Phil Gramm

Mr. GRAMM

Mr. GRAMM. Mr. President, let me make it clear--and I do not believe the Senator's comments were aimed at this particular amendment--but let me make it clear that under this amendment we do not hold back a dollar of disaster assistance. We provide the assistance. We provide it as fast as it can be provided. We simply pay for it. So I wanted to make that clear. Let me now recognize the Senator from Kansas, Senator Brownback.

Mr. GRAMM. Mr. President, I think I have 3 minutes left. I know Senator Byrd and I know our distinguished committee chairman wishes to speak. I do not know how the Chair wishes to handle it, but I would like to try to reserve about 3 minutes.

Mr. GRAMM. That will be fine.

Mr. GRAMM. Mr. President, I thank the Senator from Alaska for yielding me 10 minutes of his time. Let me address the issue of how big does a disaster have to be. We spend $1.6 trillion a year here in Washington, DC, on the Federal budget. The bill before us is going to spend $699 million this year over budget in new deficits. So what I am asking is simply that less than $1 out of every $1,600 we spend be dedicated to pay for this emergency appropriation. The second point I would like to make is this is not the first time I have offered this amendment. In fact, nearly every time we do one of these add-on spending bills, I offer an amendment to require that we pay for it. Some of our colleagues say, wouldn't it be better if we paid for it in advance? It would be better. We ought to do it, but the point is we are not doing it. In 1993, we added $5.4 billion to the deficit in the name of a disaster; $9 billion in 1994; $10 billion in 1995; $6.4 billion in 1996. We have already added $5.4 billion in 1997. The point is, when do we start paying our bills? I think the answer ought to be today. We are getting ready to write a brand new budget with record spending in it. We ought to be setting aside $7 billion a year for disasters, something we have not done in the last 5 years, but we are not going to do that unless we adopt this amendment today so that we see we are going to have to begin to pay these bills. So the question ultimately boils down to deficits. Do we want to pay for helping people, or do we want to pass the burden on to our children and our grandchildren? Do we want to, year after year after year, spend money we don't have? Finally, we are in the process today of busting a budget which is not even in effect yet. We are spending $6.6 billion today that will not even count as that budget even though we will spend it over the next 5 years. So we are writing a budget with record spending, and we are busting the budget before it even becomes the law of the land. That is how serious we are about spending. I am not saying it is easy to pay our bills, but I am saying that every family in America has to pay its bills. Every day families have to deal with emergencies, and they do not have the ability to just declare it a dire emergency and go on about their business. They have to go back and take things they wanted, things they planned for, things they needed, and they have to deny themselves those things to pay their bills. What is wisdom in every household in America cannot be folly in the governance of a great nation. If you really are concerned about deficits, if you are really concerned about the Government paying its bills, if you want more jobs, more growth, more opportunity, if you really want to balance the budget, today we have an opportunity to take $6.6 billion, with a ``B,'' off the deficit in the next 5 years. I urge my colleagues, if you are for fiscal responsibility, show it today, show it today, not in some abstract speech somewhere back in your State, but show it today by voting to pay for this bill and, in the process, to eliminate $6.6 billion of deficits. I thank the Chair for his tolerance. I yield back the remainder of my time.

Mr. GRAMM. Surely.

Mr. GRAMM. I thank the Senator very much.

Mr. GRAMM. Does the Senator want to use----

Mr. GRAMM. Mr. President, let me pick up the point that our dear colleague from New Mexico made. If we do not want to disrupt Government by having to pay our bills when disasters occur, we ought to appropriate the money in advance for disasters. But what has happened, and the reason I have offered this amendment, is that we have not done that. At one time we did, but I just would like my colleagues to recognize we are paying for disasters but there is nothing unexpected about it. Every year in America there are hurricanes, there are floods, there are earthquakes. In fact, in 1993, we spent $5.4 billion on disasters; in 1994, $9 billion on disasters; in 1995, $10.1 billion on disasters; in 1996, $4.6 billion on disasters, and in 1997, we have already spent $5.4 billion. My point is, there is nothing unexpected about disasters. It is unexpected if you have a flood in your State, but it is not unexpected that America is going to have disasters. But what produces the financial disaster is we do not provide money in advance and, as a result, every year we add to the deficit by saying, well, look, we have to spend this money; we do not want to have to pay for it because it means disrupting ongoing Government. But I commend to my colleagues, going back to my example in a family, when Johnny falls down and breaks his arm, it does not do the family any good to say, well, now, wait a minute; we had planned that we were going on a vacation, or we had planned that we were going to buy a new refrigerator. They do not have that luxury. They have to disrupt what they are doing. I think the Senator from New Mexico, in talking about good Government, is right; I hope in this new budget we are getting ready to write with all the money we will have, it would be a good idea to just set aside about--we have averaged $7 billion a year of disasters during the Clinton years. Why not set aside $7 billion next year, and then if we do not have disasters, we can spend it. But the point is, year after year after year we do not do it, and I do not know any way to make us do it other than to make us begin to pay our bills. That is what the amendment is about. I yield.

Mr. GRAMM. Mr. President, how much time do I have left?

Mr. GRAMM. I yield to the Senator from Oklahoma, Senator Nickles, 5 minutes.

Mr. GRAMM

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

Mr. GRAMM. Mr. President, I thank the distinguished chairman of the Appropriations Committee for giving me this time.

Mr. GRAMM

Mr. GRAMM. Mr. President, obviously, with the budget deal completed over the weekend, Members are trying now to look at the facts. What I would like to do in these 10 minutes is turn and look at the facts. I know to many people in America, it may seem too good to be true to believe that we could give the President the largest increase in social spending that we have seen in America since the 1960's, in his own words, that we could give Republicans a tax cut and that we could give the American people a balanced budget all at the same time. If all that seems too good to be true, it is for a simple reason: It is too good to be true. Let me begin by simply running through the budget very quickly. Because the economy has been growing, this year we had an easier task of balancing the budget than we have had before. In fact, we only needed about $330 billion of deficit reduction in order to balance the budget. Let me outline how the budget agreement achieves that $330 billion of deficit reduction. As many of you know, on Thursday night, at the very point where the budget agreement had reached an impasse, the budgeting arm of Congress, the Congressional Budget Office, miraculously discovered a revenue windfall where they reestimated, again, the rate of growth in the economy and the amount of taxes taken from the economy and, in the process, produced a revenue windfall that lowered the deficit by $225 billion. That one assumption of stronger economic growth provides 68 percent of the deficit reduction required to balance the budget. The budget negotiators assumed a lower inflation rate which reduced the deficit by $15 billion, another 5 percent of the required deficit reduction. They assumed by balancing the budget, the economy will be stronger still, and we will get a balanced budget dividend with stronger economic growth, and they assumed that economic growth would provide $77 billion of additional deficit reduction, another 23 percent. In the final analysis, the deficit reduction in this budget can be divided in the following way: 96 cents out of every dollar of deficit reduction is simply assumed; 4 cents out of every dollar, $14 billion out of $330 billion comes from a change in public policy. So why is the budget balanced in this budget? It is balanced because the negotiators assumed that it is balanced. Only $14 billion of the $330 billion of required deficit reduction comes from policy change. What is very much real about the budget is discretionary spending. When the Speaker said this budget is the fulfillment of the Contract With America, I think if you go back and look at the 1996 budget that was passed by Congress, which embodied the Contract With America, you will see that over the 5 years of this current budget negotiation it spent $216 billion less on social spending than the budget deal that has just been completed. The budget we adopted last year spent $193 billion less on nondefense discretionary spending. The President's budget from last year spent $79 billion less on nondefense discretionary spending. And finally, if you take the President's budget as scored by CBO, with the across-the-board cuts in the last year, this budget agreement actually gives the President $5 billion more than he asked for in his own budget with the CBO adjustment and the automatic cut mechanism in the end. In addition to this massive increase in discretionary spending, the budget entails a whole group of entitlements. It expands Medicaid in two different ways; it overturns welfare reform from last year and reinstitutes welfare benefits for illegal immigrants; it expands food stamps and, together with mandatory and entitlement programs, it spends roughly another $35 billion. Then the major savings claimed in the budget is in Medicare, but virtually all these savings come from lowering reimbursement to doctors and hospitals, because what the negotiators did is they not only picked the number of $115 billion, but they committed to the Clinton policy. The only problem is that on a dozen occasions in the last 30 years, we have assumed a lower reimbursement rate for doctors and hospitals under Medicare, and each and every time this policy has not worked because the doctors and the hospitals have found ways around it. But we take every penny of that $115 billion of claimed Medicare savings and spend it on new entitlements and on new social programs. Finally, we come to the tax cut which is funded by odds-and-ends, dogs-and-cats savings and by spectrum auction. This is selling the right to use spectrum. I remind my colleagues that the Appropriations Committee last year assumed $2.9 billion of spectrum broadcast auction to fund spending. When that auction actually occurred, it raised only $13.6 million, or, in other words, we got $1 for every $200 of spectrum auction we assumed last year. But let me talk about the tax cut. We, in the budget, have an $85 billion net tax cut. Any tax cut beyond that we have to raise other taxes to pay for it. About $5 billion of that is offset by the lower CPI assumed in the budget and its impact on taxes, and that gets the net real tax cut down to about $80 billion. We commit in the budget to fund the President's education priorities which takes another $35 billion, though it is unclear at this point whether this was a 5-year commitment or 10 years. So we are now down to a $45 billion net tax cut. I remind my colleagues that the full Republican tax cut cost $188 billion. In fact, a $500 tax credit per child cost $105 billion over 5 years. Capital gains, the way it is scored by the budgeting arm of the Congress, cost $33 billion. Our death and estate tax relief cost $18 billion, and our IRA expansion cost $32 billion. The point is, if you read the newspaper, it is as if we got an agreement to cut capital gains taxes, to reform death taxes and give a $500 tax credit. The reality is the net tax cut available will not pay for a third of that policy. What we are going to end up with, invariably, is a $500 tax credit but excluding middle-income Americans from the tax cut. I don't know how you are going to end up fitting the rest of these items into that limited space. Finally, let me conclude by saying, well, what about the question, Is this deal worse than nothing? Let me give you two reasons why I believe it is and why I am going to oppose it. No. 1, it assumes a balanced budget and, in the process, convinces America that we have really done something about the deficit when we have not. I am very concerned that that is going to take pressure off Congress to control spending. We are seeing in this budget agreement itself the largest increase in social spending since the 1960's, and I am afraid that by convincing people we have balanced the budget when, in fact, we just assume it is balanced, that that is going to open the floodgates for spending. No. 2, and of at least equal importance, in Medicare, we reduce reimbursement for doctors and hospitals. We take the fastest-growing part of Medicare, home health care, and transfer it out of the Medicare trust fund, something we Republicans denounced as a fraud only 2 or 3 months ago. By doing these things, we now claim that we have saved Medicare for a decade. I am concerned that this is going to trample on the emerging bipartisan consensus to do something to save Medicare. I am concerned that we are going to let 2 or 3 years pass where we believe we have done something about Medicare, or at least claim we have, when, in fact, Medicare, when you look at the payment for hospitals and doctors, will be a $1.6 trillion drain on the Federal budget in the next 10 years. I am afraid that by claiming we have done things we have not done--balance the budget, save Medicare--that we are going to undercut those real efforts. Those are efforts that desperately need to be undertaken. Obviously, many people will have many different views on this subject. I am a firm believer in the Jefferson adage that good people with the same facts are going to disagree. But I wanted my colleagues to understand that I am not here this morning speaking with passion about some priority I have that is not contained in the budget. What I am trying to do is to, basically, get people to understand that we assume the budget is balanced, we don't institute any policy to balance it; that we are granting a massive increase in spending for social programs that someday will have to be paid for; we are creating new entitlement benefits; and we are continuing to talk as if we are going to have this massive tax cut when we have only $45 billion net available to pay for it. Trying to get $188 billion of tax cuts into a $45 billion allowable space is going to be very, very difficult and, in the end, a lot of people are going to be disappointed. Let me, again, thank the distinguished chairman of the Appropriations Committee for giving me an opportunity to speak for 10 minutes as in morning business. I yield the floor. Mr. STEVENS addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, we have been in the midst of a filibuster where our President and many of our notable leaders around the country have gone to Philadelphia and called for an expansion in voluntarism, something that we all believe in, something that America was built on. We have a bill on the floor of the Senate now to try to protect volunteers from frivolous lawsuits which threaten the whole process, and we are in the midst, basically, of a stall and a filibuster by our Democratic colleagues in opposition to this bill. In this lull, I wanted to take the opportunity to come to the floor of the Senate and, for the first time, publicly make a comment on the emerging budget agreement. Mr. President, I believe that the budget agreement that is now emerging is a good political deal, but it is a bad budget. It is a good political deal because, in a sense, it gives both parties in the negotiation what they want. The President in this budget negotiation gets what he wants. He gets an ironclad guarantee that the era of big Government is alive and well and guaranteed in Washington, DC. He gets new entitlement programs. He gets the reestablishment of entitlements that we eliminated in welfare reform. He gets more social spending than President Carter and nearly twice as much as in the 1960's under Lyndon Johnson. The President, in this emerging budget agreement, gets the one thing that he cares most about, and that is a guarantee that Government is going to continue to grow and that its presence in the American economy and American society is going to continue to be dominant. In a sense, Republican Members of Congress get what they want. We get to claim a tax cut. We get to claim that we have delivered on a campaign promise we made to let people keep more of what they earn. There are still negotiations underway as to how big that tax cut is going to be. But the problem is that by politically manipulating the Consumer Price Index, something I will talk more about in a moment, what is happening is that while on one hand we are going to be guaranteeing a cut in taxes in the short run, by manipulating the measure of inflation upon which the Tax Code is built, we are guaranteeing increases in tax rates that will, over time, offset the cut in taxes that we will claim from this budget agreement as a victory. The President gets what he wants: more Government and a lot of it. Republicans get what they want, and that is a claim of a short-term tax cut. But let me say the American people do not get what they want. The American people get no fiscal restraint. In the end, the American people will not get a balanced budget. In the end, the American people are not going to get a stronger economy from this budget. In the end, the American people are not going to get any lasting tax relief from this budget. This budget is a great deal for Washington, but it is a bad deal for America. This is the kind of budget that comes about when the two great political parties stop debating ideas and start conspiring against the public, conspiring to promote their interest but not working either together or in contention to promote the public interest. Let me say a little bit about the Consumer Price Index and about politicizing it. America is a country where statistics matter. Facts are persistent things. Facts have an impact on what happens in our country, and the measure of inflation affects everything from how much you get in Social Security benefits to how much veterans receive in retirement benefits to how much we pay in taxes to how contracts are negotiated. We have set up an agency which, historically, has acted independently, the Bureau of Labor Statistics, to try to come up with a measure of what inflation is, what consumer prices are. Obviously, no statistic is perfect. In fact, we have had a debate in economics for 40 years about whether the Consumer Price Index is a good measure of the cost of living. To listen to politicians talk about it in the last 4 or 5 years, there is this unanimous opinion among professional economists that the Consumer Price Index overstates inflation. Let me say that there are only two economists in the Congress, Dick Armey and myself, and we both oppose the change in the Consumer Price Index. In fact, economists are split on this subject. No less an authority than Milton Friedman, Nobel Prize winning economist, perhaps the best known economist on the planet and probably the most able, has concluded that the CPI may well overstate the rise in private prices, but it almost certainly understates the cost of living, which is the measure that we are using it for. And why does the CPI understate the cost of living? Because it leaves out the No. 1 cost of living for the average working family in America. In fact, it leaves out an involuntary expenditure that is bigger than health care, housing, nutrition, and transportation combined. The Consumer Price Index does not include the cost of Government, does not include taxes and, therefore, through that exclusion, Milton Friedman argues it understates the true cost of living, even though it might understate the rise in the cost of goods and services in the private sector. But whether CPI overstates or understates the Consumer Price Index, we should not have political decisions being made about economic statistics, and I would have to say, obviously, it was inevitable in the Clinton administration that the process of setting statistics was going to become politicized. We are looking in this negotiation underway at mandating, through an assumption that it will happen in the future, a change in the Consumer Price Index that will raise taxes over a decade by over $100 billion, and it will raise taxes by changing the inflation rate and, therefore, pushing working families more quickly into higher tax brackets and lowering the value of the personal exemption and the dependent exemption, which are critical factors in calculating the taxes of working families. So the bottom line is, by deciding on a political basis where Members of Congress and the President have decided that we are going to manipulate the Consumer Price Index, we are going through that process to cut Social Security and other benefits over a decade by about $180 billion, and we are going to raise taxes by about $120 billion. What are we going to do with that money? We are going to spend every penny of it. So Social Security is 15 years away from insolvency, we are going to manipulate the Consumer Price Index and reduce benefits, but we are not going to put those benefits back in to saving the Social Security trust fund. We have the highest tax rates in American history. No American has ever lived a day where the aggregate tax rate, where you are looking at taxes at all levels of Government, was as high as it is today. Never; not a day. But what we are doing by manipulating our statistics is we are raising taxes on working families, and we are all doing it sort of quasi under the table. I will offer, when we debate the budget, an amendment which I think is a pretty important amendment. In fact, I am going to call it the CPI Social Security and Tax Equity Improvement Act. What this amendment is going to say very simply is this: That rather than having a bunch of politicians manipulate the Consumer Price Index to try to cut Social Security benefits and raise taxes so we can spend the money, we ought to go ahead, since this has now reached such a political fever pitch to seize this money and squander it will not go away, we should leave it to the experts but dedicate the savings to specific purposes. So what I am going to propose is two things. In the budget, I am going to say whatever we do to change the Consumer Price Index, that every penny that comes from raising taxes on working families ought to go back to those working families to raise the dependent exemption and the standard deduction first back to the level that existed in 1950 in real dollars. Today, the standard deduction is about $2,550. In current-day inflation adjusted dollars, in 1950, it was $3,800. So the first thing we would do with these savings that come with increases in taxes from changing the CPI, if Congress does it in the budget, is we would take that money rather than letting Congress spend it, the part that comes from raising taxes we use first to raise the standard deduction up to $3,800 a year, and then we would use it to reduce marginal tax rates. And those parts of savings that come from cutting Social Security benefits, we would put back in the Social Security trust funds, but we would set up real trust funds with it. It would be outside the Treasury Department. It would not count as the internal debt of the Federal Government, because it is the debt of the Federal Government to Social Security beneficiaries. When we pay interest on that debt, it would count as an outlay of the Federal Government. Today, it does not even count as an outlay of the Federal Government when Social Security earns interest. Finally, we would set up a procedure where we could look at having a real trust fund, including real investments. I also will introduce a bill that will establish an independent commission made up of all living American Nobel Prize winners in economics and have them, in conjunction with the Bureau of Labor Statistics, review for 6 months the Consumer Price Index and make a recommendation to the Commissioner of Labor Statistics. If she decides, based on their recommendations, which will be made public, to change the Consumer Price Index, then under the bill I will introduce, the part of savings that come from raising taxes will go back to families to raise the standard deduction and cut marginal tax rates. The part of savings that come from the Social Security trust fund will go back into it, but into a real trust fund that will be set up outside the Treasury, and it would be capable for the first time in American history of making real investments. I am not here to criticize our leader or to criticize Senator Domenici for their work on these negotiations. We all have to do the best job we can do. We all have to try to achieve what we believe in, and I am sure that if the negotiations are completed along the lines that they have negotiated them, that they will believe they have gotten the best agreement they can get. But I cannot and do not support an agreement where the President gets what he wants, a guarantee of big Government in perpetuity, new entitlement spending, social spending the likes of which we have not seen since the 1960's; Congress gets what it wants, the ability to claim a tax cut, even though by manipulating the measure of inflation, we raise taxes and, over time, offset that tax cut. The problem is the President gets what he wants politically, Congress gets what Congress wants politically, but the American people do not get what they want politically. They want a real budget; they want fiscal restraint. Nobody can claim that this budget exercises fiscal restraint. Nobody--Democrat, Republican--no one can look at this budget and say that a tough decision has been made, that spending has been controlled. There is no fiscal restraint in this budget. While we will be able to claim a short-term tax cut, the reality is there is no permanent tax cut when you factor in the change in consumer prices in this budget. We do not guarantee in this budget a balanced budget. In fact, this budget begins by assuming a balanced budget, for all practical purposes. By changing the underlying assumptions in this budget, if we simply went with a spending level set out in discretionary spending in current law, which is $4 billion for next year below what we are spending now--that is the law of the land--and we did nothing else under the assumptions of this budget, for all practical purposes, we would have a balanced budget. So a balanced budget is not achieved by this budget; it is assumed by this budget. In the end, this budget gives both political parties what they need politically, but it does not give the American people what they need and, as a result, I am not for it. This is a bad deal in the making. It is a deal that is a political deal with political ends. It is a deal that comes about when we move away from the traditional function of our great political parties, which is to contest, which is to present competing ideas and then ultimately allow the superior ideas to prevail. This budget really represents what I am sure will be portrayed in the media as great bipartisanship, but in reality it is the two parties working together to claim political victories for each party without achieving the objective that the American people seek. So I do not doubt that there will be great support for this budget. When you claim you are balancing the budget, when you can demonstrate that we are creating new entitlements and the largest social spending that we have ever seen since the 1960's, you are going to have a lot of Democrats who are going to support this budget. When you can claim, no matter how temporary it may be--with the procedures in this budget, we will over time raise income taxes--but when you can claim that we are cutting taxes, even for a short period of time, there are going to be some Republicans who find this agreement to their liking. Finally, there is pressure on us all, and there should be, to find a compromise to balance the budget, to work with the President. But I do not see an effort here to work with the President to solve the problem. I do not see an effort here to work with the President to gain control of spending. Both parties campaigned in the last election on controlling spending. There is no effort here to control spending. In fact, there is a conspiracy here, a bipartisan one, to increase spending. I do not see an effort here to guarantee and lock in a balanced budget. I see an effort here to assume a balanced budget, so I see bipartisanship all right, but it is bipartisanship basically to achieve a political goal for each political party. I do not see bipartisanship to achieve a goal for America. Let me touch on two final points and then I will yield the floor. We are going to bring up next week a supplemental appropriations bill. That supplemental appropriations bill, for all practical purposes, raises the deficit $8.4 billion, though there are some offsets in the defense area. I remember when we had 43 Members of the Senate who were Republicans, and the Democrats tried to bring up a $17 billion so-called economic stimulus package, and we blocked it. We now have 55 Republicans, and yet next week we are going to bring up an $8.4 billion spending bill where virtually every penny of it is going to raise the deficit. We are already spending $22 billion above what we said in our 1996 budget we would be spending on discretionary spending this year. I intend to offer an amendment next week. That amendment is going to do two things. No. 1, it is going to say every penny we spend this year on emergencies--and I am in favor of disaster relief--but I think it is very instructive that if you look at the number of States we have had floods in, and then you look at the fact that we are giving disaster assistance to 23 States, this disaster is taking on manmade implications made in Washington, and the disaster is not just flooding houses in North and South Dakota and Minnesota, but it is increasingly runaway Government spending at the expense of the taxpayer and at the expense of the deficit. What I will propose is the amount of money we are going to spend for an emergency this year, spend it, but do an across-the-board cut in other programs to pay for it. Then whatever we spend next year, make it count as part of the budget for next year; in other words, for next year that it be offset against other programs that we might have spent it on. I know we will have colleagues here who will jump up and say, well, we have people who have been flooded out of their homes. And we do. And we should help them. But shouldn't we pay for it? What family would not like to say, when Johnny falls down the steps and breaks his arm, ``Well, look. We don't have any money. We have planned to go on vacation this year'' or ``we were going to buy a new refrigerator this year. So we are just going to have to assume that Johnny's arm gets fixed, and it would be nice if somebody would come in from Heaven and just give us the money.'' But that does not happen in American families. What they have to do is they have to go back and they have to not buy that new refrigerator or they have to not go on vacation. What I am saying is, help people who have been the victims of natural disaster, but do not create a financial disaster by simply adding it to the deficit. Let us provide disaster assistance, but let us cut other programs that now, with these disasters, we cannot afford. Let me also note that this is not unexpected. We have had a disaster every year that President Clinton has been in office and we have not had the money to pay for it because we did not write it into our budget. It has averaged about $7 billion a year. There is nothing unexpected. Every year in America we have floods or hurricanes or tornadoes or earthquakes. We know it is going to happen. When we do not write the money in our budget to pay for it, all we are doing is saying, let us borrow the money and just keep spending. My answer is, let us pay for it by cutting other Government programs. I do not believe, Mr. President, that amendment is going to be adopted. There is no constituency that I can determine in the Congress for controlling spending. But we are going to vote on it. We are going to know where people stand on this issue. The final point I want to mention is on the so-called CR. We all know that when the Government shut down, people were dislocated. I would have to say that I think the President did an exceptional job politically of exploiting it. I admire him for it. I think we did an inept job of explaining that in fact the President vetoed the bill and shut the Government down. But in an unusual effort to have good Government, what Republicans are saying on this appropriations bill we are going to vote on next week is, look, before we get into any disputes with the President, let us just agree that if at any point during the year we cannot agree on how much money to spend to keep the Government open, that we will keep it open temporarily at 98 percent of the spending we spent last year, which, by the way, is substantially above the budget that we adopted last year. Our Democratic colleagues are saying, ``Well, no, we can't do that. We can't set out that if we can't reach an agreement we will simply spend 98 percent of last year's level.'' They are saying that somehow we are trying to impose priorities on the President. What we are trying to do is to guarantee that we do not have a shutdown in Government. I think our proposal is eminently reasonable. And I intend to support it. I do not intend to vote for this supplemental appropriations bill if we do not have this provision to prevent a fiscal disaster written into it. I think it is time for us to understand that we have an obligation, No. 1, to pay for these bills, and, No. 2, to try to set out some way of gaining control of runaway Federal spending. The problem in Washington is still spending. We are still not controlling it. That is what this debate is about. I yield the floor. Mr. LEAHY addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, I ask unanimous consent to be recognized as in morning business.

Mr. GRAMM

Mr. GRAMM. Mr. President, there has been an extended debate here this morning about many different issues, about confirmation of Presidential nominees and about the protection of hate groups. What I would like to do is to get back to the point of this bill, to get back to a definition of what we are trying to achieve, what kind of safeguards we have in the bill, and to explain why it is critically important that we support this legislation. The distinguished Senator from Georgia and those who have cosponsored his bill--and I am proud to be one of them--believe in voluntarism. We believe that there is no Government substitute for people being engaged in and trying to participate in the activities of their own communities. We do not believe there is any Government program that can substitute for genuine volunteers. The President, numerous past Presidents, and General Powell are engaged at this very moment in trying to promote voluntarism. I see the bill of the Senator from Georgia as being a complement to that effort. First, let me try to define the problem. When I was coaching little league football 25 years ago, I never thought about the fact that I might be liable had some player who was playing for me been hurt. I never thought about the liability implications because 25 years ago, at least in the very active central Texas league I coached in for 3 years, to my knowledge we never had a lawsuit filed against any volunteer. The problem is that the world has changed dramatically in the last 25 years. It is now commonplace for volunteers who are trying to help people, for no pay, taking time away from their businesses, their professions and their families, to end up being attacked in a lawsuit. Furthermore, the volunteer frequently has very little, if any, involvement in the incident, has very little responsibility for the harm that has been alleged, and yet is often the only one with deep pockets. Let me just give an example that I think is pretty easy to envision. Assume you have a volunteer working at a boys and girls club. Let us assume that the volunteer is working at the front entrance, checking people in as they come in to participate in the activities. This volunteer is critically important because, in trying to conserve the money we raise for the boys and girls club, we can hold down our costs if we can use volunteers. The problem that Senator Coverdell is trying to deal with is the following: You have a volunteer working at the front door checking people in. You have a professional staff person working in the back of the facility, say the weight room, who might not be providing sufficient supervision and as a result some young person who is lifting weights, drops the weights on his leg, breaks his leg, and sues. The professional employee at the boys club probably does not have deep pockets. The boys club of Bryan-College Station, where I am from, is not a rich organization. But the volunteer, working in the front, who by definition of being a volunteer is able to give their time voluntarily might have substantial assets. Under Texas law, they could be held liable. In this situation, you might end up having a volunteer, who never went into the weight room and who simply was there helping check people in, be the only one with deep pockets. Some knowledgeable and aggressive lawyer could end up suing the volunteer for something they had nothing to do with. Here is what the Coverdell bill does, and it does it very simply. No. 1, it recognizes the contributions that volunteers make and defines the reason we want to encourage voluntarism. Then it sets out some very simple principles about liability. That is, it relieves volunteers from liability for harm caused if: No. 1, the volunteer was acting within the scope of their responsibility; No. 2, if a license or training was required for the job the volunteer was doing and the volunteer indeed had the license or the required training; and, No. 3, if the harm was not caused by willful or criminal misconduct or gross negligence. So, it sets out some simple common-sense criteria which requires that volunteers meet the training requirements and to be carrying out their function for which they volunteered in a responsible manner. The bill also bars the awarding of punitive damages against a volunteer and, in a very important provision of the law, it sets out proportional liability for noneconomic damages. Under this bill, if you have a volunteer who has deep pockets and who is simply checking people in at the front of the building, and has nothing to do with what is going on in other parts of the building, then if a lawsuit should be filed, they could be liable only for an amount proportionate to their involvement in causing the harm. In addition, there are many safeguards in this bill which have been discussed at some length in this debate. States have the ability to opt out of this if they choose to do so. I do not believe they will choose to do this because basically what we are trying to do in this bill is to encourage voluntarism by limiting liability, by assuring people that if they are willing to put up their time and their talent and their money to help other people, and if they are willing to volunteer to try to help their community, as long as they do their job in a reasonable and responsible manner, then they are not going to end up being dragged into a courtroom. I want to address one part of the opposition to this bill. This is a very tiny step, in my opinion, in the right direction toward legal liability reform. This is a tiny step in the direction of beginning to do something about runaway litigation in America. I believe that the opposition to this bill really springs from those who do not want any limits on legal liability. I would just simply ask my colleagues to look at the limited nature of this bill, to look at the fact that America is a great beneficiary from volunteer activity by our citizens, and that one thing that has tended to happen as Government has done more and more is that volunteers have been crowded out into doing less and less in our communities. I believe that we are all losers for that decline in voluntarism. People who, 25 years ago, routinely volunteered to do things, now, in some cases, fear to do them because of legal liability. Two weeks ago I visited a school, a charter school in Texas, called the Dallas CAN Academy. This was the first charter school in my State. It is run almost exclusively by volunteers. It has a very small professional staff which runs a mentoring program where business and professional people come in and serve as mentors to kids who have dropped out of school because they have had some sort of problem. These kids have come back to this special charter school and, with the mentoring program, in about 80 percent of the cases are able to graduate from high school--and a not insignificant number of them end up going on to college. The secret of this program is voluntarism. This little program in Dallas, TX, pays $15,000 a year in liability insurance to protect its volunteers. That is $15,000 a year that could go to helping kids. That is $15,000 a year that might make it possible for 15, 20, 30, or 50 more kids to graduate from high school and to have an opportunity to get on the playing field of life. What the Coverdell bill will do is, by setting standards of reason and responsibility, it will dramatically reduce the liability cost of this charter school. It will make it easier to get people to coach youth soccer and little league. It will get more people involved, and I can say as a person who was very actively involved in volunteering in youth sports when I was a college professor, that the volunteer gets more out of it than the people who are the beneficiaries of voluntarism. We are trying to make it possible for millions of Americans to help tens of millions of Americans, but the benefits do not just go to the people who are the targets of this voluntarism, the benefits go to the people who volunteer as well. The Coverdell bill tries to limit a real impediment to voluntarism. The legal costs of people being liable for things they did not cause is driving away hundreds of thousands of volunteers. I want to congratulate Senator Coverdell. This is a very important bill, and I hope our colleagues will not let this whole political issue of legal liability and the interests of lawyers versus people who are sued interfere with what is a straightforward, reasonable, and limited bill. I strongly urge that this bill be adopted.

Mr. GRAMM

Mr. GRAMM. Mr. President, I wanted to raise an issue today and in the process urge the administration to move ahead and grant a waiver to the State of Texas to consolidate their office whereby they provide access to services like AFDC, food stamps, WIC, Medicaid, and other public service programs. In an effort to innovate and save money, the State of Texas, under the leadership of our Governor, has come up with the idea of allowing public/private partnerships, such as EDS and the Texas Department of Human Services and Lockheed/Martin and the Texas Workforce Commission, to bid for the opportunity to move toward a more efficient provision of welfare services in out State. The bottom line is the State of Texas has put together a proposal to use private technology with the public sector to unify the eligibility and application processes for a number of welfare benefits. The State of Texas can save $200 million a year in State taxpayer funds that can be used for education or for public assistance or for law enforcement, and they have asked the administration to sign off on a waiver to let the State adopt this procedure, saving $200 million, and the President has steadfastly refused to grant a waiver. Over and over and over again, we are seeing delays from the White House. If the White House does not move ahead and grant this waiver so that Texas can operate its AFDC and Medicaid programs efficiently, then Senator Hutchison and I are going to have to move on the floor of the Senate to pass a law to mandate that this waiver be granted. It is outrageous for the President to continue to give speeches about welfare reform, to talk about giving States the ability to innovate and to try new methods to provide better services and to save costs, save money, and then turn right around and refuse to grant a waiver that would dramatically improve the efficiency of the system in Texas that would make it easier for people who are truly needy to get assistance. What is the issue? By moving to a public/private partnership and saving $200 million, some State bureaucrats and the unions who represent them are afraid they might lose their jobs. Even though Texas could save $200 million and even though millions of beneficiaries would benefit from greater efficiency, the President is afraid to take on a special-interest group by granting this waiver. In this case the special-interest group is organized labor. This is exactly the kind of activity we encouraged in our welfare reform bill which passed on a bipartisan basis. This is exactly what the President says every time he speaks on welfare reform. The State of Texas is trying to be efficient and save money, and they cannot get the White House to say yes or no. Basically, what I am saying to the White House today is this: say yes or no, and get on with making the decision. If you are not going to allow the State of Texas to carry out the mandate of welfare reform, if you are not going to allow them to save money, if you are not going to allow them to operate their programs efficiently, then the Congress is going to have to act to grant this waiver. It makes absolutely no sense for the administration to refuse to say yes or no. This is a clear-cut question: Is the power of special interests within the White House so dominating and so overwhelming that when a State tries to operate under the new welfare reform bill, when a State tries to save $200 million annually of the taxpayers' money, and when a State tries to improve services by bringing the private sector into the process, it is prevented from doing so? Should we let one special interest keep all those good things from happening? That is the question that the President is going to have to answer in deciding whether to grant this waiver. I want to urge the President to grant the waiver and to do it soon. I yield the floor. I thank the Senator from Georgia for yielding the time. Mr. REED addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, let me join my colleague in expressing my disappointment that at the very moment where we have our former Presidents urging voluntarism, the Senate, on a partisan vote, is blocking our effort to remove legal liability constraints that limit the willingness of people to volunteer. So I am very disappointed that we did not get the job done, and I trust that this will not be the end of this bill.

Mr. GRAMM

Mr. GRAMM. Madam President, I thank Senator Thomas for his leadership today by asking people to come talk about Medicare. I am the chairman of the of the Finance Committee's Health Care Subcommittee, which has jurisdiction over Medicare. I wanted today to come over and talk about Medicare in light of the report issued yesterday afternoon at 4 o'clock which reaffirmed that Medicare is in the red for the first time in its history and that the trust fund which funds the hospital care portion of Medicare will be totally insolvent in 4 years. The cumulative debt that will be imposed on the American people by the existing Medicare program in the next 10 years will rise to $1.567 trillion--that is ``trillion'' with a ``T.'' Obviously, a lot of people were alarmed by this report. I agree with virtually everything that the Secretary of Health and Human Services, Secretary Shalala, said, except one comment. That one comment was when she sought to reassure people that there was no current crisis in Medicare. Madam President, if this is not a crisis, I would like to know what a crisis looks like. What I would like to do today, very briefly, is to outline the crisis. I am a firm believer in the old Biblical admonition, you shall know the truth and the truth will make you free. So I want to start with the bad news, because if we do not understand this problem, there is no way we can fix it. Then I would like to conclude with the good news. The good news is that as bad as the problem is, we can fix it. We can strengthen Medicare for existing beneficiaries, and more importantly, we can restructure Medicare to guarantee that it is going to be there for our children and our grandchildren. But we cannot do any of these things if we are not willing to make tough decisions. Part of the problem we face is that the Medicare has been too politicized with fear. It has been used as a partisan issue. The President has probably been more irresponsible than any public official on this issue. What we are going to have to do--and by ``we,'' I mean all Members of the Senate, but specifically I mean Republicans--is set aside all of the partisanship on Medicare. We are going to have to forget the bitter experience of the last election where the President, in essence, said to the American people, ``There is no problem, this is simply Republicans who want to cut your benefits.'' We can pout about it, but pouting will not solve the problem. What we have to do is to get on with the solution. Let me try to define the problem. If this sounds overwhelming, it is because the problem is overwhelming. First, Medicare was enacted in 1965, and when it started, it was to be funded by a 0.7-percent tax on the first $6,300 of earnings of all American workers. That was going to pay for Medicare. In fact, the cost projection for Medicare made in 1965 for the year 1995 was only off by a margin of 100 to 1. In other words, the program turned out to be 100 times more expensive than was originally predicted when Medicare went into effect. We started with a 0.7-percent tax on the first $6,300 a year you earned to pay for Medicare, but have since raised that tax on a continuing basis. Today it is 2.9 cents out of every dollar of income earned by every American worker. Yet, despite that massive increase in taxes, the Medicare trust fund is still exhausted; it is in the red. The trust fund is not only in the red, but all of the existing assets will be depleted in 4 years. When you add up the both parts for Medicare, the part that pays for hospitals and the part that pays for doctors, according to the Congressional Budget Office, the nonpartisan accounting branch of the Congress that looks at these numbers, we are looking at roughly $1.6 trillion of debt in Medicare within a decade. That is the crisis. Unlike a lot of crises that we talk about in Congress, this is not something that is going to happen in sweet by-and-by. This is something that is happening right now. I have a chart that shows the estimates that are made by HCFA, a part of Health and Human Services and obviously, part of the Clinton administration. This chart shows the financial health of the Medicare trust fund beginning in 1995, where we had a very slight surplus. That now is virtually exhausted, and unless we make dramatic changes in Medicare, this exploding red chart shows what is going to happen in terms of the debt of the Social Security trust fund. For example, 32 years from today, the debt of Medicare, simply the hospital part of the program, will be over $11.5 trillion. I don't know how to define a trillion dollars, but I have a constituent who knows what a billion dollars is, Ross Perot. I may have a few constituents who know what a million dollars is, and most of us know what a thousand dollars is. But not many of us know what a trillion dollars is. Let me put it another way. In 32 years, unless we do something, the debt of one-half of the Medicare program will be over twice as big as the whole current national debt. Needless to say, whether you are a Democrat or Republican, liberal or conservative, whether you work for the Urban Institute think tank or whether you work for the Cato conservative think tank, everybody who has looked at this problem with any degree of scientific basis concludes one thing: This is not sustainable. Twenty-five years from now, if we don't change this program, we are going to have to triple the payroll tax in order to pay these benefits. I want to remind you that the average American family now is paying over 15 cents out of every dollar they earn in payroll taxes and, at the margin of the last dollar they earn, 28 cents out of every dollar in income taxes. If such an explosion in the tax rate at a moment where we have the highest tax rate in American history, as we do today, doesn't frighten you, it should. What is causing this problem? There are really two causes. The first one is an explosion in Medicare per capita costs. It is easy looking back at 1965--when many of us were not in the Senate and when some of us were in college and not worried about this problem--and criticize people who wrote the Medicare program. But in retrospect, the structure of the system makes no sense. I will give you only one example. On hospital care, a big component of Medicare critical to our seniors, if you are in a hospital for up to 60 days, you have no copayment. Every penny of the hospital bill, except for a deductible, is paid by the taxpayer, but on the 61st day, you become responsible for a copayment of $190 a day. On the 91st day, it goes up to $380 a day, and on the 150th day, they throw you out in the street. If you have been in a hospital for 61 days, you are sick. If you have been in a hospital 61 days, the presence of a copayment is not going to change your behavior, because you are already very, very ill. What this irrational structure has done is it has forced our seniors to dig into their pockets and pay between $1,100 and $1,300 for what is called medigap insurance. My mother pays about $1,100 a year for a medigap policy that fills up all these gaps in Medicare so she doesn't have to worry about losing her home if she ends up in the hospital for an extended period of time. But once she has paid for this medigap policy, she then has no copayments and no deductibles on anything other than prescription drugs. So what we have done is set up a system where the copayments are at the end of the system, inducing people to have great risk, but they do not change anybody's behavior. Instead, force people to spend a lot of money to guarantee against it, but once they spend the money, health care to them is free. There are a lot of reforms we need in Medicare, but two are obvious to a blind person. No. 1, we need to give our seniors the ability to pick and choose among competing alternatives, not just an HMO in places where one is available. They need to have a whole range of other options that people can choose. The Federal Government needs to do something in Medicare which long ago everybody else started to do, and that is bargain. The Federal Government with Medicare is the largest consumer of health care in America, and it is the only consumer that does not bargain on the basis of price. The second thing we need to do is reform the current Medicare policy to put the deductibles and copayments up front. I know this sounds extraordinary, but I want to mention it today. As the debate unfolds, I will talk a great deal more about it. We could take the amount that the average senior is now spending on health care, including what they spend on medigap insurance, copayments, deductibles, and pharmaceuticals--which is not covered, and instead have a simple deductible of $1,000 and copayments of 20 percent, with a cap on those copayments of $1,000. Doing this would change the system in a way where the average senior would not be spending 1 penny more than they are currently spending. But by changing the incentive, we could save enough money to pay for pharmaceuticals for all of our seniors. The cost of such a drug benefit is $62 billion over the next 5 years. That is how inefficient the system is. So we want to defend the benefits and defend the seniors, but we have to be willing to fix a system that is broke. If we do those things, we can stop the explosion of per capita costs, and we can actually improve the system, in my opinion. That is only part of the problem. The next part of the problem is a demographic time bomb, and let me explain how it came about and how big the problem is and then talk about how we fix it. When Medicare was written, something extraordinary was going on in America. It was 1965, and what we call the baby boomer generation was just beginning to enter the labor market. This chart I have shows the birth rate in America from 1930 to 1985. It is a pretty extraordinary chart. What happened is that the birth rate was relatively low in the Depression. There was a little spike during the war. But when Americans came home from the war--while economists were worried about whether were we going back into the Depression or what the future was going to look like--Americans decided the future was going to be great. One of the things they started doing was having babies at an unprecedented rate since the colonial period. In fact, a number of Members of the Senate today were born as part of this baby boom generation. When Medicare was written, it was the first year a baby boom group had entered the labor market. In fact, these first baby boomers, born in 1946--causing this big spike--came into the labor market the same year that Medicare was written. That year four times as many new workers came into the labor market as had come in just 2 years before, and as far as they could see, it did not look like it was ever going to end. However, had they actually gone over to the Census Bureau and looked at the data, they would have seen it had already ended. But, when you are spending money and making people happy, you do not want bad news; you want good news. The good news was we were about to have this explosion of new American workers, and so Congress decided that we could fund Medicare by simply using a transfer payment, almost like a chain letter, and I do not intend to be critical. They decided that these workers are so numerous--and wages immediately after the war had grown twice as fast as they had grown in the modern era--that we can simply tax them and begin providing medical benefits for retirees immediately, funding this as a transfer payment. Now, this system worked great until these baby boomers started to near retirement. This chart is an extraordinary chart because you can see where we are. The people who are retiring today were born in 1932. You can see from this chart the birth rate in 1932--in fact, here it is, 65 years ago. The birth rate in 1932 was relatively low, and in fact this year only 200,000 people are going to retire. This is as good of a year as we are going to get. In fact, these should be the best years in the history of Medicare. These are really the fat years since there are relatively few retirees and every baby boomer is still in the work force. Let me just use a story from the Bible. Remember Joseph, Jacob's son, who was the favorite son of his father because he was real smart. His father bought him a multicolored coat. You remember the story. His jealous brothers kidnaped him, hid him in a well and sold him into slavery in Egypt. One day the Pharaoh of Egypt dreamed of seven fat cows and seven skinny cows. The seven skinny cows ate the seven fat cows. Nobody could interpret the dream. Then he hears about Joseph, this guy who can interpret dreams. He sends for Joseph, and he interprets the dream. He explains that there will be 7 years of plenty followed by 7 years of drought. The Pharaoh commissions Joseph to set up stores of grain during the years of plenty. He stores the grain, and then the drought comes, and the people are happy. Now, today we are in the fat years. We have all these baby boomers still working. We have the lowest number of people retiring that we have had in the recent past or that we will ever have again in the history of the country. Yet in the midst of the fat years we are broke. In the midst of the fat years there is no grain being stored. We have guaranteed benefits to a whole generation of Americans, and we have not set aside a penny to pay for them. Whereas only 200,000 people are going to retire this year, 15 years from today 1.6 million people are going to retire, and that number is not going to change for 20 years. The impact of that is cataclysmic-- cataclysmic. Now we are beginning see apologists write letters and say, OK, look, people like this guy Gramm and a lot of other people are saying we have this terrible problem. We are going from 5.9 workers when Medicare started per retiree to 3.9 workers per retiree today to 2.2 workers per retiree by 2030. People who say, don't worry about it might agree that we are about to have this huge number of people retire and claim a benefit for which we cannot pay. But, they say, we can rejoice in the fact there are fewer children, and since the average family spends $110,000 on things for their children before they are 18, we could get them to give us that money so that we could spend it on somebody else. We might be able to solve this problem with additional taxes. Well, look, here is the problem. We do spend mammoth amounts of money on our children, but we are joyful givers in doing giving to our children. People do not feel the same way about paying taxes. We are pretty efficient in spending money on our children most of the time, yet our Government is not terribly efficient. That is the problem. I do not care how you try to gloss over it, this is a big problem. Solving this problem is going to cost more money in real, inflation-adjusted dollars than it cost to win World War II. So what is the good news? The good news is the following. No. 1, today, the average 22-year-old worker, who is paying 2.9 percent of their income into Medicare, and is paying for Social Security benefits, unless we do something and do it quickly, will never get the kind of benefits I would. It would not be possible to get the kind of benefits their parents are getting today. But if they simply took 1.3 percent of their wages and invested that in an annuity that earned a 3.0-percent real rate of return--a pretty conservative rate of return--they would have assets when they retired at 65 big enough to fund a private health policy that would cover everything Medicare covers. Now, think about it. The average 22-year-old today is paying over twice what they would have to pay if they could simply set aside part of their income to pay for their own retirement health care. In fact, the average 39-year-old worker, if allowed, could put that 2.7 percent into a real investment, instead of giving it to Medicare, and could fund their health care in retirement. Now, what we are going to have to do to fix Medicare is the following. We are going to have to, first of all, set up a system where young workers can put at least part of what they are paying into Medicare today in a real trust fund that will guarantee them some health care benefits. If we do not do that, we are simply going to have a generation that is going to pay for benefits that they never get. So the first thing we have to do in dealing with this long-term structural problem is to take at least part of the tax for Medicare being paid by young people and set up a real trust fund for them. Second, we are going to have to admit that we have an unfunded liability on Medicare of $2.6 trillion. Now, swallow hard and think about that number. That is the number that we owe because we guaranteed these benefits, and we never set aside any money to pay for it. What we are going to have to do is take part of the premiums of young people and invest them to guarantee their benefits. Over the next 50 years we are going to have to come up with $2.6 trillion to pay off this debt we have. That is a lot of money, but let me tell you, if we set up a transition program, we could do it. Let me conclude with this point. We are in the midst of a budget debate. You are going to hear in the next few weeks debate on the floor of the Senate about the budget, and you are going to hear people talking about cutting Medicare or politicizing the Consumer Price Index to cut Social Security to pay for balancing the budget or to pay for tax cuts. We are not going to make money by saving Medicare. We are not going to make money by saving Social Security. Anybody who thinks that by saving Medicare we are going to enable ourselves to spend money on other things simply does not understand the problem. It is going to cost money to save Medicare. It is going to, 20 years later, cost money to save Social Security. And if we want to balance the budget, we are going to have to do it by having less bureaucracy and less Government. Every penny we save in reforming Medicare has to go to save Medicare. If we ultimately, as a result of decisions by economists and not politicians, change the Consumer Price Index and we save money on Social Security, every penny of that money has to go to strengthen Social Security. We cannot let Congress go out and spend it on something else because the problem is already a severe problem, and every day we put it off it gets worse. Let me conclude with the Fram oil filter argument. If today we decided to fix Medicare and change the system to stop the explosion in per capita cost, then get Medicare benefits purchased by the Government as purchased as efficiently as medical care purchased by the private sector, then we set up a 50-year transition program that allowed us to pay off the money we owe to provide the benefits to current beneficiaries of Medicare, it would cost us about $2.6 trillion, which is about half of the existing Federal national debt. We owe the money we committed. We are going to have to pay it. But if we wait 10 years to do anything, that unfunded liability is going to rise to $3.9 trillion. And if we wait 20 years to do anything, it is going to rise to $6.1 trillion, which is bigger than the current national debt. So what we have to do in Medicare is this. First, we have to admit that we have a terrible problem, and it really boils down to two things. No. 1, we do not have a system that is efficient and that encourages economy, and we have to change it. No. 2, we have a huge unfunded liability because Congress has guaranteed all these benefits year after year after year. At the very moment when we ought to be piling up big surpluses to pay for these benefits, the system is going broke. So we have all these guarantees and we have not a penny to pay for them. And we are going to have to pay for them. Nobody is arguing that we forfeit on these commitments we made. Now, I know, as we get into this debate, there will be people on the floor of the Senate and there will be many professional advocate groups that will say, my goodness, you are talking about these big debts. Don't you realize this is Medicare, and it is wonderful and it is great? That is like when you are trying to call the fire department because the house is on fire, and somebody says, well, it is burning, but isn't it a beautiful house? Isn't it great and don't we want to keep it the way it is? Well, the point is it is on fire. The second thing we have to do is to come up with a long-term funding mechanism. All these issues can be demagoged. All of them can be very rich politics for somebody who wants to exploit them. But look at the cost of doing that. The cost is dramatically changing the real income of our children and grandchildren. If we do not deal with Medicare now, if we do not deal with Social Security 15 years from now, we are going to have the first generation in American history that is going to have lower living standards. I am not saying these problems are easy to deal with. When you guarantee a benefit and you do not set aside money to pay for it, when people start claiming it, there is no easy out. But the point is, there are things we can do. And we have been putting off and putting off and putting off doing something about Medicare. The time has come to start making some tough decisions. And it seems to me, Mr. President, that on the day when we have just gotten another report from the Social Security trustees and from the Medicare trustees basically saying, ``Alert. Medicare is going to be insolvent in 4 years,'' and it is going to have a cumulative debt for the hospital and physician portions of about $1.6 trillion over the next 10 years, the time has come to do something. I hope we can do it on a bipartisan basis. As chairman of this subcommittee, whether we have a budget or not, my goal is going to be to try to do something about Medicare. This is not a budget problem. This is not about the deficit. This is about maintaining the viability of a program that is critically important. As I said yesterday at a press conference, there are a lot of things I am going to do in my life that I do not want to do. But I am never going to pick up the phone and call my 83-year-old mother, and say ``Momma, Medicare went broke today. It went broke because Congress didn't want to tell anybody that there was a problem, and we didn't have enough courage to do something about it.'' I am going to talk about this problem a lot because 4 years from now all America is going to know about it. And 4 years from now every Member of the Senate who is still here is going to have to answer the question: Where were you when all this happened? Where were you when all this was going on? Why didn't you say something about it? Why didn't you do something about it? I am going to say a lot about it. I hope to do something about it. I want to thank the Chair for giving me this opportunity today to come over. This is a speech that is going to have to be given many, many times. The first reaction, when you get news like this, is denial. I guess it is sort of like going in to see the doctor, and the doctor says, ``Well, I hate to tell you this, but you've got a debilitating disease that can ruin your life.'' I mean, the first thing we all want to do is say, ``No. You have messed up this test. This is somebody else's test. This can't be me. I am a guy that works out. I run. I say my prayers. It's not me.'' But in my concluding remark, let me say that while this is the doctor saying, ``You've got a debilitating disease and it can ruin your life,'' the important thing is that the doctor also is saying, ``but I can cure this disease. I can cure this disease. But the cure involves you changing your lifestyle. You're going to go on a diet.'' Now it is up to us. I am ready to do both. And I am confident ultimately Congress will--ultimately we will fix this problem. If we do it now, the burden is going to be heavy but it is going to be bearable. If we delay it we are going to end up ultimately denying some benefits and we are ultimately going to lower the living standards of the next generation. Both those things can be avoided. I hope we can avoid them. I yield the floor. Mr. KYL addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, let me first congratulate our distinguished colleague from Georgia for his leadership on this issue. I came over today to speak on this subject because I think this is a very serious matter. It behooves us, and it is in the interests of the American people on issues like this, to speak before the President acts, rather than to wait for the action to occur and then complain about it. I want to be very emphatic today on this issue because I think this is a fundamentally important issue. First of all, the Constitution is very clear in article 1 that Congress shall have the power to make law. Now, granted, within the parameters prescribed by law, the President has the ability, through Executive power, to implement those laws, and has from time to time used Executive orders to implement the laws passed by Congress and enacted by the President's signature. Many of you will recall that 2 years ago the President attempted to put into operation by Executive order a provision that had already been rejected by Congress. Though it is a very important issue, the principle is what I want to deal with today. Basically, Congress had refused to pass a law that said that if workers refuse to work, the employer could not hire other workers to take their place. I never viewed that issue as a labor-management issue. I always viewed it as a freedom issue, as I believe most Americans do. Simply stated, I have a right, if I do not want to work for you, to quit. If I want to stop supplying my labor, or in concert with others, stop supplying my labor, I have a right to strike. But you have rights, too. One of those rights is hiring somebody else who is willing to work. After an extended debate, the Congress refused to enact a law denying employers the right to hire other people when their current workers refuse to work and a strike drags on and on. The President, by Executive order, tried to do what Congress had refused to do, by mandating that companies not be permitted to replace striking workers. The courts properly stepped in and said that the President had overstepped his bounds and had no authority to make such law by Executive order. In fact, Congress had already refused on exactly that same subject to take legislative action. If we can believe what the Vice President has said in a speech before the AFL-CIO, it appears that the President is about to do the same thing again. Now, he is going to try to do it a little bit differently. He is going to allow the individual Federal departments and agencies to take action if they choose. The net result is that through Executive order, the President is going to be violating the constitutional powers of Congress. This Executive order has been alluded to before, but what it boils down to is this: If the President goes ahead with his Executive order, he is going to be saying that in order to bid on a contract, a company is going to have to hire union workers. Now, 89.1 percent of all private workers in America are not members of unions. So what this Executive order would do is say to almost 90 percent of American workers in the private sector of the economy, ``You can't work on a Federal Government contract. You are precluded because you are not part of a privileged group empowered by the President to have rights beyond anybody else's rights. That is, you are not a member of a labor union.'' Now, Mr. President, if the President's Executive order and new regulations went forward we would mandate union representation of all workers on all Government projects. We would mandate that all workers on all Government construction projects be hired out of union halls. We would require that all workers on Government construction projects pay union dues. We would eliminate competition. Mr. President, 89.1 percent of all American workers would be precluded from working on contracts funded by their tax dollars. Finally, we would impose on contractors doing work for the Federal Government union rules, including restrictive rules that limit the ability of workers to carry out their functions officially. So the first thing the President's order would do is say to 89 percent of all workers in America, ``You can't do work for the Federal Government on contracts.'' Second, if the current contractors switched and required mandatory union membership by their workers, the President's proposed Executive order, in one swoop, would increase the number of people who are members of unions by at least 13 million members. Let me repeat that: If the President's Executive order is put into place and it stands, and if existing contractors, rather than lose their livelihoods and businesses, employers would be forced to say OK, we will pay tribute and force our workers to join unions whether they want to join and pay dues for services they do not want or not. That one action alone would mandate at least 13 million people to pay tribute and earnings to organizations they have chosen not to join. That does not sound like America to me. I have a right to join a union. I have always supported that right. But I also have a right not to join a union. And I ought to have a right not to join a union and still do contract work for the Federal Government, which is run in small part by my taxes. As my final point, if the President puts this Executive order and new regulations into effect, and we are then forced to pay union scale on every construction project undertaken on behalf of the taxpayers, it will add 17 to 21 percent to the cost of Federal projects, according to the General Accounting Office, which is the accounting arm of the Congress and the Federal Government. The President's Executive order and new regulations would add $42 billion of additional expenses on the backs of the American taxpayers. So what the President proposes to do by Executive order, in summary, is deem 89.8 percent of Americans ineligible to work on Government contracts. And at least 13 million Americans, if they choose to work on Government contracts, would be forced into involuntary union membership. Finally, the taxpayer would be forced to pay union wage levels higher than the level typically paid in the private sector and often above the level paid to many people who are paying the taxes that fund the project. Now, I wanted to make two points today, and then I will yield the floor. First, this is a terrible Executive order. This seems to be little more than political payoff. Those are strong words to say on the floor of the U.S. Senate, but it is hard to find any other justification or any other rationalization for barring almost 90 percent of American workers from working on contracts for their Government, mandating that at least 13 million people join a union they do no want to join, and paying an additional $42 billion per year in new labor costs. If that does not give the appearance of a political payoff, I would like to know what does. It is hard to think of any other explanation. Second, and probably the most important point that I want to make, is that sometimes things occur between branches of Government that create ill feeling and hinder the ability to engage in bipartisanship. They make it more difficult for us to do our job. If the President follows through with his Executive order, it will seriously jeopardize bipartisanship cooperation in this Congress. There is no way we could let this stand and little possibility that we could act as if nothing had changed when our very powers prescribed in article I of the Constitution are being usurped by the President. It difficult to imagine us acting as though we simply disagree with each other and then go on working together hand-in-hand doing whatever we might be doing. There is little chance of that happening. Our message today is a warning to the President: Mr. President, don't do this. This is wrong for America. If you do this, it is going to be very difficult for us to work together. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Mr. President, along with my colleague, Senator Hutchison, I am proud to introduce legislation that would name the Federal courthouse in Brownsville, TX after a man who has been involved in the administration of justice throughout South Texas for nearly 60 years, Judge Reynaldo G. Garza. Judge Garza was the first Mexican-American to be appointed to a Federal judgeship in the history of our country, when President Kennedy appointed him to a district court bench in 1961. Judge Garza served as a U.S. District Judge until 1979, when President Carter appointed him to the Fifth Circuit Court of Appeals, where he still serves, at the age of 81, in senior status. Besides being named a the first Mexican-American Federal district judge, he was the first Mexican-American chief district judge, and the first Mexican-American Federal circuit court judge. He would have been the first Mexican-American ever to have been appointed to a President's Cabinet if he had accepted President Carter's request to serve as the Nation's attorney general in 1977. Sensibly, however, Judge Garza didn't want to move from Brownsville to Washington, DC. Judge Garza's life has been filled with extraordinary accomplishments. Born in 1915 in Brownsville to Ygnacio and Zoila Garza, both Mexican immigrants, he was the sixth of eight children. Judge Garza reached adulthood during the Depression and, through sheer ability, hard work and determination, graduated from the University of Texas Law School in 1939. He then established a law practice in Brownsville, mixing his work with the demands of raising five children and serving his community in capacities ranging from the local school board and city commission to the Knights of Columbus. Following the Japanese attack on Pearl Harbor in December of 1941, Reynaldo Garza enlisted in the U.S. Army and served until the war's end in 1945 as a gunnery sergeant and in other capacities. In 1943, Garza was selected to serve as translator in a meeting between President Franklin D. Roosevelt and Mexican President Miguel Avila Camacho, marking the first time a U.S. president had met with a Mexican president on Mexican soil. Judge Garza's selfless commitment to his family, his community and his Nation is exemplary, and today, he serves as a role model for people both inside and outside of the legal profession. I am privileged to introduce this legislation in Judge Garza's honor today and look forward to working with my colleagues to make the Reynaldo G. Garza Federal courthouse a reality.

Mr. GRAMM

Mr. GRAMM. Mr. President, I would like to congratulate Profs. Robert F. Curl and Richard E. Smalley of Rice University in Houston for their work in the field of molecular chemistry. Along with Prof. Harold Kroto of England, Professors Curl and Smalley were awarded the 1996 Nobel Prize in chemistry for their discovery of the third molecular form of carbon. Professor Curl, a native Texan from Alice, and Professor Smalley are codiscoverers of the carbon molecule called Buckminsterfullerene. It was named after R. Buckminster Fuller, the architect famous for his geodesic domes, because this new molecule closely resembles his designs. In fact, the term used to describe these molecules is ``buckyballs.'' This breakthrough discovery by Professors Curl and Smalley promises to revolutionize the world we live in. This new carbon molecule will have scientific and practical applications across a wide variety of fields, from electrical conduction to the delivery of medicine into the human body. These extremely stable molecules are impervious to radiation and chemical destruction, and can be joined to form carbon nanotubes which are 10,000 times smaller than a human hair, yet 100 times stronger than steel. Buckyballs will establish a whole new class of materials for the construction of many products, from airplane wings and automobile bodies to clothing and packaging material. The work of Professors Curl and Smalley is just one example of the excellent work being done at Rice University and at the many other fine research institutions in Texas. Rice University has long been a premier research center, and with the new Center for Nanoscale Science and Technology, Rice is the first university in the United States to focus on submicroscopic methods for fabricating new structures on the atomic and molecular scale. As Professor Smalley himself described it, ``This is the ultimate frontier in the game of building things.'' Given that nanoscale science and technology requires an interdisciplinary approach, Rice University is the ideal setting for this new center for nanoscale research. The collaborative scientific approach, which is common at Rice but less customary at larger research institutions, encourages the sort of scientific breakthroughs exemplified by the discovery of buckyballs. These discoveries are essential if we are to guarantee that America will remain the world leader in research. We must be sure we do all we can to support our Nation's scientists, because our Nation's future depends upon the work of people like Professor Smalley and Professor Curl. Once again, I congratulate Professor Robert Curl and Professor Richard Smalley, as well as Rice University, for earning the Nobel Prize in chemistry. Their contribution to the body of scientific knowledge has been invaluable and will touch the lives of millions.

Mr. GRAMM

Mr. GRAMM. Mr. President, the Chairman of the Securities and Exchange Commission, Arthur Levitt, has requested that the Securities and Exchange Commission be given additional time to prepare for the historic changes enacted by the last Congress to the Investment Advisers Act. Chairman Levitt requests an additional 90 days before those changes become effective. After careful review and discussion with my colleagues, and with the members of the affected industries, I believe that it would not only be proper but also desirable to give the SEC an additional 90 days to prepare appropriate regulations and take other steps necessary to implement last year's legislation. I support this extension, S. 410, of which I am a cosponsor, primarily out of a desire that the necessary rulemaking be done carefully and responsibly. In most respects, I believe that the draft regulations published by the SEC for comment faithfully implement the language of the National Securities Markets Improvement Act and the intent of the Congress. In several instances, in fact, I believe that the SEC has done a particularly fine job in anticipating and responding in detail to the various questions that would arise as we implement the division of regulatory responsibility mandated in last year's historic legislation. As we adopt this bill today, however, I feel compelled to express concern about one point in particular in which the draft SEC regulations are deficient. The good work of the Commission in other areas of implementing regulations makes this error so glaring. The draft regulations propose to define an investment adviser representative's ``place of business'' in a way that runs totally counter to the spirit of the legislation, the intent of the Congress, and the clear, plain reading of the language of the law. I am aware that there are those who oppose bringing rationality to the system of securities regulation, who wish to retain superfluous layers of regulatory oversight, and who are not bothered by subjecting securities professionals to redundant supervision by the Federal Government and by a multitude of State governments. However, the fact is that Congress acted last year to eliminate where possible multiple State supervision of securities market professionals, and the SEC rules should not contradict the statute. Under the plain provisions of the law as enacted last year, investment adviser representatives subject to SEC supervision may also be supervised to a limited degree by the Government of the State where the representatives has a ``place of business.'' When I think of place of business for an investment adviser representative, I certainly do not think of a restaurant, an automobile, an airport lobby, or a phone booth, and I would consider it bizarre to think of an adviser's client as a ``place of business.'' The implementing regulations must not indulge in the creation of this confusion, either. Mr. President, I urge my colleagues today to agree to this legislation to give the SEC an additional 90 days to implement the investment advisers title of the National Securities Markets Improvement Act, and I do so explicitly so that the SEC will use this time wisely to correct the deficiencies in the proposed regulations, such as the place-of-business definition, and thereby implement last year's act and the will of the Congress, not frustrate it.

Mr. GRAMM

Mr. GRAMM. Thank you, Mr. President. I begin my discussion of the resolution before the Senate by reading two things. The first thing I will read is the first amendment to the Constitution. I will then read a statement made by the principal proponent of this amendment as it has evolved through the legislative process, the distinguished minority leader of the House of Representatives, Richard Gephardt. And then I will discuss the fact that for the first time in the debate on campaign finance reform, for the first time ever, we are debating the real issue. To this point, as is often so true, even in this greatest of deliberative bodies on the planet, we have not really debated the underlying issue, because often either one side or both sides of an argument has an incentive to cloud the real issue so that people do not understand. The one thing that I am very thankful for, and that I want to congratulate our colleague from South Carolina for in proposing this amendment, is that for the first time in the debate on campaign finance reform, we are finally debating the real issue that is being contested here--I rejoice in having this opportunity to debate. I will debate the issue a little, then I want to talk about the underlying issue, and then I will say something about our distinguished colleague from Kentucky. The first amendment to the Constitution, which has been memorized by most schoolchildren in our country, is one of the most recognizable part of the Constitution, and says the following thing: Amendment I. Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of people peaceably to assemble, and to petition the Government for a redress of grievances. That is the first amendment to the Constitution of the United States, and that is the massive thorn in the side, the impediment, and the giant mountain that serves as a barrier to those who want to reform American campaigns to limit the ability of people to raise and spend money. It is this impediment that they face which makes it impossible, without trampling this amendment into constitutional dust, to achieve what they want. Today, we are debating this issue in a proposal to amend the Constitution and to amend, in particular, the free speech clause of the first amendment. Now, I want to next read a quote from the distinguished minority leader of the House, Richard Gephardt. This is a quote where Mr. Gephardt is talking about his amendment. He says: What we have is two important values in direct conflict: freedom of speech and our desire for healthy campaigns in a healthy democracy. You can't have both. Now, let me read that again: ``What we have is two important values in direct conflict: freedom of speech and our desire for healthy campaigns in a healthy democracy. You can't have both.'' Now, Mr. President, I wish the Founding Fathers could have heard that statement and could have realized that the distinguished leader of the Democratic Party in the House of Representatives, in setting out what he views as desired healthy campaigns and desired healthy democracy, believes that free speech must die for these healthy campaigns to occur. This logic would have rightly been rejected by every single Founding Father. I know it because when they wrote the Constitution and when the first Congress adopted the Bill of Rights, they picked one amendment to be first, and that amendment is very clear: ``Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech * * *'' Now, why this amendment is so important, why this debate is so critical to the debate on campaign finance reform is that, for the first time, we are now discussing the real issue: Do you believe in freedom of speech or not? I do. Therefore, I am opposed to this amendment, and I am opposed to what is posing as campaign finance reform. Or do you believe that Government ought to be given the power to circumscribe free speech to achieve the Government's decision of what, in essence, good elections are? That is what the issue is. For the first time in this long, convoluted debate, we are really now down to that key issue. I hope and I believe that we are going to reject this amendment and that we are going to say, once and for all, that we believe in free speech. In fact, how can you have genuine elections without free speech? Ultimately, the speech that our Founding Fathers were most concerned about was political speech. Yet, we have an amendment before us that would amend the Constitution and that would limit free speech in the name of--to go back to Leader Gephardt's language--``promoting healthy campaigns in a healthy democracy.'' Mr. President, what Mr. Gephardt wants to do, and what proponents of this amendment want to do, is to limit free speech because they want to change the balance of power in the political process. Those who believe that the first amendment is a sacred part of the Constitution have to reject this amendment out of hand--and I do. And I believe the majority will as well. But let me go one step deeper into the process to try to at least give my view as to what this whole debate is about. If you went out in the public, which is reading all of these stories written by all these groups who are promoting various ideas about campaign finance reform, I think what the American people would be saying is that they are concerned that too many groups exert too much control over Government and they would like to fix it. Well, it is interesting, because the Framers of this document, the Constitution, were concerned about exactly the same thing. But maybe because their world was simpler than ours, maybe because their vision was clearer than ours, they understood that the solution to bad speech or ineffective speech or speech you disagree with is not limiting speech, but opening speech up and guaranteeing free speech. Now, here is the problem. People are worried about interest groups influencing the Government. But, let me go back one more basic step. What is it about Government that people want to influence? Well, what it is about Government that people want to influence is that Government does things that are very valuable. Government sets the price of things. Government runs programs where we set interest rates, where we set rents, where we set the price of commodities, where we impose regulations that benefit some people and hurt others. Government is a major player in the economy as a setter of prices and regulations that accumulate and destroy fortunes. So people want to influence Government. The second reason people want to influence Government is that Government spends a lot of money and people want part of it. A third reason people want to influence Government is they care about it. They care about the future of their children. They love their country, and they have philosophies that they believe in. They have a vital interest in their children and grandchildren and they take seriously either their obligations as a citizen, defined in the Constitution, or the biblical admonition, ``Render unto Caesar what is Caesar's.'' Now, nobody wants to limit the third kind of influence, I don't think. If somebody loves America and they want to be involved, or if somebody believes our colleague from North Carolina is the next Thomas Jefferson and they want to support him because they believe in him, nobody in this debate claims they want to interfere with that right. It has always amazed me that never once in the campaign debate has anybody proposed eliminating the power that people are trying to affect by engaging in campaigns. If we are worried that milk producers are going to give money to candidates to raise the price of milk, why not stop having the Government set the price of milk? Then, if milk producers are involved in the debate, you do not have to worry about why they are involved. They are involved because they care and they have opinions and they have an interest in the country. If we are worried that people are wanting to sleep in the Lincoln bedroom or go to a coffee with the President because they want a contract from HUD, and we think that is the wrong use of political power, why not get HUD out of the contract business? Why do we not mandate competitive bidding? Why not eliminate all of this discretion? If we are worried that people want a contract or a benefit or something, why do we not go after that power and eliminate it? That is what the Founders would have said we should do, yet nowhere is that being proposed. What is being proposed, then, is not eliminating all the reasons people want to influence the Government for their own benefit, but what is proposed is changing who is allowed to intervene in that debate. The basic argument, which on its face is a self-contradiction, always seems to be that we want to limit the ability of citizens to contribute to the candidate of their choice so that this candidate can express his views. I have heard nobody object to the AFL-CIO endorsing a candidate, which is worth millions of votes nationally, is worth hundreds of thousands of volunteers, and has the monetary equivalent of millions of dollars. Nobody says there is anything wrong with that. Nobody says that there is something wrong with the teacher's union, the National Education Association, endorsing the President and putting thousands of teachers into phone banks and doing all kinds of letters to their members to promote the President. But there is an effort to single out one particular type of involvement, and that involvement is where a person puts up their time, talent, and especially their money to support a candidate. There is somehow supposed to be something wrong with somebody writing a check to support their local candidate or their State candidate or their national candidate. But notice that if we ban contributions completely so that nobody could spend any money and so that the only people who would have the ability to communicate would be big, powerful organizations like the AFL-CIO, organizations that are able to manipulate the media--like environmental groups or Ralph Nader--people who are rich enough to own newspapers, and people who were simply influential enough to command attention for their ideas. I have a constituent, Ross Perot, who is worth over a billion dollars. When you are worth over a billion dollars, people listen to what you have to say. But the point is that this effort to limit the ability of free people to contribute does not eliminate what people do not like about the system; it simply makes other groups more powerful. I would like to establish a principle which I think it is made very clear by this proposed amendment. What we are seeing here is an effort not to eliminate political power, but to redistribute it. Limiting the ability of people to raise money or contribute money or spend money would clearly eliminate part of the competition in the battle for ideas in America. But it would leave all the other competitive groups in place and would clearly tilt the balance of power. What is really being said here is that something pretty fundamental has happened in America. It is really the confluence of two forces, and if I were on the other side of this political debate, it would scare me to death. No. 1, people don't write small checks, by and large, to Democrats. I have had the great honor of heading up the National Republican Senatorial Committee, where we had a power that our Democratic colleagues never had. We could send out a letter to millions of people and we could get hundreds of thousands of people to write us checks for $25, $50, or $75. Never was there a day while I was chairman of the National Republican Senatorial Committee when the Democrats average donor did not give somewhere between 3 and 10 times as much, in terms of the amount of money, as our average donor. The plain truth is, if your agenda is more government, more taxes, and less freedom, you have a hard time sending out a fundraising letter and getting people to give. You have to let them sleep in the Lincoln Bedroom. You have to hold meetings with them. You have to make them believe they might be getting something for it. So, obviously, if you are on the losing end of this battle of free speech, you want to limit free speech. The other force that is coming to bear in this confluence is that Reconstruction is over. Reconstruction in the South ended in 1994 when we elected a Republican majority of House Members, Senators, and Governors from the Old South. It is hard to believe that the Civil War and Reconstruction took that long to work its way through the system. But it did, and it is forever changed. So what we are really seeing here--and, unfortunately, it is aided and abetted by those who want the change to occur because it makes them more powerful--is an effort to change the political landscape of America to give more power to editorial writers, to unions, to teachers, to groups that can manipulate the media, and to take power away from working men and women who are willing to voluntarily contribute their time, their talent, and their money. Unfortunately, the people who give report cards on this debate and write nasty editorials about our dear colleague from Kentucky are editorial writers who are probably the biggest beneficiaries of this proposed amendment. After all, if we are limited in our ability to either spend our own money or to raise money from other people and then spend it, then editorial writers become very, very important. On the other hand, if you have the ability to raise money and to tell your story, they become far less important. As I have said to those friends that I have had in meetings with editorial boards, ``Endorse my opponent on the editorial page, and write a good story about me on the front page.'' Editorial endorsements are not nearly so important when people can engage in free exercise of free speech. The issue here is freedom. You either believe in it or you don't. And I do. I have never bought, and I will never buy, the logic that somehow, if you have 88,000 people in your State who have contributed to your Senate campaign, which I do, that somehow we ought to have a law that says we can allow up to 50,000 people to contribute, but when we reach the point of that 50,000th person that has contributed, the 50,001st person will not be allowed to participate. I totally and absolutely reject that. The whole purpose of this amendment is to limit the free speech of that last person because Congress is going to decide who will have power, who will exercise it, and how that power will be exercised. The founders of this nation, in this debate, would rejected this proposal. They would have said that if you are worried about Congress setting the price of a product, and you are worried that people will give money to politicians to try to get a higher price to benefit themselves and line their pockets, then take the power to set prices away from Congress. If you are worried about construction contracting, eliminate the discretion in giving contracts and limit the number of contracts that Government is engaged in. But do not limit the ability of people to speak and to express their opinion. I think it is interesting to note--and it is not a debate that I want to get involved in, but I think it is interesting to note--that in the amendment before us, when the amendment says that it gives Congress the power ``to limit the amount of expenditures,'' it is pretty clear that this is very, very broad language. That language could be interpreted, it seems to me, to mean something far more than the authors of this amendment intended. The authors of this amendment intend to limit one particular kind of free speech; that is, free speech by a candidate and by that candidate's supporters. They clearly do not intend to eliminate free speech by editorial writers, by unions, or by whomever else. But the point is that this amendment is probably so broad that ultimately it could mean the limitation of that free speech as well. We have to make a choice as to what we are for. I submit that it is very tempting, in looking at these bills, to say, ``What benefits me?'' And it is very easy for me to devise a campaign finance reform system that benefits me. In fact, I think it is easy for any of us to do that. It might well benefit me to limit contributions because then someone running against me would have no real opportunity to get the kind of exposure I am getting by speaking on television right now with millions of people watching C-SPAN. But I think we have to take a longer view of what these changes are going to mean to people, 20 years from now, who are going to be standing right here where we are standing today. Limiting free speech is not in America's interest. This is a very bad amendment. The intentions of it are basically founded on the principle that free speech and healthy democracy are in conflict. Free speech and healthy democracy can never be in conflict because when free speech dies, democracy dies. If dead democracy is healthy democracy, then you would view that as a good thing. But I do not view it as a good thing. The final point on the amendment: We have voted on this as an amendment to the balanced budget amendment. I believe that we have touched on it with other issues. But today this is a freestanding proposed amendment to the Constitution of the United States. I hope some of the people who voted for it, as a way of making it harder for us to pass the balanced budget amendment, will today vote against it on the merits. I know no simpler way of defining what it is about than to quote its author when he said, as I have already read two previous times, ``What we have is two important values in direct conflict, freedom of speech and our desire for healthy campaigns in a healthy democracy. You can't have both.'' If that is the choice--and it is the choice --do we not choose free speech? Do we not believe in the end, to quote a biblical admonition, ``Ye shall know the truth, and the truth shall set you free"? Before I yield the floor, I want to say something about our colleague from Kentucky, Senator McConnell. These issues are very difficult issues. It is not very popular to get into a discussion about these issues, and there is one Member of the Senate who, more than anybody else, has been willing to stand up on these issues, and his leadership and his courage have become fundamental to protecting our constitutional rights. I just want to say to my colleague from Kentucky that there are millions of Americans who will never know your name, who will never know what you have done, and certainly there are hundreds of editorial writers who will castigate you for it. But I want to tell you in the opinion of one of your colleagues, you have earned our great and permanent appreciation for the courage you have shown on these kinds of issues in standing up for our fundamental constitutional rights. And you have certainly earned our admiration and affection for doing it. Millions of people who will never know your name, will never know about this debate, are beneficiaries of the great leadership you have provided. I wanted to say that on the floor of the Senate because I believe it. I yield the floor. Mr. McCONNELL addressed the Chair.

Mr. GRAMM

Mr. GRAMM. Mr. President, first let me thank our dear colleague from Utah, Senator Hatch, who has been a great and effective leader on this issue. We would not be where we are--that is, as close to the goal line as we are--without him. Our Senate Democratic colleagues are concerned. We hear it everywhere. They are really concerned. I went back this morning and looked at every amendment they have offered to the balanced budget amendment to the Constitution of the United States and found that they are so concerned that they have offered amendments on the floor of the Senate to exempt 95 percent of the domestic budget from the balanced budget requirement. They are so concerned about balancing the budget that they think 95 percent of the things we spend money on domestically ought to be exempt. They are so concerned about Social Security that they believe we ought to continue to pile up debts. We balanced the budget last in 1969. Since 1969, we have piled on some $4.8 trillion worth of debt. In fact, just on the debt we have incurred since 1969, the last year we balanced the budget, we paid a gross interest payment of $320 billion last year. And the Democrats are very concerned. They are concerned that if we do not keep piling up debt, we may not pay for Social Security. But, since 1969, in piling up $4.8 trillion worth of debt, we are paying more interest on that debt than we are paying for Social Security retirees today. Our Democratic colleagues are so concerned, they remind me of someone who would be advising young parents, who have very small children, who want to be able to afford for them to go to college--who might advise those parents, saying: Don't get in the habit of balancing your budget because then you may not send your children to college. How in the world can anybody with a straight face--and I understand politics--but how can anybody with a straight face stand on the floor of the U.S. Senate and say we are in a better position to protect Social Security today, paying $320 billion of interest payments per year on the debt piled up since 1969, than we would have been if we had never incurred that debt, when the interest payment is bigger than what we are paying into Social Security for retirees? Does logic have no meaning? Finally, there is the argument about, well, this is not perfect. This just is not quite perfect. Let me say to my colleagues--and this is an experience I have had in working with Senator Hatch--we have been trying to find perfection here. You know, the Founding Fathers didn't find it. If those who remember the story of the miracle at Philadelphia will remember back, when Franklin stood to speak he said that he didn't believe what they had done was perfect, but he doubted that they would do better. I have found that every time we try to find perfection, every time we try to offer to accept this concern that our Democratic colleagues have, they end up backing away from it. There is no one so unconvincible as a person who will not be convinced. So, I think it is important that the American people understand some basic facts about all we are going to do today, since the balanced budget amendment to the Constitution is going to fail by one vote. Two Members, who voted for this very amendment in the House and who campaigned for it, are going to cast votes to kill it today. What are we getting out of all this? Let me tell you what the lesson is to the Nation. There are 55 Republicans in the Senate, and every one of them-- and I am proud to say every one of them--is going to vote for the balanced budget amendment to the Constitution of the United States. Our Democratic colleagues, in their concern for everything but deficit reduction, have offered amendments to exempt 95 percent of all domestic spending from the balanced budget. How can you balance the Federal budget when you don't count 95 percent of the domestic items that the Government spends money on? The plain lesson here is this: Despite all we say in our campaigns, despite the fact that there are so many who want the public to listen to what they say at home and not look at what they do in Washington, the bottom line is, over and over and over again, what our Democratic colleagues have shown is that they are not for a balanced budget amendment. How can you vote to exempt 95 percent of the budget from the balanced budget amendment and be for it? You can always find an excuse to not balance the Federal budget. You can always be for it in the abstract and not in reality. What I want America to get out of this 3-week debate that we have had is, there is a clear difference. There is a clear difference. Republicans, I am proud to say, are absolutely united, 55 out of 55, in favor of requiring, constitutionally, a balanced budget. This is not our idea. Thomas Jefferson had come back from France where he had been Minister to France during the Constitutional Convention, and when he first saw the Constitution, he said if he could change one thing, he would limit the ability of Government to borrow money to incur debt. And we are here today, over 200 years later, trying to fix this problem in the Constitution. Some say this is not perfect. Some say, ``Shouldn't we exempt all these programs?'' What is more important than the future of our children? A baby born in America today, if this current trend of spending continues--and it will without this amendment--will pay $187,000 of income tax during their working lifetime just to pay interest on the public debt. When does it end? Obviously, in the minds of our Democratic colleagues, not today. We are going to pass a balanced budget amendment, but I am very concerned that we are not going to pass it until we have a financial crisis, until we are all brought to our senses that this debt binge that we are on, mortgaging the future of our children, taxing people yet unborn to pay benefits to people today, has to end. I wish it were ending today. It is a profound disappointment. I yield the floor.