Orrin Hatch

Mr. HATCH

Mr. HATCH. Wait, it wasn't Republicans in charge. We didn't originate those money bills. Or did we?

Mr. HATCH. No, in the House I'm talking about, where all money bills originate.

Mr. HATCH. Who was in charge during those years?

Mr. HATCH. I am still proud.

Mr. HATCH. Mr. President, I move to reconsider the vote.

Mr. HATCH. I will do it at your request. But let me just say this, the Senator is talking about overall spending. I am talking about revenues that came from the tax cut. We actually had revenues increase 40 percent during that period of time. Be that as it may, whether I am wrong and you are right, the fact of the matter is that the Congress, during all of those Reagan years, was controlled by the more liberal persuasion, and all money bills originated in the House, which was controlled by the Democratic Party. Now, allegedly we did have Republican control in the Senate, but if you look at the total number of liberals versus moderate conservatives, the Senate was still liberal during those years, and we were the ones primarily responsible for these 28 years of unbalanced budgets. To lay it at the feet of Reagan, Bush, or Clinton is not right. I yield the floor. I reserve the remainder of my time. Mr. TORRICELLI addressed the Chair.

Mr. HATCH. Let me just say this, I will allow a vote up or down on the Torricelli amendment. It is the only exception I am going to make. I hope my colleagues on my side will----

Mr. HATCH. I thank the Chair.

Mr. HATCH. Mr. President, I know there are a couple of Senators who want to qualify their amendments. Unanimous-Consent Agreement Mr. President, I ask unanimous consent that immediately following the vote on Senator Torricelli's amendment, Senator Dorgan be recognized to offer his substitute amendment. I further ask unanimous consent that there be 2 hours of debate equally divided in the usual form, and following the expiration or yielding back of time, the Senate proceed to a vote on or in relation to the Dorgan amendment.

Mr. HATCH. I move to reconsider the vote.

Mr. HATCH. I move to table the amendment and ask for the yeas and nays.

Mr. HATCH. I am sorry.

Mr. HATCH. Then I yield back the remainder of my time, and I move to table and ask for the yeas and nays.

Mr. HATCH. If you desire to say anything else, I will certainly extend that courtesy to you. Mr. President, the balanced budget amendment was written by both sides of the floor. This amendment has been developed over a period of almost 40 years. It has taken both Republicans and Democrats to do it. It is a bipartisan amendment. Even though some in this body might try to see some flaw in it, it is the only balanced budget amendment that has a chance of passage. It is well thought through, it makes sense, and it's the only one that can end having unbalanced budgets year after year, like this stack represents the last 28 years of our budgetary life in this country. I might add that for 58 of the last 66 years we have had similar unbalanced budgets. These stacks are obscene; we know that. I think it tells the story better than anything else I can do. These folks just want to continue the status quo. Now, the distinguished Senator from California is very sincere, and I admire her for it. She is on our committee. I care for her and I care for her ideas. But in all honesty, I have to rise in opposition to the substitute offered by my colleague from California. With the various escape clauses she has built into her amendment, it would be too easily gamed, and I believe it would be ineffective in stopping Washington's debt addiction. As we have debated the balanced budget amendment here on the Senate floor for the past several weeks, we have seen amendment after amendment that seeks to gut the substance of the proposed constitutional amendment. What we have here is yet another attempt to make the balanced budget amendment ineffectual by carving out ways to deficit spend. How does this amendment of the distinguished Senator from California, as sincere as she is, make it easier to deficit spend? ``Let me count the ways,'' to paraphrase Elizabeth Barrett Browning. No. 1, it scales back the number of votes necessary to raise the debt limit. We know how easy it is to raise the debt limit around here, when that is the only methodology you have. So it scales that back from a three-fifths vote to a constitutional majority. No. 2, it provides a waiver for undefined economic emergencies. These people are really clever in the Congress. They can define anything as an economic emergency. All they have to do is pass a statute saying it is an economic emergency. No. 3, it provides yet another waiver for undefined natural disasters. No. 4, it exempts Social Security from the balanced budget calculation beginning in the year 2003. No. 5, it carves out a separate exemption for items designated as capital investment. Can you imagine what these intelligent, ingenious, and, in some ways, devious people in the Congress who have done this to us over the last 28 years could do with capital investments? Now, Mr. President, I wonder what is left. The reason we are here on the floor debating a balanced budget amendment to the Constitution is not to make it easier to deficit spend. We are here to constrain that sort of runaway spending that has produced unbalanced budgets in every one of the last 28 years. The Feinstein amendment does not do that. Let me take a few minutes to address the substance of each of the changes proposed by the Feinstein amendment individually. The Feinstein amendment would alter section 5 of the bipartisan balanced budget amendment to allow for a waiver of the balanced budget rule by a constitutional majority in any year ``in which the United States is experiencing a national economic emergency or major natural disaster.'' As an initial matter, the undefined terms ``economic emergency'' and ``natural disaster'' are malleable terms and could be abused by any future Congress bent on deficit spending. What constitutes an economic emergency? We have already resoundingly rejected an amendment on this issue because it is a broad loophole. Now, what about natural disasters? Does this amendment mean to say that the balanced budget amendment can be waived by 51 votes in the Senate in any year in which there is a natural disaster in some region of the United States? There is hardly any year when we don't have something somebody claims is a natural disaster. If that is the case, and given the fact that natural disaster is not defined, isn't it plausible, or even likely, that Congress will routinely find something to classify as a natural disaster, thereby providing an excuse to waive the requirements of the balanced budget amendment. Twenty-eight years of unbalanced budgets would suggest that this is the case. Congress will find a way if you give them these kinds of generic terms that are not defined and really can't be defined. What's more, nothing in this amendment of the distinguished Senator from California would require the additional spending to be directed to the communities affected by a natural disaster or to be used to get us out of a recession. ``Natural disasters'' or ``economic emergencies'' are only the triggers that let us spend whatever we want for whatever purpose. Because these terms are so malleable and subject to abuse, we need a supermajority provision to guarantee fidelity to the balanced budget rule. The general three-fifths waiver contained in section 1 of Senate Joint Resolution 1 is both sufficient to answer the concerns raised by this amendment and strong enough to keep the balanced budget amendment meaningful. The Feinstein amendment would exclude Social Security outlays and receipts from unified budget calculations until 1 year after the effective date of Senate Joint Resolution 1, the balanced budget amendment. In essence, the Feinstein amendment is nothing more than the Reid amendment we debated yesterday to exclude Social Security from Senate Joint Resolution 1 and unified budgets, with one wrinkle--the exemption will not go into effect until 1 year after the date that the balanced budget amendment becomes effective. This would allow, of course, President Clinton to include the current Social Security surpluses in his budget calculations but would leave future Presidents and Congresses holding the bag when they are forced to unnecessarily slash programs like Medicare because the budget deficit appears larger without Social Security surpluses than it really is. Moreover, the explanation of the distinguished Senator from California of her provision, and the charts that illustrate it, contemplate implementing this change by a one-time massive cut in a single year. Opponents of the balanced budget amendment have regularly argued that such an abrupt change would cause serious economic distortions in our country. The Feinstein amendment suffers from the same disease as the Reid amendment. It is not a workable compromise because, for the most part, Social Security surpluses will be excluded from the protections provided by the balanced budget amendment. As King Solomon wisely knew, there is no practical way to split the baby without destroying life. If you split the baby and put Social Security exposed out there without any balanced budget protections and everything else is in the budget and protected, Social Security will become a political football to be used by those who want to get around the balanced budget. And everybody here knows that. Everybody knows what a phony issue that is. So, too, the Feinstein amendment will destroy the viability of the balanced budget amendment. First, as I discussed during the debate on the Reid amendment, it is necessary to include Social Security in any balanced budget plan. Obviously, without including Social Security, the largest single item in the Federal budget, other programs must be cut far more than they really need to be. I have the belief that the distinguished Senator from California would be among the first to want to oppose those cuts. Certainly I wouldn't feel good about cutting things beyond where they should be cut. But that is what inevitably would happen if the Reid amendment had passed yesterday, or the Feinstein amendment is passed today. The proponents of this amendment have not told us which programs they will cut in order to come up with approximately $100 billion per year that the total exclusion of Social Security surpluses will cost us. Astoundingly, this figure is greater than our combined annual expenditure on education, the environment, and transportation and infrastructure. In fact, between 2003 and 2019, when the Social Security outlays will exceed receipts, the trust fund is expected to earn more than $1.8 trillion. Where do the supporters of the Feinstein amendment propose to come up with the money necessary to cover this self-imposed shortfall? It is no secret around here that many on the other side support this amendment because they want to kill the balanced budget amendment. That is the whole game here. I do not believe that is the motive of the distinguished Senator from California. At least I hope it isn't. But that is the only reason why this amendment will be supported by our friends on the other side, if you really analyze it. Let's put it in perspective. Discretionary savings from last year's budget resolution, which were described as draconian, were only $291 billion. The Feinstein amendment would require that Congress cut spending or raise taxes more than six times that amount. Similarly, the projected revenues from the 1993 Clinton tax increase--the largest tax increase in history, many assert--were only $241 billion. The Feinstein amendment would require that Congress cut spending or increase taxes over six times this largest tax increase in history. These levels of spending cuts and tax increases are clearly unworkable. And the adoption of the Feinstein amendment would kill any chance the balanced budget amendment has of being ratified. That is really in the eyes of many who hate this balanced budget amendment, who do not want fiscal restraint, and who really want to continue their taxing and spending ways. That is really why they support the Feinstein amendment. One person who testified against the balanced budget amendment said-- if you are going to have a balanced budget amendment you should not exclude anything from the budget. Second, exempting Social Security from the mandates of the balanced budget amendment for any considerable period of time will probably result in the demise of the Social Security program years earlier. Such an exemption will create a powerful incentive to redefine taxing and spending programs as Social Security, and to pay for them through what could become a giant loophole in any attempt to balance the budget. Opponents of the balanced budget amendment incorrectly contend that including present-day Social Security surpluses in a unified budget would raid the trust funds. Give me a break. This is a complete misnomer because the surpluses are nothing more than an accounting record. Social Security FICA taxes are deposited with other revenues. Interest-bearing securities are purchased equal to the amounts of Social Security receipts. And those are Federal Government U.S. interest-bearing securities. These securities provide safe investments as long as we are financially solvent in this country, as long as we don't go broke, as long as our economy is going ahead, and the only thing that is going to keep us doing that for sure will be if we pass the balanced budget amendment. The fact is that these securities provide a safe investment, the safest in the world, I have to say, as long as this country is safe. This safety, however, would be wrecked if Social Security were removed from the protection of Senate Joint Resolution 1's balancing requirements. In fact, the very fears of the advocates of the Feinstein amendment will be realized. Their exemption of Social Security will really cause the trust fund to be raided. That is the ironic situation here. Why? Because under the Feinstein amendment trust fund receipts would be used to finance other costly programs that they would simply call Social Security. I heard the distinguished Senator from Nevada, Senator Reid, 2 days ago say that Social Security is defined by statute. If it is defined by statute, it can be redefined by statute. There is no argument against that. It is ridiculous to sit here and argue that it will not be used as a loophole to spend anything they want to spend by calling it Social Security. Trust fund receipts really could be used to finance other costly programs by simply relabeling them ``Social Security.'' With the loophole proposed by this exemption in place there will be an irresistible impulse in future Congresses to redefine unrelated programs as Social Security. This in turn will create an incentive for Congress to include costly programs as part of Social Security. Congress has not been able to restrain itself. Look at these. There is just no answer to this by those who oppose the balanced budget amendment. Anything they try to say just comes out when you look at 28 years of unbalanced budgets, and 58 of them over the last 66 years. This is not rocket science. It doesn't take any brains to understand that Congress is incapable of living within its means unless we put in some sort of restraint within the Constitution that requires them to live within their means. So I am saying that if you carve out Social Security that in turn would create an incentive for Congress to include costly programs as part of Social Security. Like I say, Congress can't restrain itself from either wasteful spending or increasing this web of services provided by Social Security. What is going to prevent them from doing that in the future if you have all of the loopholes that the Feinstein amendment provides for? Are we willing to let future Congresses roll the dice with the financial security of America's seniors? That is what is going to happen if we do not have a balanced budget amendment. Mark my word, it certainly is going to happen if we pass the Feinstein amendment and put Social Security out there exposed all by itself and not subject to balanced budget protections. Frankly, if the Feinstein amendment passes the balanced budget amendment is dead. There is no use kidding about it. It would be killed, and for good reason because it wouldn't work anyway. So that is what we are talking about. Passing an exemption loophole would essentially create two Federal budgets. One would be based on sound principles of solvency, and the other, the Social Security budget, which would not be based on sound principles of solvency. One budget would be required to be in balance unless a supermajority voted to allow a deficit. The other the Social Security budget would be raided and bloated with unrelated spending programs and projects. Taking Social Security off budget will subject the funds to Washington's special interest scavengers. As I have said before, when you have rats in your house, you need to plug up the holes. If you do not, they are going to find a way in. If we leave Social Security off budget all of the special interest spending initiatives, which cannot survive or make their way in under a balanced budget plan, will smell out the scent of Social Security and devour it. This loophole would not only blow a hole in the balanced budget amendment but it would also seriously harm Social Security. This in turn could mean--and I think would mean--the end of Social Security as we know it, transforming it into the least secure of all Federal Government programs. I do not see how anybody can argue with that. Third, let's not forget about the troubling future for Social Security. The Feinstein amendment does absolutely nothing to protect Social Security, and, in fact, it will make it extremely difficult, if not impossible, to achieve balanced budgets. The Social Security Board of Trustees estimates that by the year 2070, if we keep going the way we currently are, Social Security is expected to run an annual $7 trillion deficit. If we include Social Security in our balanced budget calculations we will be able to prepare for and budget for these massive shortfalls. Under the Feinstein proposal we will not be including this deficit in our budgetary planning. As a result, under the Feinstein amendment, in order to raise revenue and increase the debt ceiling sufficient to cover the expected Social Security shortfalls of the next century, we will have to dramatically increase taxes or cut spending on other important programs or face an annual three-fifths-vote fiscal crisis to avoid financial default by raising the already staggering $5.3 trillion national debt ceiling. The way to protect Social Security benefits is to pass the balanced budget amendment, Senate Joint Resolution 1. The proposal to exempt Social Security will not only destroy the balanced budget amendment but in all probability will cause the Social Security trust funds to run out of money sooner than they would have without an exemption. The final change in the amendment of the distinguished Senator would permit the creation of capital budgets for those major capital improvements which require multiyear Federal funding. Most programs are funded for more than 1 year. Exempting capital budgets from the balanced budget amendment is bad policy because it creates a powerful incentive for Congress and the President to balance the budget by redefining more programs as capital expenditures. This is just another loophole. A gimmick capital budget exemption could actually endanger capital investments as fake investments crowd out real investment. For these reasons, budget experts, including the President's Office of Management and Budget, the General Accounting Office, and the Congressional Budget Office, have suggested that capital budgets are inappropriate at the Federal level and certainly do not justify increasing debt to finance them. The amendment of the distinguished Senator from California would enshrine that into the Constitution. The most basic problem with the separate capital budget as envisioned by the Feinstein amendment is that there is no clear standard definition of a capital budget. So no one knows what expenditures will fall within that definition. For example, in President Clinton's proposed fiscal year 1998 budget, the Office of Management and Budget lists four broad categories of programs that may or may not be considered capital expenditures, ranging from physical assets owned by the Federal Government to social investment, including nutrition programs, health care and drug rehabilitation, all under the idea of a capital budget. Mr. President, perhaps the point was best made in a Washington Post editorial criticizing the Reagan administration for floating the idea of a capital budget. In that editorial, the Post wrote that ``The concept of the capital budget applied to the Federal Government is pure fakery. It is the resort of an administration that, finding the realities of the budget intractable, wants to fuzz up the numbers.'' Pretty hard to argue with that. Pretty hard to argue with that. Finally, Mr. President, given all these holes in the balanced budget rule proposal offered by the distinguished Senator from California, it is no wonder the proponents of this substitute have concluded that they need to reduce the supermajority requirement to raise the debt ceiling in their substitute. Given the high likelihood of substantial borrowing under this substitute for undefined capital spending, undefined economic emergencies and natural disasters and the possible loophole for the abuse of Social Security, no wonder the proponents of this substitute do not want to have the three-fifths vote to raise the debt ceiling. Instead, they reduce the antidebt protections of Senate Joint Resolution 1 to a constitutional majority. Now, Mr. President, I hope we will reject this substitute, which is essentially a hit parade of loopholes repeatedly offered over the years by opponents of the bipartisan consensus balanced budget amendment and which could literally endanger Social Security. The Feinstein amendment is a hit parade of loopholes offered in past debates. How can we keep borrowing? How can we keep doing this to ourselves, doing this to future generations, doing this to our children and our grandchildren? These volumes, this picture speaks a thousand words, a million words, maybe I should say trillions of words, as to why we have to get strong about doing something about these unbalanced budgets. Let me count the ways why this amendment is wrong. No. 1, it exempts an undefined capital budget, allowing any level of borrowing for capital as defined by future Congresses. They could do anything they want to under this amendment. Just define them--any statute, any simple majority. No. 2, it allows for a waiver of the balanced budget rule in times of economic emergency or natural disaster, however interpreted by any future Congress. They could do anything they want to if we adopt the Feinstein amendment. The balanced budget amendment would be a thing of the past. There would be no hope to have any fiscal mechanism at all. In fact, it would be the biggest joke you could possibly have. No. 3, it exempts whatever a future Congress calls ``Social Security.'' They could define anything as Social Security. This endangers the retirement security of current and future American seniors. And No. 4, because of all these loopholes for deficit spending, it reduces the supermajority requirement to raise the debt ceiling from a three-fifths majority to a constitutional majority or 51 percent. The substitute offered by the Senator from California should be rejected. It would allow continued deficit spending and borrowing, as has happened in the past 28 years, or should I say in 58 of the last 66 years. It would just continue the process, only make it easier to do it under the guise that we are somehow or other living within a balanced budget amendment constraint as defined by this amendment. Mr. President, look, we are talking about the future of our country. We are talking about our children. We are talking about our grandchildren. We are talking about our seniors. We are talking about a country that is going to be swallowed up in debt if we do not pass a balanced budget amendment. I had one of the leading liberals from the Democratic side tell me yesterday in no uncertain terms that--in fact, more than one--I have had at least three or four just flat out admit that if it had not been for these fights for the balanced budget--and these people, all but one of these people are against the balanced budget amendment--if it had not been for these fights over the balanced budget amendment, if we had not waged this battle, we would not even be talking about balanced budgets. All you have to do is look at this year's balanced budget submitted by President Clinton, and he is not alone. I saw budgets by several Presidents that also were smoke and mirrors because they have to; there is no restraint; there is nothing that forces them to do right. But you look at the budget that President Clinton called a balanced budget this year, that he just submitted. According to the Congressional Budget Office, which has been pretty accurate on some of these matters, that budget by the year 2002 will not be balanced; it will be at least $49 billion in deficit, and that is assuming that all these rosy scenarios the President has plugged into it are coming to pass. That is assuming that. The fact is, it will not be balanced. Second, even if it was true that it would be balanced, everybody knows the only way we can reach balance is to attack the deficits each and every year up to the year 2002. President Clinton's budget goes up for the next 4 years, and then he calls for a 75-percent reduction in the 2 years after he leaves office. It does not take a rocket scientist to realize that is a phony budget, that they have tried to get around the requisite of bringing up here a balanced budget. He said he would. But it clearly is not a balanced budget. And it clearly could not be balanced. Even if you assume that it is--and the Congressional Budget Office says it is not--the fact is, it could not be balanced by a 75- percent reduction in the 2 years after the President leaves office. It is as phony a budget as you can have from that standpoint. But we are going to work from it because we are going to have to. Let me just say this. If we pass the substitute amendment of the Senator from California today, those games will become even more pronounced. No, what we have to do is, we have to realize that over the last 20 years--frankly, longer than that--good Democrats and good Republicans have fought together to work this out. We have worked it out. This is the only amendment that has a chance of passage. It has to pass unamended. Frankly, I hope that our colleagues will vote down the Feinstein amendment and support the balanced budget amendment in the end. If this goes down, it is going to be because of one vote. No matter what the final vote is, it is going to be because of one vote. I can tell you that right now. I do not believe it is going to go down. I believe we will pass this amendment in the Senate, and I am hopeful that this will be an incentive to go to the House. Mr. President, do I have any time remaining?

Mr. HATCH. Well, I will try to save some time for the distinguished Senator from California so she can make her wrap-up remarks out of our time.

Mr. HATCH. Mr. President, how much time remains on both sides?

Mr. HATCH. Sure.

Mr. HATCH. That the Senator came across the line and actually produced 40 percent more revenues than they thought. The problem is we kept spending.

Mr. HATCH. I move to table the amendment and ask for the yeas and nays.

Mr. HATCH. Indeed, it does.

Mr. HATCH. I would be glad to do that. If my colleague gets short on time, I will try to accommodate him.

Mr. HATCH. Mr. President, Senator Dorgan's substitute, simply put, would add to Senate Joint Resolution 1 language that would exempt Social Security from the requirement that ``total outlays for any fiscal year not exceed total receipts for that fiscal year,'' unless three-fifths of each House concurs. In essence, the Dorgan substitute's exemption for Social Security is identical to the Reid amendment, which we fully debated yesterday. As such, we are all familiar with the arguments--pro and con--of the effect of removing Social Security from the safeguards of the balanced budget amendment. It is my fervent hope this renewed debate over the proposed exemption of the Social Security funds from the requirements of Senate Joint Resolution 1 will convince my colleagues to support the balanced budget amendment. As Justice Brandeis so eloquently wrote in the 1927 case of Whitney versus California, ``[i]t is the function of speech to free men from the bondage of irrational fears.'' I truly believe that many of my well-meaning colleagues' desires to exempt the Social Security Program is based on unfounded fears. I hope to allay those fears and demonstrate that far from harming Social Security, including the program within unified budgets subject to the amendment, will help to preserve the program. Moreover, ironically, by exempting Social Security from the amendment, the very fears of some of my colleagues may come about because the program will certainly be weakened if we agree to to remove it from the unified budget. Before I directly address my colleagues concerns, it is helpful to put this debate in a larger context. Today, the accumulated national debt is nearly $5.4 trillion. Interest payments on this debt consume $250 billion annually, which the Washington Times recently estimated, is more than the combined budgets of the Departments of Commerce, Agriculture, Education, Energy, Justice, Interior, Housing and Urban Development, Labor, State, and Transportation. This means that the share of the debt for every infant born today is about $20,000. There is a crying need for sound fiscal reform. Unless we do something, this Nation will continue to have stagnant economic growth with less jobs. Unless we do something, the interest payment on the debt will continue to devour capital that could be otherwise used for investment or Federal programs. Let's not kid ourselves that Washington politicians will remedy this problem; the blunt truth is that no balanced budget deal has worked in the past, that is why we need to amend the Constitution to provide for fiscal sanity. Yet opponents of Senate Joint Resolution 1 argue that Social Security should be removed from the protection of the balanced budget amendment. But to do as they request would be a risky gimmick that would harm Social Security and open a loophole in the constitutional amendment. The Dorgan Substitute Is Unworkable Mr. President, the Dorgan substitute suffers from the same disease as the Reid amendment. It is not workable. Let me tell you why. First, as I discussed during the debate on the Reid amendment, it is necessary to include Social Security in any balanced budget plan. Obviously, without including Social Security, other programs must be cut far more than they really need to be. The proponents of this amendment have not told us which programs they will cut in order to come up with the approximately $100 billion per year that the total exclusion of the Social Security surpluses will cost us--astoundingly, this figure is greater than our combined annual expenditure on education, the environment, transportation and infrastructure. In fact, between 2002 and 2019, when Social Security outlays will exceed receipts, the trust fund is expected to earn more than $1.9 trillion. Where do supporters of the Dorgan substitute propose to come up with money necessary to cover this self-imposed shortfall? Show me the money. Let's put this in perspective. Discretionary spending savings from last year's budget resolution, which were described as draconian, were only $291 billion. The Dorgan substitute would require that Congress cut spending or raise taxes more than six times this amount. Similarly, the projected revenues from the 1993 Clinton tax increase--the largest tax increase in history--were only $241 billion. The Dorgan substitute would require that Congress cut spending or raise taxes over eight times this largest tax increase in history. These levels of spending cuts and tax increases are clearly unworkable, and the adoption of the Dorgan substitute would kill any chance the balanced budget amendment has of being ratified. Indeed, as I alluded to, the Clinton administration uses Social Security surpluses in formulating its own budgetary numbers, and has done so for the past 4 years. Secretary of the Treasury Rubin admitted to and defended the practice during hearings before the Judiciary Committee on January 17: ``We will include it * * * I believe that with respect to budget policy that the view of the Congress and the view of the President to include Social Security is correct.'' Similarly, in a recent press conference, President Clinton noted that Social Security receipts are used in his budget and admitted that neither he nor the Republicans could balance the budget without including the Social Security surpluses. The fact is that all administrations in recent memory have relied on a unified budget calculation of surpluses, and it is good budgetary policy. Second, exempting Social Security from the mandates of the BBA for any considerable period of time will probably result in the demise of the Social Security Program years early. Such an exemption will create a powerful incentive to redefine spending programs as ``Social Security'' and pay for them through what could become a giant loophole in any attempt to balance the budget. Opponents of the BBA incorrectly contend that including present-day Social Security surpluses in a unified budget would raid the trust funds. This is a complete misnomer because the surpluses are nothing more than an accounting reference. Social Security FICA taxes are deposited with all other revenues. Interest bearing securities are purchased equal to the amounts of Social Security receipts. This debt provides a safe investment. This safety, however, would be wrecked if Social Security were removed from the protection of Senate Joint Resolution 1's balancing requirements. In fact, the very fears of the advocates of the Dorgan substitute will be realized. Their exemption of Social Security would really cause the trust funds to be raided. Why? Because under the Dorgan substitute, trust fund receipts would be used to finance other costly programs that would be relabeled as Social Security. With the loophole proposed by this exemption in place, there will be an irresistible impulse for future Congresses to redefine unrelated programs as Social Security. This, in turn, would create an incentive for Congress to include costly programs as part of Social Security. Congress has not been able to restrain itself from either wasteful spending or increasing this web of services provided by Social Security in the past--what would prevent combining them in the future? Are we willing to let future Congresses roll the dice with the financial security of America's seniors? Passing an exemption loophole, accordingly, would essentially create two federal budgets, one based on sound principles of solvency, and the other, the Social Security budget, which would not. One budget will be required to be in balance unless a supermajority votes to allow a deficit, the other--the Social Security budget--would be raided and bloated with unrelated spending projects. Taking Social Security off budget will subject its funds to Washington's special interest scavengers. When you have rats in your house, you need to plug up all the holes. If you do not, they'll find a way in. If we leave Social Security off budget, new and old special interest spending initiatives--which cannot survive or make their way in under a balanced budget plan--will smell out the scent of Social Security and devour it. This loophole would not only blow a hole in the BBA, but it would also seriously harm Social Security. This, in turn, will mean the end of Social Security as we know it, transforming it into the least secure of all Government accounts. Under the Dorgan substitute, the other possible use for Social Security surpluses would be for the Government to pay down our staggering national debt. Thus, if there are any surpluses left over after programs are redesignated ``Social Security,'' the remaining surplus would be used to make debt repayments. This sounds wonderful, but in fact, creates a dangerous mechanism for the Congress to continue deficit spending. By paying down the debt, the Congress would provide itself a debt cushion--that is, a gap between the statutorily limited debt ceiling and the actual paid down debt. Congress could therefore use this gap to continue to deficit spend, thus avoiding the three- fifths vote required in section 2 of the BBA to raise the debt ceiling. The surpluses used for the purpose to pay down the debt will have been squandered as the debt ceiling is reached with a new gorge of spending equal in amount to the surplus that was used to pay off debt. Such a spending device completely frustrates real purposes for which I have introduced the balanced budget amendment--achieving sound fiscal policy and a healthy economy. Consequently, the net effect of the loophole will be the depletion of the trust funds years early, with no protection for the benefit checks owed our seniors. How ironic. This is exactly what the Dorgan substitute was designed to avoid. But the Dorgan substitute does absolutely nothing to protect the Social Security trust funds. Let's just look at the language--is there anything in this amendment that prevents Social Security from being cut? Of course there isn't. I believe that the gamesmanship and gimmickry that the Dorgan substitute will engender is exactly what must be avoided. The way to avoid it is to reject such exemptions. The best way to protect retirees and future generations is to adopt a clean and strong balanced budget amendment, free of loopholes. Third, let's not forget about the troubling future for Social Security. The Dorgan substitute does absolutely nothing to protect Social Security and, in fact, will make it extremely difficult--if not impossible--to achieve balanced budgets. The Social Security Board of Trustees estimates that by the year 2070, Social Security is expected to run an annual $7 trillion deficit. If we include Social Security in our balanced budget calculations, we will be able to prepare for and budget these massive shortfalls. Under the Dorgan substitute, we will not be including this deficit in our budgetary planning. As a result, under the Dorgan substitute, in order to raise revenue and increase the debt ceiling sufficient to cover the expected Social Security shortfalls in the next century, we will have to dramatically increase taxes or cut spending in other important programs, or face an annual three-fifths vote fiscal crisis to avoid financial default by raising the already staggering $5.5 trillion debt ceiling. Fourth, Mr. President, the Dorgan substitute should be rejected because the language of the exemption is confusing and its application may harm the Social Security program--the very thing the Dorgan substitute claims to protect. The substitute exempts the Social Security trust funds from Senate Joint Resolution 1's balancing requirement. But it also includes the proviso, as and if modified to preserve the solvency of the funds. Explicitly exempting Social Security by placing it in the Constitution may constitutionalize the program in perpetuity unless a subsequent constitutional amendment provides for the program to be altered or abolished. As a result of the Dorgan substitute, do minor technical changes to Social Security every year require amendments to the Constitution? The constitutional amendment process is a long one; indeed it was designed by the Framers to be lengthy to prevent specious changes to the Constitution. If we must go through this time consuming process for every change to Social Security--even minor technical alterations--I fear that major needed reforms to Social Security will come far too late. Similarly, does the proviso language require the solvency of the Social Security system or does that language merely allow Congress to take steps to assure the solvency of the trust funds? And if the answer is that Congress must take measures to assure solvency; does this require tax increases or benefit cuts? Frankly, this proviso language strands us in uncharted territory. We do not know exactly how this language will be interpreted. It could also very well mean that the scope of Social Security, as a constitutional provision, could be amended by statute. For instance, in 1965, Social Security was broadened by statute to include portions of Medicare. My question is this: if, under the Dorgan substitute, Social Security can be similarly modified by statute, would we be constitutionalizing a massive loophole, through which we could constitutionally enforce spending on any program redesignated as Social Security? If, on the other hand, we can only modify Social Security by constitutional amendment, won't that require a two-thirds Senate vote, approval of 37 States and a 7-year delay to enact even the most minor changes? All this demonstrates the danger that the Dorgan substitute as a whole creates--that Congress ought to be responsible and not amend the Constitution to include specific statutory programs like Social Security. A constitutional amendment should be timeless and reflect a broad consensus, not make narrow policy decisions. We should not place technical language or overly complicated mechanisms in the Constitution and undercut the simplicity and universality of the balanced budget amendment. Explicitly exempting Social Security may constitutionalize the program in perpetuity unless a subsequent amendment provides for the program to be altered or abolished. It would also invite gaming and endless litigation as the terms of the program are altered. Former Assistant and Acting Attorney General Stuart Gerson and attorney Alan Morrison have both had extensive experience litigating constitutional issues and testified in a Judiciary Committee hearing on Senate Joint Resolution 1. Although the two disagree about the wisdom of the balanced budget amendment, they agree that exempting Social Security is a bad idea, and both strongly opposed exempting Social Security from the balanced budget Amendment. According to Alan Morrison, a litigator with Public Citizen who opposes the balanced budget amendment and testified for the minority: Given the size of social security, to allow it to run at a deficit would undermine the whole concept of a balanced budget. Moreover, there is no definition of social security in the Constitution and it would be extremely unwise and productive of litigation and political maneuvering to try to write one. If there is to be a Balanced Budget Constitutional Amendment, there should be no exceptions. responses to opponent's allegations Supporters of exempting Social Security argue that section 13301 of the 1990 Budget Enforcement Act [BEA] literally exempts the Social Security trust funds from the President's and the Congress' budget calculations. They claim that the balanced budget amendment would change this because it requires a unified budget. These critics of the balanced budget amendment are wrong on both counts. Under section 13301(a) of the BEA, the receipts and outlays of the Social Security trust funds are indeed not counted in both the President's and Congress' budgets--but only for certain specific reasons. The primary purpose for this exclusion was to exempt Social Security from sequestration by the President under the Gramm-Rudman- Hollings procedures and from the act's pay-as-you-go requirement. In addition, as added protections, sections 13302 and 13303 of the BEA also created firewall point-of-order protections for the Social Security trust funds in both the House and Senate. All of this is made clear by the conference report accompanying the 1990 act. Indeed, the 1990 Budget Enforcement Act does not preclude both Congress and the President from formulating a unitary budget--that includes Social Security trust funds--for national fiscal purposes. Surely, the opponents of the balanced budget amendment are not suggesting that the President of the United States and the Congress have been flouting the law when they include the Social Security trust funds in their respective budget calculations? Look, we all know that Social Security will need reform if it is to continue to be viable over the long haul. But the problem is not the inclusion of Social Security funds in the budget. The problem is that with the retirement of baby boomers, there will not be enough FICA taxes to fund their retirement. Moreover, the surplus Social Security taxes being collected today will not cover the future costs of the system. Most of current Social Security taxes are used to cover benefit payments to present retirees. Outlays will exceed receipts of the system in about 2019. The guarantee of future benefits, therefore, will depend on the Federal Government's future ability to pay benefits. Not including Social Security in the budget would harm the program. Congress could rename social programs--as they have done before--as Social Security and use the FICA taxes to fund these programs. Then you'll really see the program raided. The problem that the Dorgan substitute raises--in reality--is not with the BBA, but with the problems the Social Security program faces. We need to fix that and adopting the balanced budget amendment is a good start. Mr. President, in a related argument that seeks to justify the exemption, some have argued that the balanced budget amendment will override the existing statutory protections for Social Security. Contrary to this assertion, it is clear that the current statutory protections for Social Security would not be eliminated by the amendment. Of course, the supremacy clause of the Constitution provides that any legislation contrary to a constitutional provision must fail. As the great Chief Justice John Marshall held in the landmark 1803 decision of Marbury versus Madison, ``[a]n act of the legislature, repugnant to the constitution is void.'' But what critics fail to mention is that there is absolutely nothing in the balanced budget constitutional amendment that is inconsistent with the current statutory schemes. The Social Security statutory protections are not legislative acts repugnant to the Constitution as amended by Senate Joint Resolution 1. Congress under the balanced budget amendment can also create statutory protections for the Social Security program. Further, the Dorgan substitute has absolutely no protection against Social Security benefit cuts. The plain fact is that the best thing we can do for Social Security, the best thing we can do for retirees, and the best thing we can do for all Americans is to enact the balanced budget amendment without loopholes or exemptions, and bring fiscal sanity and a little common sense back to Government Finally, opponents of the Senate Joint Resolution 1, in arguing for a Social Security exemption, contend that the balanced budget amendment will not in reality produce a balanced budget because gross debt will still rise. This is clever, but misleading. Mr. President, the balanced budget amendment does indeed require a balanced budget. Outlays must not exceed receipts under section 1 of Senate Joint Resolution 1. But it is also true that gross debt may still increase even if the budget is balanced. That is because the Government's exchange of securities for incoming FICA taxes is counted as gross debt. It is merely an accounting or bookkeeping notation of what one agency of Government owes another agency. It is analogous to a corporation buying back its stock or debentures. Such stock and bonds are considered retired obligations that once paid have no economic or fiscal significance. Thus, if we enact the BBA, the debt the United States owes to everyone but itself will stop growing. This type of debt--termed net debt or debt held by the public--is legally enforceable and is what is economically significant. If net debt zooms--because of interest payments of debt--which last year amounted to $250 billion--budget deficits balloon with all the dire economic consequences. To assure that budgets will be balanced unless extraordinary situations arise, debt held by the public cannot be increased unless three-fifths of the whole number of each House concur. That net debt is considered to be of far greater economic significance than gross debt is a widely held truism among economists. Indeed, in the study ``Analytical Perspectives: Budget of the United States Government Fiscal Year 1998,'' the Clinton administration concludes that net debt or ``borrowing from the public, whether by the Treasury or by some other Federal agency, has a significant impact on the economy.'' On the other hand, the study also maintains that gross debt, or debt issued to government accounts, ``does not have any of the economic effects of borrowing from the public. It is [merely] an internal transaction between two accounts, both within the Government itself.'' Analytical Perspectives at 218-219. It is true that a balanced budget amendment does not by itself reduce the $5.3 billion national debt. But what it does do is to straighten- out our national fiscal house. Passage of Senate Joint Resolution 1 will increase economic growth and allow us to run surpluses. With this, our national debt may be decreased if Congress desires to do so in the interest of national economic stability and prosperity. Without Senate Joint Resolution 1, this will be an impossibility. The Dorgan substitute, on the other hand, adds nothing to protect the trust funds from accumulating debt. In fact, by creating this loophole, the Dorgan substitute may cause the trust fund to dry up sooner and run deeper deficits. Thus, the Dorgan substitute is a risky gimmick that endangers Social Security. Mr. President, the biggest threat to Social Security is our growing debt and concomitant interest payments. Debt-related inflation hits hard those on fixed incomes, and the Government's use of capital to fund debt slows productivity and income growth, and siphons-off needed money for worthwhile programs. The way to protect Social Security benefits is to pass Senate Joint Resolution 1. The proposal to exempt Social Security will not only destroy the BBA, but in all probability will also cause the Social Security trust funds to run out of money sooner than it would have without an exemption. Benjamin Franklin, moments after the Philadelphia Constitutional Convention adjourned in 1787, was asked what type of government was established. He replied, ``[a] Republic if you can keep it.'' Franklin knew his history. The judgement of history has always been that republics and democracies were frail entities prone to collapse because of the greed and envy of an unchecked majority. It would take a citizenry imbued with civic virtue to prevent that collapse. Indeed, a wise philosopher once opined that without that virtue a democracy cannot last as a permanent form of government: It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on the majority always votes for the candidate promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The fundamental question facing the American Republic in the coming millennium is how our Nation deals with the future fiscal crisis born of a volcano of rising debt. The success of our Republic depends on the virtue and morality of America--on the willingness of her people to eschew largesse that we simply cannot afford. We need to get our fiscal house in order. And to do that, past Congresses have proved that this Nation needs to place within our Constitution a balanced budget amendment. Finally, Mr. President, I compliment my colleague for her excellent remarks. She has been a stalwart on this balanced budget amendment, and rightly so. She has been an inspiration to me, and I personally want to express my gratitude. Mr. President, we have only 1 minute left. This is the Reid amendment revived. There is only one reason for this amendment and that is because they do not want the balanced budget amendment. I guess they want to continue just the same 28 years of unbalanced budgets; 58 out of the last 66 years. Let us just be honest about it, this amendment, along with most of the others, is what I call a downright phony amendment. First of all, I cannot imagine why anybody in their right mind would believe you could take the largest item out of the Federal budget and put it out there to drift aimlessly on its own where anybody could amend it, anybody could redefine it, anybody could add any program, anybody could use the surplus for additional spending rather than trying to balance the budget, and to argue that it is raiding the trust fund when, in essence, we are going to continue to put money into U.S. Government securities and bonds regardless of what happens. What they do not tell you is that unless we have a balanced budget amendment, we are not going to be able to pay off those bonds. When the baby boomers come, and maybe even before--and I suggest it is going to happen before--we are going to hit the skids where we are not going to know what to do for our seniors because of the games that are played on the balanced budget amendment. I am not going to accuse anybody of insincerity, but I can say this: There is no question that there is a desire on the part of many who like to spend and tax to kill this balanced budget amendment, no matter what it takes. If they can hide behind something they can demagog later, they will do it. That is what this whole game is about. This amendment is not a good amendment. This amendment is something that anybody in their right mind would say, ``My gosh, how can you even present it as an amendment that might do some good in this country?'' In fact, the only thing that will do good is the balanced budget amendment. I move to table the amendment and ask for the yeas and nays.

Mr. HATCH. Mr. President, I move to reconsider the vote.

Orrin Hatch

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