Judd Gregg

Mr. GREGG

Mr. GREGG. I ask unanimous consent that the Committee on Finance be permitted to meet Thursday, November 2, 1995, beginning at 10 a.m. in room SD-215, to conduct a markup of S. 1318, the Amtrak and Local Rail Revitalization Act of 1995.

Mr. GREGG. Mr. President, I ask unanimous consent that the Subcommittee on Forests and Public Land Management of the Committee on Energy and Natural Resources be granted permission to meet during the session of the Senate on Thursday, November 2, 1995, for purposes of conducting a subcommittee hearing which is scheduled to begin at 9:30 a.m. The purpose of this oversight hearing is to receive testimony from academicians and State and local officials on alternatives to Federal forest land management. Testimony will also be sought comparing land management cost and benefits on Federal and State lands.

Mr. GREGG. Mr. President, I ask unanimous consent on behalf of the Governmental Affairs Committee to meet on Thursday, November 2, 1995, at 9:30 a.m. for a hearing on S. 704, the Gambling Impact Study Commission Act.

Mr. GREGG

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GREGG

Mr. GREGG. Mr. President, I ask unanimous consent that at 12:45, the Senate turn to the consideration of Calendar No. 219, S. 1372, regarding an increase in the earnings test.

Mr. GREGG

Mr. GREGG. Mr. President, last week we passed out of this body the reconciliation bill which will lead to a balanced budget. This is obviously a significant step on the road to guaranteeing our children a nation which can be prosperous and which is solvent. I believe most Americans understand the importance of the balanced budget. They certainly expressed it in my district, and I am sure in other States, year after year as they have gone to the polls. They understand it because in their homelife they experience the need to maintain fiscal solvency. They know that if they continue to spend every year more than they take in, it will lead to some sort of economic chaos in their own lives, and intuitively and logically they understand, therefore, that for the Federal Government to do that, not only year after year but what has amounted to generation after generation, leads inevitably to economic chaos. So the Republican leadership in the Senate and the House has produced a budget which will give us a balanced budget by the year 2002. For the first time in years we will actually be living within our means. This is, I believe, a critical step on the path to assuring, as I said earlier, a solvent nation for our children, which is, I believe, our No. 1 responsibility as keepers of the flame of America as Members of this Senate. The question, however, is whether or not the President will join us in this effort in a serious way. The President has repeatedly said that he wants to balance the budget. But so far his actions have certainly not matched his words. Although we have produced a serious proposal for balancing the budget, which the Congressional Budget Office has scored as being in balance, and are now trying to iron out the differences, we do not find that the President has been willing to join in substantively discussing this matter in a serious way. Conventional wisdom holds, in fact, that the President will veto this bill and then he and the Congress will negotiate and reach some type of agreement, hopefully. But I am not so sure. [[Page S 16573]] I say this because before we can negotiate, the President, despite all his nice political statements, still must prove he is truly serious with accomplishing a balanced budget. So far, he has not taken this action. He certainly has not proved it either to the Congress or to the American people. In my view, there are five things which the President must do if he is to prove that he is serious about the issue of balancing the budget. These go beyond the rhetoric of campaign promises. I would like to go over these five items. First, we must start using the same numbers to talk about the issue of balancing the budget. The administration began its term with a very grandiose statement back in February 1993 fresh off the election that they would use the Congressional Budget Office for the purposes of determining the fair scorekeeping of the budget process. He made this statement a number of times. But he made it most eloquently when he spoke in his initial speech to the Congress. In taking this position when he was first elected President, he took the right position, the correct position. The Congressional Budget Office is the fair arbiter of the scoring of the budget process. However, since the Congressional Budget Office scoring process has no longer become convenient to the administration, the President has abandoned his original commitment. This is a mistake. The numbers which he sent up to us in June--which were basically a sheaf of paper and were not really a budget--represented, according to the President and to his people, a balanced budget which we would reach in 10 years. Unfortunately, those numbers used as their baseline and for their assumptions were numbers produced by his own inhouse accountants, the Office of Management and Budget. When that budget was scored by the Congressional Budget Office, the fair arbiter of budget scoring in this body and which the President had initially said would be the fair arbiter, it turned out that their budget did not reach balance, that, in fact, it represented $200 billion deficits each year for as far as the eye could see and that there was no closure between spending and revenues. So, the first thing the President's people have to do is be willing to agree to use numbers which are credible and which are acceptable. And I would suggest that we go back to the beginning of this Presidency and follow the counsel that he gave us at that time and use the Congressional Budget Office numbers. In June, the President submitted a revised budget, and, as I mentioned, it alleged that it would reach balance in 10 years. Unfortunately, he only released 25 pages, and he gave us no specifics as to how he would accomplish this, even in terms of the numbers, which as I mentioned earlier, were inaccurate. It is essential that we get details, that he--as we have as Members of the Senate and as Members of the House--produce a budget which has the details behind the numbers, which has substance, which has meat on the bones. We cannot possibly reach a budget agreement if we are simply going to work off a sheaf of paper which has no specifics. We have put down on the table in extensive language what we as Republicans think should be done to correct some of the excesses of the Federal Government, to improve the manner in which it delivers services, to give people an opportunity to have a Medicare trust fund which will remain solvent. We need now to hear from the President as to his specifics in detail as to what he would do in the area of Medicare reform, in the area of Medicaid reform, in the area of welfare reform. Yet, we have not heard that. That is why one questions his sincerity when he talks about producing a budget that will be in balance. Third, we need to reach an agreement as to when we should reach a balanced budget. We, as Republicans, have put forward a budget which reaches balance in 7 years. It was not easy. It meant that we had to make some very difficult decisions. We had to agree--amongst ourselves, unfortunately, because the White House was not willing to participate--to agree to take $1 trillion of spending out of the Federal stream of spending. That did not mean we cut the size of the Federal Government. In fact, it will continue to grow by 3.3 percent annually. Medicare will continue to grow by 6.4 percent annually, and Medicaid will continue to grow by approximately 4.5 percent annually. But we did have to slow the rate of growth of those programs, and we did, in a number of programs, actually have to cut spending. For example, defense spending will go down in real terms over the next 7 years by $19 billion. But we have to have a definable period when we are going to reach a balanced budget. The people of this country have a right to know that we are willing to step up to the issue and define the terms of the issue in benchmarks that are scorable and which we can be held accountable for. We have said we will reach a balanced budget in 7 years. We have produced a budget which accomplishes that. It is absolutely critical that the President give us a timeframe in which he is willing to put forward a budget which reaches balance with real numbers and with details. Recently, he said 7 years was something he could live with. If that is his position today, I believe he should state it. Unfortunately, sometimes his positions change. But hopefully he can stick with the 7-year commitment. If he can, that means we can reach agreement on that one critical point. Fourth, if we are going to reach an understanding, we have to have the ability to sit down with the President and talk to him in terms that are substantive and not in simply political election-year rhetoric. If you look at what the President sent up here in June and you take those numbers and score them by CBO's accounting rather than by OMB's accounting, you find that we really were not that far apart. For example, in the area of Medicare, he wanted Medicare to grow at a rate of 7 percent. We suggested it grow at a rate of 6.4 percent. Both of those numbers were significantly less than the present 10-percent rate of growth that Medicare is experiencing. That 10-percent rate of growth we know is not sustainable. The Medicare trustees have told us that if we continue to allow Medicare to grow at that rate, it will be insolvent, there will be no trust fund for the seniors from which they can get a health care benefit. So we have suggested proposals which will give seniors more choices, more options, which we think will strengthen the Medicare system and which will slow the rate of growth to 6.4 percent. The President sent us up a number which when it was recalculated by CBO--granted, it came up under OMB's scoring mechanisms, but when it was calculated by CBO said we only want Medicare to grow at 7 percent. I believe that difference is not great. And yet if you listen to this administration, they talk in terms of hyperbole which would make you think that the Republican proposal on Medicare was going to slash, was going to devastate, was going to savage the rights to health care which we all recognize are absolutely essential for our seniors. In fact, the Vice President of the United States had the temerity to come to New Hampshire just a few days ago and speak to a very self- serving audience, the AFL-CIO convention, and state time and again--in fact, I think we found the word ``extremist'' in every sentence during the period of a couple paragraphs--that our Medicare Program was slashing. If our Medicare Program is slashing, and we are talking about a 6.4- percent rate of increase and the President is talking about a 7-percent rate of increase, which is 3 percent down from 10 percent and we are 3.5 percent down from 10 percent, what is the President's program? He would have to apply the same standards to his own. It would also be slashing. It would also be extremist. The fact is that neither of the proposals are extremist or slashing. They are both--at least in our case--a reasonable attempt to try to strengthen the Medicare system so that seniors will have a solvent trust fund. If the President would send up details of his proposal, maybe we could say that his proposal was also a reasonable attempt to accomplish the same goal, but at least the number he is talking about, a 7-percent rate of growth, is something that is within the ballpark, [[Page S 16574]] within the range of doability and certainly within the range of what is necessary to keep the trust fund solvent. So in substance what he sent up here in June can be discussed, and it can be worked for the purposes of resolving the matter. But when the President and the Vice President talk in such outrageous political terms and use such hyperbole, it is not constructive to the process. So the fourth thing I think the President must do is stop running for reelection all the time and start trying to govern the country. Is that not his job for the next year and a half? There will be plenty of time to have an election next summer. Let us get about governing the country. Let us start talking some substance around here. And that comes to my fifth point, which is leadership. If there is one obligation of the Presidency, it is to lead. Regrettably, this President has been leading like a bumper car. It is time that he gave us some definition and direction. It is time that he sent up here a budget based on numbers which everyone can agree are honest and fair, CBO numbers--a budget which has details attached to it, or if not a whole budget at least major programmatic activities that have details attached to them so that we can evaluate them. It is time he started talking to Members of Congress as if they were colleagues working on a problem rather than opponents created by some political spinmeister that he has hired to do his polling for him. The fact is that leadership does not involve running for reelection. Leadership involves guiding this country through some very difficult times. So the time has come, in my opinion, for the President to engage in these five areas, to show that he is serious about balancing this budget. We have put on the table serious proposals to balance this budget, to give our children a future, to make sure that this country brings under control its most serious threat to its future, which is the expansion of its Federal debt and the fact that our generation is borrowing from the next generation to finance day-to-day activity that we are benefiting from today. If the President is serious, he has to address these five points. He has to start using numbers that we all agree are reasonable. And I suggest CBO numbers are the ones that are the best. He has to start giving us some details of what he intends to do in these major programmatic areas such as Medicare and Medicaid. He has to agree to a goal that is scorable, such as a 7-year goal to reach a balanced budget. He has to stop politicizing the issue, using the extreme language that may score well in the polling place but does nothing to move the process along. Finally and most importantly, he has to give us some definable leadership that shows us where he feels we can reach compromise and govern rather than run for reelection. Mr. President, I yield back the remainder of my time.

Mr. GREGG

Mr. GREGG. I am asking for the regular order. [[Page S 16049]]

Mr. GREGG. What is the regular order?

Mr. GREGG

Mr. GREGG. I think the Senator highlighted a critical point, which was not made by the Senator or by anybody on our side, but made by the trustees of the hospital insurance trust fund, three of whom are members of this administration--Secretary Rubin, Secretary Shalala, and Secretary Reich--which is that the trust fund is headed toward insolvency, and that in order to correct the insolvency, there would have to be a significant adjustment in the trust fund, either in the way of revenue or benefit costs. I would like to ask the Senator from Colorado if he noted also on page 27 that they put a number on what that adjustment would have to be. Their number, as I read it, is .65 percentage adjustment in payroll rates for employees and employers, which translates into $387 billion of adjustment which must occur over a 7-year period. This is the trustees speaking, saying an adjustment must occur over a 7-year period in order to get actuarial solvency, under their intermediate assumptions--which you say are rather rosy--for a 25-year period, which they consider to be a short time. They would rather it be for 75 years. That means when the other side comes forward with a proposal that only does $89 billion, they are missing the mark, according to their own trustees, by somewhere in the vicinity of $300 billion. Is that not correct?

Mr. GREGG. If the Senator from West Virginia is going to propound a question to myself and the Senator from Michigan----

Mr. GREGG. I will be happy to respond to the question in the context of his timeframe. It seems rather unusual in speeches to be propounding questions and not wish to seek response.

Mr. GREGG. I thank the Chair. I associate myself with the comments of the Senator from Michigan. I wish to respond to some of the points made here by members of the other side who, I am sure, have done so with sincerity but who have been inaccurate to say the least. Initially, let me state that the purpose of the Medicare reform which has been put into this bill is to significantly strengthen the program which has cared for our seniors well but which was designed in the 1960's and which is not functioning well as we move into the year 2000. It is like a 1960 automobile trying to drive on a turnpike in 1995. The fact is that the muffler has fallen off, the pistons are not working very well, the chassis is out of line, and it needs to be fixed. In fact, it needs to be significantly strengthened, and that is what we have proposed. The basic thrust of the Republican plan is to give seniors essentially the same options which Members of Congress have. Now, why is that so outrageous? We are saying to seniors, ``You shall have choice. You shall have the ability to go into the marketplace, if you wish, and choose other options than what you are presently supplied under Medicare.'' We are not saying they have to do that. In fact, we are making it very clear, under the Senate plan, if a senior decides to stay with fee for service, which is what most seniors have today, which is where they go out and choose their doctor individually, they can continue in that framework, they can continue to do that. That is their decision. What we are saying, however, is if they should choose, they will have other choices. If they should choose, as like many people, their sons and daughters, who are in the workplace, to go with some group of doctors who practice together in what is known as a PPO, they will have that option. If they choose, as many of their sons and daughters do today who are in the workplace, to go with an HMO, where you have an affiliation of doctors and hospitals and delivery systems, they will have that option. There are a variety of other options which we cannot even anticipate because the marketplace has not created them yet that we will make available to our seniors. And in giving our seniors those choices, what else do we do? We also say we are going to give you some economic benefit from being a thoughtful purchaser of your health care. Under the Senate plan, if a senior chooses a plan which delivers the same or better care than they are presently getting from their fee-for-service plan but happens to cost less, we are going to allow the senior to keep that savings. We are going to create an incentive amongst seniors to look at other options. We are not going to say they have to look at them. We are not going to say they even have to take them. We are simply going to say you have that option. So what is so dastardly about giving seniors the same option which Members of Congress have? I do not understand it myself. But the other side is outraged for some reason. I think their outrage functions more from politics than from substance. Let us talk a little bit about substance, about some of the points that have been made by the other side. First, they say there is a $270 billion cut. That is an interesting concept. Only in Washington would a program where you are going to increase spending by $346 billion over the next 7 years be deemed a cut in spending. This is the chart, ladies and gentlemen. Medicare spending goes up $349 billion--I was off by $3 billion; I apologize-- $349 billion over the next 7 years. That is a cut in spending? It still remains, under that spending increase, the fastest growing, most significant expenditure in the Federal budget. In fact, if you compare the rate of growth of Medicare spending over the next 7 years to the rate of Medicare spending over the last 7 years, you would have to conclude that over the last 7 years we ``savaged it,'' under the Democrat terms, because in the last 7 years it grew to $923 billion spent on Medicare, but over the next 7 years we are going to spend $1.6 trillion on Medicare. So clearly there is no cut here in spending on Medicare. In fact, per beneficiary, spending on each beneficiary will go up by approximately $2,000 between this year and what would be spent on that beneficiary in the year 2002. We heard this equally rather interesting argument: Well, there are going to be more people in the system; therefore, more should be spent. Actually, demographically, there will not be a significant increase in seniors going into the system until we hit the year 2007. So that is not an accurate statement on its face. We heard the statement of essentially, well, but really, to meet the obligations of Medicare we have to spend $8,700, or something like that, per senior in the year 2002. What does that presume? It presumes a rate of growth of Medicare which would be 10 percent per year for the next 7 years--10 percent per year. If that is what my colleagues on the other side of the aisle want for Medicare, they have just signed on to a prescription which the Medicare trustees have said will lead to bankruptcy, because it is that 10 percent rate of growth that the Medicare trustees, three of whom happen to be members of this administration, stated was totally unsustainable--totally unsustainable--and that if it is allowed to continue at that rate, if Medicare is allowed to continue to grow at an annual rate of 10 percent, the trust fund becomes bankrupt. They gave us a rather definitive chart which reflects that, and that is this chart here. It is a plane crash, ladies and gentlemen. A 10- percent rate of growth leads to insolvency in the trust fund in the year 2002. So when my colleagues on the other side of the aisle say, ``But you are simply not increasing spending enough when you are increasing spending by $2,000 per beneficiary over the next 7 years, you have to increase it by another $2,000,'' what they are really saying is we want insolvency of the trust fund. We heard some other rather interesting comments, something about, well, the trustees never said that there had to be anything like $270 billion saved in order to accomplish the rescue of the Medicare trust fund. I think my colleague from Iowa said there is no place in the trustees' report where that occurs; all we need is $89 billion. I strongly suggest that my colleagues on the other side of the aisle read the trustees' report. I will read it for them. I have to put on my glasses, though. The trust fund fails to meet the trustees' test of long- range close actuarial balance by an extremely large margin. To bring the HI program into actuarial balance even for the first 25 years-- Which happens to be their minimum year----

Mr. GREGG. I am sorry. I will not yield. The other side did not yield. I will not yield.

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

Mr. GREGG. I am not yielding to the Senator from Iowa. To bring the HI program into actuarial balance even for the first 25 years under the intermediate assumptions, would require an increase in the HI payroll tax of about 0.65 percentage points per employee or employer each or a comparable reduction in benefits. What does that language mean in English if you convert it to numbers? That means that the trustees are stating that under their most conservative approach, on an actuarial basis, which they did not even agree should occur because they think it is too short of a timeframe, it would take $386 billion--$386 billion--of adjustment over a 5-year period in order to accomplish actuarial solvency. So this $89 billion number is specious on its face. And then we have heard, ``But the premiums of our seniors are going to double.'' That is a very interesting argument, because it just happens to ignore one major point. This plan that the Republicans have put forward does not increase the burden of the seniors on the percentage of premium that they pay in the part B premium. Under the part B premium--I think this should be explained for those who may not be familiar with it; I know most in this room are--but under the part B premium, the senior citizen pays 31 percent of the cost, the general taxpayers, specifically the senior's children and grandchildren who are working, pay 69 percent of the cost. Under the Republican proposal, the senior citizen will continue for the next 7 years to pick up 31 percent of the cost of his or her part B premium, and his children or her children and his or her grandchildren will continue to pay 69 percent of the cost of the part B premium. We do not change that. Sure, it goes up. Health care costs go up. Of course it is going to go up. But as a percentage of the cost that is being borne between the senior citizen and their children who are paying the taxes, the subsidy, it will remain the same. Now, if we are to follow the logic of my colleagues from other side of the aisle, what they are saying is that the subsidy that the senior citizens' children should pay and their grandchildren should pay should go up. That is the only logical conclusion from what they are saying. They are essentially saying that the senior citizens should receive a greater subsidy from their children and their grandchildren, so that they will not be paying 31 percent of the cost of their part B premium, so that they may be paying 28 percent or 25 or 26 percent of that cost. Who is going to pick up the difference? The senior citizens' children and grandchildren. Their commitment, their subsidy to that premium paid for by the children and grandchildren of seniors will go from 69 percent to 70 percent, 75 percent. I do not know where they are going to end that number. But essentially they are pandering, on that side of the aisle, to one constituency at the expense of another constituency. It is basically generational politics that are being played. What we have said in our bill is, ``Listen, there's a fair distribution of subsidy between seniors and their children, the wage earners and the payers of their subsidy. Sixty-nine percent is paid for by their children; 31 percent by the seniors.'' We are saying we should continue it in that reference. We are not suggesting it be changed at all. I think most seniors in this country would view that as a reasonable approach. I find very few seniors in this country who wish to pass on to their children either, one, a country that is bankrupt, two, a Medicare trust fund that is bankrupt, or, three, feel their children should be hit with a further charge for bearing the cost of their health care. What else do we say in this plan? We say, let us ask the wealthy senior citizens to pay the whole cost or at least a larger percentage of the cost of the part B premium. You explain to me why a person who is working 40, 50, 60 hours a week on a computer assembly line in New Hampshire or at a restaurant or at a garage, why that person should have to subsidize the top 100 retirees from IBM last year. But that is exactly what is happening. Under the present law, the top 100 retirees from IBM may make $150,000 a year when they retire. And they have a 69-percent subsidy of their part B premium paid for by John and Mary Jones who are working real hard just to make ends meet and take care of their families. It is not right. We have corrected that in this bill. We have said if you have more than $75,000 as income as an individual, more than $120,000 of income as a married couple, then you have to begin paying a higher percentage of your part B premium. In fact, if your incomes get into the real high levels, $120,000, I think it is, for individuals and $150,000 or $160,000--I have forgotten the number for married folks--then you will not get any more subsidy. What is wrong with that policy, my friends? Talk about income transfer from moderate income to wealthy, this part B premium, as it is presently structured, is the ultimate in the wrong way to approach income transfer. So we corrected that. This whole premium argument is really inaccurate, as I mentioned a number of other points they have made. And then I think the core issue here becomes this question of solvency. How do you make the trust funds solvent so that seniors will have it, so that their children will have it? And what we have proposed is to put in place a system which generates a marketplace competition atmosphere which will help control the rate of growth of costs. As I mentioned earlier, the trustees have made it very clear that a 10-percent rate of growth of the Medicare trust fund leads to bankruptcy. It leads to this horrendous event. It seems that some of my colleagues on the other side are willing to accept a 10-percent rate of growth. The trustees were not. I am not. Republicans on this side are not. So what we have proposed is to try to slow that rate of growth from three times the rate of inflation to twice the rate of inflation. That still is a very generous increase. As I mentioned, there is a $349 billion increase in spending in the Medicare trust fund over the next 7 years. It is not a dramatic reduction in the rate of growth. You are still talking about a rate of growth which is twice the rate of inflation. In fact, if you compare it to what is happening in the private sector in health care, it happens to be six times the rate of growth of premium costs in the private sector today. Last year, for example, the health care system which all of us here in the Congress benefit from had actually a drop in the rate of growth of our premium costs. Why? Because there was competition, because there was choice. What we are suggesting is that seniors should have those same types of choices that we as Members of Congress have, and as a result we will hopefully see a significant drop in the rate of growth in premium costs. What we are projecting is a drop of 30 percent. We are not even expecting to get the same drop as in the Congress. But this is a reasonable drop. That is what this chart shows. Instead of a 10-percent rate of growth, which my colleagues on the other side seem to be ready to endorse, which leads to bankruptcy, we are saying let us have a 6.4-percent rate of growth. Ironically, the President, when he sent his budget up here in June-- it was just a sheaf of papers that did not happen to make a lot of sense in other areas--the numbers in the Medicare area were not that far from our number. In fact, they were a lot closer to our number than they are to the 10-percent which my colleagues on the other side of the aisle seem so enthused for because the administration understands that it cannot absorb a 10 percent rate of growth in the Medicare trust fund. So we have put forward a plan which will lead to a slowing of the rate of growth of the Medicare trust fund to 6.5 percent approximately. And how do we do it? We do it by using the marketplace and by giving seniors more choices, more options, a stronger health care system, rather than a weaker health care system. From my standpoint, that is what reforming and improving and strengthening the Medicare system is all about. That is what this whole issue is all about. We have heard a lot of misrepresentation on this by the other side of the aisle already. We have only been at this for, what, about 45 minutes of debate from the other side of the aisle, and we have already heard about seven major misrepresentations, all of which I just noted. I would hope, however, as we go into the rest of this debate, that we will have some integrity in the discussion, we will get back to talking about what we need to do in order to make the Medicare trust fund solvent, and get off of this issue of trying to scare seniors through politics, versus addressing the issue through substance. I thank the Senator from Michigan for his courtesy and for his time and would yield the floor.

Mr. GREGG. I thank the Chair. The Senator from Idaho.

Mr. GREGG. If the Senator will yield on his time, I will be happy to respond.

Mr. GREGG. I am running out of time. I probably will not have time to touch on it. But let me simply say in concluding on this point that the plan which we as Republicans have put forward is a plan which fundamentally strengthens the Medicare system. It says to seniors that we are going to give you an opportunity to participate in similar programs that Members of Congress and Federal employees have, the opportunity to go out in the marketplace and look at different health care plans and decide which one is best for you. And remember, we also say in our plan that if you, the senior, happen to purchase a health care program which costs less than what it presently costs us as a Federal Government to pay for your fee-for- service health care, we are going to let you keep the savings. For example, in New England, for the average senior we are paying about $5,000. To the extent that senior is able to go out and find a health care plan that has to supply the same basic benefits and will probably supply many more--eyeglasses, some sort of drug benefit--to the extent that senior gets that plan because the marketplace prices that plan at a lower price, say they get it for $4,500 instead of $5,000, we are going to let the senior under our plan keep up to a minimum 75 percent of that $500 or possibly the whole $500, which is another huge marketplace incentive to control costs because it makes seniors thoughtful and, yes, cost-conscious purchasers of their health care. It also creates in the marketplace a tremendous dynamic to compete for those senior dollars, which is the whole theory behind what we think is known as capitalism and what we think will generate, first, better and higher quality care and, second, care which will be more cost-effective and therefore will be affordable and therefore will guarantee the solvency of the trust fund.

Mr. GREGG. Mr. President, I thank the Senator from Michigan for yielding this time. I think it is important at this juncture in the debate, because so much has been discussed relative to the impacts of the Medicare activity within this bill and all these numbers that have been put on the floor, to maybe go back and review where we are, especially in the context of this amendment that has been brought forward by the Senator from Michigan, which is an excellent amendment, and the amendment which has been brought forward by the Senator from Iowa, because the Senator from Iowa keeps referring to the fact that the essence of cost control in Medicare should be competitive bidding. If that is the Senator's position, and that is the position of the Members on the other side of the aisle, then they should be embracing with enthusiasm the proposal for strengthening Medicare which we have put forward in this bill because our proposal is competitive bidding. What we are saying to the senior citizens of this country is today you are locked into a single-source provider, or approach called fee for service. But we are going to open the marketplace up to you. We are going to give you, the seniors of this country, choices--essentially the same choices in concept that Members of Congress have. We are going to allow you to choose between groups of doctors practicing together in what is known as PPO's, and doctors practicing together with hospitals in what is known as HMO's, and groups of doctors and hospitals practicing together in all different kinds of imagination for which we do not have names and titles for, euphemisms, initials, and titles for; medical savings accounts, and your present fee-for-service proposal which you can participate in. We will not limit your ability to participate in that. But we will open the marketplace to competitive bidding for your dollars that you are spending on Medicare today and on your health care. That is the essence of our proposal. It is to bring the marketplace into the Medicare system, something that has been ignored over the last 20 years as we have seen Medicare evolve. The impact of doing that is essentially what the Senator from Iowa has mentioned. He thinks the impact of bringing competitive bidding into a narrow band of purchasing activities on Medicare, the impact of bringing competitive bidding to the entire concept of health care and the marketplace into the Medicare system, is to control the rate of growth of costs of the Medicare system. Why are we doing this? We are doing it because if we do not control the rate of growth for the Medicare system we have been told by the Medicare trustees that the Medicare system will go bankrupt. Unfortunately, earlier today we heard about the fact that statements were made on the other side of the aisle from some of the Members that we, in controlling the rate of growth of the Medicare system, are undermining the Medicare system; the fact we are trying to keep the Medicare system from growing at the 10-percent rate of growth, which the trustees have said is going to lead to bankruptcy, is being construed on that side of the aisle as somehow irresponsible. I find it very difficult to follow the logic of that argument because, as the trustees have told us, a 10-percent rate of growth is not sustainable, and will lead to bankruptcy. How can you come forward on the floor of this Senate and say that, when we are trying to control that rate of growth and allow a rate of growth which is sustainable which allows the trust fund to remain solvent, we are being irresponsible? The irresponsibility lies with those who continue to allow the costs to escalate uncontrolled at a 10-percent rate of growth and, therefore, would lead to bankruptcy of the system. The way we are planning to control those costs is through competitive bidding, using the marketplace, giving seniors options which they presently do not have, to go out and choose different forms of health care delivery; being absolutely clear at the same time that, if they want to stay in the system they want today, if they want to stay in fee for service, they can do that. What has been the experience that leads us to believe that by giving seniors more choices we will end up being able to control the rate of growth in health care costs? It is what has happened in the private sector. The private sector, over the last 5 years especially, has seen a major move of employee insured groups going from fee for service into some sort of coordinated care delivery, some sort of fixed cost insurance program. The experience has generated some fairly clear guideposts for us in the public sector as we attempt to give our seniors who are getting Medicare today the same type of options that those of us in the Senate have, and that many people in the private sector have, which is the opportunity to choose different types of health care delivery services. This chart that I have here reflects what has happened in the private sector as we have seen a movement of approximately 60 percent of the population from fee for service into different types of coordinated care, or care with a fixed cost paid up front. This red line is the rate of inflation in health care costs. The blue bars indicate the rate of enrollment in managed care types of plans. As you see with the managed care enrollment going up, the rate of health care costs, inflation, has gone down. In fact, it has dropped by about 50 percent. It has dropped so much that, for example, in the Federal employee plan, which is the plan that basically we are tracking at least in concept-- not specific but in concept--with what we are going to offer senior citizens, last year the Federal employee plan had no health care inflation. This year it will have no health care inflation. Last year it actually had a drop in health care inflation. So there was actually a negative increase in premium costs. That is why we believe that when we give seniors the option to participate in a marketplace, why when we bring the marketplace forward to compete for the seniors' dollars, we will see the type of efficiency which is inherent in a capitalist system, in a marketplace system, in the type of approach which the Senator from Iowa has said will work in a narrow band. It will work in a broad band also. Therefore, under our plan we are essentially going to be able to address not just the narrow costs of how much a bandage costs but the broad costs, the overall health care delivery system cost for our senior citizens. That, of course, should be our goal. Why should it be our goal? Let us get back to why that should be our goal--controlling the rate of growth of health care costs. Because, if we do not control that rate of growth, once again it is important to emphasize the fact that the hospital trust fund goes broke. It goes bankrupt. Once again, I want to point out that I keep hearing this number on the other side of the aisle that all we need is $89 billion to adjust the Hospital Health Care Trust Fund. That number is simply not accurate according to the trustees' report. The trustees' report was very definitive in stating that in order to get actuarial solvency of the hospital trust fund of the most minimal nature, the absolute bare minimum actuarial solvency, you need an adjustment that amounts to $387 billion over 7 years, not $89 billion. So by using the method of creating competition for seniors, we expect to be able to control the rate of growth of costs. And we are really not controlling it all that much, quite honestly. We are talking about still allowing the rate of growth of Medicare to be 6.5 percent, essentially the same rate of growth of health care that the President wanted. As pointed out earlier by Senator Nickles on this floor, the President's budget, as it was sent up, allowed for a rate of growth in Medicare which was essentially the same as our rate of growth in Medicare. Why did the President send those numbers up? Because the President understands or at least his trustees understand that a rate of growth which we are presently suffering from--the 10-percent rate of growth-- is unsustainable, and will lead to bankruptcy. You have to slow that rate of growth. But a 6.5-percent rate of growth is a huge--an absolutely huge--infusion of money into the Medicare system. That infusion of money--I will return to another chart which I had earlier-- which represents $349 billion of new spending on Medicare over the next 7 years will be the type of dollars necessary to generate competition in the marketplace for our senior citizens as they go out in the marketplace and look for different types of health care to obtain. How much time do I have remaining?

Mr. GREGG

Mr. GREGG. Mr. President, I heard earlier a discussion on this floor from a number of Members on the other side, specifically the Member from California and the Member from North Dakota about the effects of the coming debate or the implications of the coming debate on the matter of balancing the budget relative to tax policy. First, I think it should be noted once again for the record that for the first time in 25 years this Congress, this Senate, is going to get the opportunity to take up the issue of balancing the budget. For the first time in 25 years there will be on the floor of this Senate a reconciliation resolution which, if passed by this Congress and agreed to [[Page S 15489]] by this President, will lead to a balanced budget by the year 2002. That fact is certified by the Congressional Budget Office, the fair arbiter, as we have all agreed around here, including the President during his first speech to Congress, of the number-scoring process. We have a major opportunity, probably the most significant opportunity--clearly the most significant opportunity in the last 25 years to bring under control the spending of this country. The purpose of doing this is really rather simple, as has been discussed before. It is to give our children a chance to have a prosperous lifestyle, to pass on to the next generation the opportunity to live in a Nation which is fiscally solvent. If we do not take this action, I think the matter has been well debated, and generally agreed to, that the next generation will have very little opportunity for prosperity, that they will be given a country which is insolvent, that they will be faced with a Nation where we will probably have to grossly inflate our money supply, creating economic havoc as children move into their earning years, as our children move into their earning years, in the period of their twenties and on. So we as a Congress stepped up to this matter. At least as a party we have stepped up to the matter. We have produced a budget which is in balance. As a result of producing that budget in balance, certain very good things happen. First, of course is the point that our children will have a shot at an economically solvent future. A more immediate event occurs, which will assist almost all Americans, or at least all Americans who borrow money--which is I suspect almost all Americans. That is, that under a generally accepted view of economists and once again the Congressional Budget Office, the interest rates in the economy generally will drop as a result of passing a balanced budget and having it be in law by approximately 2 percent. What does that mean? It means if you are borrowing to buy a new home, that the interest rates you will have to pay on that new loan will be 2 percent less. That translates into literally thousands of dollars for middle-income Americans seeking home ownership. It will mean if you are going to school as a student that your interest rates will probably be at 2 percent less than what they are today, meaning you will be able to go to school longer or get out of school with less debt--either one being a very positive aspect of this. It means if you buy a car or household goods or you improve on your home or you are simply borrowing money because it is necessary due to some circumstances of your lifestyle, that the cost of borrowing that money will drop rather significantly. It also means good news for the Federal Government. It means that our rate of interest will drop by 2 percent. As a result, CBO has said that we will receive over the next 7 years, because we have put in place this balanced budget, a windfall, if you wish to describe it that way, or dividend if you wish to describe it that way, or approximately $170 billion in savings on the cost of paying for the Federal debt, the interest. We have taken that $170 billion and we have passed it back to the taxpayers of this country. We have said--the Republicans in this Senate--that if we are going to balance the budget and we are going to reduce the size of growth of the Federal Government, we ought to return to the people who support this Government and who are the underpinnings of our Nation, the taxpayers specifically, that they ought to be able to participate in the benefits of this event of balancing the budget. So we have decided to use this economic dividend, this drop in interest rates which generates $170 billion, and return it, return it directly to the taxpayers. Now we have heard a lot from the other side about the fact we should not have any tax cut, that there should not be any tax cut at all, that there should be no return to the taxpayers of this country of putting in place a balanced budget. Of course, they do not want a balanced budget, so you can probably understand the fact they do not want to return the money to the taxpayers, but it seems to me a little crass and unfeeling and unkind to say to the taxpayers of this country who have been supporting the largess of this liberal Government for the last 40 years when it finally gets its act together those taxpayers will not receive any of the benefit. We are not going to take that on this side of the aisle. We are going to suggest that that money flow back to the taxpayer. We also heard first they do not want a balanced budget, or a real balanced budget, put it that way. They want something like the President sent up here that CBO scores as being out of balance for as far as the eye can see--for at least $200 billion a year, adding $1 trillion of new debt to our children's backs over the next 7 years. They do not want a real budget. They want some sort of gamesmanship budget. They will not support our balanced budget which has been scored as a real balanced budget. They do not want a tax cut. Furthermore, not only are they opposed to a balanced budget and opposed to a tax cut, they come to the floor and misrepresent the tax cut that is before the Senate. I heard a number of Members on the other side, or at least two, state that that tax cut is just going to the wealthy, that this economic dividend which we are going to use to send back to the taxpayers of this country which is their right and due reward for having a balanced budget, is just going to go to the wealthy. Somebody ought to refer them to real figures. Maybe CBO figures, for example, rather than OMB figures. Under those figures, we will talk about where the benefit of that tax cut goes. Mr. President, 84 percent--84 percent of the benefit of that tax cut flows to people with incomes under $100,000; 77 percent of the benefit of that tax cut goes to people with incomes under $75,000. Maybe we have a new definition of ``wealthy'' coming from the Members of the other side of the aisle. If you make up to $75,000 in this country you are suddenly wealthy. I do not think so. If 77 percent of the economic benefit of the tax cut goes to people with incomes under $75,000, I say a vast majority of the tax cut, at least three-fourths of the tax cut goes to people with moderate and lower incomes. This is only logical, because if you look at what the terms of the tax cut are, they are clearly targeted progressively on assisting especially moderate income families. First, of course, is the $500 tax credit for children. This does not in any way put the average family into the type of position that they were in, say, back in the 1940's and 1950's, when you could have a single earner in a household and maintain a family, and about 3 percent of your income went to the Federal Government. Today, unfortunately, 24 percent of your income goes to the Federal Government. But, in order to try to alleviate in some minor way--and actually it should be fairly significant for many people--the cost of raising a family in this country, and especially the tax cost of being a moderate-income family, we have said we are going to put in place a $500 tax credit. That is a fairly reasonable proposal. So, if you have children--one, two, three, four--you can multiply the number of children you have by $500 and that is how much you are going to get back as a tax credit. This tax credit, by the way, phases out as your income goes up. For very high-income people there is no tax credit. So it must be fairly logical, since this is the largest part of the tax cut, it clearly flows to people with moderate incomes, under $75,000, who have families. So when you say the tax cut is going to the wealthy, when I hear that statement from the other side of the aisle, it is either, first, disingenuous; second, uninformed; or, third, potentially misleading. Then look at some of the other proposals we have. We have a spousal IRA. Again, it phases out as your income goes up, so high-income people do not have the benefit. So, clearly, low- and moderate-income individuals will have that benefit. We have elimination of the marriage tax penalty, again for middle- and low-income individuals who find themselves, because they got married, actually paying more taxes than if they had remained single and been filing the [[Page S 15490]] same type of returns. That is an unfair and unique quirk of our tax laws which has existed too long and needs to be changed. So, we have put in place in this tax package the tax benefits which are targeted directly on, essentially, the middle- and moderate- and to some extent low-income families, to the extent they pay taxes, in this country. So it is a blatant misrepresentation to come to this floor and say this tax cut goes to the wealthy. It is equally unfair and inappropriate to come to this floor and suggest there should be no tax cut at all if we actually have a balanced budget, when you are not even willing to vote for the balanced budget. There seems to be something inappropriate in taking that position. So, as we go forward on this debate, I hope he will look at the hard numbers, at the real substantive action rather than the political hyperbole. I hope we will step back from this attitude, which the White House seems to be taking, which is to pick a constituency a day to scare through misrepresentation, and, rather, inform people as to what is actually happening. Because, if people look at the facts of this situation, they will come to two very clear conclusions. First, if we do not do something fairly soon, this country is going to find itself unable to remain financially solvent; and, second, if we follow the program put forward by the Republicans in the Senate and in the House, which leads to a real balanced budget, we will be able to pass on to our children a country which is financially solvent and one where they have an opportunity for prosperity. We will be a generation which passes on to the next generation opportunities that exceed even those that were given to us by our parents. If we fail to take this action, we will, of course, be the opposite, the first generation in the history of this country which will pass less on to our children than was given to us by our elders. That is not acceptable, it is not right, and it is not fair. That is why I strongly support the reconciliation bill that will be coming forward toward the end of this week. Mr. President, I appreciate the courtesy of the Chair and yield such time as I may have. Mr. President, I make a point of order that a quorum is not present.

Mr. GREGG

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

Mr. GREGG. I ask unanimous consent to proceed in morning business for up to 10 minutes.

Mr. GREGG

Mr. GREGG. Mr. President, I first want to congratulate the Senator from West Virginia on his fine remarks relative to the issue of Bosnia. It is not my purpose to rise on that issue but I would make a comment that I think it is good that the President is willing to come to the Congress for prior authorization, as the Senate is familiar with the sense of the Senate which passed last week which I offered requesting the President to come to the Congress for prior approval. I also suggest, however, that, if we wait until the agreement is reached on a peace accommodation or a peace accord, we may well be past the time when the Congress can take action effectively; that there has been discussion of the fact that we would have a very short time after a peace agreement has been reached to expect troops to be introduced into the region; in fact, 96 to 100 hours has been the discussion. Obviously, that would give a very short window for the Congress to express its views on whether or not we should be putting American soldiers at risk on the ground in Bosnia. So I hope that we can take up this subject more substantively before a peace agreement is reached, if it is reached.

Mr. GREGG

Mr. GREGG. Mr. President, I rise to associate myself with the remarks made earlier in the day by the Senator from Pennsylvania, Senator Santorum, who was addressing the fact that we have heard a great deal from the administration on the issue of their budget, and whether or not they have a budget which reaches a balanced budget. As we all know, we on the Republican side of the aisle have produced a budget that reaches a balance, is scored by CBO as reaching balance over the next 7 years, and is the first budget to do so in the last 25 years. It is a budget that does this by reforming--and, I think, significantly improving--many of the functions of Government. We end for, example, welfare as an entitlement, and say to people in this country who seek to receive the support of the Government through welfare payments that they are expected to work after a certain amount of time on welfare, and they will only have the right to be on welfare for a period of up to 5 years throughout their lifetime. It also addresses the issue of Medicaid by returning the authority for managing Medicaid with the dollars to the States, a major step forward in my opinion. For example, in the State of New Hampshire I know that we will be able to deliver better health care to our indigent, to our people who are in need of health care who qualify for Medicaid, and to the disabled, especially young mothers with children, mothers with young children, and our young men also, in a much more efficient and effective way with probably more dollars in those programs by having the State manage that program at the State level and not having it be a Federal program. We have in our budget reform improved significantly and strengthened the Medicare Program. In fact, we have taken the Medicare Program-- which is on the brink of bankruptcy, according to the Medicare trustees headed in that direction, and will be there by the year 2002, and will begin next year to spend more money than it takes in, and thus starts this death spiral toward bankruptcy--taking that program, reform it, strengthen it, and will be giving our seniors dramatic new choices which they do not have today for alternative forms of health care delivery while retaining their right, preserving their right, to continue in their pre-Medicare delivery system, if they wish it, with their present doctors. That Medicare reform and strengthening is done in I think a way that is fairly consistent with what is happening in the private sector. It is using the marketplace, saying to the senior citizens of this country, ``Listen, you should have the same choices those of us in Congress have. You should not be limited in your ability to choose other types of health care.'' So we have put forward plans which I believe are very aggressive, very effective, and very positive in reforming Government, in downsizing the rate of growth of the Federal Government, and in delivering a balanced budget. Why have we done this? Republicans recognize that, if you do not do something about the problems of this country in the area of the deficit, we are going to be driving this country into bankruptcy. This chart reflects that fact. The red lines represent entitlement spending; the blue lines discretionary spending; and, the yellow line is interest on the Federal debt. You will note that the green line represents the revenues of the Federal Government. You will see from this chart that, if we continue on our present path with the present rate of growth as a Government, beginning in the year 2010 we will only have enough money as a Government to pay for interest on the Federal debt and entitlement spending. That means all spending such as defense spending, spending on education, and spending on the environment, we will not be able to afford. Beginning in about the year 2017, we will only have enough money to pay for the entitlement spending of the Federal Government, which means we will not be able to pay interest on the Federal debt. What does that mean? That means we end up like Mexico was about a year and a half ago. We will be insolvent as a nation. We will have passed on to our children a country that is essentially bankrupt. It is not fair, not right, not appropriate, and it is not something this Congress is going to allow happen. That is why, as Republicans, we came forward with this rather dramatic idea of balancing the budget, and we delivered on it. We have produced a budget that is in balance. However, the issue is, has the President done the same thing? Has he been a substantive player in this process? Has he contributed to it? That is the issue raised earlier today by the Senator from Pennsylvania when he suggested a sense-of-the-Senate resolution which would basically allow the other side, if they felt confident in the President's numbers, to put forward the President's budget and say, all right, we stand by the President's budget as an approach to balancing the budget. I have not heard anyone from the other side of the aisle take up the Senator from Pennsylvania on that issue, and I do not expect we will because, as a practical matter, the President has not come forward with anything that reflects any type of a balanced budget. CBO, which is the fair arbiter of scoring in this institution, and which the President designated as the fair arbiter of scoring at the beginning of his term in office in his first address to the joint session of the Congress, has calculated that the President's budget as sent up in February was out of balance by at least $200 billion per year as far as the eye could see, adding $1 trillion of new debt to the backs of our children over the next 7 years, and that his most recent submission, which was not sent up in budget form but was sent up basically in outline form, is also entirely out of balance and does not accomplish any sort of cloture on the deficit over that same timeframe of 10 years, which he professes as being the period when we should be balancing the budget. And so there is no proposal on the table from this administration which would lead us to a balanced budget. That gets to the core of the issue. When you hear from the other side of the aisle, as we heard earlier today from the Senator from North Dakota and the Senator from California and the Senator from Minnesota, that our budget is insensitive, that we are not caring, that we are dastardly individuals on this side for trying to balance the budget because it impacts this group or that group--many of which representations, by the way, were inaccurate, especially in reference to the WIC Program--but when you hear those allegations, you have to ask yourself, what is the true insensitivity and unfairness in this country today? Is it not really that we as a generation, our generation--I am talking now about the postwar baby-boom generation, the Bill Clinton generation, of which I happen to be a member--is running up a huge debt for our day-to-day expenses, for expenses which we incur and enjoy the fruits of today but are not willing to pay for today, that we are taking that bill and passing it on to our children? Is not the true injustice that is occurring today to the people of this country, and especially to the children of this country and to the next generation of this country, that if we continue on our present course we will be the first, the first generation in the history of this great and wonderful country--now, again I am referring to the postwar baby-boom generation--the first generation to pass on less to our children than was passed on to us by our elders. That is the true insensitivity, and so we have addressed it, and we have addressed it in a very positive way, I believe. Mr. President, I would simply conclude my remarks by saying that I believe the President of the United States has an obligation to engage in this process substantively rather than politically. He has engaged very well politically. There is no question about that. He has managed to go to almost every interest group in this country, including one group in the Midwest, to this group in the South, to that group in the West, far West, and represent that he is on their side in this budget issue. I suggest that he come to the Congress and make specific proposals which do lead to a balanced budget rather than proposals which are simply structured for his reelection campaign. If he were to come to this Congress with proposals which would lead to a balanced budget, which were substantive, where he actually put on the table a budget with numbers balanced by CBO, we could close this matter rather quickly and, as a result, pass a better opportunity for a good life to our children, which is our primary obligation as Members of the Senate. I notice the Senator from Louisiana has some guests present, and I would be happy to pause in my comments and in fact yield back my time so that the Senator from Louisiana can introduce his guests. Mr. JOHNSTON addressed the Chair.

Mr. GREGG

Mr. GREGG. I thank the Senator from New Mexico for his courtesy. Mr. President, in an attempt to accommodate my colleagues, who I understand wish to move on to other business but who I also think desire to speak on this issue in some manner before we break for a week, I have made this----