Orrin Hatch

Mr. HATCH

Mr. HATCH. I yield 5 minutes to the distinguished Senator from West Virginia. I will reserve 1 minute.

Mr. HATCH. Mr. President, I say in relation to section 6, the term ``appropriate legislation'' has appeared in every enforcement clause that has been adopted since the Civil War. But in order for appropriate legislation to become a law, it must be passed by both Houses of Congress, presented to the President, and signed by him into law. I do not think there is any question about it. I yield back the balance of my time. I move to table and ask for the yeas and nays.

Mr. HATCH. Mr. President, I am hoping we can conclude debate for this evening. I will say a few words and hope that our leadership will be ready to end the session for today. I give warning that I am prepared to close down the Senate if the Senate is prepared to be closed down. Let me just say a few words about my friend's amendment. My friend, Senator Reid, and others seek to remove Social Security from the protections of the balanced budget amendment. I look forward to a lengthy debate tomorrow on this subject and this issue. But while I respect these critics, and I certainly do, the truth of the matter is that the Reid amendment is merely a diversion from what should be the real focus of this debate: whether the Constitution should be amended to require a balanced budget amendment except in exigent circumstances. When I say that, I again look at these 28 years of unbalanced budgets. This is the real issue. Everybody knows that if the Reid amendment passes, this is going to only get worse. The fact of the matter is, if we are going to do anything about this, we have to pass the underlying balanced budget amendment without the Reid amendment on it. Exempting Social Security from the balanced budget amendment will create an overwhelming incentive to do just what these critics fear. Let me point out this chart here. Social Security--don't leave it out. The budget is protected by the balanced budget amendment. If Social Security is left out, special interests will eat Social Security surpluses like cheese. There is no question about it. This exemption would focus budget pressures on the Social Security trust fund that could destroy the viability of the Social Security trust fund itself. It is a risky gimmick, and it has no real relationship to the goals sought. Taking Social Security off budget will subject its funds to Washington's special interest scavengers. When you have rats in your home, you need to plug up all the holes. If you do not, they will 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 simply devour, just like these rats that are devouring the Social Security cheese. You need to leave it in because the budget will be protected by the balanced budget amendment. Do not take it out. Furthermore, exempting the trust funds is simply unjustified. There already exists an elaborate scheme of firewalls that protect the trust funds from Presidential and congressional tampering. Nothing in the balanced budget amendment is inconsistent with the statutory firewall scheme. The truth is that the passage of Senate Joint Resolution 1 is the best way to preserve Social Security benefits. Mr. President, I must emphasize another reason why the Reid amendment is unnecessary. The proposal to remove Social Security from the protections of the balanced budget amendment does nothing to respond to the concern that Social Security benefits will be reduced. This is the language of the Reid amendment. Nothing in the exemption would protect Social Security recipients from either benefit cuts or tax increases. Just look at the message there. In fact, the Reid amendment could weaken the financial integrity of the Social Security System. Under current projections, Social Security will have exhausted the trust funds and will be running deficits by the year 2029. Many of us believe they will run deficits before then. By 2070, as shown on the chart, Social Security will face a startling $7 trillion shortfall. Just look at these deficits--by 2070, a $7 trillion shortfall. Excluding Social Security ignores this problem and places the whole system in dire jeopardy. Including Social Security in the budget calculation forces Congress to address the pending crisis in a responsible manner before it becomes too late. Why? Because exempting Social Security creates two budgets, one which must be balanced because receipts must equal outlays, and the other, a Social Security trust budget which will contain the current trust fund's surplus. This second budget presents the political branches of Government with a powerful incentive to redefine costly spending programs as Social Security and pay for them through what would become a giant loophole in any attempt to balance the budget. There is no telling where these games might lead. Imagine the christening of the SS Social Security battleship, or the creation of the Social Security National Park, which will probably, of course, be located in Utah if this administration has anything to say about it. Thus, this loophole would make it easy to balance the budget on paper without changing anything except accounting methods. And, in perhaps the ultimate paradox, Congress could use the loophole to seem to eliminate the deficit without a single spending cut. According to Wall Street analyst David Malpass, who recently testified before the Judiciary Committee, ``Financial markets would react negatively to a budget concept that ignores Social Security.'' By passing a balanced budget that excludes Social Security, Congress would, according to him, and I think anybody else who looks at it objectively, ``game'' the system, saying, in effect, that it does not intend to balance the consolidated unitary Federal budget. For Malpass and other market analysts, ``This would be a decidedly negative signal for financial markets leading to higher interest rates.'' That would hurt every citizen in this country, but most of all the poor. Furthermore, Wall Street's support for the balanced budget amendment was made evident today in a full-page advertisement that Merrill Lynch placed in Roll Call. The ad was entitled ``Why the Balanced Budget Amendment Makes Sense.'' I ask unanimous consent that the article be printed in the Record at this point.

Mr. HATCH. Not that I know of.

Mr. HATCH. Does the Senator need more time?

Mr. HATCH. Mr. President, I believe that this gamesmanship is exactly what must be avoided. The way to avoid it is to reject such exemptions. The best way to protect retirees of future generations is to adopt a clean and strong balanced budget amendment, free of loopholes. Significantly, critics of Senate Joint Resolution 1, who wish to exempt Social Security, have not demonstrated in the least how they would balance the budget without including the present Social Security trust fund surpluses, which, as I stated, is only temporary. Presumably, without including the present surpluses in budget calculations, other programs would have to suffer greater cuts. It is ironic that many of those who argue that a balanced budget constitutional amendment would cause cuts in social programs are themselves calling for the exemption of Social Security, advocating draconian cuts in their most favorite programs. Let me give you an example. Between the years 2002 and 2007, without including the surplus, the deficit will appear to be $700 billion larger than it is. This means either a mammoth tax hike on all American families--almost $1,100 per year per household--or devastating cuts in important programs like Medicare, cancer, and other disease research, Head Start, and environmental cleanup. I might add that Treasury Secretary Rubin, at a January 17 balanced budget constitutional amendment hearing, testified that the trust fund surplus will be included in the Presidential budget, and that this view of budget policy reflects the view of the President and the Congress. Indeed, President Clinton, in a recent press conference, while opposing the balanced budget constitutional amendment, admitted he could not balance the budget without counting the present Social Security surpluses. In the words of the President, ``Neither the Republicans nor I could produce a balanced budget tomorrow that could pass if Social Security funds could not be counted.'' In fact, all the budgets the President has submitted to Congress have contained the Social Security surplus. Some would think it hypocritical to not argue that it should not be included. I would never go that far, but it is a game that is being played by the White House and, frankly, it is time for the games to end. The President knows that not including the present day surpluses would require draconian cuts to other worthwhile Federal programs. By the way, contrary to what Senator Reid has alleged, CRS did not--let me emphasize this--conclude in any of its memoranda that the balanced budget amendment requirement and the Social Security program would prohibit the use of surpluses or other receipts to finance benefits in succeeding years. In fact, today, the nonpartisan Concord Coalition--a nonpartisan group founded by a Democrat, Paul Tsongas, and a Republican, Warren Rudman--revealed a study that clearly demonstrates that the best way to protect Social Security is to adopt this clean, unamended balanced budget constitutional amendment. I want to point out that the Concord Coalition has been cited by both sides as a responsible group trying to do the best to bring about good budgetary matters in this country. I also want to point out that these amendments that are attacking this balanced budget amendment would, for the first time, place a statutory reference in the Constitution. The constitutional effect of this is unclear and likely to engender much confusion that could be destructive in both balanced budgets and Social Security. In fact, former Assistant and Acting Attorney General Stuart Gerson, and attorney Alan Morrison, a liberal attorney, as witnesses for the majority and minority, respectively, in a recent hearing on Senate Joint Resolution 1, the balanced budget constitutional amendment, agreed that exempting Social Security from the balanced budget amendment is a bad, bad idea. According to Alan Morrison, a litigator with the Public Citizen, who opposes the balanced budget amendment and who 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. He is a liberal and is affiliated with the Ralph Nader group. But he is a competent constitutional expert. Normally, he is advocating the most liberal constitutional principles. But even he said there should be no exemptions like the Reid amendment to this balanced budget amendment. Mr. President, I am eager for the debate tomorrow over the Social Security exemption. I am confident that when the dust settles, the Reid amendment will go down to defeat because it will be shown to be not only unnecessary, but also harmful to the very thing it sought to safeguard, Social Security. I have stated that the debate on the Reid amendment is really a diversion from the real underlying issue--whether this Nation has the will to avert a common fiscal crisis. Mr. President, the absolute 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 balanced budget amendment, but, in all probability, will also cause the Social Security trust funds to run out of money sooner than they would have without an exemption, risking the viability of the Social Security program itself. Finally, the Senator from Nevada has raised the specter that the balanced budget amendment may cause the Social Security trust funds to be ``raided,'' because the amounts of the present day surplus will be included in budget calculations. This contention is erroneous for several reasons. The argument to exempt Social Security surpluses disregards the fact that the United States has a unified budget, and not including the present trust fund surpluses will make the budget very difficult to balance and threatens the vitality of other Federal programs. The Social Security trust funds are, in actuality, nothing more than an accounting device. Let's consider this chart on how the system works. Social Security tax receipts are not kept in some sort of isolated bank vault. Instead, Social Security taxes are deposited into accounts maintained by the Federal Government with various financial institutions. Social Security taxes, along with other deposited receipts, become part of the U.S. Treasury. FICA tax receipts go to the Social Security Administration, and they are passed on from there to the Treasury, where all FICA tax proceeds are commingled with the general funds. In return, the Treasury invests in Treasury bonds which will be redeemed later. These bonds are, incidentally, the most important and stable securities in the world. All the Treasury moneys are indistinguishable from other deposited moneys. But the Social Security revenues are accounted for separately through the issuance of Federal securities to trust funds. The trust funds do not hold the moneys. They are simply bookkeeping accounts. Thus, as part of unified budget, any surplus derived from the trust funds, much like other revenues, is used to finance the operations of the Federal Government. Like all of us, the Federal Government has one budget. Listing categories of spending in discrete bookkeeping entries does not reduce the size of what we owe or spend. Moreover the surplus Social Security taxes being collected today will not cover the future cost of the system. Most of current Social Security taxes are currently used to cover benefit payments to present retirees. Outlays will exceed receipts of the system, and the year that it is suspected to do that is the year 2019. The guarantee of future benefits, therefore, will depend on the Federal Government's future ability to levy taxes, the size and the amount of the benefits, and the overall health of the economy, not the balances or ``surpluses'' of the trust funds. To characterize the use of the surplus as ``raiding'' the trust funds is, therefore, erroneous and absolutely wrong. Furthermore, the exclusion of the present-day surpluses in the budget will make it extraordinarily difficult to balance the budget by the year 2002, the date Senate Joint Resolution 1 mandates balancing the budget. Between now and the year 2002, the surplus is estimated to be over $500 billion in current dollars. Ten years from now, the year 2007, the value of trust fund surpluses is expected to be $1.067 trillion. This is an annual surplus average of approximately $100 billion. According to current budgetary figures, $100 billion per year is more than our current annual expenditure on education, the environment, and transportation and infrastructure. Mr. President, $1.067 trillion is in fact more than our expenditure this year on Medicare, education, veterans' benefits, the environment, national defense, Social Security, transportation and infrastructure, and natural resources combined. Where will we come up with the money to fund these programs if we exclude Social Security surpluses from the unified budget? Federal programs would have to be cut, or taxes raised by this amount to reach the balanced budget goal. Ironically, it appears that those who yell the loudest to exempt Social Security are the very same people who wish to increase the very social welfare programs that are being put at risk by this exemption. They are the ones that are really screaming about wanting to spend more on social programs, which will have to be cut if this amendment becomes law. The real issue is where are we going to get the money to redeem the Federal securities that make up the Social Security trust funds? Let's put that other chart up. Where will we come up with this $1.067 trillion shortfall if Social Security is exempted from the balanced budget amendment? The trust funds are not being raided. We owe the money to the Social Security trust fund, and we will have to pay. But if Social Security is exempted from the balanced budget amendment it will be mortally wounded. Either other programs will be relabeled ``Social Security'' so that they take away from the luster of Social Security and the willingness of people to support it like it should be. Either programs will be relabeled ``Social Security''--as we have done in the past--and the present surpluses will be spent, or the surplus will be used to pay down our national debt. And thereafter we will keep spending until we have reached the debt ceiling. Either way, the surplus will be used up. Well, frankly, it is the Reid exemption and the Reid amendment that will ultimately destroy Social Security. The best way to face the coming problems with the Social Security System is through a unified budget. We all have to work together within constraints to redeem those securities, and not allow any other programs to be relabeled Social Security or affect the Social Security trust funds. But if we don't, if we take Social Security outside the unified budget, the rats will come and eat it away. Inside, Social Security competes better than any other issue for budgetary markets. So, it is penny-wise and pound-foolish to take it out and risk having to reduce all of these other good social welfare programs. Head Start, education, environment, highways and infrastructure--all of these programs that are so important would have to be cut to reach a balanced budget by the year 2002 if Social Security is exempted. We show that by the year 2019--on this chart, the green part is the surpluses--surpluses drop, and huge deficits will be as high as $7 trillion a year by the year 2007. Without the balanced budget amendment, that is where we are headed. We would not get this balanced budget if the Reid amendment happened to pass. And, if it did past, it would put us at tremendous risk as we try to reach a balanced budget by the year 2002. We would have to cut almost every social program that we have more than we should. Naturally we are going to have to find restraint in growth, and we are going to have to find ways of cutting without cutting to the bone. Taking Social Security out. I have to tell you, it will still be the same system. The only difference is we will still be investing in the bonds which I was showing--these Federal Government securities. The only difference is our colleagues who want to spend more will be spending those surpluses for more social welfare programs without reaching a balanced budget. The fact is that this country will be doomed. We have to pass this amendment. Frankly, it is the only thing I know to stop the rats from raiding all of our budgetary assets. And this will start us on the the pathway of getting things in order. Look. We know that we cannot keep up the same system. We cannot keep doing this. We just can't keep doing this. And the only chance to put an end to these types of unbalanced budgets year after year is to pass this balanced budget amendment, and to pass it intact without these amendments, as sincere as they may be. Mr. President, I am prepared to move on this side of the Senate, if we can.

Mr. HATCH. How much time would the distinguished Senator like to have to close out at the end?

Mr. HATCH. I am happy to yield to the Senator.

Mr. HATCH. The same thing that is meant in every constitutional amendment since the Civil War.

Mr. HATCH. Let me answer the question. In addition, and I will take back my time, in addition to the fact that we have no strong incentives under the current system to stay within either the estimates or the budget that is under the current system, Congress often compounds the problems inherent in using estimates by making changes in policy that the estimates did not foresee. There is no disincentive under the current system for doing this without great concern about the effect on compliance with the budget plan.

Mr. HATCH. Mr. President, I do not want to prolong the debate tonight, but I have to say no matter what you do, those funds are going to be invested in bonds, U.S. securities. That is what is statutorily required. The fact is, if you set Social Security outside of the budget, if Social Security is defined by statute, it can be redefined by statute. So we have accounting surpluses in Social Security. I am just using bizarre examples, but what about Medicare? People around here are not willing to reform Medicare. They are not willing to pay the price to get it done. They just want to find some other revenue source to pay for it. It would be easy to shove it into Social Security and make the surplus pay for it rather than facing the music which the balanced budget amendment would make us do. And it is not just that. It is all social spending they want to do. They will use that surplus for that rather than using it for what it needs to be used for, and that is to balance the budget. And the only way you are going to get the payment for that Social Security surplus in the future is if the United States can redeem its bonds. And the only way the United States can redeem its bonds in the year 2020 is if we do what is right today and we pass a balanced budget amendment. That is the only way, because every dime of it, if there is a surplus up to the year 2020, every dime will be invested in Federal Government bonds, every dime, just like it is today. The question is, will we be using those dollars, every dime in those dollars, to balance the budget or will it just be another big spending spree by those who want to spend us blind and who have done so for 28 straight years? I do not mean to sound rabid about this, but this is important stuff. And when we start talking about putting Social Security outside the balanced budget amendment, we're really talking about milking that program to death. You cannot get away with it if it is all on budget. If it is a unified budget, you cannot get away with it. And these people say it is currently raided. Everyone knows that every single nickel of that money is going to go into Federal Government bonds. The question is whether that money is going to be used to reduce the deficit and get us to a balanced budget by the year 2002 or whether we are going to have people raiding it and using it to pay for other additional social spending programs because it is not subject to balanced budget requisites. This is a pretty serious issue. I have here a wonderful article by Stephen Chapman in Sunday's Washington Times entitled ``Balanced Budget Shell Game.'' He says: Opponents of a simple balanced budget amendment, which include President Clinton, say it would harm retirees by allowing Social Security surpluses to be used to offset deficits elsewhere in the budget. North Dakota's Democratic Sen. Byron Dorgan says such a ``misuse'' would violate ``a solemn promise:'' How is that, since all that money is going to be invested in Federal Government bonds? The question is, what is it going to be used for, once the Government gets the money? Is it going to be used to balance the budget or used for more spending, which is going to happen if the Reid amendment passes? This tax taken from your paycheck goes into a trust fund to be used for only one purpose, and that is to fund the Social Security system. The critics say the amendment would encourage Congress to cut retirement benefits to pay for tax cuts and other programs at the expense of the elderly. They propose an alternative version that excludes Social Security from deficit calculations. For many Members of Congress, this option has an extra attraction: It has no chance of enactment, since it would force Congress to come up with another $465 billion in spending cuts or tax increases between now and the year 2002. So there will be no need to make the unpleasant choices that our lawmakers have been dodging for an entire generation. As they have passed these 28 unbalanced budgets and 58 of the last 66. The opponents have found a clever way to gull voters into accepting a continued tide of red ink. But the public shouldn't be fooled. The opponents are playing a shell game, hoping voters won't be able to detect their sleight of hand. The fears they have for Social Security are unfounded and their solution would protect only fiscal indiscipline. Indiscipline, not discipline. First of all, excluding Social Security would create a loophole big enough to drive a $300 billion deficit through. If Social Security is exempt from the balanced-budget requirement, everything will be Social Security. Any program with any remote benefit to the elderly can easily be renamed. ``Housing, national health care, highways will be treated as Social Security,'' says Heritage Foundation budget expert Daniel Mitchell. We would end up with a ``balanced'' budget that drives us ever deeper into debt. The exclusion is billed as a way to prevent looting of the trust fund, but its actual effect would be zero. Right now, the retirement fund is running a surplus every year. The surplus is ``invested'' in government bonds--in other words, it is lent to the Treasury, which uses the borrowed money to pay for other government programs. Once it is excluded from the budget, the surplus will still be lent to the Treasury. Mr. Dorgan says Social Security taxes should never be used except to pay Social Security benefits. But his proposal does nothing to prevent that. The ostensible reason we are running a surplus is to build up a reserve that can be used to pay benefits when the Baby- Boom generation retires. Dorgan and Co. say the original balanced-budget amendment would deplete that reserve, seriously endangering future benefits. Nonsense. The ``reserve'' consists of government bonds. These are nothing more than IOUs, which cannot be repaid unless future taxpayers are willing. When the Baby Boomers retire, taxes will have to rise to pay their benefits. That's true whether Social Security runs a surplus today or not. The opponents insist that excluding Social Security from the amendment would shield it from politicians eager to starve Grandma so they can hand out goodies to special interests. Since Congress wouldn't be able to reduce the deficit by cutting Social Security benefits, those benefits would be as safe as the gold in Fort Knox. This argument is neat, simple and hopelessly naive. What it overlooks is that if Congress can't use the surplus to balance the budget, it can always get rid of the surplus by cutting payroll taxes--then raise taxes an equivalent amount elsewhere to pay for the programs it wants. It could also cut benefits to allow even deeper cuts in the payroll tax, which would permit additional tax increases to finance spending that doesn't help the elderly. The protection for Social Security would soon turn out to be no protection at all. The opponents of the original amendment take the politically easy position of saying that the Constitution shouldn't require the budget to be balanced at the expense of the elderly. What they mean is that the Constitution shouldn't require the budget to be balanced at the expense of anyone. The fact is, the same funds will be invested in the same bonds, and the credit of the United States will have to take care of those bonds in the future or people on Social Security will not have the money. You saw the deficits expected in Social Security during the next century. The fact is, unless we balance this budget, unless we get fiscal discipline into the Constitution, I guarantee we are not going to do what is necessary to solve our fiscal problems. We are certainly not going to have the funds to take care of Social Security in the future. So, passing the balanced budget amendment in its current form, in the form that we have here, the only one that has a chance of passage, is our only hope to get spending under control. Mr. President, I am prepared to turn the floor over to the majority leader.

Mr. HATCH. If I could finish. I want to answer your question, and it will take me a second because it is an interesting question, and then I will be happy to yield. Under Senate Joint Resolution 1, Congress will, by necessity, need to be more careful about its decisions through the year in order to comply with the constitutional directive of the other sections. For instance, section 6 simply recognizes that to be reasonable and workable, we will need to rely on estimates throughout the fiscal year in complying with the balanced budget amendment rule.

Mr. HATCH. Of course I will. And I will also acknowledge it is still $107 billion in debt. If I can just finish, it is amazing to me--I give credit for that. We had what some think is the largest tax increase in history and the deficit has come down. But the fact of the matter is, only in Washington would people say that a $107 billion deficit is making real headway.

Mr. HATCH. I will be happy to.

Mr. HATCH. I thank my colleague. I have great respect for him, as I have said. I have been around here a long time, and I have seen Senators come and go. This Senator is one of the greatest of all time, and I have respect for him. I do not agree with him here today, but I do have respect for him. And I want his amendment to be given every consideration. Mr. President, today we begin our third week of debate on the balanced budget amendment. Our national budget as of right now is going to $5.4 trillion. That is about $20,000 for every man, woman, and child in America. Believe me, when we are talking about the debt we are placing on the backs of our children and grandchildren, we are truly playing with fire, and we have been getting burned for 28 years, the 28 years represented by these unbalanced budgets--these stacks are obscene, and yet that is what we face ad infinitum if we do not have this balanced budget amendment. These stacks will reach all the way to the ceiling of this Chamber. And it is time to do something. We have been getting burned for 28 years now--actually, 58 of the last 66 years. That is what those two towers of debt mean. There is only one way to scale this tower of debt and only one way we will ever reach and remain at a balanced budget. There is only one cure that I can think of for this addiction that we have for debt. That is this balanced budget constitutional amendment. Everybody knows it is a bipartisan amendment. Everybody knows it has been worked out with Democrats and Republicans. Everybody knows it is the only one that has a chance of passage. Everybody knows we have to keep amendments off or we lose Senators here or Senators there. Everybody knows it is the best possible language we can arrive at and still have it be bipartisan. There are Senators over here who want to have a three-fifths vote to increase taxes. We cannot do that and have it bipartisan, even though the Senator from Utah may have some sympathy for that attitude. We have Senators on the other side who wish that we did not have a constitutional majority to raise taxes, and that certainly they would like us not to have a three-fifths majority to increase the debt. But in order to have a bipartisan amendment and satisfy people on this side of the aisle--and, by the way, people on the other side--we have come to this conclusion. So anybody who says that they have to have their one little amendment or they cannot vote for this, they are for balanced budgets and they are for a balanced budget amendment but they cannot vote for this, they may be sincere, but, in most cases, they are obfuscating. The fact is, they knew at the beginning of this debate if we cannot pass this amendment as it is, there will never be a balanced budget amendment and there will never be, at least I do not think there will ever be, a fiscal mechanism put into the Constitution that will require us to at least do what is right here. This afternoon we are resuming the consideration of the Byrd amendment, which would remove the ability of the Congress to rely on estimates in implementing the balanced budget amendment. Let me just say a few things about this proposal, keeping in mind I want to reserve some time for my colleague on the other side. If there are any Republicans who want to speak, I hope they will get over here soon, because I am going to reserve the last 5 minutes for my colleague from West Virginia. Estimates are a necessary tool to be used by a more vigilant Federal Government living under current law or under the balanced budget amendment. The very first step in the perennial budgeting process is the presentation of the budget estimates of OMB and the CBO, the Office of Management and Budget and the Congressional Budget Office. We have just seen this process in action this last month as the President proposed his budget and the Congressional Budget Office came out with its latest deficit predictions, predicting that even though the President is trying to balance the budget--of course, 75 percent of the cuts are in the last 2 years after he has left office--even at that, it is $49 billion in debt come the year 2002. This process has not been the subject of intense scrutiny or recriminations. I do not understand why, if it is satisfactory now, some have argued it is insufficient under the balanced budget amendment. Now, we all know that no budget can be predicted to the penny more than a year and a half in advance, particularly not the $1.6 or $1.7 trillion Federal budget. Even I am amazed at how high it is now. The bottom line is that we have no crystal ball, only reasonable estimates upon which to work. The President and the Congress use estimates now in budget planning. They are a necessary part of the process. They will continue whether this passes or not. But there will be some incentives to be more careful if the balanced budget amendment passes. The balanced budget amendment accepts the plain truth that the President and Congress use estimates in the budget process and that they are a necessary part of the process and that they will have to have continued use. The difference is that the balanced budget amendment provides new incentives for Congress to be more vigilant in actually getting to balance or being more deliberate and accountable in our spending and borrowing decisions. In the past, estimates have been off target at least in part because there was no incentive to get them right in the first place and no real sanction for getting them wrong or failing to live within them. It is ultimately up to Congress to determine the estimates that we use, and, more importantly, it is up to Congress whether they will work to stay within Congress' projected budget or the estimates' projected budget. Under current practice, once the Congress passes a budget resolution, it never looks back at these predictions with an eye to adjusting its behavior to accommodate new information. Whether the estimates were in fact right or wrong, high or low, Congress is never held accountable under the current system for the accuracy of its estimates or its failure to stay within the stated budget based on those estimates. Under the balanced budget amendment, we would have to be much more vigilant. If the estimates are incorrect, then we, the Congress, will have to set things right to get back on track. Failure to do so would force the Congress to muster a three-fifths vote to approve the deficit and announce to the American people that we have failed to do our job. That is what it will mean. In other words, Congress will be held accountable for its own predictions. This incentive can only help us make more realistic projections and to work to abide by our stated budget goals. Further, we have only heard part of the story on the accuracy of estimates. The statistics most often cited to show that the CBO is frequently off target when trying to predict the budget are the earliest estimates that the CBO compiles, often a full 20 months before the end of the fiscal year they are predicting. But there are many other sources of updated information throughout the year. Both OMB, the President's Office of Management and Budget, and the CBO, the Congressional Budget Office, update their budget statistics for the current year and their estimates for the next year every February and every August. Further, the Treasury Department issues monthly statements showing detailed information on receipts, outlays, and borrowing. These multiple reports and any additional ones we might require under the balanced budget amendment give the Congress increasingly accurate information, providing the ability to anticipate a trend towards a deficit and to make appropriate adjustments to the budget. Let us also recognize that the early estimates are often distorted by the subsequent volitional acts of the Government. Life under a balanced budget amendment can use estimates more effectively than they are now. The first thing the Congress and the President will do is pass a budget resolution laying out the general scenario for outlays and receipts in the fiscal year. This resolution will be based on estimates, as is now the case. At this stage, the wisest policy is to shoot for a budget which is in surplus, which would be a very wonderful thing compared to what it has been over the last 66 years, shoot for a budget that is in surplus to provide a margin for error in case outlays are in fact greater or revenues less than expected during the year. That would become the norm rather than to not do anything, which is the norm today. Over the course of the fiscal year, the Congress will need to monitor outlays and receipts. While it is not required that the budget remain in balance during every moment of the year, Congress must work to get its budget back in balance by the end of the year unless it votes, by a three-fifths vote, to authorize a specific deficit. If a trend towards an unintended deficit is observed, Congress should adjust its budget in order to rectify the problem. Indeed, the reconciliation process was originally created for the purpose of adjusting outlays and receipts, if necessary, before the end of each fiscal year. Should it be determined that circumstances are serious enough to warrant deficit spending, the Congress could approve an appropriate deficit and raise the debt ceiling, if necessary, as provided for in the balanced budget amendment. As the fiscal year comes to a close, Congress will have a very good idea of whether the budget is likely to be out of balance or out of line. This is where Congress will be held accountable for the accuracy of the estimates it adopted earlier. Sloppy estimates will require more work to keep the budget in balance. Realizing this potential difficulty will keep Congress honest in its budget estimates. If the budget is balanced or is in surplus, the country will have prospered from disciplined fiscal policy. On the other hand, if it appears that there may be an unintended deficit due to unexpected economic conditions or events, a deficit could be approved but it would take a three-fifths vote to do it. Even if the precise size of the deficit is unknown at the close of the fiscal year, budget forecasts will certainly provide a range in which the deficit will fall. In order to anticipate all contingencies, the Congress would simply approve a deficit at the high end of the projections. That way, the Government would continue proper operations even in the worst case scenario. So you see, the Federal budget process can work smoothly and efficiently under the terms of the balanced budget amendment. Further, it will provide the strong incentives towards fiscal responsibility, reasonable budget forecasts, and, most important, a balanced budget. The reality is that under a balanced budget amendment, the Government will have increased accountability for its decisions and increased incentives to act responsibly throughout the year to get to a balanced budget at the end of the year. This is a real change from the system we now have that has given us an unbroken chain of unbalanced budgets for each of the past 28 years. Each of the past 28 years--I don't care who you are, you have to be shocked by that. I am so afraid of knocking these over for fear I will crush somebody, but literally, these stacks really tell it all. There is just no real argument against this, other than the argument that you want to spend more, you want to tax more, and that old argument, let us just have the will to do what's right. Come on, give me a break. We haven't had the will for 28 years, we are not going to have it for 28 more if we don't put some fiscal discipline into the Constitution. It is about time to end this game and do what's right. And, yes, I have to admit I am very loathe to amend the Constitution. It is, to me, an inspired document. Those Founding Fathers never thought for a minute, they never thought for a minute that we would have 28 straight unbalanced budgets and 58 out of 66 years of unbalanced budgets. They never thought that for one minute. They thought the only way you would ever have an unbalanced budget is during time of war or serious, real serious economic distress, and they could understand that. But you would immediately get in balance once the economy picked up or you got out of war. The Founding Fathers knew that, and nobody ever thought in their wildest imaginations that we would be brought to the pitiful, or should I say pitiable, position that we are in today. Nonetheless, some proponents of the Byrd amendment contend that the reliance on estimates somehow turns the balanced budget amendment into a gimmick. That claim is simply untrue. And, to paraphrase the distinguished senior Senator from Maine, basically she said, ``I'll tell you this, if a balanced budget amendment were a gimmick, Congress would have passed it long ago.'' I think that says it all. ``If the balanced budget were a gimmick, we would have passed it a long time ago,'' because we love gimmicks around here, the biggest of which, and the biggest hoax of which, is saying that you have to take the largest item in the Federal budget, Social Security, out of the purview of the balanced budget and then let it sit out there all naked so it can be attacked, manipulated, poked at, taken apart.

Mr. HATCH. Let me reserve 5 minutes for the distinguished Senator.

Mr. HATCH. I will answer the Senator. First, how much time remains on both sides?

Mr. HATCH. Mr. President, I am going to try to reserve some time out of my time for the Senator from West Virginia to make closing remarks here today. If that is all right, I will reserve some time for the distinguished Senator from West Virginia to make closing remarks out of my time.

Mr. HATCH. Mr. President, I ask unanimous consent that the new counsel on my committee staff, Brian Jones, be granted floor privileges for the remainder of the day on the balanced budget constitutional amendment.

Mr. HATCH. Under the Supreme Court decision in Chadha, appropriate legislation has to go to the President and become a law. I think it is a moot point, to be honest with you. Frankly, we are using the language of the Constitution itself, and appropriately so, in my opinion. I notice the distinguished Senator from Wyoming is here. He would like to speak for 8 minutes. I yield to him, and then I would like to have the time back so I can finish my statement. I want to respond to my dear colleague's thoughtful comments. They are intelligent comments, and I always enjoy listening to him as one of the true experts in this body. I mean every word I am saying, as well. I don't agree with him on much of what he is saying here today, but so what. The fact is, I respect him. I yield 8 minutes to the Senator from Wyoming. Privilege of the Floor

Mr. HATCH. I will be happy to.

Mr. HATCH. All right. I thank the Chair. The term ``by law,'' used in the Senate Joint Resolution 1, sections 1 and 2 is used there in order to make clear that Congress cannot imbalance the budget or raise the debt limit by an internal rule. Why? The President must sign a bill for it to become a ``law.'' The President is not involved in the adoption of rules in the Senate or House. The term ``by appropriate legislation'' is used in Senate Joint Resolution 1, section 6, because that is the standard term used in all other enforcement clauses in the Constitution since the Civil War. So we have followed that which has been used. And I believe it will be interpreted similarly to the word ``law.'' But be that as it may, it has not been a problem since the Civil War, and I don't believe it will be a problem now. Specifically, ``appropriate legislation'' means that it satisfies article 1, passed by both Houses and is signed by the President. But the language actually mirrors all enforcement clauses in the Constitution since the Civil War. So I don't quite see the problem that the distinguished Senator from West Virginia does, and I don't think anybody else will.

Mr. HATCH. I acknowledge that.

Mr. HATCH. I am strongly suspicious that the Senate may prevail over the balanced budget amendment.

Mr. HATCH. Did I say that? I am implying that.