Gil Gutknecht

Mr. GUTKNECHT

Mr. GUTKNECHT. Those numbers are a little small to read. What it really says is that under the old policies of the past with higher taxes and more spending, the market was growing at about 18 percent, had grown about 18 percent. Since the American people said enough is enough, and let us elect a whole new team to run things, and let us control spending instead of just raising taxes. In fact, let us control spending and allow families to keep more of what they earn and invest, the market has grown by 136 percent. So they are celebrating the failed policies of 18 percent and we are talking about growth of 136 percent. And you are right, in the end it really is about quality of life and a lot more people can enjoy a higher quality of life when you have a stronger market, lower interest rates. You can have an economy that is growing at 3 and 4 percent, which we believe it should grow at, than you can with an economy that is only growing at 1.8 percent. We have not even talked about the real impact in terms of welfare and what we have done for poor people and allowing people to get on the ladder and climb that ladder of success and go from poverty and get that job and begin to grow and invest and grow with this economy. I think the most exciting thing that has happened since my colleague and I came to Washington is that we cut the welfare roles by 2.2 million American families. And a lot of people thought, when we were talking about reforming welfare, they said, this is an accounting exercise, and it is just about saving money. Well, welfare reform is not so much about saving money as it was about saving people. It was about saving families. It was about saving children. It was about saving those kids from one more generation of dependency and despair. I think one of the greatest victories we have had since my colleague and I came to Congress is this victory over welfare. We have got a long ways to go, but enormous progress has been made.

Mr. GUTKNECHT. Nonetheless, let us talk about what it was like growing up in the 1950s. In the early 1950s, the average American family sent to Washington about 4 percent of their gross income. And I was really fortunate because my mom and dad could raise me and two brothers, three boys in our family on one paycheck. Mom was always there when we came home from school, when we were doing things around the house, mom was there. Things have changed a lot in the last 30 years. Back then they paid 4 percent of their gross income to the Federal Government. Today, the average family sends 25 percent of their gross income to the Federal Government. What a difference that makes. Today, the average family spends more on taxes than they do for food, clothing and shelter combined. And that is what is really driving a lot of the things you are talking about because we have changed the nature of the family. We have decided somehow in Washington that we could spend money smarter than the American family, that by creating more and more government programs that somehow we could improve the moral and the social fabric of this country. The facts just do not bear that out. As a matter of fact, most Americans now believe that the fabric, the moral fabric of our country today is in worse shape than it was back in the 1950s. More government programs clearly are not the answer. Strengthening the cornerstone that makes our society work, strengthening the American family really is the answer.

Mr. GUTKNECHT. Let us talk a little bit about what has happened in America over the last 30 years with the other team in control. I was fortunate; I was raised in the 1950's. So were you. You are a little bit younger than I am.

Mr. GUTKNECHT. There really is a philosophical divide.

Mr. GUTKNECHT. I might just point out about that chart, it is no secret that interest rates peaked on election day of 1994. They trended down dramatically after the people on Wall Street, and more importantly the people on Main Street began to believe that the new Congress was serious about controlling spending. You see a couple of blips up there. I think those correspond almost exactly with those periods when it looked as if we were going to lose that fight in terms of balancing the budget and paying down some of the debt in this country. And when the American economy, when Americans, as I say, from Wall Street to Main Street started to think that perhaps we were not going to succeed, we saw interest rates begin to trend upward. But generally speaking, they know better sometimes than the pundits and the pollsters and whatever that it has been the Republican Congress since we came here in 1994 that has put a lid on Federal spending and said the problem is not that Americans do not pay enough taxes. The problem is that Washington spends it so rapidly. If I could just close with this on this particular issue, there was a farmer in my district who said it so well and so simply, better than I can say it, and I quote him, and I am sorry, I do not have his name. But he once, I was out meeting with farmers one day and he said, talking about Federal spending and the deficit and the debt, he said the problem is not that we do not send enough money into Washington. He said the problem is that you guys spend it faster than we can send it in. And that, I think, is the best way to say it. The problem was not that Americans were not paying enough taxes. They can celebrate down in the White House because I think it demonstrates to the American people more clearly than anything else that those folks believe that the problem has been that the American people were not paying enough in taxes. We believe that the American people were right in saying that the real problem was that Washington spent it too fast. We have slowed that spending rate dramatically. As a result, we have a balanced budget.

Mr. GUTKNECHT. We ought to use the same kind of accounting that every business uses and every family uses. Unfortunately, we are still stuck with the old accounting standards used by Washington since 1964. I might mention a lot of people, a lot of Members who are watching this in their offices, and others, they really need to understand that in 1964 in many respects Washington changed the accounting standards. They went to what is called a unified budget, and many believe that the real reason that they did that is because they wanted to disguise the total of the Vietnamese war plus the total cost of the great society. And by taking all of that money from Social Security that was supposed to go into a trust fund and transferring that into the general fund, they made the deficit look much smaller. In the end, it is real money either way.

Mr. GUTKNECHT. If the gentleman would yield, I think it really illustrates the difference between the two philosophies. One says, and the people who are celebrating down at the White House the largest tax increase in the history of the world, those people are saying the problem was that the American people were not paying enough taxes. What the American people believe, and we believe, is the problem was that there was too much Washington spending. I think we have proven and we can demonstrate with some of your other charts that by eliminating 300 programs, by beginning to get control of those entitlements, including welfare, including Medicare spending, by doing that we have come closer now, in fact by the old Washington accounting standards, for the first time since Neil Armstrong walked on the face of the moon we will in fact have a balanced budget this year. It seems to be an incredible coincidence that all of this has happened literally since the 1994 elections, because in 1994 the American people finally said enough is enough. This team has had their chance now for 30 years, they have controlled Washington, they have controlled Congress, they have run up deficits. And I might just point out that one of the most scary statistics about our deficits and ultimately the debt, and we talk a lot about deficit and sometimes people get confused. There is a difference between the national debt and the deficit. Deficits are annual. But we have run up a debt of over $5.5 trillion on our kids and grandkids. That is a scary statistic. But what is scarier is how much we have to pay every year just to pay the interest on that national debt. I tell people in my district, because Wisconsin and Minnesota are divided by the Mississippi River, but every single dollar of personal income taxes collected west of the Mississippi River now goes to pay the interest on the national debt. If that is not a scary statistic, I do not know what is. The charts that we have there, and I want you to talk about it a bit, demonstrates how much we have actually slowed the rate of growth in spending here in Washington since we came and became part of that historic 104th Congress.

Mr. GUTKNECHT. Those are not our numbers. Those are from the nonpartisan Congressional Budget Office. That even after the enormous tax increases of 1993, had we passed the President's budget, the red line represents how much the deficit was going up over the next five years.

Mr. GUTKNECHT. One of my favorite quotes is from John Adams, and John Adams had something to do with writing our Constitution. And John Adams often said, ``Facts are stubborn things.'' And you have some charts which help demonstrate the facts.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, it is kind of comical to listen to some of our liberal friends debate the tax limitation amendment. They do not like it. They really do not like it. They do not like the idea that Congress must get a supermajority before passing legislation to erode our freedoms. They do not mind eroding freedoms when it comes to ideology that opposes freedom. Even though our Founders fought a revolution to win our freedom, and even though the overwhelming majority of Americans would vote for freedom when given the chance, the Democratic Party stands opposed to the idea that it should be difficult to erode basic freedoms. Mr. Speaker, the fact is that Americans on average have to work until May 11th just to pay the tax man. The average American family spends more for taxes than for food, clothing, and shelter combined. I think the time is long since past to say enough is enough. May 10th in 1998 is already too much freedom lost. That is why we need to pass the Tax Limitation Amendment tomorrow so that Americans can have more freedom, so that they can keep more of their money to spend on their families and their priorities. I hope the amendment passes.

Mr. GUTKNECHT

Mr. GUTKNECHT. If the gentleman will yield, finally what you are really saying is what Vaclav Havel, the first freely elected Prime Minister of Czechoslovakia, said shortly after he was elected. He said in the end all politics is moral. Balancing the budget, saving Medicare, saving Social Security and stopping partial-birth abortions in many respects are all about regaining some of that high moral ground, and if you ask Americans what is really wrong in this country, they will many times say it is the unraveling of the moral fabric of this country. And so all of the things we have talked about tonight really, at the end of the day, are about morality.

Mr. GUTKNECHT. I think sometimes we have to remind ourselves, and I know that my colleague was back in South Dakota and was probably watching some of the debates when we first got into this fight about balancing the budget and allowing families to keep more of their own money while we were trying to save Medicare and a lot of the critics and cynics on the other side said, first of all, you cannot do it. You cannot balance the budget. You certainly cannot balance the budget and provide tax relief. And, above all, you cannot balance the budget, provide tax relief, and save Medicare. Then sometimes the cynics said, well, if you give these tax cuts it will only benefit the wealthy and particularly as it relates to capital gains. I mean, that was the argument. I am sure my colleague heard it. There were ads run. There was almost hysteria around this town that if you provide capital gains tax relief, it will not do much for the economy but it will help the wealthy. Well, we did not pay attention to the cynics. We did not pay attention to the critics. We had to ignore them. And, ultimately, what happened? Well, we are balancing the budget. We have the healthiest economy we have seen in 30 years, the lowest unemployment rate. And perhaps the best news of all, partly because of our welfare reform, and I know the governor in Wisconsin has probably done more than almost any other governor, we have done a good job in Minnesota, and I think they have done a good job in South Dakota as well. But nationally, when we passed welfare reform and sent a lot of the decision-making back to the States and all that we did was require work, personal responsibility and encourage families to stay together, that was welfare reform. We block granted it. We ended the Federal entitlement, which existed for 60 years. And a lot of the critics and cynics on the other side said, ``You are going to pull the rug out from these people. People will starve. People will be thrown out in the streets.'' Well, let us look at the facts. Let us look at what has happened. 2.2 million American families have moved off of welfare roles and onto payrolls. I will tell the gentleman a story from my district. I was meeting with some teachers. After school, we talked about Title 1, and we talked about some educational programs. Finally, one of the teachers said, you know, of all of the things you guys have done since you went to Washington, I think the most important is this welfare reform. I said, really. Tell me about that. She said, well, let me tell you about one of my students. Let us call him Johnny. All of a sudden, Johnny started to behave better. He had a better attitude. He was a better student. He even carried himself better. Finally, she said, I asked Johnny, is there something different at your house? Johnny said, yeah, my dad got a job. We forget sometimes, those of us who have had at least one job since we were 15 years old, that a job is more than the way we earn our living. A job helps improve and affect our entire life, and it affects everybody in the family. Through a stronger economy, by lowering capital gains tax rates, by allowing families to keep more of what they earn, by encouraging work and personal responsibility, the great news is, not only have we saved money, but we have saved people. We have saved families. We have saved kids from one more generation of dependency and dispair. Mr. Speaker, I yield back to my friend from Wisconsin.

Mr. GUTKNECHT. If the gentleman would yield further, though, there is one more caveat that he did not mention; and that is that we do not return to spending normally. The pressure to spend in this town, the propensity of Washington to spend money that is not ours, it is so easy to spend other people's money and it is even easier to spend the money of people who are not yet born. We have our friend the gentleman from South Dakota (Mr. Thune) joining us. I want to share one more thought. All of us are no more than one generation removed from the farm, and this is something I talked about in some of my town hall meetings in terms of balancing the budget and ultimately paying off some of that national debt. And my colleague and I are cosponsors of a bill which, ultimately, if we could get the Congress to agree to it, would actually pay off the debt. Let me share before we yield to our friend from South Dakota. Historically, particularly people out in the farm understand this, that the American dream was to pay off the mortgage and leave our kids the farm. And what Congress had been doing for the last 30 years is we have been literally selling off the farm and leaving our kids with the mortgage. And it is time that that change.

Mr. GUTKNECHT. Just for the Members who may not know, these are principally people born between the years 1917 and 1926. And there is almost something cynical about this. Most of my seniors are not particularly cynical people, but it does almost seem as if Members of Congress in the past said, well, if we just let this thing go eventually all of these people will die off, and it is not a problem anymore. I hope that we are bigger than that. I hope we are better than that. I think, hopefully, we can find the funds this year within the budget to take care of those people. I would also like to talk a little bit about how important and the work that has gone, and I am not certain how many of your slides you have shown tonight talking about the seriousness of the debt and how far we have come. I think we need to remind ourselves once in a while that under the old accounting standards, and going back to about 1964, and what we call the unified budget, we have literally taken those excess Social Security funds and used them to mask the deficit. Now, some people say that happened because people back in the mid- 1960s wanted to hide the cost both of the Vietnam War as well as the great society. And this was a way of being able to spend the money without having to recognize the trust fund obligations that we had ultimately to Social Security. So I think the time has come, because we have come so far with balancing the budget. We have eliminated over 300 programs. We have cut the rate of growth in Federal spending in the last 3 years by almost 50 percent. We are closer today, and probably you have done a better job even than the Congressional Budget Office in terms of predicting where we would be relative to the balance and ultimately to a surplus.

Mr. GUTKNECHT. I want to congratulate you for all that you have done; not so much just in balancing the budget, because I think members of the Committee on the Budget, and you also are on the important Committee on Appropriations. I do not know of anybody who has fought more to balance the budget, to fight wasteful Washington spending than you have. I am glad you are talking a little tonight about Social Security and Medicare and seniors issues because you are not only a cosponsor of the Social Security Preservation Act, but you are also a very important proponent of trying to solve the notch issue. I know that I and many of my colleagues, I expect, I heard you mention that you had town hall meetings during the Easter break as well. Almost everywhere I went when I met with seniors, someone raised the issue of the notch baby problem. And I do not know if you spent any time talking about that, but this is really an issue, particularly now, I think, that at least we are moving towards a surplus using the old accounting method here in Washington; that maybe this is the time, this is the year we can finally do something to bring about some fairness to those folks who are called notch babies. I have a particular interest, perhaps a parochial interest, if you will, in this issue because my father is a notch baby. Every so often when I am home for a family reunion or weekend, whatever, he reminds me that notch babies have been treated unfairly by the system. And up until this point there have not been many Members in this House, or in this city, who have been willing to seriously deal with the issue. I just wanted to congratulate you. I am a proud cosponsor of H.R. 3008 for the first time giving some kind of lump sum payments, and I think the bill originally called for a $5,000 lump sum payment. I am not certain if ultimately that will be the number, but clearly the time has come to recognize the inequity and perhaps you want to talk a little bit tonight about the notch-baby problem. I suspect there are many people who are watching who have a very strong interest in it.

Mr. GUTKNECHT. I would like to thank the gentleman for yielding to me, and despite the tie, I am delighted to be with you tonight. I just want you to know my brother gave me this tie so if he is watching back home, he will know what you had to say about it.

Mr. GUTKNECHT. I really think that for many years we labored under some unwritten law, if you will, that no good deed goes unpunished. If you worked you were punished, if you saved you were punished, if you invested you were punished, if you grew a business and hired people, you were punished. In fact, even in the Medicare system those areas, regions of the country, and I think we all come from areas where we have had relatively low health care costs, as a result, in terms of the Medicare reimbursement schedule we were punished. And that was really the unwritten rule of Washington, and what we are trying to do is change that and try to reverse some of those perverse incentives. And if we do that I think that long term, and as you say, if we can come up with a Medicare system and a Social Security system which uses market principles and the doctrine of enlightened self-interest to get more people to feel as if they are stakeholders in the system, in the long run we will have a better system which provides more value to consumers or to Social Security people, recipients of Medicare treatments, whatever. And that is what we are really trying to do, is reverse those age-old perverse incentives which have been created here in Washington.

Mr. GUTKNECHT. Mr. Speaker, if the gentleman would yield, the truth of the matter is the facts speak very loudly. In fact, I often quote John Adams, one of the people who helped write our Constitution. He said, facts are stubborn things, and the facts are overwhelming. That is that if tax increases alone would have balanced the budget, we would have had a huge surplus long ago. As the gentleman indicated earlier, when Washington gets its hands on the money, the history has always been that it spends it. Not only does it spend it, but let me give my colleagues one more statistic that people forget. On the last 30 years, on average, for every dollar that Congress took in, it spent an average of $1.22. Since we took control, since the Republicans took control of this Congress, that number is down to a $1.01. I think, with this budget, it will actually be about 99 cents. If that is not a clear-cut difference, I do not know what is.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, nearly 2 years ago Congress approved landmark legislation giving farmers the freedom to farm. Supply management and command control agricultural policy had failed our farmers. The safety net that was intended was acting more like a ceiling, so farmers, locked arm in arm with consumers and taxpayers, changed the course of agriculture policy in this country. Today, instead of talking about expanding the acreage reduction program and conceding critical world market share, farmers are now asking Washington for fast track. Today farmers are talking about the need to keep a lid on their out-of-pocket expenses, especially those imposed by Uncle Sam by way of taxes and regulations. In short, our farmers do not want to depend on the government to merely survive. Rather, our farmers want the tools and the global markets necessary to actually succeed. Improved research and the development of more effective risk management tools, such as crop revenue coverage, are good examples. Unfortunately, the progress I have just described does not characterize Federal dairy policy, where regional divisions have prevented any kind of meaningful reform. Instead, price-fixing, whether by regional compact, cartels, bogus price floors, or an irrational order system, is still fashionable. I think it is ironic that this Congress, which never misses a chance to champion market-oriented reform, growth, and opportunity, still clings to a dairy policy that has fallen out of fashion, even in Moscow. When I see so many folks championing the status quo, I wonder if I have missed something. Since 1985, my home State of Minnesota has lost more than half of our dairy farmers, over 11,000. That is a rate of three per day. Nationally the U.S. has lost over 152,000 dairy producers under the very system which today so many are attempting to save. I hope when all the dust settles, we will put aside our regional bickering, abandon the failed policies of supply management and command control economics, and embark on a new path. We should not be striving for a policy that simply slows down the hemorrhaging, but we should work for a policy that puts our dairy farmers on the road to recovery. We can start by creating a more market-oriented order system, rejecting harmful regional compacts and price floors, implementing a dairy options pilot program that can eventually become national in scope, authorizing forward pricing to shift risk away from the producers, and by developing a kind of market-oriented insurance program which farmers, taxpayers, and consumers can all support. On this note, I seriously doubt that anyone in Congress would ever deny our grain farmers the right to forward contract to protect against price volatility. Yet, we do exactly that to our dairy farmers. It is bad policy, and we have the power to stop it. Tax and regulatory relief, better research and risk management tools, and expanded global markets for U.S. agricultural products offer our Nation's dairy farmers real opportunity, but price floors and supply management only offer a frustrating ceiling thinly disguised as a safety net. The difference is as stark as saving and investing for your retirement, or relying on Social Security to bring about the good life. Mr. Speaker, when the Kremlin collapsed, a newspaper editorial commented that ``Markets are more powerful than armies.'' Because history has demonstrated this time and again, I am convinced that fluid milk will be sold according to the dictates of supply and demand. If Members do not believe me, just look at the editorials in the Washington Post, the New York Times, and the Wall Street Journal. It is only a matter of time. The question before us today is, will we in the agricultural community accomplish reform on our own terms and at our own pace, or will change be forced down our throats after we have surrendered yet more farmers and more potential markets? The choice, Mr. Speaker, is ours to make.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, if the gentleman would yield, I just want to go over just a few of the facts. And one of my favorite quotes is from John Adams. And he said that facts are stubborn things. And you know Winston Churchill said it slightly different. He said, you can ignore the facts, you can deny the facts, but in the end there they are. The facts are these: Since we came here, the deficit has been slashed. And for the first time since 1969, we have a balanced budget. That, in part, has driven interest rates down by 25 percent. The stock market has more than doubled. Eight million new jobs have been created. Unemployment is lower than it has been in 27 years. Violent crime is actually down to its lowest point in 24 years. We cut taxes for the first time since Tiger Woods was 5 years old. That is an amazing thing when you think about that. We have allowed families to keep and invest more of their money. We have made it easier for them to send their kids on to higher education. Over 2 million families have gone off the welfare rolls and onto payrolls. We have eliminated over 300 government programs. Well, the American people expect results. We are a results society. We have produced some results. But there is so much more to be done. I think we do need to spend a few minutes talking about will we return to the old policies of tax and spend, or will we start to take some of those surplus dollars that we believe are going to be created in the next several years, and are we going to start to pay down some of that debt. There was an architect from Chicago, and he said something very simply but very powerfully. He said, make no small plans. If you think about that, the American people have always been big dreamers and big thinkers. The people who came here, our ancestors, as Winston Churchill said, you did not cross the oceans, ford the streams, traverse the mountains, and deal with the droughts and pestilence because you were made of sugar candy. I think the American people have always wanted big dreams and big goals. I think we ought to set this goal and this marker out before the American people. I think we ought to pay off that $5.5 trillion worth of debt in this generation. The fact of the matter is, if we will exercise the same kind of fiscal discipline that we have exercised for the last 3 years, if we will limit the growth in Federal spending to about 1 percent greater than the inflation rate, the good news is pay off the debt in 22 years. I cannot think of a better thing to leave our kids than a debt-free future. It is within our grasp; that can be done. What is the great news about that? It means they do not have to pay that $7,000 per family in interest that ultimately gets paid today. It means we leave our kids a brighter future, and we do what those farmers talked about, as I mentioned earlier. You pay off the mortgage and you leave your kids the farm. In some respects, that is generational fairness. That is generational equity. As you pay down that debt, the good news is 40 percent of the debt is owed to the Social Security trust fund. So you make Social Security solvent again. Congress has been borrowing from Social Security since 1964. I think, again, we all know that is wrong. We have been borrowing from our kids, and we have also been borrowing from our parents. I think it has been left to our generation to make things right. So we are headed in the right direction. I am delighted that you joined me tonight. If you have got any closing remarks, we certainly would like to hear them, and we will yield to the next speaker.

Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman from Arizona for joining me tonight, and I just want to say that sometimes, as I said earlier, we talk about these issues, and we sound as if we are accountants, and we talk about numbers and statistics, but in the end, this is really about what kind of a country we are going to leave to our kids. And it is about what kind of a country we are going to have for ourselves. Is it going to be a future of debt and dependency, or will it be a future of hope, growth and opportunity? The good news is we have made so much progress, but we still have those challenges. There are people who want to turn back to the old policies of tax and spend, but as long as we are here, we are going to fight the good fight. We have been making a difference, we are going to continue to make a difference, not just for this generation of Americans, but for generations of Americans to come.

Mr. GUTKNECHT. Mr. Speaker, I think we need to remind people what some of the cynics said. We originally came to Washington and said, you know, we are going to limit the growth of entitlements, we are going to cut domestic discretionary spending, we are going to put a flexible freeze on defense spending, and we are going to cut taxes, and we are going to balance the budget. The cynics said you cannot do that; I mean, you cannot balance the budget. In fact, you used the term earlier, you blow a hole in the budget. That is a reckless scheme to want to balance the budget while you are kiting taxes, because some of our liberal friends believe that it is their money and that Washington can spend it best; the last thing we should ever do here in this city is cut taxes on American families. But thanks to the leadership of the chairman of the Committee on Ways and Means and the leadership here in the House as well as the Senate, they said no, no, we are going to balance the budget and we are going to cut tax. We even had some of our Republican friends who have criticized us because the tax cut was not large enough, but I would tell you this, for a lot of families in my district have figured out it is $400-per- child tax credit this year and $500 next year. I was in a radio station, and one of the people who worked there, I was trying to explain this to. We had a radio town hall meeting. He said, wait a second. Let me see if I understand this. I have got three kids, and they are all under 17, so you mean I get to keep an extra $1,200? I said yes. I know to some of our friends $1,200 is not a whole lot of money. But to a lot of typical families out there, $1,200 is a lot of money. That will help pay for a vacation. That will help pay for an addition onto the home. That will help pay for a newer car. It will do a lot of things for that family. Our friend from Texas, Senator Phil Gramm, one day he really said it so well. One of his colleagues said this is about how much we are going to spend on children and their education and their health care. He said no, no. This is not a debate about how much we are going to spend on children or their education or their health care. He said, this is a debate about who gets to do the spending. He said, I know the family, and I know the Federal government, and I know the difference. We all know who can spend that $1,200 smarter. We know that that family can. It was not just the per-child tax credit. I want to give a lot of credit to Senator Rod Grams from my home State of Minnesota, because when he first came here as a freshman Member of this House, he made the per-child tax credit one of his top priorities. He doggedly has pursued that, and ultimately it has become reality. He deserves a lot of credit. So I want to at least acknowledge my colleague from the other body from my State. The other thing we did is we said, you know, for the typical family, one of the worst fears that most American families have is when their oldest child begins to look at college catalogs. They begin to say, wow, I had no idea it was going to cost this much. When you are paying 38 percent of your gross income in taxes and you have got a mortgage over your head and you have got to pay for all these sneakers and everything else it costs to raise kids nowadays, most families are not able to save enough money to send their kids off to college or technical schools. We said there is a real problem there, and that is one area we ought to give families another little boost. So we provided the $1,500-per- child HOPE scholarship. It is going to make it a lot easier for a lot of families to send their kids to school and get the education they are going to need in an increasingly competitive marketplace. So that was not the end of it either. We said we ought to encourage families to invest and save for their future. So we gave them almost a 30 percent cut in capital gains taxes. Guess what? Revenues have gone up geometrically because people are investing, people are saving, people are selling assets, people are trading, businesses are being bought and sold, assets are being bought and sold, farms are being bought and sold. I will tell you a story of a farmer in my district who lives near Faribault, Minnesota. He would call me about every month, and he would say, Mr. Gutknecht, when are you guys to cut this capital gains tax because, you know, I want to sell my farm, and I have got some people who want to buy it, but I do not want to pay all that money in capital gains taxes. He said, I believe you are going to cut that capital gains tax, and I am not going to sell my farm until you do. I think he represented literally millions of Americans who are sitting on assets that actually would have been better in the hands of someone else, but they did not want to pay that high capital gains tax. We lowered the rate, and guess what? Total receipts have gone up geometrically.

Mr. GUTKNECHT. If the gentleman will yield back, and I think it is a telling point because particularly you get out on the farms where I come from and you go to an auction and literally 100,000 pieces of equipment are bought or sold, and sometimes all that is really exchanged on the day of the sale is a handshake; a handshake, and people out there believe that handshake means something. And frankly, out there, and without being overly disparaging of lawyers, they tend to resent that, the whole notion that something has to be written down on paper and that you need a contract, although we have contracts and we have attorneys and I do not want to sound--but there is still an awful lot of old farmers who believe that a man's word is his bond and that when you make an agreement, and I want to remind my colleagues, you know, we did not make this chart up. I mean, this is according to the Congressional Budget Office. They are nonpartisan, this is not a Republican chart. This just shows what they believe we agreed to last year on August 5, and then they have overlaid what the President is requesting in his budget, and the two numbers are quite divergent. And this is really about trust, and it is about faith and it is about breaking faith with an agreement that we had. The problem, of course, is a lot of people around this town are saying well, yeah, but that was then this is now, and the economy is booming and unemployment is down and more revenues coming into the Federal Government, and we have got to spend more money on all these programs. But is that not what got us into the mess in the first place? I mean, is that not really--the heart of the problem is it is so easy to spend other people's money, and it is even easier to spend people's money who have not even been born yet. And that is where we got into the problem in borrowing against future generations of Americans without their consent. And that is why Jefferson warned over 200 years ago that public debt was one of the greatest evils to be feared, and this represents turning away from the direction that we have been on for the last 3 years and saying well, yeah, now things are good, let us go back and begin to resume spending normally. And we are going to have some really heated debates and fights here on the floor of the House and in the Committee on the Budget and the Committee on Ways and Means, but I think it is so critical that we keep that faith, that we say not only to Americans living today but generations of Americans yet unborn that we were serious, we meant what we said, we said what we meant; our agreement was we would limit and cap spending, and we are going to do the best to keep that cap.

Mr. GUTKNECHT. I just want to remind my colleagues or people who are listening that the information we have has all been scored by the Congressional Budget Office and is available to them. We are happy to share it with any of our colleagues. I just want to come back to that very important number, that for the 20 years previous to our coming here to Washington, for every dollar that Washington took in, it spent an average of $1.21. Now last year it was $1.01. This year we will actually have for the first time a surplus. Frankly, I believe the surplus is going to be much larger than the Congressional Budget Office says it is. And it has happened, hatched through a combination of efforts. It has happened because we have had the courage to eliminate programs, we have had the courage to fold programs together, we have had the courage to tackle those entitlements, to reform welfare, to reform Medicare, to reform Medicaid and begin to put back on a commonsense course what I think the American people have wanted the Congress to do for so many years. In some respects it is, you know, those of us in Washington and those of us with election certificates sometimes want to take more credit than perhaps we really deserve. The credit really does go to the American people. They have been way out in front of the Congress for so many years. They understand. You know the average family, this is another thing that I find when I talk to regular folks, how they balance their budgets. The average family, and you may know this, J.D., the average family in America today clips over a hundred million coupons from the Sunday newspaper. They sit around their coffee tables, their kitchen tables, and they clip over a hundred million coupons out of their Sunday papers, worth an average of 53 cents. They watch their pennies, and they make certain that they get good value for every dollar that they spend, and as a result that is how they balance their budgets every week, and frankly that is what they expect from us. They expect us to watch our pennies to make sure we balance the budget. I want to show another chart here, and this just underscores what we have been talking about. This is sort of where we were, this is what we have done, and this is where we are going. And I think we need to spend a little bit of time tonight to talk about, you know, it is great that we finally turned the corner and we are moving towards what I think will be a future, assuming the American people do not decide to turn back and change course and go back to tax and spend and some of the failed policies of the past. Unless the voters decide to do that this November, I think there is a very good chance that we will see surpluses well into the future. Now that is good news, but we have to think a little bit about what are we going to do with that. Are we going to start to pay down some of that debt? And I have become a supporter and an advocate of a plan-- well, I will show another chart in a minute. Maybe we ought to talk about this chart because this is a scary chart, and this is what this demonstrates, what we agreed to with the White House; and I think you know this, Congressman Hayworth, that last year on August 5, the President and the Congress came to a very historic agreement, and we put in place spending caps within what are called the discretionary accounts on how much we can spend in each of the next 5 years. And the blue line represents what those spending caps are. The red line, unfortunately, represents what the President has proposed in the budget that he submitted to Congress just about a month ago. And this is of great concern because over the next 5 years the President wants to spend about a hundred--almost $150 billion more than we agreed to spend just last year. Now worse than that he wants to raise taxes and fees by about $130 billion, and that is where the battle is going to be fought over the next several months as we argue about the budget. Now if we have the courage to stick to our agreement, and in fact I have said that I think Congress ought to live up to its end of the bargain, even if the President does not want to, and we are going to have a fight here on the floor of the House very soon about a supplemental appropriation bill and whether or not that should be offset with spending cuts elsewhere in the budget. I happen to believe that it should. It is about keeping faith and it is not just about keeping faith here now with the agreement, it is about keeping faith with the American people and ultimately with interest rates and the money markets because they are watching, are we serious. And I yield to my friend from Arizona.

Mr. GUTKNECHT. I think that is the wonderful thing. It is not just about welfare reform. It is also about Medicare reform. In fact, most Americans are not aware, again I am on the Committee on the Budget, the gentleman from Arizona is on the Committee on Ways and Means. Sometimes we risk sounding like accountants, but I think sometimes numbers do illustrate very powerful points. Something most Americans do not know and we need to remind them as often as we can, that 53 percent of the Federal budget is what we call entitlements; in other words, things that have to be paid, Medicare, Medicaid, Social Security, welfare. Those are the 4 largest entitlements, 53 percent. That had pretty much been put on autopilot. That happened in Congress back in about 1975. The important thing this Congress did when we came here is we said, ``We've got to get control of entitlements. Because if we don't control entitlements, they're going to eat us alive.'' Entitlements were growing at something like 10 percent per year at a time inflation was only going up 3 percent. This is where we had some very pivotal fights here on this floor and ultimately I think that were played out in many districts around the United States in the last congressional elections where there were ads run that said, you know, if so and so has their way, kids are not going to get school lunch and if so and so has their way kids are going to get thrown out in the streets and Medicare is going to, quote, wither on the vine, which was, I was going to say deceptive, but it was downright dishonest. The truth of the matter is what we did is we slowed the rate of growth of those entitlements, we have dramatically slowed the rate of growth. We have encouraged work, we have encouraged personal responsibility. Even more important than that, we have encouraged families to stay together. The good news is it is working. It is working in part because of the kind of faith that Ronald Reagan had in the system and in the American people. He believed that if you give them just a modest amount of incentive to do the right things; in other words, lower the capital gains tax rates by 30 percent, which we did, you will encourage people to invest and save for their future. When they do that, it means there is more capital to expand businesses. It makes it more opportunity for all Americans. If you give people a little incentive to get out and work, people will work. People want to work. The real tragedy of American compassion was we had been so compassionate that we have destroyed people's initiative, their sense of personal responsibility, and their desire to build a better life on their own. I want to come back to a couple of more charts and if we can, I want to talk a little bit about why the American people I think sometimes distrust what is happening here in Washington. Sometimes I say to myself, why should they not distrust it because there have been so many broken promises. Let us give one example. Remember in 1987 we had the Gramm-Rudman bill. The Gramm-Rudman fix is this blue line right here. Basically they said we will use budget mechanisms to slow the rate of growth in Federal spending and by 1993 we will balance the budget. That is the blue line. Here is what really happened. The reason of course is Congress did not have the courage to face some of those interest groups, to slow the rate of growth of entitlement spending, to eliminate Federal programs as we have, and we will talk a little bit about that as well. And so as a result, we had the Gramm-Rudman fix but all we got was a broken promise. But down here, what has really happened since 1994 we see, the elections of 1994. This is what our plan was, to balance the budget. It was not a perfectly straight line. We had a 7-year plan to balance the budget. Here is where we are. In fact, we have a balanced budget today. How has that happened? A couple of things have happened. Most Americans know that at least on the revenue side because we have had a stronger economy, because interest rates have gone down, there is more consumer confidence, there is more confidence on Main Street, there is more confidence on Wall Street, the economy is stronger. Everybody knows that we have taken in more revenue than we expected in our original 7-year balanced budget plan. What most Americans do not know is we have actually spent $50 billion less than we said we were going to spend in the summer of 1995, when we passed that 7-year balanced budget plan. Frankly, I cannot blame the American people for not knowing that because the truth of the matter is most Members of Congress do not know that, that we have slowed the rate of growth that much in entitlements plus we have eliminated over 300 programs. I tease people sometimes. I say, ``How is your coffee today?'' They say, ``well, it tasted like it always does.'' I said, ``Well, that's interesting. We eliminated the Coffee Tasters Commission.'' We eliminated a lot of commissions. We eliminated a lot of needless government. We have folded a number of programs together. There is so much more to be done. The truth of the matter is the more you get inside the budget, the more you realize there is still an enormous amount of duplication, of waste, of fat in this budget, but we have made enormous progress. We have dramatically slowed, in fact we have cut the rate of growth in spending almost in half. You combine that with a stronger economy and it is relatively easy to balance the budget.