Daniel Moynihan

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, today I am introducing legislation to prohibit the use of tax-exempt financing for professional sports stadiums, the Stop Tax-exempt Arena Debt Issuance Act [STADIA], with one modification. The bill I introduce today is identical to S. 122, the previously introduced version of the STADIA bill, in all respects save one. The new version, rather than generally applying to bonds issued on or after the date of first committee action, as specified in S. 122, will be effective generally for bonds issued on or after the date of enactment. On February 27, during the floor debate regarding the reinstatement of the airport and airway trust fund taxes, the senior Senator from Pennsylvania, Senator Specter, raised an objection to the majority leader's request that the aviation tax bill be taken up and passed. Senator Specter's objection was based on his concerns about the effective date of S. 122. In view of the importance of the aviation tax legislation, which is critical to the funding of air safety measures, I agreed to revised the effective date of my bill. Senator Specter then withdrew his objection to passage of the aviation tax legislation, which the Senate proceeded to pass by unanimous consent.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, yesterday, March 10, marked the 38th anniversary of the Tibetan uprising, at a time when many Tibetan citizens gave their lives to defend their freedom and to prevent the Dalai Lama from being kidnaped by the Chinese Army. For those who stand with the Tibetan people, it is a day to consider what can be done to lend support to their aspirations. The United States Senate will mark the occasion by adopting this resolution Senate Resolution 19, introduced on the first day of the 105th Congress, condemning the egregious prison sentence imposed by the Chinese Government on Hgawang Choephel. The Foreign Relations Committee has considered the measure and unanimously reported-out the resolution last week. Mr. Choephel, a Tibetan ethnomusicologist and Fulbright Scholar, returned to Tibet in July 1995 to prepare a documentary film about traditional Tibetan performing arts. He was detained in August 1995 by the Chinese authorities and held incommunicado for over a year before the Government of the People's Republic of China admitted to holding him, and finally charged him with espionage in October 1996. On December 26, 1996, the Chinese Government sentenced Ngawang Choephel to an 18-year prison term plus 4 years subsequent deprivation of his political rights following a secret trial. This is the most severe sentence of a Tibetan by the Chinese Government in 7 years. The imprisonment of Ngawang Choephel reflects the broader conflict between Tibetans and Chinese. Mr. Choephel's arrest, and harsh sentence, appear to stem from his collecting information to preserve Tibetan performing arts. Such treatment of Tibetans is indicative of the extreme measures the Chinese Government continues to take to repress all forms of Tibetan cultural expression. To the Chinese Government, which views Tibetan religion and culture as an impediment to successfully unifying Tibet with the ``motherland,'' such efforts are reactionary. As we have seen, they are so threatening that Mr. Choephel has been sentenced to 18 years imprisonment for his efforts. The New York Times editorial on January 2 explains: The basis of Ngawang Choephel's conviction is unclear, but even taping Tibetan culture for export could qualify as espionage under Chinese law. Since its invasion of Tibet in 1950, Beijing has gradually increased its efforts to erase Tibet's identity. China has arrested those who protested the takeover and tried to eradicate the people's affection for the leader of Tibetan Buddhism, the Dalai Lama. My first encounter with this transcending issue came with my appointment as Ambassador to India a near quarter-century ago. In 1975, along with my daughter Maura Moynihan, I visited China as a guest of George Bush, who was then Chief of our U.S. Liaison Office in Peking. By this time, I was persuaded the Soviet Union would break up along ethnic lines. But I was not prepared for the intensity of ethnic tensions in the People's Republic. One was met at the Canton railroad station by a giant mural of Mao surrounded by ecstatic non-Chinese peoples who occupy more than half the nominal territory of the People's Republic. In Beijing, 3-year-olds in the Neighborhood Revolutionary Committee of Chi Eh Tao nursery school sang a patriotic song for us which began: We will grow up quickly to settle the border regions. We will denounce and crush Lin Piao and Confucious A refrain which ended: We will each grow a pair of industrial hands. Much of that Stalinoid dementia has disappeared from the coastal regions of China, at least for the moment, but not from Tibet. My daughter Maura has traveled to Tibet several times. After her most recent trip last year, she wrote in the Washington Post of the Chinese assault on Tibetan religion and culture: Beijing's leaders have renewed their assault on Tibetan culture, especially Buddhism, with an alarming vehemence. The rhetoric and the methods of the Cultural Revolution of the 1960s have been resurrected--reincarnated, what you will--to shape an aggressive campaign to vilify the Dalai Lama. The resolution before us records the United States Senate's response to these Chinese policies. We reject Chinese efforts to ``erase Tibet's identity'' and their ``assault on Tibetan culture.'' Tibetans must be free, not only to preserve their identity and culture, but to determine their future for themselves. In the words of the International Commission of Jurists in 1960, ``Tibet demonstrated from 1913 to 1950 the conditions of statehood as generally accepted under international law.'' The Government of the People's Republic of China should know that as the Tibetan people and His Holiness the Dalai Lama of Tibet go forward on their journey toward freedom the Congress and the people of the United States stand with them. I thank all my colleagues who have cosponsored this resolution. In particular I would like to recognize the long commitment that the chairman of the Foreign Relations Committee Senator Helms, has shown in support of Tibetans and thank him for joining me in this effort today. I would also thank both Senators from Vermont, who have remained engaged in this matter since it was made known and for their joining me as a cosponsor of this measure.

Mr. MOYNIHAN

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. ROTH addressed the Chair.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I am honored to be a cosponsor of this measure which our revered chairman has brought to the floor. I would like to endorse each and every thing he has said. This legislation would create an independent Cost of Living Board to determine annually what cost of living adjustments should be made for the following calendar year. In the event a majority of the Board cannot agree on a decision, then by default the automatic adjustments would be based on the change in the Consumer Price Index as calculated by the Bureau of Labor Statistics. The Board would have five members and would be comprised as follows: the Chairman of the Board of Governors of the Federal Reserve System; the Chairman of the President's Council of Economic Advisers; and three others appointed by the President with the advice and consent of the Senate. The bill specifies that members of the board shall be professional economists familiar with issues related to the calculation of changes in the cost of living, such as index number theory. There is a growing consensus that the CPI overstates the cost of living. In December 1996, the Advisory Commission to Study the Consumer Price Index appointed by the Finance Committee--the Boskin Commission-- concluded that the Consumer Price Index overstates the inflation by 1.1 percentage points. The distinguished Chairman of the Board of Governors of the Federal Reserve, Alan Greenspan, agrees. And in testimony before the Finance Committee, Chairman Greenspan provided the definitive response to those who have argued that this issue should not be ``politicized.'' He said: There has been considerable objection that such a . . . procedure would be a political fix. To the contrary assuming zero for the . . . bias is the political fix. On this issue, we should let evidence, not politics, drive policy. I referred earlier to index number theory. I might add that in the last decade or two, there has been very considerable advancement in the subfield of index number theory--the point where mathematics meets economics. We know a lot more than we did. We can do it better than we do. There are persons who have specialized in this. The first particular study goes back to 1961, when the National Bureau of Economic Research, at the request of the then Bureau of the Budget, gave us a report by a committee chaired by George J. Stigler, soon to be a Nobel laureate, on the price indexes of the Federal Government. It concluded the indexes overstated changes in the cost of living. They did not have any estimates of the bias at the time, but they knew there was a bias. And in the manner of academic work, people addressed it. For what it is worth, perhaps one of the most distinguished practitioners now teaches at the University of British Columbia. In any event, we are able to do so much more than we have done, and the need to get it right is paramount, it is our obligation, as persons responsible for the public fisc. This bill represents the next step in a logical progression. We are beyond a fact-finding commission. The overwhelming evidence is that the CPI overstates the change in the cost of living by between 0.5 and 1.5 percentage points. It is now time to consider how to go about getting the number right-- and getting it right every year henceforth. As the chairman indicated, it is our intention in introducing this bill to suggest one possible mechanism. Certainly there are other options, and I would not rule out any alternative at this point. Our purpose today is to keep attention focused and keep the dialogue moving on this issue, for delay is costly. If we get our numbers right--and that is all we propose to do-- then we save $1 trillion over 12 years. If we delay for 2 years, then the savings are reduced to $750 billion. I believe this Board, with the Chairman of the Federal Reserve Board, the Chairman of the Council of Economic Advisers, and the three economists nominated by the President and confirmed by the Senate, is a superb approach. We hope it will be given the attention it deserves now that it has been made clear by the White House that they see the necessity for doing this. Our distinguished majority leader, over there in the corner even as I speak, has spoken to this matter. And now we have a proposal for legislative action. With great and renewed thanks for our chairman, I yield the floor. Mr. ROTH addressed the Chair.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I am honored to be a cosponsor of this measure which our revered chairman has brought to the floor. I would like to endorse each and every thing he has said. This legislation would create an independent Cost of Living Board to determine annually what cost of living adjustments should be made for the following calendar year. In the event a majority of the Board cannot agree on a decision, then by default the automatic adjustments would be based on the change in the Consumer Price Index as calculated by the Bureau of Labor Statistics. The Board would have five members and would be comprised as follows: the Chairman of the Board of Governors of the Federal Reserve System; the Chairman of the President's Council of Economic Advisers; and three others appointed by the President with the advice and consent of the Senate. The bill specifies that members of the board shall be professional economists familiar with issues related to the calculation of changes in the cost of living, such as index number theory. There is a growing consensus that the CPI overstates the cost of living. In December 1996, the Advisory Commission to Study the Consumer Price Index appointed by the Finance Committee--the Boskin Commission-- concluded that the Consumer Price Index overstates the inflation by 1.1 percentage points. The distinguished Chairman of the Board of Governors of the Federal Reserve, Alan Greenspan, agrees. And in testimony before the Finance Committee, Chairman Greenspan provided the definitive response to those who have argued that this issue should not be ``politicized.'' He said: There has been considerable objection that such a . . . procedure would be a political fix. To the contrary assuming zero for the . . . bias is the political fix. On this issue, we should let evidence, not politics, drive policy. I referred earlier to index number theory. I might add that in the last decade or two, there has been very considerable advancement in the subfield of index number theory--the point where mathematics meets economics. We know a lot more than we did. We can do it better than we do. There are persons who have specialized in this. The first particular study goes back to 1961, when the National Bureau of Economic Research, at the request of the then Bureau of the Budget, gave us a report by a committee chaired by George J. Stigler, soon to be a Nobel laureate, on the price indexes of the Federal Government. It concluded the indexes overstated changes in the cost of living. They did not have any estimates of the bias at the time, but they knew there was a bias. And in the manner of academic work, people addressed it. For what it is worth, perhaps one of the most distinguished practitioners now teaches at the University of British Columbia. In any event, we are able to do so much more than we have done, and the need to get it right is paramount, it is our obligation, as persons responsible for the public fisc. This bill represents the next step in a logical progression. We are beyond a fact-finding commission. The overwhelming evidence is that the CPI overstates the change in the cost of living by between 0.5 and 1.5 percentage points. It is now time to consider how to go about getting the number right-- and getting it right every year henceforth. As the chairman indicated, it is our intention in introducing this bill to suggest one possible mechanism. Certainly there are other options, and I would not rule out any alternative at this point. Our purpose today is to keep attention focused and keep the dialogue moving on this issue, for delay is costly. If we get our numbers right--and that is all we propose to do-- then we save $1 trillion over 12 years. If we delay for 2 years, then the savings are reduced to $750 billion. I believe this Board, with the Chairman of the Federal Reserve Board, the Chairman of the Council of Economic Advisers, and the three economists nominated by the President and confirmed by the Senate, is a superb approach. We hope it will be given the attention it deserves now that it has been made clear by the White House that they see the necessity for doing this. Our distinguished majority leader, over there in the corner even as I speak, has spoken to this matter. And now we have a proposal for legislative action. With great and renewed thanks for our chairman, I yield the floor. Mr. ROTH addressed the Chair.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I do want to assert that she is extraordinary and will be plenipotentiary.

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, just to supplement the chairman's remarks, I would like to point out that he and I have received a letter today from Charles F.C. Ruff, Counsel to the President, stating: Because the President strongly desires to appoint Charlene Barshefsky as USTR and in order to ensure the absolute propriety, without question, of her appointment, President Clinton will not appoint Ambassador Barshefsky until S.J. Res. 5 has been enacted. I yield the floor and thank the Chair.

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. MOYNIHAN. I thank the Senator from Montana.

Mr. MOYNIHAN. Mr. President, the chairman and I have a letter we have just received from Charles F.C. Ruff, counsel to the President, and after the upcoming vote, we will vote on the resolution itself. He states: Because the President strongly desires to appoint Ambassador Charlene Barshefsky as USTR, and in order to ensure the absolute propriety, without question, of her appointment, President Clinton will not appoint Ambassador Barshefsky until S.J. Res. 5 has been enacted. I ask unanimous consent that the full text of the letter be printed in the Record at this point.

Mr. MOYNIHAN. Mr. President, I yield 10 minutes to the distinguished Senator from Montana.

Mr. MOYNIHAN. Mr. President, I rise, as is so frequently and pleasantly my lot in this Congress, to support entirely the major statement made by the chairman of the Committee on Finance, our revered Bill Roth of Delaware. As he stated just now, this proposal for a waiver, a very technical matter, a prudent matter, comes to the floor of the Senate as a unanimous action of the Committee on Finance. Just last week, we had a revenue measure which also came to the Senate with the unanimous agreement of the Finance Committee and was duly enacted and is now, in fact, law. The President signed that measure. We are acting today at the request of the administration, which has a very proper principled concern that if there is any question about the application of this statute, then let that question be resolved by a waiver, which is what we are doing. In the specific instance, Mr. President, as an attorney in practice here in Washington, Ambassador Barshefsky provided legal advice to the Government of Quebec on softwood lumber countervailing measures--I do not fully claim to understand that--and to the Government of Canada itself. As the chairman has observed and noted--was she seeking to influence actions here in the Congress? She gave legal advice. I cannot but doubt that there are any number of solicitors in Ottawa who provide advice to American firms on trade matters between the United States and Canada. We, after all, have enjoyed a free trade agreement for nearly a decade and more and have been the closest economic partners for a century and more. The capacities that Ambassador Barshefsky brings to this job are formidable to the point of being dazzling. She is a master of the subject and has a capacity for advocacy of the American position and American interests that is surely unequaled in our time. The chairman referred to one of her predecessors, Carla Hills, who was equally distinguished in this manner. There has not been a more dramatic example of American diplomacy-- because we are talking about relations between nations--at its finest. When the much-announced, much-proclaimed agreement on telecommunications last year found the other nations unwilling to make the kind of reciprocal agreements that we required which were in our interest and where there were times when negotiators from any country, including our own, would settle for less than what might be appropriate in order to get an agreement, Ambassador Barshefsky did no such thing. Charlene Barshefsky did no such thing. She walked out of the conference, only to come back in the recent weeks with a triumphant telecommunications agreement of the very highest importance to this country. She did it because she is a firm representative of the U.S. interests and can be someone of just a little hard edge when that seems important. Her arrival in a place like Singapore is front page news. I hope she would not mind that on certain Asian missions she is referred to as the ``Dragon Lady,'' although she has disarming, personable qualities. She is a tough negotiator. I make this point simply because there is one overriding issue upon us right now--as a trading nation, as the world's largest trading nation, and the sponsor of the World Trade Organization--and that is, as the chairman indicated, the terms on which the People's Republic of China will be granted admission to the World Trade Organization, the terms which are going to make it be the real test of that organization. And it will be decisive to its future. It started well. It took a long time to get going. As the chairman knows, in the Dumbarton Oaks agreements that were reached with the United Kingdom at the end of World War II, we contemplated there would be three major international institutions: The International Bank for Reconstruction and Development, which we know as the World Bank; the International Monetary Fund; and the International Trade Organization-- three international organizations, the latter to advance the reciprocal trade programs that had begun in 1934 under Cordell Hull and the administration of President Roosevelt after the calamity of the Smoot- Hawley tariff of 1930. The World Bank was duly established. The International Monetary Fund was duly established. The International Trade Organization fell afoul, came to grief, if you will, in the Senate Finance Committee. And so it was a matter of some institutional satisfaction to the committee in the 103d Congress to report out the legislation in which we joined, as had been negotiated, the Uruguay Round, the World Trade Organization to succeed the General Agreement on Tariffs and Trade which had a much more limited, although indispensable, role in the period that followed our rejection of the ITO. And now we have the World Trade Organization. The terms on which you enter this agreement and have membership in this organization require an economy and economic practices very much disparate, very much at a distance, if that is the correct term, from those practices and that economy which we observe in the People's Republic of China. The terms on which entry can be negotiated are going to be complex and crucial. And we need a negotiator who can say no. The one thing Beijing needs to understand is that they will be across the table, or at a round table, in Geneva with a negotiator who can say ``No, period.'' Other than that, I think prospects for a successful, perhaps staged, entry are good. It certainly should not be dismissed. But it must be understood we are not going to reach agreement for agreement's sake, and to that end we have confirmed in the U.S. Senate the appointment of a U.S. Trade Representative who can say, no--will do, has done. So, Mr. President, I have the great honor to join with our chairman in this unanimous action of the Committee on Finance in reporting to the floor this proposal for a waiver just to be on the safe side of the legal question that might arise--and will not when we are finished today--and also, of course, the nomination of the Ambassador which will follow in executive session. I see my colleague from Iowa is on the floor. Mr. President, I yield the floor.

Mr. MOYNIHAN. I yield 5 minutes to the distinguished Senator from Florida, a member of the Committee on Finance, who is one of those who voted unanimously to report this nomination to the floor.

Mr. MOYNIHAN. Madam President, I rise simply to endorse, with fullest conviction, the statement of the chairman in this matter, and to emphasize, if I may be allowed, that executive agreements can never override statute. If they do, they are null and void, and the courts will so hold. For us even to suggest that that might be possible would be to introduce into our governmental administrative arrangements matters of ambiguity and doubt and uncertainty that would have the capacity to incapacitate what has turned out to be an extraordinarily successful procedure in world trade. It has taken us 60 years--63 from the Reciprocal Trade Agreements Act of 1934--to reach a point where we are the world's largest trading nation and leading the way in these matters in the world and hugely respected for that and known to have the capacity to negotiate when the Congress gives that authority to the President. The subsequent negotiations are executive agreements. If any part of them should, by inadvertence or intention, be contrary to present statutory law, they are null and void. That proposition must never be put into question as I fear this matter before us might do. I yield the floor and thank the Chair.

Mr. MOYNIHAN. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. MOYNIHAN. Mr. President, I yield the floor.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, this afternoon, the Senate will vote for the third time in 2 years on a balanced budget amendment to the Constitution. Two years ago, during our first debate on this amendment, I argued that [T]here is nothing inherent in American democracy that suggests we amend our basic and abiding law to deal with the fugitive tendencies of a given moment. My point was that a series of one-time events in the 1980s had given rise to our recent fiscal disorders, and that a constitutional amendment was an inappropriate and indeed unnecessary response. Enactment of the Omnibus Budget Reconciliation Act of 1993 had, after a decade of reckless deficit spending, returned us to a path of fiscal responsibility. At the time of its enactment, OBRA 93 was estimated to bring about $500 billion in deficit reduction over 5 years. Three and one-half years later, estimates are that the total deficit reduction under the 1993 legislation will be more like $924 billion. So we are on the right track. In fact, we are even closer to a balanced budget than one might imagine--and a balanced budget amendment to the Constitution has nothing to do with how to achieve it. A balanced budget is easily within reach, if only we have the courage to seize the opportunity soon. In January 1996 and again in January 1997, I proposed a simple plan to balance the budget by the year 2002. In addition to recommendations that were generally in both the President's budget proposal and the budget proposals offered by the Republicans, my plan requires only two actions: First, correct by 1.1 percentage points the overindexation of Government programs and tax laws; and Second, postpone tax cuts. That is all that needs to be done. It is all that ought to be done. It is not the time for tax cuts. Nor it is the time for crippling cuts in domestic discretionary spending. A correction of 1.1 percentage points, as recommended in December by the Advisory Commission to Study the Consumer Price Index appointed by the Finance Committee, or the Boskin Commission as it has come to be known, would save $1 trillion in 12 years --and it would put Social Security into actuarial balance until the year 2052. The economics profession is behind this proposal, as is the Chairman of the Board of Governors of the Federal Reserve System, Dr. Alan Greenspan, who testified before the Finance Committee on January 30 of this year. Dr. Greenspan's own estimate of the overstatement of the cost of living by the Consumer Price Index is 0.5 to 1.5 percentage points per year, which is quite close to the estimate of the Boskin Commission. Notably, referring to the familiar argument that the decision to correct cost of living adjustment factors should not be politicized, Dr. Greenspan had the definitive response: not to act, given the overwhelming evidence that the CPI is an upwardly biased measure of inflation, is the political fix. Let us be absolutely clear about the direction of this bias. BLS Commissioner Katharine Abraham acknowledged at a February 11 Finance Committee hearing that the CPI is ``an upper bound measure on change in the cost of living.'' So there is broad agreement in the economics community. And encouragingly, it appears we are close to agreement in Congress and the Executive Branch. Last week, Majority Leader Lott suggested that the appointment of a panel of graybeards on the issue was in order. The President immediately said he would take the Leader's suggestion under advisement. Then on Friday, in a meeting with editors and reporters at the Washington Post, OMB Director Franklin Raines expressed support for Senator Lott's proposal. Director Raines noted that the ``CPI is a very accurate price index, while only being an okay cost of living index.'' And now in this morning's New York Times, there is an article by Richard W. Stevenson headlined ``Clinton Wants Deal With Congress on Cost-of-Living Adjustments.'' It begins: President Clinton gave his aides the go-ahead today to try to forge a deal with Congress to reduce cost-of-living adjustments for Social Security and other benefit programs, White House officials said. This is an important step forward by the Administration. Getting an accurate measure of the cost of living is the right thing to do, and it is the only way to put our fiscal affairs in order. I should add that although this issue has reemerged only recently, the fact that the CPI overstates the cost of living is not a new understanding. I came to Washington with the Kennedy Administration 35 years ago. Upon our arrival in 1961, we had waiting for us a report by a National Bureau of Economic Research committee on ``The Price Indexes of the Federal Government.'' The committee was headed by George J. Stigler, who went on to win a Nobel Prize in economics. The report noted that: If a poll were taken of professional economists and statisticians, in all probability they would designate (and by a wide majority) the failure of the price indexes to take full account of quality changes as the most important defect in these indexes. And by almost as large a majority, they would believe that this failure introduces a systematic upward bias in the price indexes--that quality changes have on average been quality improvements. Mr. President, I hope we don't allow this moment to pass us by. It is the right thing to do, and we ought to do it soon. We could have a balanced budget plan in place and forget this foolishness about amending the Constitution. If you don't think it is foolish, ask any economist. Last month, as the Senate began this debate, more than 1,000 economists, including 11 Nobel Prize winners, signed a statement imploring Congress to reject Senate Joint Resolution 1, the balanced budget amendment to the Constitution. The economists wrote: We condemn the proposed ``balanced budget'' amendment to the federal Constitution. It is unsound and unnecessary. The proposed amendment mandates perverse actions in the face of recessions. In economic downturns, tax revenues fall and some outlays, such as unemployment benefits, rise. These so-called ``built-in stabilizers'' limit declines of after- tax income and purchasing power. To keep the budget balanced every year would aggravate recessions. May I say, to paraphrase Santayana, that we may be condemned to repeat an awful period in our history if this amendment is adopted. The historical precedent is chilling: in 1930, 1,028 economists implored President Hoover to veto the Smoot-Hawley tariff legislation. He ignored their pleas, with disastrous consequences. A 60 percent drop in trade; worldwide depression; the rise of totalitarian regimes; and in the wake of such events, the Second World War. Now, with the list of signatories growing, the economics profession is again pleading with us to reject this constitutional amendment. If we defeat the amendment, we will preserve the sanctity of our Constitution and promote economic stability. If we adopt it and it is ratified by the states, we will return to the dark ages of economic policy, having disregarded 60 years of social learning. As I indicated earlier, a great part of the rationale for the balanced budget amendment has been the problem of deficits and the rising national debt. Yet our problems with deficits are quite recent, having been generated in the relatively brief period of the 1980's. These deficits marked a sharp departure from the fiscal problems of earlier administrations, which were directed primarily to the problem of a persistent full employment surplus, with its accompanying downward pressure on consumer demand. The full-employment budget concept was explained by then-OMB Director George P. Shultz in his fiscal year 1973 budget: . . . expenditures should not exceed the level at which the budget would be balanced under conditions of full employment. Which is to say that in the absence of full employment, as was the case in fiscal year 1973, the Federal Government should deliberately contrive to incur a deficit equal to the difference between the revenues that would actually come in at levels of underemployment, and those that would come in at full employment. Far from being inevitable and unavoidable, there were points in the business cycle where a deficit had to be created. Otherwise surpluses would choke off recovery. The term ``full employment surplus'' had originated earlier. The January 1962 report of the Council of Economic Advisers explained that as the recovery from the recession of 1958 got underway, economic activity grew and so did the revenues of the Federal Government. But Congress would not spend the additional revenue. As a result, the recovery stalled. This untoward event was ascribed to ``fiscal drag.'' Beginning in 1980, the Reagan White House and Office of Management and Budget set about creating a crisis by creating deficits intended to force Congress to cut certain programs. In a television address 16 days after his inauguration, President Reagan said: There were always those who told us that taxes couldn't be cut until spending was reduced. Well, you know we can lecture our children about extravagance until we run out of voice and breath. Or we can cut their extravagance by simply reducing their allowance. Haynes Johnson wrote of this in ``Sleepwalking Through History: America Through the Reagan Years'' (1991). I will simply quote a footnote on page 111: [Stockman's] former mentor Moynihan was the first to charge that the Reagan Administration ``consciously and deliberately brought about'' higher deficits to force congressional domestic cuts. Moynihan was denounced and then proven correct, except that the cuts to achieve balanced budgets were never made and the deficits ballooned even higher. The point is that the huge deficits and debt of the 1980's were intentional and anomalous, and therefore the balanced budget amendment is an inappropriate response. A balanced budget amendment would undo all that we have learned about economic policy over the past six decades--a lesson that can be easily seen in the fluctuations of the business cycle over the last 125 years. We had enormous volatility in economic activity prior to 1945--volatility that would be unacceptable today. For example, in 1905, output increased by 9.2 percent, to be followed 2 years later by declines of 1.6 and 5.5 percent in 1907 and 1908 respectively, and an increase of 11.7 percent in 1909. Output increased by 16.2 percent in 1916 and by 7.7 percent in 1918, to be followed by 3 consecutive years of negative growth. And then, of course there was the Great Depression. After increasing by 6.4 percent in 1929, output fell by 8.9 percent in 1930, another 7.8 percent in 1931, and then a further decline of an incredible 13.3 percent in 1932. After World War II all this changed, following a brief adjustment period, as the country converted from a wartime to peacetime economy. Since then the largest reduction in output was 2.3 percent in 1982. In the 1970's, I asked Council of Economic Advisers Chairman Charles L. Schultze to analyze what would have happened if a balanced budget amendment had been in force in the middle of the 1975 recession. He reported back that the computers at the Council ``blew up.'' GDP--then called GNP--would have dropped another 12 percent in an economy in which output was already 5 percent below capacity. During the debate in the last Congress, this simulation was repeated by the Treasury Department and by our minority Finance Committee staff, with the same results. With a balanced budget amendment, a moderate recession in which the unemployment rate increases by 2-3 percent becomes a major contraction--may I say depression--in which unemployment soars over 10 percent and output falls by 15 percent or more. In the entire post- World War II era the unemployment rate exceeded 10 percent only for a brief 10 months during the 1981-82 recession. Just as importantly, a balanced budget amendment would undo the progress we have already made, which I referred to earlier. Two years ago, in arguing against House Joint Resolution 1, I noted: As a result of the deficit reduction policies [put in place by the Omnibus Budget Reconciliation Act of 1993] we have had three straight years of deficit reduction--the first such string of declines since the administration of Harry S. Truman. Here are the numbers: FY 1992 $290.4 billion; FY 1993 $255.1 billion; FY 1994 $203.2 billion; OMB 1995 est., $192.5 billion; and CBO 1995 est. $176 billion. As I have said, our progress has been even better than expected. Remarkably, the deficit for fiscal year 1995 was lower than projected: $163.8 billion compared to projections of $176-$192 billion. The fiscal 1996 deficit is even lower--$107.3 billion, just 1.4 percent of GDP, resulting in 4 consecutive years of deficit reduction. And, for the first time since the 1960's, we have a primary surplus--that is, excluding interest payments, revenues exceed outlays. Adoption of a balanced budget amendment--which as I said last year would be tantamount to ``writing algebra into the Constitution''--can only jeopardize the progress we have made. We can and will complete the job of balancing the budget without this amendment. It would be disastrous for our economy, and I hope it will once again be defeated.

Mr. MOYNIHAN

Mr. MOYNIHAN. Yes. I would like to say, first of all, that I very much appreciate the judgment of the Senator from Pennsylvania that the bill will be enacted, and that I propose to amend it such that it takes effect upon enactment as against the day it is actually passed, which is the precedent. But with that agreement, that it will be enacted.

Mr. MOYNIHAN. Madam President, this is the first measure to be reported from the Committee on Finance, and once again it was reported unanimously. In the last Congress, of the 10 major measures that came out under the leadership of Senator Roth, 6 were unanimous, which speaks of his chairmanship and prudence and desire to enhance revenues.

Mr. MOYNIHAN. Mr. President, this is the first bill passed by the Committee on Finance in the 105th Congress, and characteristically, it was adopted by unanimous vote. I would point out that 6 of the 10 major pieces of legislation reported by the Senate Finance Committee during the 104th Congress also were passed unanimously. We are off to a good start in the Finance Committee this year, and I hope we maintain this fine tradition under the able leadership of Senator Roth. We are here today because the taxes levied to finance the airport and airway trust fund have expired. These taxes largely support the operations of our Federal Aviation Administration, including our Nation's air traffic control system. They also finance our airport improvement program, providing grant money for important airport equipment and infrastructure improvements. Collection of these taxes is critical to maintaining and improving our national air transportation system and continuing to fund airport modernization projects, aviation safety enhancements, and airport security efforts. On February 4, the Finance Committee held a hearing on the status of the trust fund, which we found to be critical. There is an unexpected shortfall in the trust fund. The Treasury Department had transferred estimated trust fund excise tax receipts to the trust fund based upon an assumption--now known to be inaccurate--regarding the timing of tax receipts. The Treasury Department was required to reverse this transfer, and we are informed that a correcting transfer of almost $1.2 billion has been made. The trust fund will be depleted much sooner than expected, which has consequences. FAA informs us that while the air traffic control system will be funded through the end of the fiscal year, funds for FAA capital programs will be depleted in March. If we do not act promptly, FAA will be forced to halt new airport improvement grants, and to cancel contracts that are designed to improve airports and airway systems in every part of the country. These programs could include better bomb detection equipment, improvements for better communication between pilots and controllers, and safety and security studies. The Finance Committee under Chairman Roth's leadership moved quickly. One day after our hearing, we unanimously reported out a bill to extend the trust fund taxes through the end of the fiscal year, or September 30, 1997, and to allow Treasury to transfer trust fund tax receipts to the trust fund, no matter when the taxes are collected. The House has now passed identical legislation. It therefore falls to us in the Senate to pass this bill, promptly and without amendment, and to send it to the White House for the President's signature.

Mr. MOYNIHAN. Will the majority leader yield for a comment?

Mr. MOYNIHAN. Madam President, may I just concur in those remarks. May I also report that the trust fund began in the administration of President Nixon, and our distinguished Senator from Utah was the person who managed the representation up on Capitol Hill, from the Department of Transportation.

Mr. MOYNIHAN. That is correct. I also agree, hearing now that it will become law.

Mr. MOYNIHAN

Mr. MOYNIHAN. Mr. President, I rise to pay tribute to the Young Israel of Flatbush, a major modern Orthodox synagogue in Brooklyn, NY, which is celebrating its 75th anniversary on March 2, 1997. Young Israel of Flatbush has been intensely involved, and provided extraordinary leadership, on the local, national, and international scenes. It has anchored the enormous development of the Flatbush community in which it is located, which is well noted for its commitment to communal service. The Young Israel has long stood for the classic Jewish religious values which are among the shared principles of American democracy. In particular, the Young Israel has emphasized through the years aid and assistance to the needy, both at home and abroad. During most of its 75-year history, Young Israel has been served by two outstanding spiritual leaders, Rabbi Solomon J. Sharfman who retired in 1984 after 45 years of service, and Rabbi Kenneth Auman, who currently occupies the pulpit. Through their distinguished leadership, in collaboration with a succession of lay partners, the Young Israel of Flatbush has been a source of strength in all aspects of civic and Jewish life, and at age 75, retains the vigor and optimism of a young congregation. I am certain the Members of the Senate join me in saluting the rabbis, members, and officers of the Young Israel of Flatbush on this auspicious occasion and wish them continued success in every endeavor, sacred and temporal.