Paul Simon

Mr. SIMON

Mr. SIMON. Mr. President, I introduce a bill that is neither controversial nor monumental, but highly important to the operation of our U.S. circuit courts of appeal. Under our current law, there is a real question as to whether a circuit judge who hears an en banc case, but then takes senior status prior to the decision of that case, is eligible to participate in that decision. This situation creates the potential for significant confusion within an en banc court: If judges who participated, and cast initial votes, in an en banc case were to become suddenly ineligible to decide the case by virtue of taking senior status, the initial determination as to how a case should be decided would possibly have to be revisited. Moreover, though unlikely, the current situation also creates the potential for manipulation of the system by circuit judges unhappy with an en banc decision: Conceivably a judge could hold up the release of a particular en banc opinion in order to render a judge who heard the case as an active judge ineligible to participate in the case's decision, and thereby to force a change in the outcome of the case. The bill I introduce today would simply clarify that circuit judges who hear an en banc case as active judges may participate in the ultimate decision of the case even if they take senior status between the time the case is argued and the time it is decided. I believe this technical change to be consistent with what Congress would have done had it been aware of this problem when it enacted the law governing circuit judges, and hope that my colleagues will facilitate its passage. Finally, let me say that I am indebted to Chief Judge Richard Posner of the seventh circuit for bringing this problem to my attention. Judge Posner is a stellar member of the Federal judiciary, and I am very appreciative of his courts.

Mr. SIMON

Mr. SIMON. Will the Senator yield?

Mr. SIMON

Mr. SIMON. Mr. President, I want to touch on one other point, and then I will be leaving the floor here. The question has been mentioned about capital budgets, and that States have capital budgets. Now, frequently, States have to. But I also have to add, and I say this as a former State legislature in Illinois, frequently States take advantage of this. The State decides--in Illinois--does not need to have bond issues. We are now spending huge amounts of money on interest. We do not call it deficits but we issue bonds. It is not wise. The biggest capital budget in the history of humanity, not just the history of our country, has been the Interstate Highway System. It was proposed, to his credit, by President Eisenhower. But President Eisenhower said, ``Let's issue bonds to pay for it.'' And a distinguished Senator from Tennessee, the father of our Vice President, Senator Albert Gore, Sr., said, ``Let's not issue bonds. Let's do it on a pay-as-you-go basis, and let's increase the gasoline tax.'' And we did it. As of about a year ago the estimate was that we saved about $750 billion in interest because of that. What project is there that the Federal Government does today that requires that we have to issue bonds? The biggest single thing we do is a nuclear carrier. That will cost about $6 billion. We will say inflation goes up to $8 billion, pay for it over a period of 4 to 6 years. In a 1.6 trillion budget, we can do that. Second, it is very significant that we were putting a lot more money into capital investments when we were not paying $300 billion-plus for interest. Our investment budget has gone down with these deficits, not up. Our fiscal imprudence just does not make sense. The General Accounting Office has said we ought to divide our budgets into investment and consumption. The General Accounting Office also warns against using capital budgets as an excuse for deficits. It would be a great mistake to follow that line. There is no question, Mr. President, if we have the courage to adopt this amendment, we are going to face some tough choices. And we are going to have to squirm. And we are going to have to cast some unpopular votes. If balancing the budget were popular, we would have done it a long time ago. It is popular in concept but as soon as I say, ``We will have to step on your toes in spending,'' then, all of a sudden, it does not become popular. I would add one other point: My friends who say we can balance the budget without a constitutional amendment--first of all, they gave that speech in 1986 when we failed by one vote. Then we had a $2 trillion deficit. Now it is $4.7 trillion. We have an obligation to spell things out, and I think we should spell out, in general terms. Not as suggested precisely by Senator Daschle's motion. But I think in general terms we do have an obligation. I think we should move on that right after this is adopted. But if we have an obligation, so do our friends who oppose this, who say advantage. The most conservative estimate on savings on interest with the adoption of this is by the Congressional Budget Office. They say we can save $140 billion in interest. Data resources, Inc. is talking about $500 or $600 billion in savings. Plus when interest goes down, revenue goes up. We are talking about how we, because we exercise some discipline, can build a better future for our country. I am never going to be a candidate for anything again, Mr. President. Maybe I will run for the local school board or something like that, but I will not run for the Senate. I will not run for Governor. I will not run for President. I am interested in doing something for the future of my country. Here we have a chance to do it. Let Members not miss this opportunity. I yield the floor. Mr. SARBANES addressed the Chair.

Mr. SIMON. I will be pleased to yield for a brief question.

Mr. SIMON. That is correct. So ultimately we are at the end of the fiscal year.

Mr. SIMON. Mr. President, it seems the obligation to have a balance at the end of the fiscal year--I would have to say someone might have a point of order at some point. If someone wanted to launch a $100 billion program, and that clearly would create a deficit situation.

Mr. SIMON. I yield to my college from Tennessee.

Mr. SIMON. Let me finish responding to your question and the question of the Senator from Tennessee. The third option is that we build in, as we have discussed in committee, because you cannot balance everything down to a dime, that in a $1.6 trillion budget you might have a 3 percent leeway where that could then be shifted over to the next fiscal year. And the fourth option is to get more than the 60 votes. And we have shown over and over and over again we have the ability to do that. And we have done that, you know, for earthquakes in California, for storms in Florida and Louisiana, for floods in Illinois and Missouri. We have done that over and over. So I do not think that is a great problem.

Mr. SIMON. In response to the question of the Senator from Tennessee, Mr. President, it is that we face basically three options. One is to build in a surplus, which I favor and which others have indicated they favor so that you have this cushion. And maybe there are really four options. The second is to build in additional automatic stabilizers so that you build up a fund and if you have a dip in employment in Tennessee, the President would be authorized to immediately launch some projects there.

Mr. SIMON. There is no question that is one of the options. I would add, Data Resources, Inc., says if we adopt this, we are going to create 2.5 million more jobs in this country.

Mr. SIMON

Mr. SIMON. Yes. I would like to respond to my friend from Arkansas. First of all, I believe that Government can do very good things. I believe it more than my friend from Utah does. I am for a WPA program right now. I put in the Record yesterday an article by a distinguished economist, as well as a couple of other things by other economists, saying that the evidence now is that because of the heavy debt we have, we simply are not responding. You can remember when the President of the United States, when he first came in, asked us for $15 billion for a jobs program, but because of the deficit, we could not do it. Fred Bertston, a former Assistant Secretary of the Treasury, whom you know, has said, if you had asked him 10 years ago would he be for a constitutional amendment requiring a balanced budget, he would have said absolutely not. He says, ``Now I think it is essential.'' The only recessions that is adequate is to build up about a 2-percent surplus, give the President the authority to respond with certain specific programs when unemployment goes above a certain level in various States. I would say, finally, to my friend from Arkansas, where we have responded is in the extension of unemployment compensation. I went back over several decades when we have extended unemployment compensation. I could find only one time--in 1982--when we did not have more than 60 votes to respond to that. So the reality is that we are frozen by this huge deficit from responding adequately now. We can build in a system where we can respond much more adequately to recessions than we now do.

Mr. SIMON. Mr. President, I would simply like to respond briefly to my friend from West Virginia--and he is my friend and I have great respect for him.

Mr. SIMON. In what he has had to say. Let me, in response to his last question to my colleague from Utah, say my colleague from Utah and I do not agree on how we ought to balance the budget. We have some strong philosophical differences, as Senator Byrd knows. We do agree, however, that we have to do it, and we need the discipline of a constitutional amendment to force us to do it. I would differ also with respect to my friend when he talks about the heavy tax burden. I am not suggesting that we are going to solve this primarily through taxes. I do not think that is the case. I would add, of the 24 major industrial nations we are 24th in the percentage of our income that goes for taxation. We do not have a value-added tax. Most of the countries in Western Europe have that. We have the lowest tax on a gallon of gasoline of any country outside of Saudi Arabia; the lowest taxes on a package of cigarettes, and you could go on and mention other things. But, having said that, there is no question we are going to primarily do this through restraining growth in spending. And the Senator is right, I say to Senator Byrd, when he says we are going to have to make hard choices. But it is very interesting--and we were just given at the Democratic caucus today a poll by the Wirthlin group on the balanced budget amendment--79 percent of the people favor a balanced budget amendment and 53 percent of them believe they are going to have to sacrifice in order to achieve it. They are willing to, the American public is willing to. I take the choice of sacrificing a little bit so my three grandchildren can have a better future. And I do not have a difficult time making that choice at all, and I do not think the American people do. Mr. President, I see my colleague on his feet, and I am pleased to yield to my distinguished colleague.

Mr. SIMON. I am sorry. I thought my colleague had yielded the floor.

Mr. SIMON. Mr. President, I said what I am required to do, if we pass this, is to sacrifice a little bit myself so they can have a better future. The GAO says if we continue down the present path we are going to have a gradual declining standard of living. But if we, by the end of the century or 2001 in their original study, now it will be postponed to 2002, have a balanced budget by the year 2020, the average American will have, in inflation adjusted terms, an increase in the standard of living of 36 percent. That is a huge increase for those three grandchildren.

Mr. SIMON. I can see how you got elected in West Virginia, Senator Byrd.

Mr. SIMON. I am willing to sacrifice right now, and I know the Senator from West Virginia and the Senator from Utah are, too. Unfortunately, we have 26 years in a row of history that, as a body, we have rarely been willing to do it. Oh, in 1993, you and I voted for what Senator Bob Kerrey called a modest step toward reducing the deficit. I was pleased to do that.

Mr. SIMON. The Senator is correct. Economists are virtually unanimous in saying that that was a good thing. It is to the credit of President Clinton that we did that. I think history clearly shows we need outside discipline. We can even say it is a little more print in the paper of the Constitution. But as I said yesterday-- then, too--I said all of us went right over there and we took but one oath, to defend the Constitution. That has meaning for Senators. And I think that is true for any Senator. I think we are going to live by that.

Mr. SIMON. Mr. President, the Senator from Utah has the floor and when he is through I want to get the floor just to respond very briefly.

Mr. SIMON. Mr. President, let me say that there is no absolute guarantee that this will work. I think what we can virtually guarantee is if we do not pass this, we are continuing down the same slippery slope and we are not going to get things done. In 1981 I was in the House. I was not in the Senate. But in the House we ended up with a bidding war between President Reagan and the Democrats on a tax cut. I voted against both the Reagan tax cut and the Democratic tax cut because the numbers just did not add up. We were saying by 1984 we will have a balanced budget. Third grade arithmetic told you that was not true. Just a few other quick comments. One is the details of where we are heading. Concord Coalition put together a package. By the time this debate is over we will have a rough idea. One way to do it, for example, is to live within the limits that we have established right now through 1998, and then make some policy decisions that would combine the total of the Bush package, I think it was 1991, and the Clinton package, 1993. Not that onerous. People are being told, ``This is going to hit every group.'' Senior citizens are being told it will come out of your Social Security. I had a man this morning, a hospital executive, tell me, We have been told $500 billion of this is going to come out of hospitals. Every group is being told that. It just is not true. Second, I say to my friend, who is, I think--and I am not one to exaggerate on the floor of the Senate, even though we all have a propensity to do that occasionally--I think it is correct to say that there has been no Senator in the history of the Senate who has been as much of a historian as Robert Byrd. His sweeping knowledge of history is impressive. I have written a few books in the field of history, but I do not pretend to have his knowledge of history. The only historian who would even come close would be Albert Beveridge who served Indiana around the turn of the century who did a three volume biography of Abraham Lincoln. But he had nowhere near the comprehensive knowledge of Senator Byrd. But it was interesting to me this great historian did not get into the economic history of nations, and that economic history is very clear. As nations pile up debt, they keep on piling up debt, and what do they do eventually? They monetize the debt. They start the printing presses rolling. That is the history of nations, and we cannot avoid that. Now, my friend from West Virginia had all what is going to happen to the various States. What is going to happen in those States if we do not pass the balanced budget amendment?

Mr. SIMON. I say to my friend from West Virginia, if we had 51 Robert Byrds in the U.S. Senate, we could do that. We do not. That is the simple reality.

Mr. SIMON. I do have some other points, but I will make them on some from Utah.

Mr. SIMON

Mr. SIMON. Mr. President, representing Puerto Rico in the House of Representatives is Carlos Romero-Barcelo, the former Governor of the Commonwealth of Puerto Rico. I have worked with him through the years and have come to have great respect for him. One of his passions is that Puerto Rican citizens not be second-class citizens but have all the rights that the rest of us, as Americans, have. I share that passion with him. The blatant inconsistency of the way we treat people in Puerto Rico should be on the consciences of those of us who serve in the House and the Senate. Recently, Representative Romero-Barcelo sent a ``Dear Colleague'' to the Members of the House and enclosed an item of his that was published in the Washington Times about Puerto Rico. I ask to insert that at the end of these remarks and urge my colleagues in the Senate and the House to listen to his powerful message. The letter follows: House of Representatives, Washington, DC, January 24, 1995. Re Puerto Rico's colonial dilemma. Dear Colleague: On December 15, 1994, I wrote a column--a copy is provided on the reverse side--published in the Washington Times in which I discussed Puerto Rico's colonial dilemma and the unequal treatment of U.S. citizens in Puerto Rico. For the past 97 years, Puerto Rico has been and still is a territory, or a colony, of the United States. The Island is home to 3.7 million American citizens who are disenfranchised and deprived of participating in the democratic process of the Nation. This disenfranchisement has been justified by a policy, created and maintained by Congress, which frees residents of Puerto Rico from paying Federal personal and corporate income taxes. Puerto Rico's residents do, however, pay most all other Federal taxes and user fees. In addition, this exemption from Federal income taxes has justified the exclusion of the island's residents in critical Federal programs such as Supplement Security Income [SSI]. Moreover, through section 936 of the Internal Revenue Code, the Federal Government has exempted subsidiaries of multi- national corporations in Puerto Rico from Federal corporate taxes. Section 936 has resulted in a socio-economic policy for Puerto Rico that is exactly opposite of the socio- economic policy of the rest of the Nation. While wealthy corporations in Puerto Rico are given billions of dollars in annual tax credits, the poor, the disabled, the elderly, and children at risk are denied the same safety net and economic opportunities that their follow citizens receive in the 50 States and the District of Columbia. Like the District, Puerto Rico has no voting representation in Congress, yet its residents are also denied the right to vote in the Presidential elections. This is significant because the President is our top elected official and the one who makes daily policy decisions that affect all citizens, including those in Puerto Rico. We preach the virtues of democracy throughout the world. Nevertheless, the United States still maintains the largest colony in the world--Puerto Rico--home to 3.7 million disenfranchised American citizens that are excluded from the democratic process of their Nation. American citizens in Puerto Rico should not be denied full participation in our great democratic experience. Residents of the island should share in equality with their fellow citizens in the 50 States, not only in the rights and benefits protected by the U.S. Constitution but in the responsibilities and duties as well. I urge you to read my column which sheds more light on Puerto Rico's colonial dilemma and the unequal and unfair treatment which our people receive as a result of the existing colonial relationship. Sincerely, Carlos Romero-Barcelo.

Mr. SIMON

Mr. SIMON. This is the lead story. The headline says: ``A Balanced Budget Myth Bared,'' in which the article talks about the fact that, in fact, we just do not act promptly enough to move in a recession, so to stop the balanced budget on that basis just does not make any sense. The article quotes James Bennett, an economist at George Mason University: If anything, I think the government has made economic cycles worse. I hear this: What about floods, earthquakes? We have an emergency in Michigan or Missouri, or someplace, and we have had them in Missouri and Illinois recently in our floods. First of all, I will say that I favor creating a special emergency fund. We should not create a deficit every time. We ought to create an emergency fund of $5 or $10 billion every year, where we can tap into that for emergencies that will occur almost every year. Take a look at the votes on these things. They say, well, we will be prevented from helping in natural calamities. Starting in 1991, I have not been able to find a single time when, in an emergency, we declined helping people. Now, there have been times when, years later or sometime later, we come back and they want help and they have been declined. In March 1991, 92 to 8; March 1991, 98 to 1. May 1991, voice vote. November 1999, 75 to 17. September 1992, 84 to 10. April 1992, 84 to 16. May 1992, 61 to 36. August 1992, voice vote. June 1993, voice vote. August 1993, 86 to 14. February 1994, 85 to 10. These are all more than 60 percent. Then the argument is made, well, we will have the courts in this massively. What is the reality? Well, section 6 of this article says. The Congress shall enforce and implement this article by appropriate legislation which may rely on estimates of outlay and receipts. The only example you have of a Federal court acting is in the case of the State of Missouri, the Jenkins case, and there it was the Federal court acting, in terms of a State situation, under the 14th amendment, but we had no legislation and so you have a very, very different situation. Second, we can say who has standing. I think we ought to say it takes 10 Senators or 30 House Members or 3 Governors to go before the courts. So we limit who can go before the courts. And then, finally, the reality is we have a very good enforcement mechanism: You cannot increase the debt ceiling without a 60-percent vote. I think the likelihood that we are going to go before the courts is very, very slim, and the experience of the States is--and 48 of the 50 States have some kind of provision--the experience of the States is that it is rare for any kind of litigation. I remember when this came up--and Senator Abraham will recall this--Senator Hank Brown said in the history of the State of Colorado, which has such a provision in its constitution, there has been no litigation. This idea that we are going to be massively in the courts is just not true. Then some say, ``Well, you are going to give the President impoundment authority and the President is going to increase taxes.'' If I thought there was any possibility of that happening, I would favor an amendment. I had my staff research this very carefully. And I want to pay tribute to Aaron Rapport of my staff who has really done a superb job, but my staff has researched this and it is very clear, there is no impoundment authority. Anyone who looks at the legislative record will know that, and we will make it clear through implementing legislation. Then I hear people say, ``It is going to hurt my program, it is going to hurt my State, we are getting these letters from the Department of Defense and all the other departments.'' If you total up what everyone says is going to hurt and what is going to be taken out, we will have a huge surplus in this Nation. Obviously, these figures are largely phony, and if the President of the United States had made a different decision, we would be getting all these letters from people saying what a great thing this is and this is going to be the salvation of our program. I think you have to ask all these agencies and the States what is going to happen if we do not alter the present path. And the answer is, interest is to States, interest rates are going to continue to go up, and eventually we will monetize the debt. Then I hear about Social Security, and we are going to have an amendment on that on the floor. I suggest we listen to Bob Myers, chief actuary for Social Security for 21 years, in which he says the only protection that we need that is desperately needed is a balanced budget amendment so we do not monetize the debt. That is the only way to protect senior citizens. Groups like the AARP, and others who are saying that we should not pass this are looking short term. They are not looking long term. We have to protect Social Security, and it is true it is running a surplus now, and I would love to balance the budget without that surplus, but starting in the year 2012 or 2013, it starts going in the red. We have an obligation to face this problem. President Gerald Ford said: Unless we, as a Nation, face up to the facts of fiscal reality and responsibility and the sacrifices required to restore it, the economic time bomb we are sitting on will do us in as surely as any sudden enemy assault. We cannot go on living beyond our means by borrowing from future generations or being bailed out by foreign investors. He is absolutely right. We have, and some will argue we have shown in 1993 we can do something. We did and to the praise of President Clinton we did do something. But you had an unusual confluence of things. You had a brand-new President in his honeymoon period, you had a Congress of both Houses that was in his party, and you had a President who had the courage to do something. What happened? Interest rates came down, even with the small gesture that we made at that point. Listen to the lead witness against the balanced budget amendment 2 years ago before the House Budget Committee, Professor Laurence Tribe, of Harvard. I want to make clear he still opposes a balanced budget amendment: Listen to what he said:. Despite the misgivings I expressed on this score a decade ago, I no longer think that a balanced budget amendment is at a conceptual level an ill-suited kind of provision to include in the Constitution. The Jeffersonian notion that today's populace should not be able to burden future generations with excessive debt does seem to be the kind of fundamental value that is worthy of enshrinement in the Constitution. In a sense, it represents structural protection for the rights of our children and grandchildren. People say, ``Well, let's just do it with statutory action.'' I voted for Gramm-Rudman, but as soon as it started to squeeze too much, we changed the law. It is just too easy. For people who say, ``Well, we're not going to pay attention to the Constitution''--John Ashcroft when you took that oath of office right over there, you took only one oath, to uphold and defend the Constitution. I cannot imagine any Senator, no matter how extreme, standing up and saying, ``Let's ignore the Constitution.'' That just is not going to happen. We are going to pay attention to it. The language that we have devised, that we have cleared with a great many people, is constitutional in nature, and those who say we are violating the spirit of the Constitution by requiring more than a majority vote ignore the fact that eight times in the Constitution it requires more than a majority vote to prevent governmental abuse. Have we had governmental abuse in this area? I do not think anyone can say anything to the contrary. I also hear, ``Oh, this is just a gimmick.'' I was in a press conference with Olympia Snowe, our new colleague in the Senate, when she was in the House, and a reporter said, ``Isn't this just a gimmick?'' And she responded, unfortunately with too much accuracy, ``If it was just a gimmick, Congress would have passed it a long time ago.'' And I am afraid there is some truth to that. If it were just a gimmick, my friend--and he is my friend--Senator Robert Byrd, would not be working so hard against this. The reality is, this has teeth. That debt increase means something. People say, ``Well, we have to show how we are going to do it. If they are talking in broad principles, I am all for, once this passes, spelling it out. Let me give you one option, and that is we follow the present limits we set forth in our agreement through 1998 and then a combination of the Bush program for reducing the deficit and the Clinton program, something somewhat similar, neither of which did any great harm to anyone, that will do it by the year 2002. I say to my colleagues who oppose this, who make these great speeches, ``We can do it without a balanced budget amendment,'' they insist we spell out what we are going to do, and I am for spelling it out in broad terms. But I think there is a responsibility on the part of those who say we can do it without a balanced budget amendment to spell it out. We save at least, by the most conservative estimate, about $140 billion in interest and some people say as much as $600 or $700 billion in interest. But there is that substantial savings. There is not that savings on the other side. Finally, Mr. President, let me just give you one illustration why we need this. Two or 3 years ago, I introduced a bill for long-term care, a problem that is going to escalate in this country. I had with it a half-percent increase in Social Security to pay for it. Two of my colleagues in the Senate, one of whom is still in the Senate, came to me and said, ``We really like your bill for long-term care. If you will just drop the taxes to pay for it, we would like to cosponsor the bill.'' My friends, that is our problem. Nothing is there to restrain us from doing that. Now, my colleague from Michigan and my colleague from Missouri may differ with me on whether or not we ought to have the program. That ought to be a legitimate area of debate. There should not be a debate that if we have the program, we have to be willing to pay for it, and if we are unwilling to pay for it, we cannot have the program. That is what it is all about. We need pay-as-you-go Government. I hope this body will take a look not just at all the pressure groups that are coming at us right now, but take a look at future generations, take a look at those pages, take a look at your children and your grandchildren and ask: How do we best protect them? Deficit reduction is a tax cut for future generations. Do I make a little sacrifice myself so that my three grandchildren can live better? That is the real question. I do not have a hard time answering that. Are we going to have to make some unpopular decisions if we pass this? You bet. If it was easy, we would have done this a long time ago. That is why we need a constitutional amendment. So I hope my colleagues will do the right thing--not politically but for future generations. The right thing clearly I think is adopting this balanced budget amendment. Mr. President, I yield the floor. Mr. ABRAHAM addressed the Chair.

Mr. SIMON. Mr. President, while I have been engaged in some dialog on the floor on the balanced budget amendment, I have not spoken. I want to take this opportunity just to spell out clearly why we need this change in the Constitution. I thank Senator Hatch for his leadership, and also others on the other side, Senator Craig, who has been a real Rock of Gibraltar on this. Also Senator Thurmond through the years has been providing leadership. On our side I want to pay tribute to a former Senator, Dennis DeConcini, who was very helpful, Senator Heflin, Senator Bryan, Senator Graham, Senator Robb, Senator Kohl--I could mention others. I am grateful to them all. Leading the opposition is our colleague, Senator Robert Byrd. I want to make clear that, while he and I differ strongly on this issue, there is no lack of respect on my part for Senator Byrd. He is one of the most valuable Members of this Senate today, one of the most valuable Members in the history of the Senate. I agree with him on this, that this is an issue beyond politics. What we have to look to is the future of our country. Forget the polls, forget party affiliation, forget everything else. How can we best serve the country? I believe strongly we can best serve the country by passing this constitutional amendment. What is our problem? We have both an economic problem and a political problem. The economic problem, first of all, is very clear as you look at the history of nations. If we do not get a hold of this--and if everyone forgets everything else I say just remember this--the history of nations is you pile up debt and if there is no restraint then you do what the economists call monetize the debt. You start the printing presses rolling and you go from there. And that is where we are headed. As you look into the next century and you see the percentage of deficit versus GDP, that is unquestionably where we are headed. We can take a gamble that we can be the first nation in history not to follow that path, but it is a huge gamble on the future of our country. Listen to Adam Smith in his ``Wealth of Nations,'' published in 1776, the year of our Declaration of Independence. He writes: When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid. The liberation of the public revenue * * * has always been brought about by a bankruptcy * * *. The raising of the denomination of the coin has been the most usual expedient by which a real public bankruptcy has been disguised * * *. The creditors of the public are really defrauded. Almost all States * * * ancient as well as modern, when reduced to this necessity have * * * played this very juggling trick * * *. The Romans at the end of the First Punic War reduced [the value of] the coin by which they computed the value of all other coins * * *. The [Roman] Republic was in this manner enabled to pay the great debts which it had contracted with the sixth part of what it really owed. In other words, your dollar, if I may use a current analogy, $1 became worth one-sixth of what it was worth. What does that do to the Social Security trust fund? It just devastates it. What does it do to family savings? Devastates them. What does it do to the economy of the country? Devastates it. What does it do politically? It causes chaos. We do not know where we are headed on this. For those who say that just is not going to happen, do not take my word for it. Take a look at what the OMB put forward last year as part of the budget. This table is taken directly from there: ``Lifetime Net Tax Rates Under Alternative Policies.'' I was born in 1928, so you go down here to this line--to 1930--and you see that before we passed the August 1993 budget reconciliation bill, I would have spent in my lifetime 30.5 percent on taxes. It is not changed much by the reconciliation bill, 30.6 percent; with health care reform I would spend 30.9 percent, or a lifetime of roughly 30.9 percent with or without health care reform. But then look down here, to the line for ``future generations.'' The grandchildren of Robert Bennett and John Ashcroft and Paul Simon and the people who work here: future generations. What does it say about the budget reconciliation--spending 93.7 percent of lifetime earnings in taxes? After budget reconciliation, 82 percent of lifetime earnings, with health care reform, would have gone to 66 percent, or without health care reform, because it did not pass, 75 percent. That is just not going to happen. No one is going to spend 75 percent of their lifetime earnings in taxation. What you do is you start the printing presses rolling. One of the great fights early in our history was taxation without representation. Talk about future generations and taxation without representation--what we are doing is living on a huge credit card saying send the bill to our children and grandchildren, send the bill to the pages who are here, and send the bill to my three grandchildren, the oldest of whom turned 5 just the other day. Thomas Jefferson was the first person to advocate a balanced budget amendment to the Constitution. He was not here in the United States when the Constitution was written. He came back. And, when he came back, he said, ``If I could add one amendment to the Constitution it would be to prohibit the Federal Government from borrowing money.'' He had an absolute prohibition. We have some flexibility. We say with 60 percent growth you can have a deficit. But the history of nations is clear. There is a book written by a man named Michael Veseth, published by Oxford University Press, entitled ``Mountains of Debt.'' It goes into the history of modern city states, and starting in the early 15th century. He comments on Florence and other city nations at that point. He says: The fiscal imperatives caused by huge debt drain away the capital that might have helped Florence adjust to the new world economy and growth in the future. By 1494, the future pattern of the Florentine economy was set, and Florence's years of economic power and influence were over. Again, we can take a chance that we are not going to follow the path of Florence, of all the other nations since but we are taking a huge chance. This is what is happening in terms of our expenditures in inflation- adjusted percentages. What has happened between fiscal year 1980 to fiscal year 1994 is that education--we all make speeches how important education is to our future, and the Presiding Officer and I were talking about that in committee the other day--education is down 13 percent; transportation is down 2 percent; get over here to defense, a lot of people think that is the biggest growth item, 18 percent growth; entitlements have grown 50 percent largely because of growth in numbers and because of health care reform; get over here to gross interest, it has grown 120 percent. I do not care whether you are a conservative, liberal, Democrat, or Republican. The expanding increase in percentage of our tax dollar on interest just is not rational. We simply have to do better. What is happening to our country in terms of economic independence? If the Simon family gets too deeply into debt, you start losing your independence. The same is true for a nation. Right now we know, because we require public disclosure, that 17 percent of our debt, or a little better than $800 billion, is held by other countries, and people in other countries. In addition, many countries do not permit their citizens to hold foreign bonds. So there are some countries where the citizens use some other person as a front, and, in fact, hold U.S. bonds. So it is in excess of $800 billion. There was a time when people said about the deficit, ``We owe it to ourselves.'' That is no longer true. I can remember when I was in the House and I opposed an arms sale to Saudi Arabia. I can remember a Treasury Department official coming into my office saying, ``Please do not vote against this arms sale to Saudi Arabia because among other things Saudi Arabia holds a lot of our bonds.'' That is what is happening. Let me give you a bit of history that a lot of people have not paid attention to. In 1956--my colleague from Utah is old enough to remember 1956 along with me--President Nasser of Egypt grabbed the Suez Canal, and just before the 1956 election when President Eisenhower was running for reelection, the British, the French, and Israelis ran through and seized the Suez Canal. friends and allies, and because it was just before the election, that the United States would not do anything. We did not send a soldier anywhere. Because the British were deeply in debt, we threatened to dump the pound sterling. And, without firing a shot, they withdrew. You lose your independence when you get too deeply into debt. Let me use a more practical illustration. Let us say Senator John Ashcroft was not a Member of the U.S. Senate but the president of the First National Bank in Carbondale, IL, and I went to him, and I said ``Mr. President, I would like to borrow more money than I take in this year. Will you lend me some money?'' And he would do it for 1 year, and maybe 2 years, and maybe 3 years. But at some point a prudent banker is going to say I had better put my money somewhere else. We have gone to the international bankers for 26 years in a row saying we want to borrow some money because we want to spend more than we take in. And at some point prudent international bankers are going to start saying no. We do not know when that point is going to be reached. Lester Thurow, one of the Nation's great economists, says at some point international bankers are going to say no to us. He said the question is not if they are going to say no. The question is when they are going to say no. Alan Greenspan testifying the other day said: In today's more open and integrated international capital markets, it is easier to finance investment abroad. But this does not mean that we should view the pattern of U.S. external deficits as sustainable in the long run. Looking back at the history of the past century or more, the record would suggest that nations ultimately must rely on their domestic savings to support domestic investment. The New York Federal Reserve Bank did a study from 1978 to 1988 of what the deficit has, of what our lack of savings primarily caused by the deficit has cost us. They came to the conclusion that in that 10- year period we lost 5 percent growth in GDP, in our gross domestic product; 1 percent, according to the Congressional Budget Office, is 600,000 jobs. That means a loss of 3 million jobs. The General Accounting Office, in June 1992, issued a very significant report, in which it said if we do not get ahold of things, we are going to have a gradual decline in our quality of life and our standard of living. If, by the year 2001-- that was the year at which they put it, and this year we are talking about 2002 for balancing but it basically holds--if by the year 2001 we balance the budget, then by 2020 the average American will have a real growth in quality of life and income of 36 percent. Those are huge numbers. If we do not adopt this balanced budget amendment, we are headed toward continual decline. We did, to the credit of President Clinton and, I think, to the majority in this body and the other body, pass a budget reconciliation bill in August 1993 that has helped. Our colleague Senator Robert Kerrey described it as a modest improvement. I am going to switch charts here. It shows clearly that we have reduced the deficit here, but it is also clear we are headed way, way up, far beyond anything we have known in terms of deficits. Let me quote just a few sentences from the GAO, and these sentences are taken from different parts of the report. But, I am not, I believe, taking anything out of context and distorting what they say. Early action to reduce the deficit pays huge dividends in lower interest costs. Must come from program cuts or revenue increases. The more rapidly interest costs can be brought down, the less sacrifice is required. They also say, To prevent stagnation in the living standards for future workers, if deficits are not reduced, the Government will have no fiscal flexibility to increase its investment in better infrastructure, technology and skills. Large and continued deficits are likely to seriously inhibit the growth of the economy under current and present foreseeable economic conditions. Inaction is not a sustainable policy. They predict ``a deteriorating American economy, if we do not get ahold of it. Action that is stronger and taken sooner yields greater long-range benefits.'' They include a study of Japan, Australia, Germany, and the United Kingdom. They all had deficits, along with the United States, in 1981. All but Australia's was significantly greater than the United States deficit. By 1989, Japan, Australia, and Germany had surpluses. Great Britain had a deficit about 2 percent of ours, while ours had grown substantially. Eliminating the budget deficit and, if possible, achieving a budget surplus should be among the Nation's highest priorities. Because of the accumulating burden of interest and the mounting public debt, it is important to move rapidly. Take the report we got a few days ago from Data Resources, Inc., one of the two most prestigious econometric forecasters in the Nation. I will quote a little bit: A balanced budget would be a major boost to the long-term growth of the U.S. economy. Over a 5-year period-- We are talking really about a 7-year period now. this can be done with few problems. Today, when the Fed is trying to slow the economy anyway, would be a good time to start. Balancing the cuts would require real interest rates to drop to their lowest levels since the 1970's. They predict a drop of 2.5 percent in the interest rates if we move on this. The Wharton School, the other prestigious group, predicts a drop of 4 percent. I do not know who is right, but even if it is half those figures, that is tremendous.