Bob Graham

Mr. GRAHAM

Mr. GRAHAM. I cannot. And there is a way to solve this problem. This is not a conflict which is beyond our ability to resolve. I suggest that the resolution is found in the amendment which is currently pending and that is the simple step of constitutional amendment, so that the amendment will now read: The limit on the debt of the United States shall not be increased, unless three-fifths of the whole number of each House shall provide by law for such an increase by a rollcall vote. What that will require is that there will be a three-fifths vote required to increase the national debt, whether it comes from debt held by the public or debt held by the Social Security trust fund. With that approach you get a dramatically different structure of our Nation's fiscal future. Going back to the assumptions that I started with, which is that the whole purpose of the three-fifths vote, as stated by its authors, is to create a blackmail threshold that will make it virtually impossible to raise the national debt, that would indicate we will move to the $6 trillion level between now and the year 2002 when the constitutional amendment becomes operative. Then there will be no increase in the national debt from the year 2002 into the indefinite future. We will plateau at $6 trillion. The consequence is going to be that we will see the Social Security trust fund continuing to generate substantial surpluses between now and the year 2018, which will become a larger share of our total debt. But at the same time we will be buying down the debt held by the public. We will be substituting Social Security indebtedness for debt held by the public. We will be doing what I think the sponsors of this amendment want to do. We will be releasing capital back into the country for productive investment. We will be making the Social Security system sound because we will not be adding an enormous amount of debt, we will be stabilizing our debt and placing us in a position after the year 2018 to do a graceful shift from Social Security back to debt held by the public and be able, by this borrowing from debt held by the public, to meet our Social Security obligations without the enormous tax or spending cuts that will be required if we do not adopt this amendment.

Mr. GRAHAM. And it runs exactly counter--the answer is I cannot answer the question. I hope maybe some of those who are the authors could explain why they have done this. In the material that was distributed, it states, ``The purpose of this section is to motivate an avoidance of deficits.'' That is a direct quote from the materials distributed by Congressional Leadership United for a Balanced Budget. The reality is that the opposite occurs. The national debt goes from $5 trillion today to $6 trillion. This is going to happen in almost any event. But this is what is not necessary, and that is this dramatic increase in the national debt from $6 trillion to $8 trillion that will occur roughly between the year 2002 and 2018, and which is virtually mandated by the structure of this balanced budget amendment.

Mr. GRAHAM. I was born almost 3 years prior to the Senator from Nevada. We were both born during a period of national depression. There were not very many people being born in either Pennsuco, FL, or Searchlight, NV, in those years of the 1930's. So there are not a lot of Americans who have birth dates in the years in which we were born. Conversely, I know the Senator has children who were born probably in the 1960's. I have four of those children. There were large numbers of people born in the period after World War II, in the 1940's, 1950's, and 1960's. Those folks are going to start retiring in about the year 2019, and so instead of having a surplus, we are going to start to spend down the Social Security system and do it dramatically. In 10 years, we will go from over $3 trillion of surplus to zero surplus in the Social Security system. And we are going to have the challenge--not us individually, but our successors here and the citizens of this country--to calculate how to meet that enormous obligation under this balanced budget amendment.

Mr. GRAHAM. The building of the surpluses, as the Senator from Nevada correctly states, is not as an aberration. We are doing this because this more or less tracks the demographics of the U.S. population. During the period from now until about the year 2018 or 2019, when the number of people going into the Social Security system as a percentage of the total population is relatively low--I do not know what year the Senator was born in Searchlight, NV. Could he inform us of that?

Mr. GRAHAM. The Senator asked a very salient question. I might say before answering, it is one of the reasons we should have adopted the amendment the Senator offered last week because it would have segregated Social Security and allowed us to focus on its problems, which are serious, without having it commingled with the rest of the Federal budget. But the amendment, unfortunately, was defeated so we are now locked into a situation in which we are going to continue to do what we are doing now, which is to use the Social Security surplus to mask the extent of our real deficit. We are going to be taking the surplus of Social Security, not investing it in stocks, bonds, or other securities as would a traditional pension plan, including pension plans of State and local governments; we are going to be investing it in the Federal Government to finance our national debt. As this chart indicates, by the year 2018 our national debt will be $7.098 trillion and Social Security will hold $3 trillion. Three- eighths of our total national debt will be held by the Social Security system. The question is, what are we going to do when we get to the point that Social Security begins to draw down that surplus? What we are going to do is either have to, first, dramatically cut spending for Social Security benefits or other Federal programs in order to generate the cash to pay for the Social Security redemptions; second, dramatically increase taxes to pay for the Social Security redemptions; third, some combination; or, fourth, continue with borrowing, but now we will have to be borrowing from debt held by the public because there will not be a Social Security alternative to draw from.

Mr. GRAHAM. The Senator is absolutely correct. This is the chart that shows what that Social Security surplus is going to be in each year from 1995 to the year 2029, when the Social Security trust fund is exhausted and is at zero.

Mr. GRAHAM. Well, that is the difference between passing a cliche and passing an actual constitutional amendment. This constitutional amendment I think virtually assures that we are going to have a national debt of approximately $3 trillion over the next 20-plus years above the national debt that we have today.

Mr. GRAHAM. Yes.

Mr. GRAHAM. Mr. President, I am offering these two amendments, both of which relate to section 2 of the proposed constitutional amendment, which is one of the most important, and I suggest, least understood provisions in this constitutional amendment. If I could, I would like to read the language of section 2. The very fact that it is the second section of this amendment, coming immediately after the section which states the basic principle that the Federal Government shall balance its revenues and expenditures, is indicative of the importance which the authors of the amendment attach to section 2. I will discuss that further in a moment. Section 2 reads as follows: The limit on the debt of the United States held by the public shall not be increased unless three-fifths of the whole number of each House shall provide by law for such an increase by a rollcall vote. Within those words, constituting one sentence of the balanced budget amendment, are a number of important policy considerations. My amendments focus on one of those policy implications which constitute just four words in the section. Those are the words ``held by the public.'' The requirement of a three-fifths vote of the whole number of each House is applied to raising the debt ceiling as it relates to that debt held by the public. I was curious as to what the rationale behind this provision of the section was, so I sought as one source of clarification the book which has been distributed to all Members of the Senate by the Congressional Leaders United For A Balanced Budget Amendment. In that description, the following information is given relative to section 2, and particularly the language ``held by the public.'' It states that: Because borrowing and increases in any limits on cumulative borrowing must be enacted by law, section 2 makes the amendment effectively self-enforcing. So this is a very important section because it makes the rest of the balanced budget amendment self-enforcing, self-enforcing by requiring a three-fifths vote to raise the limit set by law for debt held by the public. The statement by the Congressional Leaders United for the Balanced Budget goes on to state that by lowering ``the blackmail threshold'' associated with passage of the regular debt limit bill from 50 percent plus 1 in either body to 40 percent plus 1, section 2 increases the motivation of the administration and the leadership, including the chairs of the relevant committees, to do whatever is necessary legislatively and cooperatively, even to the point of balancing the budget to avoid facing such a difficult debt vote. So the purpose of this provision is to enforce the balanced budget amendment and, two, to create a blackmail threshold at 40 percent plus 1; that is, if 41 Senators refuse to go along with a proposal to raise the limit on debt held by the public, that would be such an enforcement figure that collectively we will do all that we can to avoid having to be placed into that position. That is the rationale for this amendment. Mr. President, as we commence this process of possibly placing this language into the Constitution of the United States, let me provide, and I hope this is not excessively tedious, a little background regarding this statement of debt held by the public The projection of the Congressional Budget Office is that the end of this fiscal year, which will be September 30, 1995, the gross Federal debt--all debt owed by the Federal Government--will be $4.942 trillion, a shade less than $5 trillion. That debt can be divided in a number of ways, but this amendment calls for it to be divided into two sectors. One sector is debt held by the public, and these are some of the entities which constitute the public which holds the debt of the Federal Government: State and local governments happen to be the largest public holder of the Federal debt. They hold $641 billion. Foreign governments and private sources, $601 billion, and so forth throughout this analysis. The second sector of the national debt is debt held by Government accounts. These are the accounts that are not part of the debt held by the public. These are primarily the trust funds of the Federal Government whose surpluses must be invested in Federal Treasury obligations. The largest of those, of course, is Social Security, which has $488 billion of debt of the Federal Government. We are going to talk extensively about that Social Security indebtedness. All the other Federal Government accounts, which include primarily those that are analogous to Social Security in that they are accounts designed to provide for the retirement of persons, for instance, Civil Service is $346 billion; military retirement, $105 billion; and then others of significance are Medicare, $150 billion, the Department of Transportation has $30 billion in its account, the unemployment compensation account has $40 billion. Cumulative of all these other accounts, excluding Social Security, is $837 billion, or a total of $1.325 trillion are debts of the Federal Government which are not held by the public, but rather by one of these Government accounts. With this background, I would like to talk about some of the policy implications of restricting to a three-fifths vote only this portion of the national debt. Under this amendment, it will take a three-fifths vote of the whole number of the Members of both Houses of Congress to raise the debt held by the public. The debt held by Government accounts can be raised by the legislative majority which we currently utilize. The last time we voted on increasing the national debt, which was in Public Law 103-66 on August 10, 1993, we voted--and this is the language in the statute, Mr. President--``to increase the public debt limit,'' not debt held by the public, but the public debt limit. And we increased it to $4.900 trillion. One fact that obviously creates is that before the end of this fiscal year, we are going to have to raise the debt limit because we are going to break the $4.900 trillion level prior to the end of this fiscal year. As I turn to some of the policy implications of this section 2, I would like to state a couple of assumptions that I am going to make so that if anyone would like to engage in further discussion, they would do so with those assumptions in mind and might wish to discuss them further. The first is primarily because we do not have projections through the year 2025 and beyond for these other Government accounts and, second, because although they are very significant, $837 billion, relative to the scale of the policy issues we are going to be dealing with, they will not substantially affect the policy considerations. To the degree they do affect the policy considerations, as I will explain, they make the concerns I am going to express even more serious. I am not focusing on this component, the Federal debt structure. My comments are focused on the Social Security borrowing. And second, as the statement of the Congressional Leaders United for a Balanced Budget indicates, I am assuming that the purpose of this three-fifths vote is to make it very difficult to raise the amount of debt held by the public; that the purpose of this is to create a political hydraulics that is going to make it difficult to raise debt held by the public and make it relatively easier to raise debt held by Government accounts. That is clearly the purpose of the distinction that has been made in this amendment. So let us turn to what is going to be the implication of adopting a balanced budget amendment with section 2 as it is currently written. Where are we today? As this chart demonstrates, at the end of this fiscal year we will have a total debt of $4.942 trillion. Of that amount, $488 billion is in the red zone, which is the Social Security trust fund. Everything else, which is the debt held by the public, plus the debt held by Government accounts other than Social Security, is in the blue zone. That amount is $4.452 trillion. critical date in the year 2002 when we are to come into balance. The projection is that between now and the year 2002, we will increase the Federal debt by approximately $1 trillion. So, that when we reach the year 2002, we will have a total national debt of $6 trillion. Of that amount, the Social Security trust fund surpluses will be $1.40 trillion in the year 2002. Social Security will represent that much of the indebtedness. Everything else, including the debt held by the public, plus the non-Social Security Government accounts will be $4.96 trillion. If the purpose of this is to make it very difficult to raise the debt held by the public, the debt held by the public will assumedly, essentially, stay at the same $4.96 trillion level from the year 2002. We have gone out to year 2028. But since there is no restraint in this supermajority on borrowing from trust funds, and particularly from Social Security, which is the trust fund that is going to be, of course, the one rising dramatically, we are going to see the debt rise to $7.098 trillion by the year 2018. This will occur when the surplus in the Social Security fund reaches its apex. We will be adding to the national debt under this amendment by a majority vote, an additional $2 trillion. I do not think that is what the public believes they are getting with this amendment, that they are going to get an additional $1 trillion between now and 2002 and then $2 trillion between 2002 and 2018.

Mr. GRAHAM. Mr. President, parliamentary inquiry. We have ordered the yeas and nays on these two amendments, on motions to table amendments numbered 259 and 298; am I correct?

Mr. GRAHAM. Mr. President, I anticipate my presentation will take approximately 15 to 20 minutes, and I know the Senator from Nevada, Senator Reid, wanted to ask some questions of my amendment.

Mr. GRAHAM. Mr. President, I asked for a rollcall on the yeas and nays on this, with the intention of then presenting a discussion on these amendments. I ask, if the Senator is going to ask for a tabling motion, that he withhold until after we have had an opportunity to debate the two amendments.

Mr. GRAHAM. I have called up the amendments 259 and 298. I have asked they be voted on in sequence. I am now asking that that vote be by recorded vote.

Mr. GRAHAM. I ask for the yeas and nays.

Mr. GRAHAM. Parliamentary inquiry, Mr. President. Would it be appropriate at this time to ask for the yeas and nays on amendments numbered 259 and 298?

Mr. GRAHAM. Mr. President, I ask unanimous consent that reading of the amendments be dispensed with.

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

Mr. GRAHAM. I am calling them up en bloc, and I am going to debate both of those amendments. Then I will ask for a rollcall vote on each of those amendments in that sequence.

Mr. GRAHAM. Mr. President, I would like to call up two amendments, Nos. 259 and 298.

Mr. GRAHAM. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. FEINGOLD addressed the Chair.

Mr. GRAHAM

Mr. GRAHAM. Mr. President, a recent report by the Journal of American Medicine estimates that the average American child has watched 100,000 acts of violence by the end of elementary school--including 8,000 murders. By 18, the average child has watched 200,000 acts of violence and 40,000 murders. Parents are rightly concerned. As a father of four and a grandfather of four, with four more on the way, I am concerned. Over the past year, Congress has begun to respond. We are asking whether it is appropriate to get involved on behalf of the interests of Children. Broadcasters are also beginning to pay attention. Last year, cable and broadcasting outlets agreed, with encouragement from Congress, to allow an independent monitor to review their programming for violence. While the monitoring project is underway, the debate continues over whether Congress should regulate violence on television. I believe that if the Federal Government plans to become involved in this issue--which may be appropriate--the Federal Government must first lead by example. That's why I have asked the three agencies, or federally related companies, that spend the most money per year on TV advertising, to join me in developing a uniform policy regarding The three groups are the Department of Defense, which spent $37.3 million last year on television advertising, the U.S. Postal Service, which spent $22.9 million on television advertising last year, and Amtrak, which spent $8.1 million. I was glad to learn that the Department of Defense, the Postal Service, and Amtrak all have existing policies in place to monitor their advertising. Our goal in asking these three entities to sign this pledge is to reaffirm their commitment by agreeing on a uniform policy defines violence and establishes a common goal for spending their advertising dollars. We define violence as ``an act perpetrated on another person or persons with the specific intent to cause physical harm, injury and/or death.'' And we consider programs violent if they contain violence which is inappropriate or unnecessary to the story. Generally, our definition excludes documentary programs, including news and sporting programs. This is not censorship. This is a voluntary agreement among Federal, or federally related entities to act in the best interest of Americans. In voluntarily signing this pledge, the Department of Defense, the Postal Service, and Amtrak are sending an important message--that various elements of the Federal Government can work effectively together in the best interests of Americans. And they are saying we can accomplish worthwhile goals--such as limiting violence on television-- without new legislation and regulations. Our next goal is to encourage other agencies, and private companies to follow this example, and to take responsibility for the placement of their television advertisements. Four reputable groups with an interest in the TV violence issue support our initiative. They are: Americans for Responsible TV; the National Coalition on TV Violence; the National Education Association; and the National PTA. Finally, Mr. President, I would like to thank the representatives from the Department of Defense, the Postal Service, and Amtrak for attending this morning's announcement. Their cooperation and leadership in this initiative testifies to their concern about violence on television.

Mr. GRAHAM

Mr. GRAHAM. That is not what the committee report says. The committee report specifically states that the purpose of the phrase ``debt of the United States held by the public'' is to differentiate between indebtedness which is held to private individuals, corporations, nonpublic institutions, State and local governments, are all part of the category of ``The public''--those that are excluded that are the Federal Government trust funds of which Social Security is by far the largest. So, it seems to me we are setting up a system here in which we create a clear political preference for borrowing from nonpublic entities, for example, Government trust funds, primarily Social Security, as opposed to borrowing from other sources. I do not understand what the public policy rationale of that is and, more so, what the rationale is of putting that in the Constitution.

Mr. GRAHAM. Mr. President, my concern is that it seems to me if we are concerned about the amount of debt that the Federal Government is undertaking, we ought to be concerned about the amount of debt without regard to who the lender of those funds happens to be. I am concerned that by saying that we can borrow from Social Security with a majority vote, would require a three-fifths vote to raise the debt limit where it relates to borrowing from the public, that we will create a political imbalance which will be more attractive to borrow from Social Security.

Mr. GRAHAM. Mr. President, this may appear to be tangential to the issue before the Senate, which is the question of whether Social Security should be removed from the calculation of the balanced budget amendment. But I think that it does, in fact, go to the ability to deal with some of the fundamental problems of Social Security. Section 2 of the amendment which talks about the Congress having to vote by a three-fifths margin to raise the debt limit specifically restricts that vote to raising the debt limit for debt held by the public. In the committee report it clarifies that is meant to exclude borrowing from the Social Security trust fund or from other Federal trust funds. I am curious as to what is the rationale of that restriction on only debt held by the public being required to be subjected to that higher than majority vote of the Congress.

Mr. GRAHAM. Mr. President, would the Senator from Illinois yield?