling of the hollow promises from 1981: large tax cuts, defense spending increases, and a balanced budget. That is what they said then; that is what they are saying now. They did not keep their promises then and they can't do it now. The Reagan administration predicted the economy would improve from a $55 billion budget deficit in 1981 to a surplus of $5.8 billion in 1985. In reality, the Federal deficit actually rose during that period to $212 billion--another gap between rhetoric and reality. They inherited a deficit of $55 billion and they ran it up to $212 billion, all the while saying they would achieve a surplus. Mr. President, the contract is just as irresponsible. The contract's tax cuts will cost $364 billion, and the Republican defense increases will add another $82 billion. That means the Republicans need $1.4 trillion of spending cuts to balance the budget by the year 2002. Let me repeat: The Republicans need $1.4 trillion in spending cuts over the next 7 years to balance the budget after their tax cuts and after their defense increases. But where are their spending cuts? Where are they? ``Where is the beef?'' The only specific cuts the contract identified add up to $277 billion over the next 7 years, not even enough to pay for their tax cut proposal, let alone start to balance the budget. The bottom line is that there is a $1.2 trillion--not million, not billion, $1.2 trillion--Republican credibility gap, the gap between Republican rhetoric and Republican reality. It gives new meaning to the phrase ``Don't ask, don't tell.'' That is the economic policy the Republicans are asking the American people to buy--a pig in a poke. ``We will balance the budget.'' The problem is $1.4 trillion. They have shown $277 billion of spending cuts. Where is the rest? Where is the other $1.2 trillion? You really have to wonder what the Republicans are hiding from the American people. We have seen these sorts of promises before, so we know what is going to happen. These tax breaks for the wealthy will end up busting the budget and the middle class will get stuck with the bill in one of two ways. Either they will be paying through huge cuts in middle class programs, from Medicare to student loans to keeping our highways in good repair, or they will pay with higher interest rates on home loans, car loans, and educational loans, and economic stagnation caused by falling investment in our future. The Republicans have been enormously successful at selling their contract as a benefit to the middle class. Mr. President, the reality is that, hidden in the fine print of the contract, are enormously expensive tax breaks for the wealthy that will bust our budget. Instead of talking about more defense spending and tax breaks for the wealthy, the Republicans need to tell us their specific proposals for balancing the budget. Where are they going to cut the other $1.2 trillion necessary to balance this budget? That is $1,200 billion. We are waiting to hear from the Republicans. Where are they going to make the cuts specifically? Not these nostrums, ``Oh, we will maybe eliminate agriculture funding.'' In closing, let me again say we have heard this all before. There was a credibility gap in the 1980's between what the Republicans promised and budget reality. Earlier, I said the Contract With America was a contract on the middle class. I would warn those middle class Americans who listened to the promises of the Republicans in the 1980's. What happened to you? What happened was the rich got richer, the poor got poorer, and the middle class paid the bill. Mr. President, political rhetoric in a campaign is one thing. Performing when one has the responsibility of governing is another thing. I call on the Republicans and I challenge the Republicans to come forward with their plan to balance the budget. What are they going to do to close the gap between the $1.48 trillion necessary to balance the budget over the next 7 years and the paltry $277 billion of budget cuts they have identified? Where is the other $1.2 trillion the Republicans need in spending cuts in order to balance this budget? We are waiting. The American people are waiting. We wait with great interest to see how our friends on the other side of the aisle will begin to close the gap between rhetoric and reality. I thank the Chair and I yield the floor.